Electronic Bond Transmission

DEPARTMENT OF HOMELAND SECURITY

U.S. Customs and Border Protection

19 CFR Parts 4, 10, 11, 12, 18, 19, 24, 54, 112, 113, 118, 122, 123, 125, 127, 128, 132, 133, 134, 141, 142, 144, 146, 147, 148, 149, 151, 162, 163, 190, 191

[USCBP-2026-0199]

RIN 1685-AA24 (formerly RIN 1515-AE49)

Electronic Bond Transmission

AGENCY:

U.S. Customs and Border Protection, Department of Homeland Security.

ACTION:

Proposed rule; request for comments.

SUMMARY:

U.S. Customs and Border Protection (CBP) collects bonds from parties engaging in transactions or activities with CBP to adequately protect the revenue of the United States and ensure compliance with U.S. statutes and regulations. This document proposes to amend the CBP regulations to require that most bonds be transmitted to CBP electronically via a specialized system by the surety securing the bond, or by the principal on a bond secured by cash in lieu of surety. The changes proposed in this document further centralize and streamline CBP's bond program.

DATES:

Comments on the proposed rule must be received on or before April 14, 2026.

ADDRESSES:

You may submit comments, identified by docket number, through the Federal eRulemaking Portal:

http://www.regulations.gov.

Follow the instructions for submitting comments via docket number USCBP-2026-0199.

Instructions:

All submissions received must include the agency name and docket number for this rulemaking. All comments received will be posted without change to

http://www.regulations.gov,

including any personal information provided. For detailed instructions on submitting comments and additional information on the rulemaking process, see the “Public Participation” heading of the

SUPPLEMENTARY INFORMATION

section of this document.

Docket:

For access to the docket to read background documents and submitted comments, go to

http://www.regulations.gov.

FOR FURTHER INFORMATION CONTACT:

For questions regarding bond policy, contact Sharolyn McCann, Director, Commercial Operations, Revenue and Entry Division, Trade Policy and Programs, Office of Trade, at

otbond@cbp.dhs.gov

or (202) 384-8935. For operational questions, contact Kara Welty, Chief, Revenue Protection Branch, Revenue Division, Office of Finance, at

KARA.N.WELTY@CBP.DHS.GOV

or (202) 875-3284.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Public Participation

II. Background

A. Development of the Automated Commercial Environment and Electronic Filing

B. Centralization and Modernization of Bond Processes

C. The eBond System in ACE

D. Effect of Transmission of a Bond, Bond Amendment, or Termination

E. Overview of Transmission of Bonds, Bond Amendments, and Terminations via the eBond EDI

F. Overview of the Transmission of Bonds, Riders, and Terminations by Email to the Revenue Division

III. Explanation of Proposed Amendments to CBP Regulations

A. Proposed Amendments to Part 113

B. Technical and Conforming Amendments

IV. Statutory and Regulatory Requirements

A. Executive Orders 12866, 13563 and 14094

B. Regulatory Flexibility Act

C. Paperwork Reduction Act

V. Signing Authority

VI. Proposed Amendments to the CBP Regulations

I. Public Participation

Interested persons are invited to participate in this rulemaking by submitting written data, views, or arguments on all aspects of this notice of proposed rulemaking. U.S. Customs and Border Protection (CBP) also invites comments that relate to the economic, environmental, or federalism effects that might result from this proposed rule. If appropriate to a specific comment, the commenter should reference the specific portion of the proposed rule, explain the reason for any recommended change, and include data, information, or authority that supports the recommended change.

II. Background

As more fully discussed below, this document proposes amendments to title 19 of the Code of Federal Regulations (CBP regulations), to require that bonds be transmitted to CBP using a specified electronic data interchange (EDI) or by email. Pursuant to these proposed amendments, all bonds, bond amendments, and terminations must be transmitted electronically to CBP, and CBP proposes to eliminate paper bonds. Bonds secured by a surety must be transmitted by the surety or the surety's authorized agent. Bonds secured by cash in lieu of surety must be transmitted by the principal on the bond. Under the proposed regulations, all bond processing will be centralized at CBP's Revenue Division, Office of Finance, in Indianapolis, Indiana.

Section 623 of the Tariff Act of 1930, as amended (19 U.S.C. 1623), gives CBP broad authority to require a bond, by regulation or specific instruction, where CBP deems it necessary to protect the revenue or ensure compliance with any provision of law, regulation, or instruction that CBP is authorized to enforce. 19 U.S.C. 1623(a). 19 U.S.C. 1623(b)(1) permits CBP to prescribe the conditions and form of bonds and the manner in which the bond may be filed with or, pursuant to an authorized electronic data interchange system, transmitted to CBP. 19 U.S.C. 1623(b)(1). In 19 CFR part 113, CBP has promulgated regulations exercising this authority, detailing requirements for the execution and filing of bonds required by Chapter I of title 19 of the Code of Federal Regulations. These regulations outline a paper-based bond process designed to complement other paper-based processes in title 19. In keeping with other automation and centralization efforts, CBP is proposing to replace the paper-based bond process set forth in the regulations with an electronic bond process.

A. Development of the Automated Commercial Environment and Electronic Filing

Title VI of the North American Free Trade Agreement Implementation Act (Pub. L. 103-182, 107 Stat. 2057, December 8, 1993), commonly known as the Customs Modernization Act or Mod Act, amended the Tariff Act of 1930 to provide for electronic filing, among other things. Subtitle B of title VI established the National Customs Automation Program (NCAP), an automated and electronic system for the processing of commercial importations. Section 631 in Subtitle B of the Mod Act created sections 411 through 414 of the Tariff Act of 1930 (19 U.S.C. 1411-1414). These sections define and list the existing and planned components of the NCAP (section 411), promulgate program goals (section 412), provide for the implementation and evaluation of the program (section 413), and provide for Remote Location Filing (section 414). Paragraph (a) of Section 411, which lists the existing and planned components of the NCAP, includes the electronic filing of bonds as a planned component. 19 U.S.C. 1411(a)(2)(D). Paragraph (b) of Section 411 authorizes the Secretary of the Treasury to “require

the electronic submission of information described in subsection (a),” by regulation.

Section 647 of the Mod Act amended section 623(b)(1) of the Tariff Act of 1930 (19 U.S.C. 1623(b)(1)) to give CBP the authority to prescribe “the manner in which the bond may be filed with or, pursuant to an authorized electronic data interchange system, transmitted” to CBP. In addition, section 647 of the Mod Act amended section 623(d) of the Tariff Act (19 U.S.C. 1623(d)) to provide that “[a]ny bond transmitted to the Customs Service pursuant to an authorized electronic data interchange system shall have the same force and effect and be binding upon the parties thereto as if such bond were manually executed, signed, and filed.”

Pursuant to these mandates, CBP has modernized the business processes essential to securing U.S. borders, facilitating the flow of legitimate shipments, and targeting illicit goods. The key automated system behind these initiatives is the Automated Commercial Environment (ACE), the successor to the Automated Commercial System (ACS). ACE is an automated and electronic system for commercial trade processing that streamlines business processes, facilitates growth in trade, ensures cargo security, and fosters participation in global commerce, while ensuring compliance with U.S. laws and regulations and reducing costs for CBP and stakeholders. The ability to meet these objectives depends on successfully modernizing CBP's business functions and the information technology that supports those functions, including the development of modernized bond processes and an electronic system to support and streamline those processes.

ACE is the backbone of CBP trade data processing and risk management activities and provides a single, centralized access point to connect CBP, other International Trade Data System (ITDS) agencies, and the trade community. In 2015, CBP published an interim final rule amending the CBP regulations to reflect the designation of ACE as the CBP-authorized EDI system for processing of commercial trade data. Automated Commercial Environment (ACE) Filings for Electronic Entry/Entry Summary (Cargo Release and Related Entry), 80 FR 61278 (Oct. 13, 2015). That interim final rule became effective on November 1, 2015.

In preparation for the development and deployment of an automated bond program, CBP has engaged in regular outreach with stakeholders, including sureties, surety agents, customs brokers, trade groups and partner government agencies, with a view to obtaining meaningful feedback on existing systems and operations in order to build a mutually beneficial automated bond system.

B. Centralization and Modernization of Bond Processes

Concurrently with CBP's efforts to develop modernized electronic processes, CBP also engaged stakeholders on streamlining bond processes. In 2011, the Department of Homeland Security's Office of the Inspector General (OIG) conducted an audit of CBP's single transaction bond (STB) program, and found deficiencies in bond retention, accuracy and completion, and valuation, as well as problems with cargo being released prior to execution of bonds.

See

“Efficacy of Customs and Border Protection's Bonding Process,” OIG 11-92, dated June 27, 2011, available for viewing at

https://www.govinfo.gov/app/details/GOVPUB-HS-PURL-gpo15744

(last visited December 10, 2025). The OIG recommended centralization and automation of the STB program, and CBP adopted this objective as a CBP mission priority.

The transition to electronic bond processing allowed CBP to develop and implement centralized filing procedures with the Office of Finance. In 2015, CBP centralized the filing, review and approval of continuous bonds at CBP's Revenue Division. Customs and Border Protection's Bond Program, 80 FR 70154 (Nov. 13, 2015). In that final rule, CBP amended part 113 of the CBP regulations to require continuous bonds to be filed with the Revenue Division and allow STBs to be filed with either the Revenue Division or the port. The rule also allowed STBs and continuous bonds to be filed by email or facsimile, in addition to the existing paper bond form, known as the CBP Form 301, and required that notice of bond termination be sent to the Revenue Division and centralize surety oversight in the Revenue Division.

C. The eBond System in ACE

The culmination of these efforts to automate and centralize bond processing is the development of the eBond system. In early 2014, CBP began building the eBond system, an EDI for the transmission of bond data. The eBond system harmonizes and enhances CBP bond processes pertaining to transmission, validation, maintenance, retention, and periodic review of all bonds collected by CBP, and establishes a single electronic repository for the centralization of those bonds within the Revenue Division.

On November 28, 2014, CBP published a notice in the

Federal Register

(Announcement of eBond Test, 79 FR 70881), announcing an NCAP test of the eBond system, designed to evaluate the functionality of the system, its impact on trade, and CBP's ability to protect the revenue and enforce applicable laws.

1

The eBond test was conducted pursuant to 19 CFR 101.9(b), which provides for the testing of NCAP programs.

See

Treasury Decision (T.D.) 95-21. The test began on January 3, 2015.

1

The Mod Act authorizes the Commissioner of CBP to conduct limited test programs to evaluate planned components of the NCAP. Title VI of the North American Free Trade Agreement Implementation Act (Pub. L. 103-182, 107 Stat. 2057, December 8, 1993).

Pursuant to the test, participating sureties were invited to transmit electronic bonds, riders, and terminations to ACE through the eBond EDI. The test notice also provided procedures for email transmission of bonds and related documents to the Revenue Division, for manual input into ACE. The test required that all bonds and riders transmitted pursuant to the test be transmitted by the surety obligated on the bond or an authorized surety agent.

CBP published two subsequent notices modifying and extending the eBond test program in the

Federal Register

. In the second test notice, CBP modified the eBond test to allow conversion of continuous bonds executed outside the test into eBonds, clarified that principals and sureties are identified in eBond by their respective filing numbers rather than names, and amended the test requirements for termination of a bond in eBond. eBond Test Modifications and Clarifications, 80 FR 899 (Jan. 7, 2015). The third test notice extended the test period indefinitely. Extension of National Customs Automation Program; eBond Test, 83 FR 12403 (Mar. 21, 2018).

CBP has evaluated the eBond test and found it to be successful. Nearly all bonds transmitted to CBP in 2023 were transmitted pursuant to the test, rather than filed in paper or emailed pursuant to the procedures outlined in the regulations.

2

Electronic transmission of bonds benefits importers, sureties, and CBP by reducing paper processing, expediting cargo release, expanding bond transmission capabilities beyond regular CBP business hours, and enhancing traceability for audit purposes. Sureties benefit through increased oversight and control over

bonds on which they are obligated and the ability to receive real-time updates from ACE and through the ACE Portal. Finally, CBP benefits from decreased burdens associated with paper and increased opportunity for oversight.

2

Out of 599,342 bonds transmitted to CBP in 2023, only 37 were submitted to the Revenue Division by email or mail.

The current regulations in part 113 envision a bonding process that includes the submission of a paper bond application and approval of that application by CBP. This application and approval process is both burdensome for CBP to administer and incompatible with the modernized eBond process developed for ACE. CBP is proposing changes to part 113 of the CBP regulations to replace this paper process with the electronic eBond process tested pursuant to the NCAP. Pursuant to the proposed regulations, ACE will be the EDI system authorized by the Commissioner for the electronic transmission of bond information (eBond system), and the eBond test will be ended at the time the proposed regulations are finalized. For those bonds not suitable for transmission via EDI, CBP will require email transmission to the Revenue Division. In the event of an ACE outage, CBP will follow the downtime procedures found on the CBP website at

https://www.cbp.gov/document/technical-documentation/ace-cbp-downtime-policy-trade.

The processes for transmission of bonds via EDI and email are outlined in Sections II.E. and II.F., below.

D. Effect of Transmission of a Bond, Bond Amendment, or Termination

The transmission of bond data via EDI or by email memorializes the agreement of the principals and sureties on the bond to be bound by the terms and conditions of the transmitted bond, bond amount adjustment, rider, or termination. In accordance with 19 U.S.C. 1623(d), and consistent with the Electronic Signatures in Global and National Commerce Act, 15 U.S.C. 7001

et seq.,

in place of signatures memorializing the parties' intent to be bound, the transmission of a bond, bond amount adjustment, rider, or termination to CBP pursuant to the proposed regulations constitutes a binding representation to CBP of the surety's authority to bind all sureties and principals on the bond, bond amount adjustment, rider, or termination. In addition, transmission to CBP affirms the agreement of all sureties and principals on the bond to the terms and conditions of the transmitted bond, bond amount adjustment, rider, or termination. A bond, bond amount adjustment, rider, or termination transmitted via EDI or email has the same force and effect, and is binding upon the principal and surety thereto, as if such bond, bond amount adjustment, rider, or termination had been manually executed, signed, and filed in paper with CBP.

Likewise, the transmission of a bond secured by cash in lieu of surety by email memorializes the agreement of all principals on the bond to be bound by the terms and conditions of the transmitted bond. In accordance with 19 U.S.C. 1623(d), and consistent with the Electronic Signatures in Global and National Commerce Act, 15 U.S.C. 7001,

et seq.,

in place of signatures memorializing the parties' intent to be bound, the principal's transmission to CBP of a bond secured by cash in lieu of surety is a binding representation of the transmitting principal's authority to bind itself and all other principals identified in the bond, and constitutes the agreement of all principals on the bond to be bound by the transmitted bond.

Identification or use of a bond by the principal or other authorized user to secure an activity or transaction reaffirms that the principal intends to be bound by the terms and conditions of the bond, including all riders thereto. These certifications are provided in proposed § 113.12, and are further explained in Section III, below.

E. Overview of Transmission of Bonds, Bond Amendments, and Terminations via the eBond EDI

Bonds Transmitted via EDI

The eBond EDI is built around the transmission of electronic bond data to CBP by the surety obligated on the bond. A bond transmitted via eBond is an electronic bond contract between the principal and the surety with CBP as the beneficiary, comprised of data elements required by the eBond system. These required data elements consist of a subset of the Office of Management and Budget (OMB)-approved information collected on the CBP Form 301. Because ACE is built to reduce or eliminate repeated collection of the same data elements, information already available in ACE is not re-collected as part of the eBond transmission.

