creating broker management cee remains unlikely, dinucci says · 5—ace weekly news brief wenesay...

WEDNESDAY, APRIL 12, 2017

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Creating Broker Management CEE Remains Unlikely, DiNucci SaysCBP remains wary of creating a Center of Excellence and Expertise entirely focused on customs

brokers, said Rich DiNucci, executive director-cargo and conveyance security at CBP, during the Nation-al Customs Brokers & Forwarders Association of America annual conference April 4. Despite some early discussion of the possible addition of a CEE to focus on broker management, CBP isn’t inclined to further segment the importing process, DiNucci said. The CEEs will certainly evolve, “but I would say it’s much too early to get into that concept now. We'll see where we are three, four years from now.”

The idea of the broker CEE is part of a broader discussion of other “subject matter CEEs,” such as a drawback CEE, DiNucci said. “I've even had the ocean carriers have come and ask that there be a CEE ded-icated to ocean carriers.” The agency would like to avoid “slicing and dicing down into specialties in terms of disciplines involved,” he said. The hope for the CEEs is to “rebuild the expertise” and that includes all

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2—ACE WEEKLY NEWS BRIEF WEDNESDAY, APRIL 12, 2017


those “players in the supply chain,” he said. The agency would also need to figure out a way to be “equi-table,” since “not everybody is a UPS or a FedEx,” he said. There’s the potential to “have a smaller broker get lost in that shuffle and that’s not something we would want to get involved in either.”

CBP is working to produce a document on the “work flows within the CEEs” that is “under review internally,” he said. There’s been “a lot of success in terms of what they were originally designed to do,” which is to “drive some of these enforcement activities.” There’s been some cases developed along with the Office of Trade on antidumping and countervailing duty enforcement, he said. Still, “there is a lot, quite frankly, in terms of culture that needs to change internally,” he said. There are some high expectations and “some of it has been a little uneven here and there” in terms of meeting those expectations, DiNucci said.

CBP is making an effort to increase the number of import specialists “in the field,” DiNucci said. Todd Owen, CBP executive assistant commissioner-Office of Field Operations, “pushed very hard to expe-dite the hiring” and there’s about 70 people that CBP “has begun the process with,” DiNucci said. “We're going to be getting a lot of good people” for whom the CEEs will be their “reality” from the beginning, he said. “That’s a very good thing,” he said.

Asked about some issues with Post Summary Corrections not being processed, DiNucci said one problem is “we’re still in two systems,” ACE and the Automated Commercial System. The agency is “in ACE,” but for financial purposes the old mainframe “is up and operable, which is creating a lot of the prob-lems right now,” he said. Unfortunately, the “only alternative” right now for when a PSC isn’t processed and an entry is liquidated is protest, he said. — Tim Warren

CBP in Early Stages of Answering Questions Around Section 321 ClearanceNEW ORLEANS—Section 321 clearance via the Automated Broker Interface is likely years away, but

CBP and the trade community are actively considering a multitude of issues surrounding e-commerce and low value shipments, according to trade industry and government officials during a panel discussion at the Nation-al Customs Brokers & Forwarders Association of America annual conference on April 5. Though short-term solutions for filers and CBP are likely to come earlier, CBP and the trade community need to avoid having those fixes becoming the norm and put the resources into an automated solution that gives customs brokers the same capabilities as others in the supply chain, said Vince Iacopella of Alba Wheels Up.

CBP recently held a “tabletop exercise” on the topic March 21-22 to consider different scenarios and discuss issues surrounding e-commerce and Section 321 with industry, said Randy Mitchell, director of CBP’s Commercial Operations, Revenue and Entry Division. Major questions that came out of the meeting include who are the responsible parties to e-commerce transactions, what is the role of facilitators like Am-azon and other e-commerce platforms, and how does one “resolve” the requirement that only one Section 321 shipment is allowed per day per importer, Mitchell said. CBP is also discussing data collection, and in particular who should file, how they should file and what data the agency will require.

A major question is whether Section 321 filing should be considered customs business and limited to customs brokers. “In my mind it’s customs business,” said Alan Klestadt of Grunfeld Desiderio. “It’s entering a good into the United States,” he said. Though Section 321 has been around for a long time, a



key difference in today’s electronic clearance off the manifest is that the CBP officer no longer sees the invoice, said Amy Magnus of A.N. Deringer. On the Northern border, Canadian truckers are often preparing the manifest and making determinations about the shipment’s value, whether it meets the one shipment per day requirement, and whether it is subject to antidumping and countervailing duties or partner government agency (PGA) requirements. “I have concerns about that,” Magnus said.

