Buried under paperwork

Buried under paperwork

On December 5, 2003, the U.S. Bureau of Customs and Border Protection (www.cbp.gov) published in the Federal Register very extensive regulations pertaining to advance electronic presentation of cargo shipment information. The notice itself took up 37 pages of fine print and represents the most extensive requirements yet for the reporting of shipments being transported in or out of the U.S.

Compliance became effective on January 5, 2004, although Customs has indicated that enforcement will not be active for several months as both it and industry learn to report and process information.

For shippers, carriers and logistics providers the increasing number of government-mandated reports prior to the actual shipments of goods is presenting mounting compliance problems. With literally tens of thousands of reports coming into federal agencies each day, it is an open question as to how these reports will be processed and whether they will provide any marked increase in the level of security. These mandated reports are in addition to other government security programs impacting transportation that have been established since 9-11.

The new Customs notification rules were mandated by Congress in the Trade Act of 2002, as later amended by the Maritime Transportation Security Act of 2002. Accordingly, Customs had no option but to issue mandatory cargo reporting rules. Actually, under the legislation, the rules were to be promulgated no later than October 1, 2003. In July last year, Customs issued proposed rules and received 128 comments touching on a variety of issues ranging from complaints concerning issuance of multiple house bills of lading to the scope of an exemption for certain military traffic.

While maritime shipments bound for the U.S. have been subject to mandatory reporting rules for some time, these new rules impact all modes and also encompass outbound shipments. In summary they require prior notice be given electronically to Customs as follows:

Motor carriers. Shipments by truck coming in from Canada or Mexico require the submission of information one hour prior to arrival at a U.S. border crossing. If a motor carrier participates in Customs' Free and Secure Trade (FAST) program, then notice need not be given until 30 minutes before arrival at the U.S. border crossing. Presently, due to an order by a U.S. Court of Appeals, Mexican trucks cannot enter the U.S. except for a small border area. The U.S. Supreme Court has been asked to lift that order so Mexican trucks could start entering the U.S. in the near future. Motor carriers leaving the U.S. are required to submit the information one hour before crossing the U.S. border.

Rail carriers. Rail shipments inbound to the U.S. require notification two hours prior to arrival at the U.S. border. Outbound movements by rail require four-hour notice before the rail cars bearing the export cargo are attached to an engine that would leave the U.S.

Air carriers. For cargo moving by air into the U.S. the relevant information must be submitted four hours before the aircraft is due to arrive in the U.S. If the air shipment is originating at a foreign location closer than a four-hour flying time to the U.S., then the notification is to be submitted to Customs when “wheels-up” takes place on the aircraft.

The requirement for export shipments by air is that the information be transmitted two hours before departure. Small packages weighing less than one pound are not subject to the information submission rule in either inbound or outbound movement so air express companies will not have to be concerned with reports for these types of small shipments.

Ocean carriers. Customs continues its requirement for notice 24 hours before cargo bound for the U.S. is loaded on a vessel. However, under the new rules shipments outbound from the U.S. are now also subject to notice 24 hours before departure.

In the meantime, on December 11, 2003, the U.S. Food and Drug Administration (FDA) (www.fda.gov) and Customs issued a “transitional compliance policy” pertaining to prior notification of food products being shipped to the U.S. As reviewed in the December 2003 issue of Logistics Today, the FDA and Customs had previously announced that prior notice on practically every food product coming into the U.S. had to be received by FDA between two and eight hours (depending on the mode of transportation) before arrival in the U.S.

Many importers and carriers voiced concern about the complexity and volume of such reports (the FDA anticipates over 20,000 such reports a day). Accordingly, one day before the stated mandatory compliance was to begin, the FDA and Customs announced that until August 12, 2004, they expect “good faith” efforts at compliance and, until August 12, they will seek to educate shippers, carriers and other industry segments on the requirements. After August 12 active enforcement will begin.

All of these reports impose an additional burden on the logistics of international shipments and mandate a new leasing and compliance stratagem for those involved in the supply chain. LT

James Calderwood is a partner with the law firm of Zuckert, Scoutt & Rasenberger L.L.P., in Washington, D.C., where he concentrates on transportation matters. He can be reached at [email protected]. This column is designed to provide information of general interest. It cannot substitute for in-depth legal analysis of particular problems. Readers are urged to seek counsel concerning individual situations.

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February, 2004

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