All bonds, amendments, and terminations transmitted via EDI must be transmitted to CBP by the surety obligated on that bond or by the authorized surety agent. Filing requirements for eBond are detailed in the Customs and Trade Automated Interface Requirements (CATAIR) document, which provides conventional trade interface information for electronic bond data functionality in ACE. The CATAIR provides the input and output EDI record formations for the electronic transmission of bonds to CBP (record layouts). The input record layouts describe the data elements required by the automated EDI interface. The output record layouts describe a response to filing as generated and returned by the automated EDI interface. CBP has posted these technical specifications on the CBP website at the following link:

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

Any updates to the technical formats will be posted at the above link. The trade community is encouraged to subscribe to the Cargo Systems Messaging Service (CSMS) at

https://www.cbp.gov/trade/automated/cargo-systems-messaging-service

to receive timely notifications regarding ACE, including any future changes or updates to these technical specifications.

The required data elements are enumerated in detail in proposed § 113.21, and in the description of that provision, in Section III, below. The surety has the option of submitting additional data elements, such as the surety's internal reference number for the bond and the identification codes for any “secondary notify parties” for the bond. A “secondary notify party” is a party, identified by the surety, who will receive status notifications regarding the bond.

ACE will accept any bond data properly transmitted through the eBond system. Upon acceptance, the system will return a message to the surety and any secondary notify parties identifying the CBP-assigned bond number. A single transaction bond is available to secure an activity or transaction upon the bond's acceptance by ACE. For term bonds, including continuous bonds, the surety must identify the effective date on which the bond may be used by the principal or authorized user to secure activities or transactions. The effective date must be on or after the date the bond is transmitted to CBP and accepted by ACE. The surety may select an effective date for a term bond, including a continuous bond, so long as the selected date is no more than 60 calendar days after the date the bond is transmitted to CBP. A single transaction bond is effective for the transaction it secures, regardless of the date of the transaction.

An appropriate bond must be effective in eBond before the commencement of the activity or transaction it secures. Thus, as an example, a bond securing entry must be accepted by the eBond system prior to transmission of the related entry or entry summary. When the related entry or entry summary is

transmitted, ACE will validate the existence of the bond in eBond before accepting transmission of the entry or entry summary. The bond is then linked in ACE to the relevant transaction.

CBP will conduct sufficiency reviews of all bonds transmitted to CBP to ensure that the amount and type of bond are sufficient to protect the revenue and ensure compliance with all applicable laws and regulations. This sufficiency review is discussed in more detail in proposed § 113.13, and in the explanation of that provision in Section III of this document.

Bond Amendments Transmitted via EDI

CBP will permit limited amendments to bonds after transmission to CBP. Only those changes expressly provided for in proposed § 113.23 will be permitted. To effect any other change, the surety must terminate the existing bond and replace that bond with a new bond.

For STBs transmitted via EDI with Activity Code 1, which are bonds for basic importation and entry, CBP will permit the surety to adjust the amount of the bond following transmission of the bond, so long as that adjustment is transmitted within 10 business days of the date of entry.

3

To ensure the protection of the revenue and legal compliance, transmission of a bond amount adjustment to CBP constitutes the surety's and the principal's agreement that the amended bond amount will only limit their liability if it was calculated and transmitted using reasonable care, as that term is used in 19 U.S.C. 1484 for importations and entries. Absent reasonable care, the bond amount in effect prior to transmission of the bond amount adjustment would remain in effect. The failure to use reasonable care may result in penalties or other enforcement actions permitted by law. Transmission of a bond amount adjustment to CBP would also constitute the surety's and the principal's agreement that CBP may immediately prohibit either the surety or the principal, or both, from being party to future bond amount adjustments to any bond, if necessary to protect the revenue or to ensure legal compliance.

3

The activity code is the CBP-assigned number identifying the terms and conditions for a bond securing a particular activity or transaction. Activity Code 1 bonds are importer or broker bonds. The terms and conditions for bonds with Activity Code 1 are set forth in 19 CFR 113.62.

CBP would also permit transmission of five bond riders, as described in proposed § 113.24: the user addition rider, the user deletion rider, the addition of a reconciliation rider, the removal of a reconciliation rider, and the U.S. Virgin Islands rider. The user addition and user deletion riders would allow the surety to add and delete authorized users on an existing bond. An authorized user is a person, business firm, government agency, or other organization that is authorized to obligate the bond in the principal's name. The authorized user must be an unincorporated unit of an identified principal or a trade or business name used by an identified principal in its business. An authorized user may use the bond to cover activities or transactions to the same extent as the principal on the bond, and any such activities or transactions will be considered to be the activities or transactions of the bond principal.

The reconciliation rider would allow the principal and surety to utilize the bond to cover all reconciliations elected pursuant to 19 U.S.C. 1484(b) on entries secured by the identified bond, and certifies that all conditions set out in § 113.62 are applicable to the identified bond. The surety may also remove the reconciliation rider via EDI.

The U.S. Virgin Islands rider would memorialize agreement by the principal and surety that the words “United States,” whenever used in the terms and conditions of the identified bond, include the U.S. Virgin Islands, and that activities or transactions of the principal in the U.S. Virgin Islands are covered by the identified bond as if they occurred in the United States.

4

4

A U.S. Virgin Islands rider is required because the U.S. Virgin Islands is outside the customs territory of the United States. The customs territory of the United States includes only the States, the District of Columbia, and Puerto Rico.

See

19 CFR 101.1 and General Note 2 of the Harmonized Tariff Schedule of the United States (HTSUS). This rider is only needed for the U.S. Virgin Islands because the Secretary of the Treasury administers the customs laws of the U.S. Virgin Islands through CBP.

See

19 CFR 7.2(c). The other insular possessions of the United States other than Puerto Rico, including Guam, American Samoa, and the Commonwealth of the Northern Mariana Islands, are not governed by the Tariff Act of 1930, as amended, or by the CBP regulations.

Riders amending a bond transmitted via the eBond EDI would also be required to transmit to CBP via EDI. The data elements required in the transmission of a rider are described in proposed § 113.24, and further explained in the explanation of that provision in Section III below. Except for the amendments made pursuant to the bond rider, the surety and principal would agree that all other terms and conditions of the identified bond remain unchanged. Identification or use of a bond amended by a rider by the principal or other authorized user to secure an activity or transaction reaffirms that the principal intends to be bound by the terms and conditions of the bond and the rider. These terms and conditions include certifications, which are provided in proposed § 113.12, and are further explained in Section III, below.

ACE will accept any bond rider properly transmitted through the eBond system. Upon acceptance, the system will return a message to the surety and any secondary notify parties. Reconciliation and U.S. Virgin Islands bond riders are effective upon acceptance by the eBond system. Sureties must identify an effective date for a bond rider adding an authorized user, identifying the date on which the added user may begin using the bond. The effective date for the user addition rider must be on or after the transmission date of the rider, and no more than 60 calendar days after the date the rider is transmitted to CBP. Similarly, sureties must identify an effective date for a bond rider deleting an authorized user, identifying the date on which the user is no longer authorized to use the bond. The effective date for a user deletion rider must be at least 10 business days after the transmission date of the user deletion rider.

Termination of Bonds via EDI

CBP will permit sureties to terminate bonds via EDI or by email to the Revenue Division. Principals wishing to terminate a bond must send notice of termination by email to the Revenue Division. The surety may terminate the bond with or without the consent of the principal, but must provide the principal notice of the termination, as detailed in proposed § 113.27. The surety must transmit the effective date of the termination to CBP, and that termination date must be at least 15 calendar days after the date of the electronic notice of termination.

F. Overview of Transmission of Bonds, Riders, and Terminations by Email to the Revenue Division

Bonds Transmitted by Email

In order to effectively implement the streamlined procedures developed for bonds, CBP has adapted the process for email transmission of bonds to mirror the requirements for bonds transmitted via EDI. A bond transmitted by email is an electronic bond contract between principal and surety with CBP as beneficiary, comprised of the same data elements required by the eBond system. These required data elements consist of a subset of the OMB-approved information collected on the CBP Form 301. With the exception of bonds

secured by cash in lieu of surety, all bonds transmitted by email to the Revenue Division must be sent by the surety obligated on the bond or by the authorized surety agent. Bonds secured by cash in lieu of surety must be transmitted to the Revenue Division by the principal on the bond. All bonds transmitted to the Revenue Division by email are manually added to the eBond system and are effective only after they have been successfully added to the eBond system. Upon acceptance by the eBond system, the system will return a message to the surety and any secondary notify parties on the bond, identifying the CBP-assigned bond number. In addition, a CBP Form 301, annotated with the CBP-assigned bond number, will be sent by email to the surety. If requested by the surety, CBP will mail a CBP Form 301, annotated with the CBP-assigned bond number, to the principal. Principals transmitting a bond secured by cash in lieu of surety via email will not receive automated messages from ACE; a copy of the CBP Form 301, annotated with the CBP-assigned bond number, will be mailed to such parties.

Formatting requirements for bonds sent by email to the Revenue Division are posted on the CBP website at the following link:

https://www.cbp.gov/trade/priority-issues/revenue/bonds/bond-centralization-program.

Any updates to the requirements will be posted at the above link. Bonds transmitted via email must adhere to these formatting requirements, and include, as an attachment to the email, a CBP Form 301 containing the data elements required by proposed § 113.21. The data elements collected in bond transmissions sent by email are a subset of the information collected on the CBP Form 301. The surety has the option of submitting additional data elements, such as the identification codes for any “secondary notify parties” for the bond. A “secondary notify party” is a party, identified by the surety, who will receive status notifications regarding the bond.

For term bonds, including continuous bonds, the bond transmitted via email must identify the effective date on which the bond may be used by the principal or authorized user to secure activities or transactions. The effective date for a term bond transmitted by email must be at least ten business days after the date the bond is received by CBP. The surety may elect an effective date for a term bond, including a continuous bond, so long as the selected day is no more than 60 calendar days after the date the bond is transmitted to CBP. A single transaction bond is effective for the transaction it secures, regardless of the date of the transaction.

An appropriate bond must be effective and in the eBond system before the commencement of the activity or transaction it secures. For example, a bond securing entry must be in eBond prior to transmission of the related entry or entry summary. When the related entry or entry summary is transmitted, ACE will validate the existence of the bond in eBond before accepting transmission of the entry or entry summary. The bond is then linked in ACE to the relevant transaction.

CBP will conduct sufficiency reviews of all bonds transmitted to CBP to ensure that the amount and type of bond are sufficient to protect the revenue and ensure compliance with all applicable laws and regulations. This sufficiency review is discussed in more detail in proposed § 113.13, and in the overview of that provision in Section III, below.

Bond Riders Transmitted by Email

For bonds transmitted by email, CBP will permit only amendments made by bond rider, as provided for in proposed § 113.23. To effect any other change, the surety must terminate the existing bond and replace that bond with a new bond.

As with bonds transmitted by EDI, CBP will permit email transmission of the five bond riders listed in proposed § 113.24 and described in Section II.E.

supra:

the user addition rider, the user deletion rider, the addition of a reconciliation rider, the removal of a reconciliation rider, and the U.S. Virgin Island rider. Riders amending a bond that was transmitted by email to the Revenue Division must also be transmitted to CBP by email to the Revenue Division. The information required in a rider transmitted by email is the same as the information required for a rider transmitted by EDI. This information is described in proposed § 113.24, and further explained in the description of that provision in Section III, below.

All riders properly transmitted to the Revenue Division by email will be added to the eBond system. Upon acceptance, the system will return a message to the surety and any secondary notify parties. The effective dates for bond riders transmitted by email will be the same as the effective dates of bonds transmitted by EDI, and are explained in Section III, below.

Termination of Bonds by Email

CBP will permit sureties to terminate continuous bonds via EDI or by email to the Revenue Division. Principals wishing to terminate a continuous bond must send notice of termination by email to the Revenue Division. The surety may terminate the bond with or without the consent of the principal, but must provide the principal notice of the termination, as detailed in proposed § 113.27. The principal or surety must identify the effective date of the termination in the notice to CBP. That termination date must be at least 15 calendar days after the date of the notice of termination.

III. Explanation of Proposed Amendments to CBP Regulations

A. Proposed Amendments to Part 113

CBP is proposing amendments to part 113, in accordance with the new procedures described above. CBP is proposing to amend the scope provision at § 113.0 to reflect the proposed electronic bond process, removing reference to the submission of a bond application and subsequent approval by CBP. Instead, the scope provision will reflect the transmission of bond information, and CBP's subsequent review for sufficiency.

Proposed Amendments to Subpart A

CBP is proposing amendments to Subpart A to define terms used throughout part 113 and to clarify the transition from bonds executed under the current regulations to bonds transmitted electronically pursuant to the proposed regulations. The proposed amendments are as follows.

First, CBP proposes to move the existing authority provision in § 113.1 to a revised § 113.2, and to add a new “Definitions” section for § 113.1. The proposed § 113.1 will define the following terms:

•

Activity code:

a CBP-assigned number identifying a set of terms and conditions for a bond securing a particular activity or transaction.

•

Authorized user:

an unincorporated unit, trade name, or business name of the identified principal on the bond who is authorized to obligate a bond in the principal's name, and must have a CBP filing identification number identical to that of the principal on the bond, except that the optional two-digit suffix code may differ as allowed in 19 CFR 24.5. To make the regulations easier to read and understand, the singular term “authorized user” is used generally and, unless the context indicates otherwise, includes and applies to several “authorized users” (and the plural usage includes the singular), consistent with the Dictionary Act (1 U.S.C. 1).

•

Bond:

a contract between principal and surety, or an agreement by a principal secured by cash in lieu of

surety (even when the cash is not required to be deposited with CBP), securing the principal's performance of one or more obligations imposed by the U.S. Government with CBP or another party as beneficiary. A bond is comprised of the elements required under proposed part 113, and includes any amendments made to the bond in accordance with proposed part 113.

•

Bond amount adjustment:

a retroactive amendment of a single transaction bond's amount or limit of liability, made in accordance with § 113.23 of proposed part 113.

•

Bond rider:

a prospective amendment of a bond, made in accordance with proposed part 113.

•

Consolidated Bond:

a bond (single transaction or term) assuring compliance with two or more provisions of law, regulations, or instructions that CBP is authorized to enforce.

•

Continuous Bond:

a term bond with a bond period of one year, that renews automatically for a new one-year period beginning on the anniversary of the effective date of the bond and continuing for each succeeding one-year period, unless terminated sooner by the principal or surety, or cancelled by CBP, in accordance with the regulations in proposed part 113. Each one-year period of a continuous bond, or partial-year period if the bond is terminated sooner, constitutes a separate period of liability in the amount of the bond for the transactions or activities that occur within the period.

•

Electronic Data Interchange (EDI):

eBond or any other CBP-authorized functionality that allows filers to transmit data electronically to, and receive electronic messaging from, CBP and the CBP-authorized EDI system.

•

Electronic Data Interchange (EDI) system:

the Automated Commercial Environment (ACE) or any other established mechanism approved by the Commissioner of CBP through which information can be transferred electronically.

•

Principal:

a person, business firm, government agency, or other organization, as identified by a CBP filing identification number, as detailed in § 24.5 of this title, engaged in a transaction or activity for which CBP requires a bond, including the officers, employees, contractors, and/or agents of such person, business firm, government agency, or other organization. To make the regulations easier to read and understand, the singular term “principal” is used generally and, unless the context indicates otherwise, includes and applies to several “principals” (and the plural usage includes the singular), consistent with the Dictionary Act (1 U.S.C. 1).

•

Revenue Division:

the centralized office within the CBP Office of Finance responsible for bond processing and retention for all continuous and single transaction bonds.

•

Single Transaction Bond (STB):

a bond securing one transaction or activity covered by a single activity code.