In the near term CBP will continue to rely on Section 321 filing via manifest, then “look toward” a data set for ABI, Mitchell said. How soon that happens depends on funding and how CBP prioritizes Sec-tion 321 among the many other capabilities desired in ACE. Putting Section 321 in ABI won’t need a lot of funding, but will need some, CBP officials have said. —BF

CBP FAQs on ACE ReleasedCBP answered questions on transition of Automated Commercial System queries to ACE in its list

of frequently asked questions posted on April 7 (here). CBP also provided information on Environmental Protection Agency flagging and Temporary Importation Bond export exams. CBP sends out FAQs based on its ACE status calls.

Miscellaneous CBP Releases (April 7, 2017)CBP issued the following releases on commercial trade and related matters:

• ACE PRODUCTION Outage April 8 (here)• REMINDER: FDA Scheduled Maintenance April 8 (here).

Unlicensed Employees of National Broker Permit Holders Allowed to Perform ‘Customs Business,’ CBP Says

Employees for national customs permit holders may submit entries from a remote location, consid-ered to be “customs business,” as long as there’s sufficient responsible supervision and control, CBP said in a March 21 ruling (here). That ruling, HQ H258892, involved Superior Brokerage Services (SBS), which holds local port permits and a “national permit in order to file entries remotely from their Minneapolis/St. Paul and Miami locations,” CBP said. The company sought CBP input on whether its unlicensed em-ployees in the Chicago freight forwarding office would be allowed to transmit entries remotely on week-ends through the Automated Broker Interface (ABI), ACE or the Automated Commercial System. The law allows for only certain people to be involved in “customs business.”

Specifically, the company’s Chicago office employees, who work on weekends, would log in to the Minnesota system to transmit the entries that were prepared by the Minnesota offices during the work week, the company said. “The Chicago employees would not review the entries, and the entries would be

https://apps.cbp.gov/csms/viewmssg.asp?Recid=22603&page=&srch_argv=&srchtype=&btype=&sortby=&sby=



https://rulings.cbp.gov/hq/2017/h258892.doc



subject to a ten percent auditing requirement, as if filed in the Minneapolis/St. Paul office,” the company told CBP. According to SBS, “they would merely be hitting the send button and then checking ABI for an [Automated Manifest System] match” and if “an airway bill changed, they would update as part of their normal break bulk function.” Also, “if entry documents are required, the Minneapolis/St. Paul office would send the packet the following week,” it said. “Additionally, if a manifest issue arose, which cannot be cor-rected by the airline, the entry will not be made over the weekend” and “Minneapolis is still the only point of contact for all customs purposes, besides the importer of record.”

Those Chicago employees would in fact be handling “customs business,” based on a 2008 Court of International Trade ruling in Delgado vs. United States that laid out factors to identify what constitutes “customs business,” CBP said. The entries filed by the Chicago office “will be performed in furtherance of the customs business performed by the Minnesota office,” it said. “It will arise from the activities relating to the preparation of documents intended to be filed with CBP, in furtherance of customs business.” Even though “the unlicensed employees are not engaging in the preparation of the documents to be submitted, evaluating the data before it is submitted, correcting errors, or altering the document, are activities concerning the entry and admissibility of merchandise,” CBP said. “According-ly, these activities are elevated to a level beyond ‘mere electronic transmission of data’ and constitute ‘customs business.’”

Still, the “unlicensed Chicago employees may transmit such entry filings, under the appropriate supervision,” the agency said. CBP regulations allow for some cases in which “an employee of a broker, acting solely for his employer, is not required to be licensed” for signing customs business documents or transacting other customs business if authorized, CBP said. Brokers with national permits also aren’t re-quired to file statements identifying the authorized unlicensed employees, CBP said. Because SBS is “a licensed corporation, its employees will be allowed to conduct customs business, and use the ABI system, under the necessary responsible supervision and control,” CBP said.

The company should designate a licensed broker to be “in charge of supervising the activities per-formed under the national permit,” it said. “There are licensed brokers in the Minneapolis/St. Paul and Miami locations, who can provide the oversight needed.” In addition to auditing and monitoring, CBP suggested “other forms of supervision should be implemented such as training, the issuance of guidance instructions, and supervisory site visits. If SBS follows these guidelines to ensure the necessary supervision of the Chicago employees, the proposed transaction is permissible.” — Tim Warren


• West Coast Trade Symposium Federal Register Notice (here)• ACE PRODUCTION Deployment April 6 will impact ACE Cargo Release, ACE Entry Summary

and eBond processing (here)• Readout of Acting Commissioner Kevin McAleenan’s Trip to Poland, Latvia and Estonia (here)• ACE AESTIR Export Reference Data (here).