•

Surety:

a company listed in Treasury Circular 570 as an acceptable surety on Federal bonds or as an acceptable reinsurance company for such bonds, and the officers, employees, and/or agents (including surety agents) of such company. To make the regulations easier to read and understand, the singular term “surety” is used generally and, unless the context indicates otherwise, includes and applies to several “sureties” (and the plural usage includes the singular), consistent with the Dictionary Act (1 U.S.C. 1).

•

Surety agent:

a person, business firm, or other organization granted power of attorney by a surety pursuant to 19 CFR 113.37 to transact business on behalf of the surety. To make the regulations easier to read and understand, the singular term “surety agent” is used generally and, unless the context indicates otherwise, includes and applies to several “surety agents” (and the plural usage includes the singular), consistent with the Dictionary Act (1 U.S.C. 1).

•

Term bond:

a bond securing one or more transactions or activities with the same activity code over a defined period of time.

•

Void:

invalidating an STB transmitted to CBP via EDI before that single transaction bond has been used to secure an activity or transaction. Once voided, that single transaction bond will no longer be available to secure any activity or transaction. Only the surety may void an STB.

In revising the rest of subpart A, CBP proposes to consolidate the authority provision currently in § 113.1, which details the powers of the Commissioner of CBP relating to bonds, and that the Commissioner may authorize the Director, Revenue Division or the port director to require bonds or other security, with existing § 113.2. CBP would update the introductory text of proposed § 113.2 to clarify that the Commissioner may also authorize the Center director to require bonds or other security. CBP also proposes to modernize the language in § 113.2 by replacing the word “penalty” and the words “penalty for violation” with the word “amount” in proposed paragraphs (a) and (d) and making technical amendments to proposed paragraph (c) to replace the words “he” and “his” with the word “Commissioner” to make clearer who the references are referring to. Next, CBP proposes clarifying amendments to § 113.3, regarding the liability of the principal and the surety by adding a reference to transactions or activities that occur prior to termination of the bond, and noting CBP's authority to relieve liability on a terminated bond. Currently, § 113.4 provides an explanation for bonds and carnets. CBP proposes to remove the definition for “CBP bond” from § 113.4, as a new definition for “bond” has been proposed in § 113.1, obviating the need for clarification in § 113.4.

Lastly, CBP proposes to add two new provisions in subpart A. First, in § 113.5, CBP proposes to add a new provision specifying CBP authority to require a bond by specific instruction. The language of the proposed § 113.5 is modeled on the existing language in § 113.14, which CBP proposes to remove and replace with a new provision. Second, CBP proposes to add a new provision in § 113.6 detailing the treatment of existing bonds once the final rule implementing the new regulations is effective. All new bonds transmitted to CBP on or after the effective date of the final rule will be subject to the amended regulations in part 113. An STB filed with or transmitted to CBP prior to the effective date of the final rule will remain subject to the terms and conditions that were in place on the date that the bonds were executed. Thus, STBs will be subject to the prior regulations or eBond test requirements in place on the date of execution.

For term bonds, including continuous bonds, the proposed rule outlines a rolling transition from bonds under the existing regulations to bonds under the new regulations, beginning with the effective date of the final rule. Principals may continue to secure transactions or activities with a term bond executed prior to the effective date of the final rule until the end of that bond's latest bond period (

e.g.,

the end of the latest one-year period in the case of continuous bonds). Term bonds filed with or transmitted to CBP prior to [

insert effective date of Final Rule here

] will remain subject to the terms and conditions that were in place on the date that the bonds were executed. Term bonds will also be subject to the prior regulations or eBond test requirements in place on the date of execution. At the end of the bond's latest bond period, the bond will be deemed insufficient to secure any new transaction or activity.

In order for principals to secure further transactions or activities with a term bond, their surety must transmit a new term bond to CBP on or after the effective date of the final rule. This rolling transition period is intended to align with the bond period for term bonds, to ensure that principals are not required to obtain a new term bond prior to the end of the current bond period for a bond executed prior to the effective date of the final rule. On and after the one-year anniversary of the effective date of the final rule, all new transactions or activities must be secured with bonds under the new regulations.

Proposed Amendments to Subpart B

Currently, subpart B describes a paper-intensive process for submission of bonds to CBP. For STBs, the existing process requires the submission of either a bond application or a sufficient bond with the entry or entry summary, to be approved by either the port or the Revenue Division. For continuous bonds, the existing process requires the submission of a bond application to the Revenue Division, to be approved by the Revenue Division. CBP proposes to amend the provisions in subpart B by replacing the existing process with new regulations consistent with electronic transmission of bonds and bond amendments. The proposed changes are as follows.

First, CBP proposes to change the heading of subpart B to “Transmission, Sufficiency, and Retention of Bonds” to reflect the new contents of the subpart.

In § 113.11, CBP proposes to replace the existing provisions detailing bond application requirements with new requirements for electronic bond transmission. Proposed § 113.11(a) would require that all bonds secured by a surety be transmitted by that surety, or by a surety agent authorized to transmit bonds on behalf of that surety, unless otherwise permitted by CBP. The bond transmission would also be required to meet the new electronic filing requirements laid out in proposed subpart C of part 113. Proposed § 113.11(b) would require that all bonds secured by a surety be transmitted to CBP via EDI, unless specifically required to be transmitted by email pursuant to proposed § 113.11(c) or when otherwise agreed by CBP. Under this proposed provision, a bond transmitted via EDI is active and available to secure a transaction once the eBond system has accepted the transmission.

Proposed § 113.11(c) would require email transmission for specific bonds, or in particular circumstances where transmission by EDI is not possible. As described in more detail in Section II.F. above, bonds emailed to CBP pursuant to proposed § 113.11(c) would become active and available to secure a transaction once CBP has added the bond to the eBond system. While CBP would aim to add the bond to the eBond system in an expedited manner, the effective date for a term bond transmitted by email must be at least ten business days after the date the bond is received by CBP since it could possibly take up to ten business days for the bond to be added to the eBond system. CBP proposes to require email transmission of the following:

• Neutrality bond (Activity Code 9, bond terms and conditions found in current and proposed § 113.71);

• Intellectual Property Rights (IPR) bond (Activity Code 15, terms and conditions found in current and proposed § 113.70);

• Any bond with two or more sureties, pursuant to proposed § 113.37(d)(1), unless all sureties on the bond share the same ACE filer code;

• Any re-insurance agreement, pursuant to proposed § 113.37(d)(2);

• Cash in lieu of surety pursuant to current and proposed § 113.40. Such bonds must be transmitted by the principal on the bond.

• Bonds without surety or cash deposit. Such bonds must be transmitted by the principal on the bond.

• Any other bond that cannot be transmitted via EDI.

Upon adoption of these proposed changes, CBP will no longer accept paper bonds. All bonds would be required to be transmitted to CBP electronically via the eBond EDI or, unless otherwise specified, by email to the Revenue Division.

Next, CBP proposes to remove the existing provisions in § 113.12, which outline CBP's bond approval process, because CBP will no longer use this process. CBP proposes to add a new provision in § 113.12, replacing the signature and seal requirements that are part of the paper process currently in part 113 with new certification requirements complementing the proposed electronic process.

Under the paper bond process currently in the regulations, the parties to the bond contract must sign the CBP Form 301 and apply a seal before filing the form with CBP. In the new electronic process, the certifications in proposed § 113.12 would replace these requirements. The transmission of a bond to CBP by the surety and the principal's use of that bond, as amended by any bond riders or bond amount adjustments, to secure an activity or transaction, constitute acknowledgment of the legally binding nature of the bond. Therefore, proposed paragraph (a) states that transmission of a bond, bond rider, or bond amount adjustment to CBP constitutes binding representation by the surety or surety agent that the surety or surety agent has the authority to bind both the surety and principal identified on the bond, bond rider, or bond amount adjustment. In addition, transmission to CBP would constitute the certification of the surety or surety agent that both the surety and the principal have the legal capacity to enter into a contract. Transmission would also represent agreement that both the surety and principal agree to be bound by the transmitted bond, bond rider, or bond amount adjustment, including all terms and conditions pertaining to that bond, bond rider, or bond amount adjustment.

Lastly, transmission of a bond rider or bond amount adjustment would represent the agreement of the surety and principal on the bond to be bound by the terms and conditions of the identified bond, as amended by the transmitted bond rider or bond amount adjustment. Except for the amendments made pursuant to the bond rider or bond amount adjustment, the surety and principal would agree that all other terms and conditions of the identified bond remain unchanged.

Proposed paragraph (b) enumerates similar conditions for bonds without a surety, which are transmitted to CBP by email pursuant to proposed § 113.11. Transmission of the bond or bond rider to CBP by the principal would constitute binding representation by the transmitting principal that it has the authority to bind itself and all other principals identified in the bond or bond rider, and that all identified principals have the legal capacity to enter into a contract. In addition, transmission represents agreement that all principals agree to be bound by the transmitted bond or bond rider, including all terms and conditions pertaining to that bond or bond rider. Lastly, transmission of a bond rider would represent agreement of all principals on the bond to be bound by the terms and conditions of the identified bond, as amended by the transmitted bond rider. Except for the amendments made pursuant to the bond rider, the principals would agree that all other terms and conditions of the identified bond remain unchanged.

Proposed paragraph (c) states that the principal's or any authorized user's use of a bond to secure an activity or transaction constitutes reaffirmation by

the principal that it has the legal capacity to enter into a contract and agrees to be bound by the terms and conditions of the identified bond, and any associated amendments.

In the current regulations, § 113.13 details requirements imposed by CBP to ensure that the amount of a bond is sufficient to protect the revenue and ensure compliance with applicable laws, regulations, and instructions. CBP proposes to expand this provision to consider the sufficiency of the bond more generally, including not only the amount of the bond, but also the type of bond or other security. Under the existing regulatory procedures, CBP has the opportunity to consider and approve or deny a continuous bond application before any activity can be conducted using that bond. Because the proposed amendments would eliminate this procedure, CBP is proposing to amend § 113.13 to include review of both the amount of the bond and the type of the bond when conducting a sufficiency review. This ensures that CBP can require additional security where necessary to protect the revenue and ensure compliance with applicable laws, regulations, and instructions. Therefore, CBP proposes to retitle § 113.13 as “Sufficiency of bond.”

This document proposes minor amendments to § 113.13(a), which generally sets the minimum amount for any bond at $100. CBP is proposing amendments clarifying that fractional parts of a dollar will be rounded up to the next dollar rather than disregarded and replacing the reference to “CBP bond” with “bond.”

In § 113.13(b), CBP is proposing minor amendments to the guidelines for determining the sufficiency of a bond. CBP proposes to amend the introductory paragraph, by removing references to the amount of the bond, since CBP will consider more than just the amount of the bond in determining sufficiency. CBP also proposes to state that CBP “may” consider any of the listed factors, as not all factors are relevant to every bond, and CBP has long operated under an interpretation of this provision as discretionary, even with its existing language. Additionally, CBP proposes to clarify that the record of any authorized user on the bond may be considered in determining whether the amount of the bond is sufficient. In § 113.13(b)(2), CBP proposes to consider the prior record of the principal in complying with CBP demands for information or documents when determining whether a bond is sufficient. The proposed changes would replace the word “commitments” in § 113.13(b)(5) with the word “obligations” to be consistent with terminology used elsewhere in part 113. Lastly, in § 113.13(b)(6), CBP proposes to remove the reference to information contained in a bond application, which will no longer exist, and instead state that CBP may consider any other relevant information in determining the bond needed to protect the revenue and ensure compliance.

CBP proposes to combine existing § 113.13(c) and (d), which provide for periodic sufficiency review and CBP's ability to require additional security as separate CBP responsibilities, into proposed paragraph (c),

review of bond,

to expand CBP's review of the bond to include not only the amount of the bond, but also the type of bond or other security. While proposed paragraph (d) maintains the same heading as existing § 113.13(d), proposed paragraph (d) would set forth the form the additional security, which is required by CBP for the principal's transaction(s) or activity(ies) and authorized user's transaction(s) or activity(ies), may take. CBP further proposes to clarify the procedures and timing for remedying an insufficient bond. This is intended to clarify CBP's existing authority to determine that a bond or other security is insufficient, and to ensure that the insufficiency is remedied before further transactions or activities can occur. CBP proposes to amend § 113.13(c) to include review of all aspects of the bond securing the principal's transactions or activity and any authorized user's transactions or activity, not just the amount of the bond. CBP proposes to rephrase “periodic” review as “regular” review, as CBP is gradually increasing its ability to review bonds on file for sufficiency. Because CBP has added electronic notice capabilities for sureties and other parties to the bond, CBP proposes to provide electronic notice of insufficiency. Electronic notice has the advantage of being instantaneous, allowing the parties to the bond to remedy any insufficiency rapidly. CBP will retain the ability to provide notice of insufficiency in writing, for those parties unable to receive electronic notice.

Upon receipt of a notice of insufficiency, the principal and surety must transmit additional security to CBP before further transactions or activity can take place. Such additional security is described in proposed § 113.13(d). In general, principals and sureties would have 15 calendar days to remedy any insufficiency. This would remain unchanged from the current regulations. However, as described in existing § 113.13(d), where CBP determines that the bond presents an immediate risk to the revenue or enforcement of applicable laws and regulations, CBP will notify the principal and surety that additional security is required in a shorter timeframe to protect the revenue and ensure compliance with applicable laws and regulations. CBP may require the immediate provision of additional security in such cases. CBP proposes to move this requirement to proposed § 113.13(c).

If the principal wishes to challenge CBP's sufficiency determination, the principal must make a written submission to CBP demonstrating that the bond is sufficient, as provided in proposed § 113.13(c). The notice of insufficiency would provide contact information for that submission. CBP would consider the principal's written submission and notify the principal and surety of any change to the sufficiency determination in writing or electronically via email. Pursuant to proposed § 113.13(c), until a sufficient bond or other security has been provided, CBP may reject, suspend, or otherwise prevent the principal or any authorized user from further transactions or activities.

Proposed § 113.13(d) delineates the remedies for insufficiency. First, CBP proposes to permit a surety to increase the amount of an existing STB with Activity Code 1 that was transmitted via EDI, if the increase is transmitted to CBP within 10 business days of the date of entry. This procedure is explained in further detail in proposed § 113.23(b). CBP also proposes that a continuous bond deemed to be insufficient must be terminated and replaced with a new bond of an amount and type deemed sufficient by CBP. CBP would also be permitted to require one or more additional bonds to secure a transaction, or may require other security, as dictated by the risks of the particular transaction or activity to be secured.

CBP proposes to add § 113.13(e) to establish the joint and several liability of principal and sureties for obligations arising under all bonds that secure the same transaction or activity. In other words, this paragraph would specify that where a principal identifies only a single transaction bond to secure a transaction or activity, CBP may hold the principal and the sureties on all other bonds securing the same transaction or activity jointly and severally liable for any obligations (

e.g.,

penalty, duty, tax or other charge) arising under the bonds. This would be true regardless of whether the bonds have the same surety and even if one or more of the bonds are not identified by the principal as securing the transaction

or activity at the time it occurs.

5

This provision protects the revenue by ensuring that adequate assets are available to pay assessed charges. However, as delineated in proposed § 113.13(d), importers would still retain the ability to provide additional security in the manner most appropriate for the importer.

5

See United States

v.

Am. Home Assurance Co.,

113 F. Supp. 3d 1297, 1306-09 (Ct. Int'l Trade 2015),

aff'd under

Fed. Cir. R. 36, 776 Fed. Appx. 712 (Sep. 6, 2019) (finding that both the surety issuing the continuous bond for an entry and the surety issuing the single transaction bonds for the same entry are equally liable with respect to each entry for the payment of duties, as the sureties' obligations were identical).