https://www.federalregister.gov/documents/2017/04/07/2017-06990/meetings-2017-west-coast-trade-symposium——looking-ahead-together-whats-next-for-trade


https://www.cbp.gov/newsroom/speeches-and-statements/readout-acting-commissioner-kevin-mcaleenan-s-trip-poland-latvia

https://www.cbp.gov/document/guidance/ace-aestir-export-reference-data



CBP Considering Refunds of Liquidated Damages Caused by Wrong ACE Release DatesNEW ORLEANS—CBP has nearly fixed a series of issues surrounding release date updates in ACE

that were causing CBP to mistakenly issue liquidated damages for late filing against compliant filers, said Jim Swanson, CBP director-cargo security and controls, at the National Customs Brokers & Forwarders As-sociation of America annual conference on April 4. The agency is cancelling in full mistaken assessments of liquidated damages caused by the issues, and is currently deciding how to handle mistaken claims that have already been paid, Swanson said.

The errant release dates had been causing CBP officers to think filers were submitting late entry sum-maries and payments on statements. Aware of some issues, CBP headquarters had in March 2016 directed CBP officers to “use common sense and do due diligence” before issuing late filing liquidated damages. But as CBP officers became more comfortable with ACE, they again began generating reports showing late filers— many late only because ACE had the wrong release date—and assessing liquidated damages to filers on the list. There was suddenly a “big upsurge” in liquidated damages, partly because they hadn’t been running the reports for a while, Swanson said.

Agency headquarters clamped down in early February, instructing field staff that, because it was impossible to separate actual late filers from filers deemed late because of the glitch, to use “extreme care” when issuing liquidated damages, including by reaching out to the filer to ask if they indeed were late, Swanson said. It told field staff to “go back to the beginning of ACE” and cancel more than 200 liquidated damages claims in full. More cancelations are in the pipeline, he said. Still under discussion is refunding mistaken liquidated damages claims that have already been paid, which is fraught with “significant legal hurdles,” Swanson said.

CBP is working to fix the underlying system issues, in an effort Swanson characterized as “peel-ing an onion.” Fixes were deployed at the beginning of March, and another is being deployed April 5, he said. Another fix is coming on April 27. “It’s a big issue” and CBP is “going to keep doing this until we get it right,” Swanson said. The issue is “not a get-out-of-jail free card,” allowing late filing “whenever you want,” but CBP is “going to take a go-slow approach” and will only issue liquidated damages “when they’re correct,” Swanson said.

The release date issue headlined a list of about 30 ACE priorities recently taken to Capitol Hill by Cindy Allen of FedEx and NCBFAA lobbyist Jon Kent. Though the congressional committees with juris-diction over CBP funding have been “very receptive,” they were recently under the mistaken impression that ACE was done, Allen said during the panel discussion. “We said, ‘well, not so fast,’” and compiled the simplified, high-level list for staffers to take “and explain it to the people who are going to make the deci-sions about CBP funding,” Allen said.

That funding will determine whether CBP will be able to implement many of the capabilities long sought by the trade community and included on the list. CBP is “dedicated” to extending house bill release to all modes, with the Office of Field Operations signing off on the policy, Swanson said. Right now, the agency is “looking for the window” so it can do the primary programming, but there’s “no way to tell when the window is going to be open,” he said. It’s “all going to depend on funding.” The same goes for Section 321 release in the Automated Broker Interface, which won’t need a “massive funding package” but “there will be funding requirements,” Swanson said.


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Also requiring additional funding is implementation of changes to drawback from the Trade Fa-cilitation and Trade Enforcement Act of 2015. Though they take effect in February 2018, “right now the TFTEA requirements are all considered post-core,” Swanson said. “As far as funding is concerned, we’re not funded for any of that yet. At all. We have no money for any of that post-core work, including TFTEA stuff,” he said.

The TFTEA changes to drawback are now sure to take effect less than a year after CBP deploys drawback in ACE. Following the delay of its Jan. 14 deadline, the agency is still conducting “rigorous testing” of the post-release capabilities, including drawback, reconciliation, duty deferral collections and liquidation. “Management doesn’t want to provide a new date” until CBP has completed and is satisfied with testing, which has been complicated by how much the post-release capabilities are interrelated. “Customs has been collecting money for how many years,” said Monica Crockett, director-entry summa-ry, accounts and revenue, at CBP. “We don’t want to deploy the new system and screw it up.” The trade community will have 30 days’ notice of the new deployment date once CBP issues the required Federal Register notice, she said.