The existing § 113.14 provides that, if it is determined that none of the conditions in subpart G of part 113 is applicable to the contemplated transaction or activity, CBP may draft bond conditions to cover that transaction or activity. This provision, permitting a “specific instruction” bond, has been incorporated into proposed § 113.5. In its place, CBP is proposing to add a new provision, detailing CBP's authority to restrict the use of a continuous bond, and to instead require only single transaction bonds or other security.

Under the existing bond procedures, CBP has the authority to approve or deny any application for a continuous bond. The proposed regulations replace this oversight process with a new provision in § 113.14, whereby CBP may require a principal who has demonstrated an unwillingness or inability to perform its obligations under part 113, on one or more bonds, to secure future transactions with single transaction bonds. This restriction could be imposed for a temporary period, or as a permanent termination of the principal's ability to conduct business using a continuous bond. Before instituting such restrictions, CBP would provide notice of the proposed restrictions, the basis for imposing such restrictions, and the date the restrictions will take effect. The principal would have 30 calendar days to respond. If the principal does not respond within 30 calendar days, CBP's limitations would take effect on the date indicated in the notice. If the principal responds to the notice provided pursuant to paragraph (b) of § 113.14, then, within 30 calendar days of CBP's receipt of the response, the appropriate CBP officer would review the response and make a final decision as to whether the proposed limitation would go into effect. Notice of the final decision would be provided to the principal and the surety on any existing continuous bond, and any limitations imposed will take effect at least five business days after the date of the notice of final decision. Additionally, paragraph (d) would retain the restriction permitting each principal to hold only one continuous bond for a particular activity, originally found in § 113.12(b).

Finally, CBP proposes to amend § 113.15 regarding retention of bonds. Because all bonds will be transmitted to the Revenue Division unless otherwise specified, either by EDI or by email, CBP proposes to remove the current provision, providing that bonds approved by a port director will be retained at the port office, and bonds approved by the Revenue Division will be retained by the Revenue Division. Rather, CBP would retain a record of all bonds, bond riders, and bond amount adjustments transmitted to CBP in ACE, regardless of the method of transmission. Notwithstanding CBP's retention of these records, the absence of a bond, bond rider, or bond amount adjustment from CBP records, regardless of the reason for its absence, would not release any party from liability under the bond, bond rider, or bond amount adjustment if the bond, bond rider, or bond amount adjustment otherwise exists. CBP would continue to transmit bonds containing the agreement to pay court costs (condemned goods), the terms and conditions of which are in § 113.72, to the United States attorney, as required by section 608, Tariff Act of 1930, as amended (19 U.S.C. 1608).

3. Proposed Amendments to Subpart C

Subpart C to part 113 currently details bond requirements. CBP proposes to update the requirements in § 113.21, which details the information required on a bond. The proposed revisions include changing the title of the provision to “Information required in the bond transmission” to reflect electronic bond transmission, as opposed to the filing of a paper CBP Form 301. The existing information requirements in § 113.21 include identifying information for principals and sureties, identifying information for bond users without distinct legal status from the principal, the date of execution, and the amount of the bond.

6

In this document, CBP proposes to update and expand those requirements, to accommodate the electronic data transmitted to the eBond system. ACE is designed to minimize or eliminate repeated collection of the same data elements. As a result, the eBond transmission does not require transmission of the name or address of a principal, authorized user, surety, or surety agent.

6

In addition, § 113.21 currently includes provisions limiting the use of abbreviations and requiring strike throughs in all blank spaces. 19 CFR 113.21(d)-(e). CBP has determined that these provisions are no longer needed given the shift to the electronic submission of bonds as the identities of all parties would be known and there is no paper-based form with blank spaces at issue.

Thus, the proposed § 113.21(a) requires that bonds and riders transmitted to CBP identify principals, authorized users, and sureties as follows:

•

Principal:

the bond transmission would be required to identify all principals on the bond, by the filing identification number, as detailed in 19 CFR 24.5, for each principal.

•

Authorized Users:

if additional parties are authorized to obligate the bond, the bond transmission would be required to identify them by the filing identification number, as detailed in 19 CFR 24.5, for each user. The filing identification number for an authorized user would be required to be related to the filing identification number of the identified principal on the bond, as detailed in 19 CFR 24.5.

•

Surety:

each surety obligated on the bond would be required to be identified by its CBP-assigned three-digit surety code, pursuant to proposed § 113.37. The transmission would also be required to include the surety-assigned identification number for the surety agent on the bond, pursuant to § 113.37(c)(1). Lastly, if two or more sureties are identified on the bond, the transmission would be required to comply with § 113.37(d), including the provision of the total value of each surety's liability on the bond, in whole U.S. dollars.

CBP proposes to expand § 113.21(b) to require bonds to contain the following information, which corresponds to data elements required by the eBond test and on the CBP Form 301:

•

Type:

The type of bond being transmitted,

i.e.,

STB or continuous bond.

•

Designation:

The bond designation type corresponding to the purpose of the transmission—new bond, additional STB, substitution bond (pursuant to § 142.4(b)(2)), superseding bond (pursuant to § 142.4(b)(1)), STB bond amount adjustment, bond rider, void an unobligated STB, or termination of an existing bond.

•

Activity Code:

The activity code identifying the terms and conditions in the bond, as agreed by both principal and surety. For regulatory bonds in Subpart G, this rule proposes to identify in the regulations the activity code corresponding to the terms and conditions of each bond.

•

Amount:

The amount of the bond, stated in whole U.S. dollars.

•

Date of execution:

The date the bond is transmitted to CBP via EDI or by email.

•

Effective date of a continuous bond:

This is the first date on which the bond may be obligated, subject to the provisions of § 113.26. Because an STB is effective for the identified transaction, regardless of the date, the effective date for STBs would not be required.

•

Transaction identification information:

For an STB, the number identifying the particular transaction the bond is intended to secure. This could be the entry number, the Importer Security Filing (ISF) transaction number, the seizure case number, the bill of lading number, or the carrier and voyage identification. The entry type code is also required for bonds with Activity Codes: 1, 1A, 6, 7, 8, 12, or 16.

Currently, § 113.22 requires witnesses to the signatures of each party to a bond. Because bonds submitted consistent with § 113.11 would not need signatures, witnesses would no longer be required for these bonds. Therefore, CBP proposes to remove and reserve § 113.22 in its entirety.

CBP proposes to update § 113.23, which addresses changes made to existing bonds and lists requirements for changes to paper bonds. CBP proposes to rename the provision to “Amendments made to the bond,” and to remove the provisions related to paper bonds, which are no longer needed in the new electronic environment. In their place, CBP proposes to permit two types of changes to existing bonds: riders, as described in proposed § 113.24, and the bond amount adjustment for STBs transmitted by a surety via EDI with Activity Code 1. To effect any other change to the bond, the surety or principal would need to terminate the existing bond, and replace it with a new bond containing the change.

CBP proposes to enumerate the requirements for the bond amount adjustment in § 113.23(b). The bond amount adjustment may only be transmitted to CBP via EDI on or before the tenth business day after the date of entry. Transmission of a bond amount adjustment to CBP would constitute the surety's and the principal's agreement that the amended bond amount will only limit their liability if it was calculated and transmitted using reasonable care, as that term is used in 19 U.S.C. 1484. Otherwise, the bond amount in effect prior to transmission of the bond amount adjustment would remain in effect. Failure to use reasonable care may also result in penalties or other legal consequences permitted by law. In addition, the transmission of a bond amount adjustment to CBP would also constitute the surety's and the principal's agreement that CBP may immediately prohibit either the surety or the principal, or both, from being party to future bond amount adjustments to any bond, if necessary to protect the revenue or to ensure legal compliance.

CBP proposes to update § 113.24, which addresses bond riders and their requirements. CBP would remove riders and requirements applicable only to paper bonds, including riders effecting changes to the name of the principal or addresses on the bond. As noted previously, CBP would no longer collect this information as part of the bond or bond rider transmission. CBP proposes to replace the bond riders allowing addition or deletion of trade names and unincorporated divisions of a corporate principal with new bond riders allowing the addition or deletion of authorized users. In the electronic environment, CBP proposes to accept five types of bond rider: the authorized user addition bond rider; the authorized user deletion bond rider; the addition of the reconciliation bond rider; the removal of the reconciliation bond rider; and the U.S. Virgin Islands bond rider.

7

The terms for each of these riders are laid out in proposed § 113.24(a).

7

A U.S. Virgin Islands bond rider may not be removed. Instead, the principal must terminate the existing bond with the rider and obtain a new bond without the rider.

Proposed § 113.24(b) would require that a bond rider be filed using the same method of transmission as the bond it amends. Thus, if the bond was filed via EDI, a bond rider amending that bond would be required to be filed via EDI. Proposed § 113.24(c) lists the information that must be provided to CBP in the bond rider. This information would include the execution date of the bond rider, which is the date the bond rider is transmitted to CBP, and the bond number identifying the bond being amended by the bond rider. In addition, proposed § 113.24(c) lists required information that is specific to the type of bond rider being transmitted. This information would include:

• For a user addition rider, the CBP identification number for the added user and the effective date of the bond rider, which is the date the new user may begin to obligate the bond. Effective dates are covered in more detail in proposed § 113.26.

• For a user deletion rider, the CBP identification number for the user to be removed, and the effective date of the bond rider, which is the date the user may no longer use the bond. Effective dates are covered in more detail in proposed § 113.26.

CBP proposes to remove existing § 113.25, as seals will not be required for electronically transmitted bonds.

CBP proposes to update § 113.26, which describes the effective dates for bonds and bond riders. CBP first proposes to replace references to the paper bond application process with references to the electronic bond process, including email transmission. Next, CBP proposes to reorganize the provision, to address effective dates for bonds in paragraph (a) and effective dates for bond riders in paragraph (b). CBP proposes to consolidate the general provision in existing § 113.26(a) with the continuous bond provision in existing § 113.26(c), forming a new provision addressing the effective date of term bonds in § 113.26(a)(1). CBP proposes to retain procedures allowing the party transmitting the bond to select the effective date for a term bond, and permit transmission of a term bond up to 60 calendar days prior to the effective date of the bond. Bonds transmitted to CBP via email would be required to have an effective date at least ten days after the date CBP receives the bond, to allow time for CBP to process the bond. The proposed electronic process does not require an effective date for STBs. An STB identifies a particular transaction for bond coverage, and therefore, CBP proposes to state in § 113.26(a)(2) that an STB is effective for the full transaction identified, regardless of the date of the transaction or the date of transmission of the bond.

In proposed paragraph (b)(1), CBP states the conditions for the effective date for a bond rider transmitted via EDI. CBP proposes to permit the party transmitting the bond rider to select the effective date of a user addition bond rider, so long as the date selected is on or after the effective date of the bond and is no more than 60 calendar days after the date the bond rider is successfully transmitted to CBP. Similarly, the party transmitting the bond rider would be able to select the effective date for a user deletion bond rider, so long as the date selected is at least ten calendar days after the effective date of the bond and is no more than 60 calendar days after the date the bond rider is successfully transmitted to CBP. Additionally, for U.S. Virgin Islands bond riders and reconciliation bond riders, the bond rider would be effective on the date the bond rider is transmitted to CBP.

Similarly, proposed paragraph (b)(2) states the conditions for the effective

date for a bond rider transmitted via email. CBP proposes to permit the party transmitting a bond rider via email to select the effective date of a user addition bond rider, so long as the date selected is on or after the effective date of the bond and is at least ten business days but no more than 60 calendar days after the date of the email. However, if the bond rider email is not received at least ten business days before the requested date, or if no date is indicated in the email request, the bond rider would be effective at close of business on the tenth business day after CBP receives the email. Similarly, the party transmitting a bond rider via email could select the effective date for a user deletion bond rider, so long as the date selected is at least ten business days from the effective date of the bond and is no more than 60 calendar days after the date of the email. However, if the bond rider email is not received at least ten business days before the requested date, or if no date is indicated in the email, the bond rider would be effective at close of business on the tenth business day after CBP receives the email. Finally, for U.S. Virgin Islands bond riders and reconciliation bond riders, the bond rider would be effective on or after the date indicated in the bond rider email, so long as that date is on or after the effective date of the bond and is at least ten business days but no more than 60 calendar days after the date of the bond rider email. However, if the bond rider email is not received at least ten business days before the requested date, or if no date is indicated in the email, the bond rider would be effective at close of business on the tenth business day after CBP receives the email.

In § 113.27, describing effective dates for the termination of a bond, CBP is proposing amendments to reflect the new electronic processes for termination. In paragraph (a), voiding a single transaction bond, CBP proposes to permit a surety to void an STB as long as the bond has not been obligated. Voiding an STB constitutes the surety's and principal's agreement that the bond has not been used to secure any activity or transaction, and that the void was transmitted using reasonable care. If these conditions are not met, the STB remains in effect.

In paragraph (b), CBP proposes the procedures for terminating a bond. In paragraph (b)(1), termination by principal, CBP proposes to require that all termination requests from a principal on the bond be transmitted to the Revenue Division by email. Termination would be effective on the date requested, so long as that date is at least 15 calendar days after the date the request is transmitted by email to CBP. If no termination date is requested, or if the request is not received 15 calendar days ahead of the requested date, then the termination would be effective on the fifteenth calendar day after the termination request is transmitted by email to CBP.

In paragraph (b)(2), termination by surety, CBP proposes amendments to the paragraph detailing termination of a bond by the surety. The proposed amendments would require a surety wishing to terminate a bond to notify both CBP and the principal of the termination. The surety would be required to provide notice of termination to the principal at the same time the notice of termination is transmitted to CBP. The notice of termination could be transmitted by a surety to CBP via EDI or by email to the Revenue Division. The surety would be required to specify the date the termination is to be effective, and that effective date must be at least 15 calendar days after the date the notice of termination is transmitted to CBP, unless the surety can establish, to the satisfaction of the Director of the Revenue Division, good cause for earlier termination of the bond.

4. Proposed Amendments to Subpart D

CBP is proposing to amend the provisions in subpart D to part 113, which provides specific provisions regarding principals and sureties. In § 113.30, CBP proposes to replace references to the paper bond process with references to electronic bond transmission. CBP proposes to clarify § 113.31(a), which prohibits a party from acting as both principal and surety on a bond, by utilizing the term “principal,” as defined in proposed § 113.1, in place of the words “same person, partnership, or corporation” and by expressly stating that the principal may not act as surety on its own bond, except where the bond is secured by cash in lieu of surety pursuant to § 113.40. CBP further proposes to amend § 113.31(b), by expanding the provision to cover bonds, bond riders, and bond amount adjustments, and by removing existing paragraph (b)(2), which permits a person to act as both surety and attorney in fact for the principal. As discussed below, CBP proposes to remove § 113.35, which permits individuals to act as sureties, and, as a result, paragraph (b)(2) would not be needed.

In § 113.32, which outlines requirements for partnerships acting as principals, CBP proposes to amend paragraph (a) to replace requirements for execution of partnership bonds with requirements for transmission of partnership bonds. Under the proposed regulations, CBP would no longer collect names or require signatures. Instead, CBP proposes to require that partnership bonds be transmitted using the partnership's CBP identification number, consistent with proposed § 113.21.

CBP is proposing to revise the requirements in § 113.33 applicable to corporate principals. In § 113.33(a), CBP proposes to replace the requirement that the name of a corporation executing a paper bond as principal be placed on the bond with a new requirement that the CBP identification number of the principal be transmitted to CBP as part of the bond transmission, consistent with proposed § 113.21. CBP proposes to remove existing paragraphs (b)-(d), which list requirements for the execution of a paper bond. Existing paragraph (e), with requirements for subsidiaries named as co-principals, would become the new paragraph (b). This paragraph currently states that the requirements of § 113.33 are applicable to each corporate subsidiary joined as a principal on the bond. CBP proposes to amend this paragraph to state, instead, that the requirements of part 113, in their entirety, are applicable to all principals on a bond. CBP further proposes to remove a reference to signing the paper bond, and to add a new sentence stating that, pursuant to § 113.12, the principal's use of a bond to secure an activity or transaction constitutes re-affirmation by the principal that it intends to be bound by the terms and conditions of the identified bond.