CBP is working on addressing another trade community priority: the lack of a national downtime policy for ACE, Swanson said. Last month CBP issued a “comprehensive downtime guidance” that ex-pands “the use of Northern border broker downtime procedures to all ports and modes,” Swanson said. The procedure allows brokers to file cargo release on paper so CBP officers can input the information into ACE manually. The guidance “doesn’t rise to the level of a directive yet,” but “we’re working on that,” he said. A core principle is flexibility for ports, he said. While some less busy ports have more time to spend on each shipment and conveyance, larger ports will need “slightly different downtime procedures” to accommodate higher volumes, he said.

Email [email protected] for a copy of the slides from the presentation, including NCB-FAA ACE priorities. — Brian Feito


• Updated ACE PGA Documentation Posted (here)• Correction to Resolution for: No Bill Match issues for some Air shipments (here)• Update on ACE issue with some Truck Standard Carrier Alpha Codes (SCACs) coming up

invalid (here).

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FDA ‘Mindful’ of Challenges as FSVP Requirements Begin May 30NEW ORLEANS—The Food and Drug Administration is aware of concerns surrounding Foreign

Supplier Verification Program (FSVP) requirements that begin taking effect for food imports on May 30, said Doug Stearn, director of FDA’s Office of Enforcement and Import Operations, during an April 4 panel discussion at the National Customs Brokers & Forwarders Association of America annual confer-ence. As FSVP requirements are rolled out, the agency will be “mindful” of the new challenges faced by the trade community, and is “going to try to work with folks to make sure it is dealt with in a responsible way,” he said.

Once FSVP requirements take effect for a given importer, which, depending on the product import-ed and the size of the importer, could be anytime from May 30 through July 2020, entry filers will have to submit new data elements, including the FSVP importer’s name, address, unique identifier and email ad-dress, Stearn said. FDA recently announced it will accept the Dun & Bradstreet DUNS number as the FSVP importer unique identifier. FDA will make available a DUNS look-up capability, Stearn said.

FDA will “in the very near future” undergo the reorganization of its field offices by commodity, which includes the addition of five district offices focused on imports, Stearn said. “As opposed to dealing with 16 different districts with different chains of authority going up, we’re going to have five import dis-tricts,” he said. FDA will try to replicate the model of its Southwest import district, he said. “If you’ve dealt with the Southwest import district you have an idea of what that looks like in one place.” The reorganiza-tion will improve consistency, communication and the competence of field staff, he said.

Meanwhile, the Fish and Wildlife Service is “smack dab in the middle” of figuring out when it will resume its ACE pilot, Tamesha Woulard of the FWS Office of Law Enforcement said during the same panel discussion. As announced previously, FWS has eliminated its complicated and controversial “certified disclaimer” process and will move to a standard disclaimer with a new code “E,” which means the imported product does not contain fish or wildlife including live, dead, parts or products thereof, except as specifically exempt.

In response to feedback from the trade community, FWS has now created an email list for the public bulletins to the trade community, and will send the bulletins out to those who sign up by sending an email to [email protected] with the word “subscribe” in the subject line, Woulard said. The email list will mean the bulletins, previously available by visiting the FWS website, are “more effec-tive and reach a larger range,” Woulard said. — Brian Feito

Senate Confirms Duke to Serve as Deputy DHS SecretaryThe Senate on April 4 voted to confirm Elaine Duke to serve as deputy homeland security secretary.

The Senate Homeland Security Committee on March 15 voted to clear the nomination of Duke for floor consideration. Committee Chairman Ron Johnson, R-Wis., in an April 3 statement (here) urged his Senate colleagues to support Duke’s nomination, after she served in Department of Homeland Security leader-ship during the Bush and Obama administrations. The DHS deputy secretary has been heavily involved in

mailto:[email protected]

https://www.hsgac.senate.gov/media/majority-media/johnson-encourages-senate-colleagues-to-support-elaine-duke-for-deputy-secretary-of-dhs



managing the International Trade Data System through ACE in the past, chairing the Border Interagency Executive Committee (BIEC).


• ACE CERTIFICATION Outage April 5 (here)• Notice: Neche, North Dakota, Port of Entry Reopened (here)• FDA Scheduled Maintenance April 8 (here)• Announcement of Initiation of Antidumping and Countervailing Duty Investigations: Silicon

Metal from Australia, Brazil, Norway and Kazakhstan (here)• ACE Issue with a number of Truck SCAC codes coming up “Invalid” (here)• Entry Summary transaction ACE System Failure E90 or ACE Cargo SE with PGA Data

Rejected (here).

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creating broker management cee remains unlikely, dinucci says · 5—ace weekly news brief wenesay...

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