In § 113.34, CBP is proposing to remove the existing provision regarding co-principals, and to add a new provision in its place regarding bonds with multiple principals or with authorized users. Replacing the word “co-principals” is intended to make it clear that all principals on a bond are equal. CBP proposes to add a new paragraph (a), stating that all principals are jointly and severally liable for the transactions of any principal on the bond, and of any authorized user of the bond. Principals cannot be added to or removed from the bond by rider; a principal may only be added to or removed from a bond by terminating the existing bond and transmitting a new bond. CBP proposes to add a new paragraph (b) stating that authorized users may be added to or deleted from a bond by rider, pursuant to § 113.23, and that authorized users are not liable for the transactions of other principals or authorized users on the bond.

CBP proposes to remove § 113.35 and § 113.36, which list requirements for individuals acting as sureties on a bond, and one member of a partnership acting as individual surety for another partner, respectively. CBP proposes to eliminate individual sureties for customs bonds, as they impose an administrative burden on the agency in ascertaining the financial responsibility of the individual, and the acceptance of a bond secured by an individual surety presents a risk to the revenue. Eliminating these two provisions, which both allow individual sureties, would limit sureties securing customs bonds to those corporate sureties listed in Treasury Circular 570 and identified to CBP pursuant to § 113.37. Alternatively, principals may elect to secure their transactions and activities with cash in lieu of surety, pursuant to § 113.40.

CBP proposes to rename § 113.37 from “Corporate sureties” to “Surety requirements,” because the elimination of individual sureties means that all sureties are corporate sureties. In § 113.37(a), CBP proposes to make minor edits in keeping with the change from “corporate sureties” to “surety requirements,” such as replacing references to “corporation” with “surety,” where appropriate. CBP proposes to replace the paper-based requirements for providing a surety's name on the bond in § 113.37(b), with new electronic requirements. These requirements include the surety's acquisition of a three-digit surety code from the Revenue Division, and the transmission of that surety code with each bond issued by that surety, as detailed in § 113.21. In addition, each surety will be required to establish and maintain an ACE Portal account.

8

8

Instructions on how companies may apply for an ACE Secure Data Portal account can be found at:

https://www.cbp.gov/trade/automated/getting-started/portal-applying.

In § 113.37(c), CBP proposes to remove the paper requirements for identification of the agent or attorney acting for the surety on a bond, as proposed § 113.21(a)(2)(ii) now details the electronic requirement. Instead, § 113.37(c) has been revised to include all requirements with respect to power of attorney and identification of surety agents, including those requirements currently found in existing §§ 113.37(d), (f) and (g). Under proposed § 113.37(c), a power of attorney must be transmitted to CBP using the ACE Portal, replacing the requirement in existing § 113.37(g), that a power of attorney be transmitted on CBP Form 5297 by email, fax, or mail. The contents of that power of attorney include: (1) the surety's three-digit code; (2) the name and physical address of the agent; (3) the nine-digit alphanumeric identification number assigned to the agent by the surety (currently required by § 113.37(d)); and (4) the dollar amount of the surety agent's authority to obligate the surety on each bond. The power of attorney remains in effect until revoked by the surety in the ACE Portal. Such revocations have immediate effect. Permissible changes to the power of attorney are limited to changes to the name or address of the grantee. Any other change requires the surety to revoke the existing power of attorney in the ACE Portal and replace it with a new power of attorney.

As noted above, the surety-agent identification provision in existing § 113.37(d) has been moved to § 113.37(c) in the proposed regulations. CBP proposes to eliminate § 113.37(e), as it pertains to signatures and seals that will no longer be required in the electronic environment. CBP proposes to make existing § 113.37(f), which covers requirements for bonds with two or more sureties, the new § 113.37(d). CBP has amended the provision to clarify the requirements applicable to coinsurance and the requirements applicable to reinsurance agreements. With respect to coinsurance, CBP is proposing amendments in § 113.37(d)(1), replacing references to the paper process with references to the electronic process, including the transmission of each surety's limit of liability for the bond pursuant to §§ 113.11 and 113.12. CBP further proposes to remove requirements for the signature of an “Authorized CBP Officer” and all seals, as these requirements are not consistent with the new electronic bond process.

With respect to reinsurance agreements, consistent with § 223.11 of title 31, Bureau of the Fiscal Service Regulations (31 CFR 223.11), CBP has added a new paragraph § 113.37(d)(2) with requirements for transmission to CBP. Pursuant to these requirements, each surety must limit its liability to a definite specified amount, in terms, transmitted with the bond pursuant to 19 CFR 113.11. In addition, reinsurance agreements must be executed consistent with 31 CFR 223.11 and transmitted to CBP pursuant to 19 CFR 113.11.

In § 113.38, CBP has revised the existing provision addressing delinquent sureties. The proposed revisions expand the scope of the provision by adding new consequences for a surety's nonperformance or default, including a new type of interest charge for sureties who do not timely comply with their bond obligations, whether acting as principal or surety. CBP is expanding these consequences in response to the unwillingness of some principals and sureties to comply with their bond obligations in a timely manner and the administrative burden this has created for CBP.

See, e.g., United States

v.

American Home Assurance Co.,

100 F. Supp. 3d 1364 (Ct. Int'l Trade 2015),

aff'd,

857 F.3d 1329 (Fed. Cir. 2017). CBP's intent is to create a more robust spectrum of legal consequences so that each defaulting party can be better addressed with one or more appropriate consequences enforced by CBP. As a result, CBP proposes to rename the provision as “Consequences of surety nonperformance or default.”

CBP proposes to redesignate existing paragraph (a) as paragraph (b), adding a new paragraph (a). CBP further proposes to combine existing paragraphs (b) and (c) to create a new paragraph (c). In proposed § 113.38(a), which corresponds to a new bond condition for all bonds proposed in § 113.61(a)(5), CBP proposes to assess interest on certain unpaid amounts due to CBP under a bond, excluding penalties secured by a bond. This new form of interest will not be assessed on other debts owed to CBP under a bond when the principal or surety timely pays the full debt amount (

i.e.,

within the applicable period set forth in 19 CFR 24.3(e)). The interest provided for under § 113.38(a) will begin to accrue from the date the debt is due. Interest will be charged until the full balance is paid. The interest rates and procedures are determined according to 19 CFR 24.3a(c). For instance, in the case of any late payment, the payment received will first be applied to the delinquency interest charged under § 113.38(a), and then to payment of the unpaid balance due under the bond.

The goal of this new form of contractually-based delinquency interest is to ensure that the United States receives the full amount of the contractually-based debts on the date that they are due, or on the date that notice thereof has been given, whichever is later. For that reason, liability for this contractually-based interest will not be limited by the bond amount, and payment thereof will not be charged to the bond, consistent with the decisions of federal courts and commonly-accepted principles of general suretyship law.

See, e.g., United States

v.

U.S. Fid. & Guar. Co.,

236 U.S. 512, 530-31 (1915) (parties are liable for interest accruing beyond the limit of their bonds “for such an amount as accrued from their own default in unjustly withholding payment after

being notified of the default”) (citations omitted);

Ins. Co. of N. America

v.

United States,

951 F.2d 1244, 1246 (Fed. Cir. 1991) (“[I]f a surety delays payment beyond proper notification of liability, interest accrues on the debt. This interest may cause the surety's obligation to exceed the penal sum of the bond.”) (citing Arthur Adelbert Stearns, The Law of Suretyship 283-84 (James L. Elder ed., 5th ed. 1973); 1 George W. Brandt, The Law of Suretyship and Guaranty 271-72 (1905)).

This new contractually-based delinquency interest will complement the other forms of interest CBP already assesses or collects. CBP currently assesses or collects interest on a variety of statutory-based or regulatory-based debts, such as when duties, taxes, and fees are due after liquidation of an entry.

See

19 U.S.C. 1505; 19 CFR 24.3a(b). CBP also collects a special additional six percent interest when CBP must pursue collection of a bond debt through litigation.

See

19 U.S.C. 580; Interest Charges on Certain Delinquent Accounts, 51 FR 34954, 34956 (Oct. 1, 1986) (“If Customs must sue the debtor under a bond, it is entitled to recover the principal amount of the debt, plus interest assessed for the late payment, plus an additional amount of 6 percent assessed under 19 U.S.C. 580.”). However, CBP has generally only collected regular compensatory interest on a bond debt when it has sought an award of such interest under equitable or common law theories in the federal courts. The proposed contractually-based delinquency interest will take the place of this equitable or common law interest, and make it available to CBP in the ordinary course of administratively collecting bond debts and without the need to resort to litigation.

CBP proposes to expand the existing provisions in proposed § 113.38(b) and (c). In conjunction with the proposed regulations, CBP is centralizing determinations regarding nonperformance and default in the Revenue Division. Therefore, port and Center directors believing that a bond obligation has been breached and that limits on one or more of the bonding parties are appropriate will refer the matter to the Revenue Division for adjudication pursuant to new (b) or (c).

The proposed § 113.38(b) covers the effects of surety nonperformance or default as principal on a bond. Under the proposed regulation, a surety failing to perform its obligations or defaulting as a principal on a bond will not be accepted as a surety on any other bond.

In proposed § 113.38(c), CBP proposes a new procedure to impose limitations on a surety that has defaulted or failed to perform its obligations as a surety on a bond. Such limitations may include:

•

Required email transmission:

requiring the surety to transmit all bonds via email (barred from EDI transmission);

•

Dollar amount limitations:

limiting the surety's ability to underwrite bonds above a certain dollar amount or limiting the aggregate amount of the surety's active bonds at any one time;

•

Time limitations:

limiting the surety's ability to underwrite bonds on a daily, weekly, monthly, or some other periodic basis;

•

Volume limitations:

limiting the total number of active bonds a surety may underwrite at any one time;

•

Bond type limitations:

restricting the surety's ability to transmit continuous bonds, and permitting only the transmission of STBs, or requiring the transmission of a continuous bond;

•

Transaction or activity limitations:

limiting the activity codes for which a surety may underwrite a bond;

•

Geographic limitations:

limiting a surety to underwriting bonds for activities or transactions in specific locations or ports of entry;

•

Commodity limitations:

limiting a surety to underwriting bonds for activities or transactions involving specific merchandise or commodities (

e.g.,

bonds for steel products only);

•

Temporary suspension of a surety:

CBP will accept no new bonds from this surety for a defined period of time;

•

Permanent termination of a surety:

CBP will no longer accept new or renewed bonds from this surety.

Before imposing any of these limitations, CBP will provide notice to the surety. That notice will explain the basis for the limitations, provide a description of the proposed limitations, and identify the date the limitations will take effect, which will be at least 30 calendar days from the date of the notice. The surety will have 30 calendar days to respond to the notice. If the surety fails to respond, the limitations will be imposed on the date indicated in the notice.

If the surety does respond, CBP will have 30 calendar days to review and make a final decision regarding the proposed limitations. In any instance where the proposed limitation is a temporary suspension or permanent termination of the surety's ability to act as a surety on bonds required by CBP, the final decision will be made by the Commissioner of CBP or the Commissioner's delegate. CBP may impose the limitations as proposed, impose lesser limitations, or withdraw the proposed limitations at this stage. A “less restrictive limitation” is a reduction in the noticed limitation itself. For example, where the notice proposed a dollar amount limitation of $1 million in bonds per day, the reviewing official could impose a lesser limitation of $10 million in bonds per day. CBP will provide notice of the final decision to the surety, and any limitations imposed will take effect no earlier than five business days from the date of the notice of final decision. Notice of the final decision will also be provided to the public, by publication in the

Customs Bulletin.

CBP is proposing clarifying amendments to § 113.39, which covers the procedures to remove a surety from Treasury Department Circular 570.

9

These amendments include adding the Center directors to the list of people who may identify a surety that has failed to pay a valid demand, updating “Revenue Division personnel” or “officer” to specify the Director, Revenue Division, and updating the name of the office receiving the report showing the unsatisfactory performance by the surety of the bond obligation(s) and determining whether further action against the surety is warranted to specify the “Executive Director, Financial Operations, Office of Finance.” This change from the Executive Director of Regulations and Rulings to the Executive Director of Financial Operations ensures that the office within CBP with the greatest oversight of sureties is providing the recommendation to the Department of the Treasury. CBP proposes to insert the word “relevant” in paragraph (a)(3), (4), and (5) to more accurately reflect administrative practice and the scope of the information required in 113.39(a). The practice of including only the relevant notices, demands, correspondence, and facts sent to the surety increases efficiency and avoids undue administrative burdens and an unnecessarily voluminous administrative record. Additionally, these proposed amendments provide greater transparency about the intended scope of the evidence. CBP also proposes amendments to the text of paragraph (b) to be more consistent with the language of 31 CFR part 223.

9

Treasury Department Circular 570 is a list of companies certified by the U.S. Treasury to underwrite and issue surety bonds for federal contracts. The list is published annually by the Bureau of the Fiscal Service. The latest list is available online at

https://www.fiscal.treasury.gov/surety-bonds/list-certified-companies.html.

In § 113.40, CBP is proposing amendments to the existing requirements for cash in lieu of surety on a bond. First, CBP proposes to

eliminate the acceptance of obligations of the United States in lieu of bond. This is intended to reflect current practice by the trade community, as CBP has not received a bond secured by an obligation of the United States in many years. Eliminating the option to provide such obligations as security reduces the burden on CBP to maintain a process for tracking and securing these obligations. Second, CBP is proposing edits to paragraph (a) to provide for transmission via email of the bond information, pursuant to § 113.11. CBP proposes to remove existing paragraph (b), as a consequence of eliminating the acceptance of obligations of the United States, and to redesignate existing paragraph (c) as the new paragraph (b), with minor amendments for clarity. CBP proposes to add a new paragraph (c), stating that CBP will release cash deposited in lieu of surety upon the expiration of all applicable statutes of limitations for claims made against the bond secured by cash in lieu of surety. This will result in a refund to the bond principal, subject to CBP's set off rights as provided in 19 CFR 24.72.

5. Proposed Amendments to Subpart F

CBP is proposing to amend § 113.51, by making the existing provision paragraph (a), adding the definition of cancellation of a bond to the new paragraph (a), and adding a new paragraph (b). Cancellation of a bond is the process by which CBP relinquishes the right to enforce the terms and conditions of a bond, either because the principal has satisfied the terms and conditions secured by the bond, or because the principal has satisfied alternative terms and conditions as agreed to by CBP. CBP also proposes to clarify that the authority of the Commissioner of CBP to cancel bonds does not include the authority to cancel an International Trade Commission (ITC) exclusion order bond or any charge that may have been made against such a bond to indemnify a complainant pursuant to section 337 of the Tariff Act of 1930 as provided in 19 CFR 113.74 and Appendix B to title 19.

New paragraph (b) will address cancellation of a bond for the deferral of duty on large yachts imported for sale at U.S. boat shows. When using paper bonds, under certain circumstances, CBP is required to return the bond to the importer, which entails CBP physically returning and handing back the paper bond, to indicate that CBP does not intend to enforce this bond. These paper-based procedures for the “return” of a bond are not consistent with electronic bond processing, therefore, CBP is proposing to cancel such bonds to indicate that CBP does not intend to enforce the bond.

10

The statutory authority governing this procedure is 19 U.S.C. 1484b, which provides explicitly for the cancellation of the bond when certain conditions are met. Additional regulations are found in 19 CFR 4.94a. Pursuant to these authorities, CBP proposes to state in § 113.51(b), that the large yacht bond will be cancelled upon: (1) completion of entry and deposit of duties, if the yacht is neither sold, nor exported within six months after importation; (2) completion of entry and deposit of duties following sale of the yacht; or (3) exportation of the yacht and provision of notice to CBP.

10

As discussed further below, CBP also proposes to move the terms and conditions for the large yacht bond from current Appendix C to part 113 to revised § 113.75.

6. Proposed Amendments to Subpart G

CBP proposes to renumber the existing § 113.61 to be § 113.60, and to update that provision to reflect the electronic transmission of bonds to CBP. The proposed revisions state that the terms and conditions in an electronically transmitted bond are represented by the activity code selected for that bond. The terms and conditions for each bond in subpart G would be updated to identify the corresponding activity code for that bond.

CBP is proposing a new § 113.61, outlining terms and conditions that are applicable to all bonds. The first four of these are derived from language currently found on CBP Form 301. Generally, the principal and surety agree: (1) to bind themselves (jointly and severally) to the United States in the amount(s) set forth in the bond; (2) that any charge against the bond by any authorized user on the bond is as though it were made by the principal; (3) that they are bound to the same extent as if they executed a separate bond covering each set of conditions incorporated by reference to the CBP regulations into the bond; and (4) if the surety fails to appoint an agent under 31 U.S.C. 9306, the surety consents to service on the Clerk of the U.S. Court of International Trade or any United States District Court, in which suit is brought on the bond. In addition, CBP proposes to add a new condition in proposed § 113.61(a)(5), incorporating the proposed delinquency interest provision in § 113.38(a), and the principals' and sureties' agreement to pay such interest, into the bond itself. In proposed § 113.61(a)(6), CBP proposes to add a new condition specifically for term bonds that renew automatically, including continuous bonds that renew automatically for a new one-year period beginning on the anniversary of the effective date of the bond and continue for each succeeding one-year period, unless terminated or cancelled sooner. For such bonds, the new condition would state that the principal and surety agree that the terms and conditions applicable to each new bond period would be those terms and conditions required by CBP on the renewal date at the start of the new bond period (

e.g.,

the anniversary of the effective date of the bond for continuous bonds). In other words, by allowing the bond to renew automatically, the principal and surety would agree that the bond's terms and conditions are updated to reflect the CBP regulations and/or CBP requirements at the start of each new bond period. Thus, any amendments to the CBP regulations affecting the terms and conditions of the bond would not be incorporated into the bond until the start of the next bond period, if the principal and surety allow the bond to renew automatically. CBP intends for this proposed new condition to minimize the need to render existing term bonds insufficient when CBP changes the bond regulations, which has, in the past, led to many bonds being terminated and replaced. CBP believes that proposed § 113.61(a)(6) would create more transparency and consistency for principals and sureties when they execute and administer bonds. CBP invites comments on this proposed new condition from principals, sureties, and other interested stakeholders.

CBP also proposes to add a provision at proposed § 113.61(b) stating that additional terms and conditions for each bond are identified by the activity code transmitted with the bond, with the selection of an activity code constituting the agreement of the principal and surety to be bound by the terms and conditions in the corresponding regulation. Finally, CBP proposes to clarify in a new § 113.61(c) that the terms and conditions required by CBP for a specific bond control if they conflict with provisions of proposed § 113.61(a). For example, the International Trade Commission (ITC) exclusion order bond required by CBP binds the principal and surety to the complainant in an ITC case instead of to the United States.

CBP proposes to update the terms and conditions for the bonds in subpart G, enumerated in §§ 113.62 through 113.75, to provide the corresponding activity code for each bond, and to identify consolidated bonds. Further, CBP proposes to update § 113.62 to

clarify that an active continuous bond is obligated at the time entry is filed.

CBP also proposes to amend § 113.74, which, along with Appendix B to part 113, provides the bond conditions for the ITC exclusion order bond (Activity Code 12) to indemnify a complainant under Section 337, Tariff Act of 1930, as amended. CBP proposes to expand this provision to include the transmission and execution requirements for the ITC exclusion order bond. Because the ITC exclusion order bond cannot currently be transmitted through the eBond system, CBP proposes to retain the current requirements for transmission of the ITC exclusion order bond. Proposed paragraph (b) requires that a copy of the bond be transmitted to the Center or the port of entry, along with the entry, by the principal on the bond. Consistent with the proposed definition of “principal” in 19 CFR 113.1, the bond may be transmitted by the importer or the importer's licensed customs broker. This bond may be transmitted via the Document Image System (DIS) (which permits upload through email or EDI) or via email to the port of entry or the Center, whereupon the port of entry or the Center will complete the upload process into DIS. Because the bond is not transmitted by the surety, the principal will still be responsible for transmitting a copy of the fully executed bond, including all required signatures, seals, and witnesses. These requirements are found in paragraphs (c) and (d) of proposed § 113.74.

In addition, CBP proposes to amend § 113.75, which provides for the bond for deferral of entry completion and duty deposit on large yachts imported for sale. CBP proposes to expand this provision to include the terms and conditions formerly enumerated in Appendix C; Appendix C will be removed and reserved. Similarly, CBP proposes to add a new § 113.76 to include the terms and conditions for the Airport Customs Security Area bond that are currently enumerated in Appendix A; Appendix A will be removed and reserved. Likewise, CBP proposes to add a new § 113.77 to include the terms and conditions for the Importer Security Filing Bond that are currently found in Appendix D; Appendix D will be removed and reserved. Although these three bonds are being moved from the Appendices to individual regulatory provisions, the terms and conditions for each bond remain the same.

B. Technical and Conforming Amendments to Title 19

As a consequence of the revisions to bond procedures in part 113, CBP is proposing conforming changes throughout Title 19 of the CFR. CBP proposes to replace references to the filing of a paper Customs Bond form, CBP Form 301, with references to the new electronic bond process in proposed part 113. As a result of the centralization of bond processing and transmission of bond information to the Revenue Division, CBP proposes amendments to reflect that responsibility for setting bond amounts will no longer reside exclusively with port directors. Further, CBP proposes to change references to the port director's bond authority to reference CBP's bond authority more generally. In several provisions, CBP proposes to replace references to a “single entry” bond with a reference to the “single transaction” bond, as defined and used in the proposed changes to part 113. CBP is further proposing to amend various provisions in Title 19 to replace references to the withdrawal, discontinuance, or return of a bond, with reference to the cancellation of the bond, consistent with the procedures proposed in subpart F of part 113. These technical amendments are described below.

Lastly, CBP proposes nomenclature changes made necessary by the transfer of the legacy U.S. Customs Service of the Department of the Treasury to the Department of Homeland Security (DHS) and DHS's subsequent renaming of the agency as U.S. Customs and Border Protection on March 31, 2007.

See

72 FR 20131 (Apr. 23, 2007).

Part 4

In part 4, CBP proposes the following amendments:

•

§ 4.3 Vessels required to enter; place of entry.

In paragraph (b)(2), CBP proposes to replace the reference to the CBP Form 301 with a reference to the transmission requirements in part 113. CBP also proposes to change “single entry” bond to “single transaction” bond. Lastly, CBP proposes to change references to the port director's authority to set the amount of the bond to “CBP” to reflect the centralization of these procedures.

•

§ 4.10 Request for overtime services.

CBP proposes to replace the reference to the CBP Form 301 with a reference to the transmission requirements in part 113, and to change “Customs” to “CBP” where appropriate.

•

§ 4.14 Equipment purchases for, and repairs to, American vessels.

In paragraph (c), CBP proposes to replace the reference to the CBP Form 301 with a reference to the transmission requirements in part 113, to change “single entry” bond to “single transaction” bond, clarify that “number” refers to a “bond number,” and to replace references to paper filing requirements with references to the new electronic transmission procedures.

•

§ 4.30 Permits and special licenses for unlading and lading.

In paragraph (c) and paragraph (i)(2), CBP proposes to replace references to the CBP Form 301 with a reference to the transmission requirements in part 113, and to change “Customs” to “CBP” where appropriate.

•

§ 4.32 Vessels in distress; landing of cargo.

In paragraph (b), CBP proposes to replace the reference to the CBP Form 301 with a reference to the transmission requirements in part 113. CBP also proposes to change references to the port director's authority to set the amount of the bond to “CBP” to reflect the centralization of these procedures.

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§ 4.33 Diversion of cargo.

In paragraphs (c) introductory text, (c)(2), and (d), CBP proposes to change references to the port director's authority to set the amount of the bond to “CBP” to reflect the centralization of these procedures, and to change “Customs” to “CBP” where appropriate. CBP also proposes changing “shall” to “must” and “will”, as appropriate, to incorporate plain language into the CBP regulations consistent with CBP's policies.

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§ 4.34 Prematurely discharged, overcarried, and undelivered cargo.

In paragraph (g), CBP proposes to replace the reference to the CBP Form 301 with a reference to the transmission requirements in part 113, and to change “Customs” to “CBP” where appropriate.

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§ 4.75 Incomplete manifest; incomplete or missing Electronic Export Information (EEI); bond.

In paragraph (a), CBP proposes to replace the reference to the CBP Form 301 with a reference to the transmission requirements in part 113. CBP also proposes technical amendments to replace the word “his” with the word “master's” to make clearer whose vessel is being referenced.

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§ 4.85 Vessels with residue cargo for domestic ports.

In paragraph (a), CBP proposes to replace the reference to the CBP Form 301 with a reference to the transmission requirements in part 113, and to change “Customs” to “CBP” where appropriate. CBP also proposes a minor technical change to remove the reference to bond requirements at subsequent ports of entry to align with the new electronic process.

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§ 4.88 Vessels with residue cargo for foreign ports.

In paragraph (a), CBP proposes to replace the reference to the CBP Form 301 with a reference to the transmission requirements in part 113.

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§ 4.94a Large yachts imported for sale.

CBP proposes amendments to paragraphs (a)(1) through (4) and (b) through (d) to change “single entry” bond to “single transaction” bond; replace references to the bond conditions moved from Appendix C to § 113.75; replace references to the paper process with references to the electronic process in part 113; change “Customs” to “CBP” where appropriate; and to make both the Director, Revenue Division, and the Center director responsible for setting the bond amount. CBP also proposes to make a minor technical change to include the phrase “any applicable successor subheading” in paragraphs (c) and (d) following subheading 8903.91.00 and 8903.92.00 of the Harmonized Tariff Schedule of the United States to cover recent changes made to the Harmonized Tariff Schedule of the United States.

11

11

The Harmonized System (HS) is amended approximately every five years by the World Customs Organization, with the U.S. International Trade Commission responsible for aligning the HTSUS with the HS's amendments. 19 U.S.C. 3005. On January 1, 2022, the latest amendments entered into force, adding and removing tariff headings to the HS, including removing subheadings 8903.91.00 and 8903.92.00.

Part 10

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§ 10.24 Documentation.

CBP proposes to amend paragraph (f) to replace references to the paper process with references to the electronic process in part 113.

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§ 10.31 Entry; bond.

CBP proposes to revise paragraph (f) to replace references to the paper process with references to the electronic process in part 113, to remove the reference to modification of the paper bond, and to make changes consistent with the shared responsibility of the Director, Revenue Division, and the Center director for setting the bond amount. CBP also proposes to change “Customs” to “CBP” where appropriate.

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§ 10.41a Lift vans, cargo vans, shipping tanks, skids, pallets, and similar instruments of international traffic; repair components.

CBP proposes amendments to paragraph (c), to replace references to the paper bond process with references to the electronic bond process in part 113, and to change “Customs” to “CBP” where appropriate.

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§ 10.41b Clearance of serially numbered substantial holders or outer containers.

CBP proposes amendments to paragraphs (b)(3) and (i) to replace references to the paper process with references to the electronic process in part 113.

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§ 10.49 Articles for exhibition; requirements on entry.

CBP proposes amendments to paragraphs (a) and (c) to replace references to the paper process with references to the electronic process in part 113, and to change “Customs” to “CBP” where appropriate.

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§ 10.59 Exemption from customs duties and internal-revenue tax.

CBP proposes amendments to paragraph (e) to replace references to the paper process with references to the electronic process in part 113, and to change “Customs” to “CBP” where appropriate. CBP also proposes to remove the numbers in paragraph (e) to clarify the paragraph structure.

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§ 10.60 Forms of withdrawals; bond.

CBP proposes amendments to paragraphs (c) and (g), to replace references to the paper process with references to the electronic process in part 113.

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§ 10.61 Withdrawal permit.

CBP proposes to replace references to the paper process with references to the electronic process in part 113.

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§ 10.64 Crediting or cancellation of bonds.

CBP proposes amendments to paragraph (a) to replace references to the paper process with references to the electronic process in part 113.

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§ 10.65 Cigars and cigarettes.

CBP proposes amendments to paragraph (c)(3) to replace references to the paper process with references to the electronic process in part 113.

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§ 10.66 Articles exported for temporary exhibition and returned; horses exported for horse racing and returned; procedure on entry.

CBP proposes amendments to paragraph (b) to replace references to the paper process with references to the electronic process in part 113. CBP also proposes to change “Customs” to “CBP” where appropriate.

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§ 10.67 Articles exported for scientific or educational purposes and returned; procedure on entry.

CBP proposes amendments to paragraph (b) to replace references to the paper process with references to the electronic process in part 113.

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§ 10.71 Purebred animals; bond for production of evidence; deposit of estimated duties; stipulation.

CBP proposes amendments to paragraphs (a) and (e) to replace references to the paper process with references to the electronic process in part 113, and to change “Customs” to “CBP” where appropriate. CBP also proposes to change the word “his” to the word “passenger's” and the word “him” to the words “port director” to make clearer who the regulation refers to.

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§ 10.80 Remission of duty; withdrawal; bond.

CBP proposes to replace references to the paper process with references to the electronic process in part 113 and to change “Customs” to “CBP” where appropriate.

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§ 10.81 Use in any port.

CBP proposes amendments to paragraph (b) to replace references to the paper process with references to the electronic process in part 113, and to change “Customs” to “CBP” where appropriate.

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§ 10.83 Bond; cancellation; extension.

CBP proposes amendments to paragraph (a) to replace references to the paper process with references to the electronic process in part 113, and to make changes consistent with the shared responsibility of the Director, Revenue Division, and the Center director regarding bonds.

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§ 10.90 Master records and metal matrices.

CBP proposes amendments to paragraph (c) to replace references to the paper process with references to the electronic process in part 113.

Part 11

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§ 11.12 Labeling of wool products to indicate fiber content.

CBP proposes amendments to paragraph (c) to replace references to the paper process with references to the electronic process in part 113, and to make changes consistent with the shared responsibility of the Director, Revenue Division, and the Center director in setting the bond amount.

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§ 11.12a Labeling of fur products to indicate composition.

CBP proposes amendments to paragraph (c) to replace references to the paper process with references to the electronic process in part 113, and to make changes consistent with the shared responsibility of the Director, Revenue Division, and the Center director in setting the bond amount.

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§ 11.12b Labeling textile fiber products.

CBP proposes amendments to paragraph (c) to replace references to the paper process with references to the electronic process in part 113, and to make changes consistent with the shared responsibility of the Director, Revenue Division, and the Center director in setting the bond amount.

Part 12

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§ 12.3 Release under bond; liquidated damages.

CBP proposes amendments to paragraphs (a) and (b), to replace references to the paper process with references to the electronic process in part 113, and to change references to the port director's authority to set the amount of the bond to “CBP” to reflect the centralization of these procedures.

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§ 12.8 Inspection; bond; release.

CBP proposes amendments to paragraph (a) to replace references to the paper process with references to the electronic

process in part 113. Additionally, CBP proposes a minor technical correction to replace a reference to “customs” to “CBP”.

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§ 12.12 Release under bond.

CBP proposes amendments to replace references to the paper process with references to the electronic process in part 113 and to change “Customs” to “CBP” where appropriate.

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§ 12.16 Joint regulations of the Secretary of the Treasury and the Secretary of Agriculture.

CBP proposes amendments to paragraph (c) to replace references to the paper process with references to the electronic process in part 113.

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§ 12.26 Importations of wild animals, fish, amphibians, reptiles, mollusks, and crustaceans; prohibited and endangered and threatened species; designated ports of entry; permits required.

CBP proposes amendments to paragraph (e) to replace references to the paper process with references to the electronic process in part 113, and to change “Customs” to “CBP” where appropriate.

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§ 12.39 Imported articles involving unfair methods of competition or practices.

CBP proposes amendments to paragraph (b)(2) to change “single entry” bond to “single transaction” bond, consistent with the terminology in part 113, and amendments to paragraph (b)(2)(i) to replace references to the paper process with references to the electronic process in part 113. CBP also proposes in paragraph (e) to replace the name “Office of International Trade” with “Office of Trade” to accurately reflect the name of the office.

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§ 12.73 Importation of motor vehicles and motor vehicle engines.

CBP proposes amendments to paragraph (j) to replace references to the paper process with references to the electronic process in part 113, remove references to the consignee or surety to be consistent with part 113, and to change “single entry” bond to “single transaction” bond, consistent with the terminology used in part 113.

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§ 12.74 Importation of nonroad and stationary engines, vehicles, and equipment.

CBP proposes amendments to paragraph (c)(1) to replace references to the paper process with references to the electronic process in part 113, and remove references to the consignee or surety to be consistent with part 113. CBP also proposes amendments to paragraph (c)(2) to change “single entry” bond to “single transaction” bond, consistent with the terminology used in part 113.

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§ 12.80 Federal motor vehicle safety standards.

CBP proposes amendments to paragraph (e)(1) to replace references to the paper process with references to the electronic process in part 113. CBP also proposes amendments to paragraph (e)(2) to change “single entry” bond to “single transaction” bond, consistent with the terminology used in part 113.

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§ 12.85 Coast Guard boat and associated equipment safety standards.

CBP proposes amendments to paragraph (e)(1) to replace references to the paper process with references to the electronic process in part 113, and to change references to the port director's authority to set the amount of the bond to “CBP” to reflect the centralization of these procedures. CBP also proposes amendments to paragraph (e)(3) to change “single entry” bond to “single transaction” bond, consistent with the terminology used in part 113.

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§ 12.91 Electronic products offered for importation under the Act.

CBP proposes to amend paragraph (d) to change “single entry” bond to “single transaction” bond; replace references to the paper process with references to the electronic process in part 113; change “Customs” to “CBP” where appropriate; and change references to the port director's authority to set the amount of the bond to “CBP” to reflect the centralization of these procedures. CBP also proposes changing the word “his” to “Secretary's” to make clearer who the regulation refers to. CBP also proposes changing “shall” to “must” and “will”, as appropriate, to incorporate plain language into the CBP regulations consistent with CBP's policies.

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§ 12.104f Temporary disposition of materials and articles.

CBP proposes amendments to replace references to the paper process with references to the electronic process in part 113. CBP also proposes changing the word “he” to the words “the Secretary” to make clearer who the regulation refers to.

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§ 12.115 Release under bond of shipment detained for examination.

CBP proposes amendments to replace references to the paper process with references to the electronic process in part 113.

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§ 12.123 Procedure after detention.

CBP proposes amendments to paragraph (b) to replace references to the paper process with references to the electronic process in part 113.

Part 18

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§ 18.1 In-bond application and entry; general rules.

CBP proposes amendments to paragraph (e) to replace references to the paper process with references to the electronic process in part 113.

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§ 18.3 Transfers.

CBP proposes amendments to paragraph (d) to replace references to the paper process with references to the electronic process in part 113.

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§ 18.20 General rules.

CBP proposes amendments to paragraph (d) to replace references to the paper process with references to the electronic process in part 113. CBP also proposes changing the words “he or she” to the words “port director” to make clearer who the regulation refers to.

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§ 18.25 Direct exportation.

CBP proposes amendments to paragraph (e) to replace references to the paper process with references to the electronic process in part 113, and to change “single entry” bond to “single transaction” bond, consistent with the terminology used in part 113.

Part 19

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§ 19.2 Applications to bond.

CBP proposes amendments to paragraphs (c) and (e) to replace references to the paper process and the CBP Form 301 with references to the electronic process in part 113. CBP also proposes to change “class” to “Class” in paragraph (c) to ensure internal consistency within the section, and to change “he” to “the proprietor” in paragraph (e) for increased clarity.

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§ 19.13 Requirements for establishment of warehouse.

CBP proposes amendments to paragraph (c) to replace references to the paper process with references to the electronic process in part 113.

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§ 19.14 Materials for use in manufacturing warehouse.

CBP proposes amendments to paragraphs (b) and (d) to replace references to the paper process and the CBP Form 301 with references to the electronic process in part 113.

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§ 19.15 Withdrawal for exportation of articles manufactured in bond; waste or byproducts for consumption.

CBP proposes amendments to paragraph (g)(1) to replace references to the paper process and the CBP Form 301 with references to the electronic process in part 113.

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§ 19.17 Application to establish warehouse; bond.

CBP proposes amendments to paragraph (e) to replace references to the paper process and the CBP Form 301 with references to the electronic process in part 113.

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§ 19.40 Establishment, relocation or alteration of container stations.

CBP proposes amendments to paragraph (a) to replace references to the paper process and the CBP Form 301 with references to the electronic process in part 113, and to change references to the port director's authority to set the amount of the bond to “CBP” to reflect the centralization of these procedures.

Part 24

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§ 24.11 Notice to importer or owner of increased or additional duties, taxes, fees and interest.

CBP proposes amendments to replace references to the paper process and the CBP Form 301 with references to the electronic process in part 113.

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§ 24.16  Overtime services; overtime compensation and premium pay for Customs Officers; rate of compensation.

CBP proposes to amend the section heading to replace “Customs” with “CBP,” and to amend paragraph (c)(1) to replace references to the paper process and the CBP Form 301 with references to the electronic process in part 113; to change references to the port director's authority to set the amount of the cash deposit to “CBP” to reflect the centralization of these procedures; to change “Customs” to “CBP” where appropriate; and to change references to the port director's authority to set the amount of the bond to “CBP” to reflect the centralization of these procedures. CBP also proposes to amend paragraphs (c)(2) and (3) to replace “Customs Form” with “CBP Form.”

Part 54

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§ 54.6 Proof of intent; bond; proof of use; liquidation.

CBP proposes amendments to paragraph (b) to replace references to the paper process and the CBP Form 301 with references to the electronic process in part 113, and to change “Customs” to “CBP” where appropriate.

Part 112

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§ 112.11 Carriers which may be authorized.

CBP proposes amendments to paragraph (a)(4)(ii) to replace references to the paper process and the CBP Form 301 with references to the electronic process in part 113.

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§ 112.12 Application for authorization.

CBP proposes amendments to paragraph (a) to replace references to the paper process and the CBP Form 301 with references to the electronic process in part 113, and to change references to the port director's authority to set the amount of the bond to “CBP” to reflect the centralization of these procedures. CBP also proposes amendments to paragraph (b)(3) to align with the electronic process in part 113.

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§ 112.14 Discontinuance of carrier bonds.

CBP proposes to replace the word “Discontinuance” in the section header with “Termination,” in keeping with the terminology used throughout title 19, and to add cross-references to the termination and cancellation provisions in part 113 (§§ 113.27 and 113.51, respectively).

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§ 112.22 Application for license.

CBP proposes amendments to paragraph (a) to replace references to the paper process and the CBP Form 301 with references to the electronic process in part 113, and to change “Customs” to “CBP” where appropriate. CBP proposes to add the bond requirement found in paragraph (a)(1) to the introductory text, to remove paragraph (a)(1), and to redesignate paragraphs (a)(2) and (a)(3) as (a)(1) and (a)(2), respectively. Additionally, CBP proposes to change “he” to “the applicant” for increased clarity.

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§ 112.25 Bonded carriers.

CBP proposes amendments to replace references to the paper process and the CBP Form 301 with references to the electronic process in part 113.

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§ 112.49 Temporary identification cards.

CBP proposes amendments to paragraph (d) to replace references to the paper process and the CBP Form 301 with references to the electronic process in part 113, and to change references to the port director's authority to set the amount of the bond to “CBP” to reflect the centralization of these procedures. CBP also proposes changing the word “his” to the word “an” employee to make clearer who the regulation refers to.

Part 118

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§ 118.11 Contents of application.

CBP proposes amendments to paragraph (e) to replace references to the paper process and the CBP Form 301 with references to the electronic process in part 113, and to include a reference to the conditions for a custodial bond found in § 113.63. Because the electronic bond process does not call for an application to be submitted to CBP, CBP proposes to eliminate the second sentence in paragraph (e) that provides the option of submitting a bond application to CBP that is included with the application to operate a Centralized Examination Station.

Part 122

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§ 122.38 Permit and special license to unlade and lade.

CBP proposes amendments to paragraphs (d), (e), and (f) to replace references to the paper process and the CBP Form 301 with references to the electronic process in part 113, and to change “Customs” to “CBP” where appropriate.

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§ 122.74 Incomplete (pro forma) manifest.

CBP proposes amendments to paragraphs (a)(1)—(2) to replace references to the paper process and the CBP Form 301 with references to the electronic process in part 113.

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§ 122.81 Application.

CBP proposes amendments to paragraph (b) to replace references to the paper process and the CBP Form 301 with references to the electronic process in part 113.

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§ 122.82 Bond requirements.

CBP proposes amendments to replace references to the paper process and the CBP Form 301 with references to the electronic process in part 113, and to change references to the port director's authority to set the amount of the bond to “CBP” to reflect the centralization of these procedures.

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§ 122.117 Requirements for transit air cargo transport.

CBP proposes amendments to paragraphs (a)(1)(ii), (a)(2), and (c)(4)(ii) to replace references to the paper process and the CBP Form 301 with references to the electronic process in part 113.

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§ 122.182 Security provisions.

CBP proposes amendments to the introductory text to paragraph (c)(1) to replace references to the bond conditions moved from Appendix A to § 113.76, and to replace references to the paper process and the CBP Form 301 with references to the electronic process in part 113.

Part 123

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§ 123.8 Permit or special license to unlade or lade a vessel or vehicle.

CBP proposes amendments to paragraph (c) to replace references to the paper process and the CBP Form 301 with references to the electronic process in part 113.

Part 125

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§ 125.42 Cancellation of liability.

CBP proposes amendments to remove references to the paper process and the CBP Form 301.

Part 127

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§ 127.37 Insufficient proceeds.

CBP proposes amendments to paragraph (a) to remove references to the paper process and the CBP Form 301.

Part 128

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§ 128.22 Bonds.

CBP proposes amendments to replace references to the paper process and the CBP Form 301 with references to the electronic process in part 113, and to change “Customs” to “CBP” where appropriate.

Part 132

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§ 132.14 Special permits for immediate delivery; entry of merchandise before presenting entry summary for consumption; permits of delivery.

CBP proposes amendments to paragraphs (a)(4)(i)(C) and (a)(4)(ii)(B) to replace references to the paper process and the CBP Form 301 with references to the electronic process in part 113,

and to change “Customs” to “CBP” where appropriate.

Part 133

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§ 133.21 Articles suspected of bearing counterfeit marks.

CBP proposes amendments to paragraphs (b)(5), (c)(2), and (f) to replace references to the paper process with references to the electronic process in part 113.

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§ 133.25 Procedure on detention of articles subject to restriction.

CBP proposes amendments to paragraph (c) to replace references to the paper process with references to the electronic process in part 113.

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§ 133.26 Demand for redelivery of released merchandise.

CBP proposes amendments to remove a reference to the CBP Form 301.

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§ 133.42 Infringing copies or phonorecords.

CBP proposes amendments to paragraphs (b)(5), (c)(2), and (f) to replace references to the paper process with references to the electronic process in part 113.

• § 133.46 Demand for redelivery of released articles.

CBP proposes amendments to remove a reference to the CBP Form 301, and to change “Customs” to “CBP” where appropriate.

• § 113.47 Articles suspected of violating the Digital Millennium Copyright Act.

CBP proposes amendments to paragraphs (b)(5), (c)(2) and (f) to replace references to the paper process with references to the electronic process in part 113.

• § 113.48 Demand for redelivery of released articles.

CBP proposes amendments to remove a reference to the CBP Form 301.

Part 134

• § 134.53 Examination packages.

CBP proposes amendments to paragraph (a)(2), to replace references to the paper process and the CBP Form 301 with references to the electronic process in part 113, to change references to the Center director's authority to accept a bond to “CBP” to reflect the centralization of these procedures, and to change “Customs” to “CBP” throughout § 134.53 where appropriate.

Part 141

• § 141.4 Entry required.

CBP proposes amendments to paragraph (d) to replace references to the paper process and the CBP Form 301 with references to the electronic process in part 113.

• § 141.15 Bond for production of bill of lading or air waybill.

CBP proposes amendments to paragraph (a) to change references to the port director's authority to accept a bond to “CBP” to reflect the centralization of bond procedures, and to change “Customs” to “CBP” where appropriate. CBP also proposes to change the word “he” to the words “port director” to make clearer who the regulation refers to. CBP also proposes amendments to paragraph (b) to replace references to the paper process and the CBP Form 301 with references to the electronic process in part 113.

• § 141.18 Entry by nonresident corporation.

CBP proposes amendments to paragraph (b) to replace references to the paper process and the CBP Form 301 with references to the electronic process in part 113.

• § 141.19 Declaration of entry.

CBP proposes amendments to paragraph (b)(2)(ii), to remove references to the paper process and the CBP Form 301.

• § 141.20 Actual owner's declaration and superseding bond of actual owner.

CBP is proposing amendments to paragraphs (a)(1)-(2), (b), and (c) to change “Customs” to “CBP” where appropriate, to change “single entry” bond to “single transaction” bond, consistent with the terminology used in part 113, and to replace references to the paper process and the CBP Form 301 with references to the electronic process in part 113. CBP also proposes technical amendments to make clearer references to the noun. CBP is proposing further amendments in paragraphs (b) and (c) to clarify that the actual owner must be listed as the principal on the bond.

• § 141.41 Surety on Customs bonds.

CBP is proposing amendments replacing references to the paper process, and clarifying that this provision addresses power of attorney to act as an agent for a surety.

• § 141.61 Completion of entry and entry summary documentation.

CBP proposes amendments to paragraph (e)(2) to replace references to the paper process with references to the electronic process in part 113.

• § 141.66 Bond for missing documentation.

CBP proposes amendments to replace references to the paper process and the CBP Form 301 with references to the electronic process in part 113.

• § 141.91 Entry without required invoice.

CBP proposes amendments to paragraph (d) to replace references to the paper process and the CBP Form 301 with references to the electronic process in part 113.

• § 141.92 Waiver of invoice requirements.

CBP proposes amendments to paragraph (c) to remove references to the CBP Form 301.

• § 141.112 Liens for freight, charges, or contribution in general average.

CBP proposes amendments to paragraph (g) to replace references to CBP Form 301 with references to the electronic process in part 113, and to make clearer references to the noun. CBP also proposes to change “Customs” to “CBP” in paragraphs (b), (c), (e)(1) and (h) where appropriate.

Part 142

• § 142.4 Bond requirements.

CBP proposes amendments to paragraphs (a), (b), and (c)(1) to change “Customs” to “CBP” where appropriate, to change “single entry” bond to “single transaction” bond, consistent with the terminology used in part 113, and to replace references to the paper process and the CBP Form 301 with references to the electronic process in part 113.

• § 142.19 Release of merchandise under the entry summary.

CBP proposes amendments to the introductory text and paragraphs (a) and (b) to replace references to the paper process and the CBP Form 301 with references to the electronic process in part 113.

• § 142.21 Merchandise eligible for special permit for immediate delivery.

CBP proposes amendments to paragraphs (a), (b)(2), (e)(1), (f)(2) and (i) to replace references to the paper process and the CBP Form 301 with references to the electronic process in part 113, and to change “Customs” to “CBP” where appropriate.

Part 144

• § 144.2 Liability of importers and sureties.

CBP proposes amendments to replace references to the paper process and the CBP Form 301 with references to the electronic process in part 113, and to change “Customs” to “CBP” where appropriate. CBP also proposes technical amendments to make clearer references to the noun.

• § 144.13 Bond requirements.

CBP proposes amendments to replace references to the paper process and the CBP Form 301 with references to the electronic process in part 113, and to replace references to the Center Director with CBP, as the entity responsible for setting the bond amount.

• § 144.14 Removal to warehouse.

CBP proposes amendments to the introductory text to replace references to the paper process and the CBP Form 301 with references to the electronic process in part 113, and to change “Customs” to “CBP” where appropriate.

• § 144.21 Conditions for transfer.

CBP proposes amendments to the introductory text to replace references to the paper process and the CBP Form 301 with references to the electronic process in part 113, and to change “Customs” to “CBP” where appropriate.

• § 144.23 Endorsement in blank.

CBP proposes amendments to replace references to the paper process and the CBP Form 301 with references to the electronic process in part 113, and to change “Customs” to “CBP” where appropriate. CBP also proposes technical amendments to make clearer references to the noun.

• § 144.24 Transferee's bond.

CBP proposes amendments to replace references to the paper process and the CBP Form 301 with references to the electronic process in part 113.

• § 144.25 Deposit of forms.

CBP proposes amendments to replace references to the paper process and the CBP Form 301 with references to the electronic process in part 113, and to change “Customs” to “CBP” where appropriate.

• § 144.41 Entry for rewarehouse.

CBP proposes amendments to paragraph (d) to replace references to the paper process and the CBP Form 301 with references to the electronic process in part 113, and to change “Customs” to “CBP” where appropriate.

Part 146

• § 146.6 Procedure for activation.

CBP proposes amendments to paragraphs (d) and (e) to replace references to the paper process and the CBP Form 301 with references to the electronic process in part 113, and to change “Customs” to “CBP” where appropriate. CBP also proposes changing the word “his” to the words “the port director's” to make clearer who the regulation refers to.

• § 146.7 Zone changes.

CBP proposes amendments to paragraphs (d) and (f) to replace references to the paper process and the CBP Form 301 with references to the electronic process in part 113.

• § 146.67 Transfer of merchandise for exportation.

CBP proposes amendments to paragraph (b) to replace references to the paper process and the CBP Form 301 with references to the electronic process in part 113.

• § 146.69 Supplies, equipment, and repair material for vessels or aircraft.

CBP proposes amendments to paragraph (a) to replace references to the paper process and the CBP Form 301 with references to the electronic process in part 113, and to change “Customs” to “CBP” where appropriate.

Part 147

• § 147.3 Bond required.

CBP proposes amendments to replace references to the paper process and the CBP Form 301 with references to the electronic process in part 113, and to also make it possible for the Director, Revenue Division, and the Center director to be responsible for setting the bond amount.

Part 148

• § 148.52 Exemption for household effects used abroad.

CBP proposes amendments to paragraph (c) to replace references to the paper process and the CBP Form 301 with references to the electronic process in part 113.

Part 149

• § 149.5 Eligibility to file an Importer Security Filing, authorized agents.

CBP proposes amendments to paragraph (b) to replace references to the bond conditions moved from Appendix D in part 113 to § 113.77, and to replace references to the paper process and the CBP Form 301 with references to the electronic process in part 113.

Part 151

• § 151.7 Examination elsewhere than at place of arrival or public stores.

CBP proposes amendments to paragraph (d) to replace references to the paper process and the CBP Form 301 with references to the electronic process in part 113, and to change “Customs” to “CBP” in paragraphs (a)-(c) where appropriate.

• § 151.12 Accreditation of commercial laboratories.

CBP proposes amendments to paragraphs (f)(1)(vii) and (g)(2)(vi) to replace references to the paper process and the CBP Form 301 with references to the electronic process in part 113, to change “Customs” to “CBP” where appropriate, and to make the Director, Revenue Division, the port director, and the Executive Director, Laboratories & Scientific Services responsible for setting the bond amount.

• § 151.13 Approval of commercial gaugers.

CBP proposes amendments to paragraphs (d)(1)(vii) and (e)(2)(vi) to replace references to the paper process and the CBP Form 301 with references to the electronic process in part 113, to change “Customs” to “CBP” where appropriate, and to make the Director, Revenue Division, the port director, and the Executive Director, Laboratories & Scientific Services responsible for setting the bond amount.

Part 162

• § 162.47 Claim for property subject to summary forfeiture.

CBP proposes amendments to paragraph (b) to replace references to the paper process and the CBP Form 301 with references to the electronic process in part 113. CBP also proposes to modernize the language of this provision by replacing the words “penal sum” with the word “amount.”

Part 190

• § 190.92 Accelerated payment.

CBP proposes amendments to paragraphs (d) and (e)(3) to replace references to the paper process and the CBP Form 301 with references to the electronic process in part 113.

Part 191

• § 191.92 Accelerated payment.

CBP proposes amendments to paragraphs (d) and (e)(3) to replace references to the paper process and the CBP Form 301 with references to the electronic process in part 113.

IV. Statutory and Regulatory Requirements

A. Executive Orders 12866, 13563 and 14192

Executive Orders 12866 (Regulatory Planning and Review) and 13563 (Improving Regulation and Regulatory Review) direct agencies to assess the costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits. Executive Order 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. Executive Order 14192 (Unleashing Prosperity Through Deregulation) directs agencies to significantly reduce the private expenditures required to comply with Federal regulations and provides that “any new incremental costs associated with new regulations shall, to the extent permitted by law, be offset by the elimination of existing costs associated with at least 10 prior regulations.” CBP estimates that during the period of analysis 2015-2029, this proposed rule would result in annualized net cost savings ranging from $3.53 million (discounted 2024 U.S. dollars) using a three percent discount rate to $3.48 million (discounted 2024 U.S. dollars) using a seven percent discount rate. For the purposes of Executive Order 14192 accounting, CBP estimates that the perpetual time horizon present value of cost savings from this proposed rule would be $54.8 million, and the annualized value of cost savings would be $3.84 million using a seven percent discount.

The Office of Management and Budget (OMB) has not designated this rule a “significant regulatory action,” under section 3(f) of Executive Order 12866. Accordingly, OMB has not reviewed it. This proposed rule, if finalized, is

expected to be an Executive Order 14192 deregulatory action. The following is the economic analysis for this proposed rule.

Purpose of the Rule

This proposed rule requires sureties issuing customs bonds to use an electronic data interchange (EDI) to submit the bonds to CBP, except in certain prescribed instances where email is acceptable.

12

Generally, sureties would use eBond, an electronic system for filing customs bonds.

13

This proposed rule requires that all bonds, riders, terminations, and changes to power of attorney be transmitted electronically to CBP by the surety or the surety's authorized filer.

14

CBP has also established a central repository for all bonds within the Office of Finance's Revenue Division, helping to eliminate errors in bond execution and reduce legal risks. Implementing eBond reduces paper processing, expedites cargo release, enhances the traceability of bonds for audit purposes, and allows for bonds to be filed outside of business hours. Overall, eBond increases efficiency in the bonding process for CBP, sureties, and importers.

12

Exemptions allowing for or requiring the use of bonds sent via email are listed in proposed 19 CFR 113.11(c). Transmission by the surety is required unless otherwise permitted by CBP. These exceptions account for approximately 0.01 percent of all bonds active as of January 2024. Source: CBP's Automated Commercial Environment (ACE) database.

13

In 2015, CBP designated the Automated Commercial Environment (ACE) as the CBP-authorized EDI system for processing commercial trade data. 80 FR 61278 (October 13, 2015). The eBond system is a part of ACE. For simplicity, throughout this analysis, eBond refers to the CBP-authorized EDI.

14

Except where the bond is secured by cash in lieu of surety, pursuant to 19 CFR 113.40, and for bonds to indemnify a complainant under Section 337 of the Tariff Act of 1930, as provided for in 19 CFR 113.74.

Background

To import goods for commercial purposes, an importer may be required to procure a customs bond securing importation and entry (an “import bond”), which ensures compliance with various laws, and protects the revenue.

15

The process of importing and entering goods takes time and has several steps from the initial entry filing to liquidation. To facilitate trade, CBP allows importers to secure their transactions with an import bond so that goods may be released before duties, taxes, and fees are fully assessed and paid. In Fiscal Year (FY) 2023, CBP processed 36.7 million entries and collected almost $92.3 billion in duties.

16

Duties collected in FY 2023 were at a 17.5 percent decrease from FY 2022, and were paid on $3.33 trillion worth of imported goods.

15

Generally, a bond securing the importation transaction is required for formal entry of goods valued over $2,500. Other bonds, such as a bond required for informal entry of goods, can have a lower monetary threshold but are much less common. Additionally, importers may elect to use cash in lieu of a surety. While a bond secured by cash in lieu of surety serves to secure the transaction in the same way as a bond secured by a surety, the importer paying a cash deposit does not use a surety. Cash-in-lieu is very rare, accounting for only 0.002 percent of import bonds. Data provided by CBP Revenue Division on February 26, 2025.

16

Customs and Border Protection, “FY 2023 CBP Trade Fact Sheet” June 2024 (most recent available publication).

https://www.cbp.gov/sites/default/files/2024-06/cbp_fy_2023_trade_fact_sheet_06.2024.pdf.

Accessed March 27, 2024.

A customs bond is a financial guarantee between a principal and a surety company.

17

The surety issues the bond with CBP as the direct beneficiary. For an import bond, the importer is the principal. If CBP is unable to collect monies owed from the principal, the surety is liable for the amount of the bond and the surety may then use any legal means to seek reimbursement from the principal/importer.

17

The proposed regulations define a surety as a company listed in Treasury Circular 570 as an acceptable surety on Federal bonds or as an acceptable reinsurance company for such bonds, and the officers, employees, and/or agents (including surety agents) of such company. See proposed 19 CFR 113.1.

There are two basic types of customs bonds: single transaction bonds (STBs) and continuous bonds. STBs cover a single transaction or activity while continuous bonds apply to all transactions or activities of the same type, by a single principal, in a one-year time period. The minimum amount for a customs bond of any type is $100, except when law or regulation expressly allows a smaller amount. Generally, the principal may use either a single transaction or continuous bond to secure its customs activity or transaction. The type of transaction or activity to be secured is identified by an “activity code.” Each activity code has a different minimum amount for continuous bonds. See Table 1 for the number of bonds and total amount of bond coverage by activity code for the one-year period ending in January 2025. Table 1 indicates that the majority of customs bonds are importer bonds.

18

Bond totals reflect all bonds on file in CBP systems during the period from February 2024 to January 2025, including continuous bonds created in other years. Data provided by CBP's Revenue Division subject matter expert on February 26, 2025.

Table 1—Bonds Outstanding Summary for February 1, 2024, Through January 31, 2025

18

Activity code

Activity code name

Single transaction bonds

Count

Total amount

Continuous bonds

Count

Total amount

1

Importer/Broker

386,535

$8,212,145,904

254,103

$27,315,420,000

1A

Drawback

7,934

1,374,977,252

1,431

5,881,731,600

1A1

Combo 1 & 1A

0

0

2

210,000

2

Custodian of Bonded Merchandise

N/A

N/A

7,018

615,965,000

3

International Carrier

324

59,339,063

8,379

1,211,290,000

3A

Instruments of International Traffic

N/A

N/A

965

34,247,000

3A3

Combo 3 & 3A

0

0

30

16,540,000

4

Foreign Trade Zone (FTZ)

N/A

N/A

1,369

588,040,000

5

Public Gauger

0

0

37

1,720,000

6

Wool & Fur Products Labeling Acts Importation

0

0

N/A

N/A

7

Bill of Lading

0

0

N/A

N/A

8

Detention of Copyrighted Material

0

0

N/A

N/A

9

Neutrality

0

0

N/A

N/A

10

Court Cost for Condemned Goods

252

122,136

0

0

11

Airport Security Bond

N/A

N/A

1,700

84,563,000

12

International Trade Commission (ITC)

0

0

0

0

14 *

In-Bond Export Consolidation (IBEC)

N/A

N/A

0

0

15

Intellectual Property Rights (IPR)

0

0

35

505,500

16

Importer Security Filing (ISF)

90,944

909,440,000

87

3,930,000

17

Marine Terminal Operator

N/A

N/A

39

4,500,000

19

User Fee Facility

0

0

1

4,100,000

20

Vehicle Export Consolidator

0

0

0

0

Total

485,989

10,556,024,355

275,196

35,762,762,100

N/A = Activity Code does not apply.

* Source: ACE Reports.

Generally, single transaction import bond amounts are calculated as the value of the merchandise, plus estimated taxes, duties, and fees. Generally, continuous import bond amounts are calculated based on the amount of taxes, duties, and fees paid by the particular importer (and any authorized users on the bond) during the prior 12 months.

19

If the importer did not make payments in the prior 12 months, the importer must provide to CBP a statement of the duties and taxes it estimates would accrue during the next 12 month period.

20

19

CBP notes that when estimating the bond amount the importer should also include forecasted amounts to cover up to 12 months into the future to avoid getting insufficiency notices and encountering bond stacking liability.

20

CBP notes that if no imports were made during the preceding year, the bond amount is set based on the duties, taxes, and fees which the principal, co-principal, or user estimates will accrue on imports during the next 12-month period. In no event can the bond amount be less than $50,000.

CBP began a National Customs Automation Program (NCAP) test for eBond in 2015, allowing participating sureties to file customs bonds electronically.

21

CBP also published a final rule in the

Federal Register

,

which centralized the filing of continuous bonds at the Revenue Division, and allowed both STBs and continuous bonds to be filed by email or facsimile to the Revenue Division, in addition to paper bond filing.

22

The final rule retained the ability for STBs to be filed on paper at the port.

21

79 FR 70881 (November 28, 2014).

22

80 FR 70154, 70155 (November 13, 2015).

In the years before the 2015 eBond test, and for those not participating in eBond after 2015, a paper import bond was required to be filed by the importer or a licensed customs broker using CBP Form 301 with either the port director of the requisite port or the Director of the Revenue Division of CBP.

23

Before the eBond test or for those not participating, the customs broker or importer filing an import bond could reach out to a surety each time a bond was needed at entry. However, the processing times involved meant that, in practice, sureties would give the broker executed bonds with the importer information and amount left blank. When a bond was needed for entry, the broker added the amount and importer information and filed the bond with CBP, leaving the surety without the chance to decline to issue the bond. The practice of filing by brokers and importers left sureties without enough information to adequately assess their risk position and without an opportunity to decline to issue the bond. Although this method was not the one envisioned in the CBP bond regulations, it was generally adopted for efficiency and competitiveness in a fast-moving and geographically spread-out trade environment.

23

CBP has also been accepting CBP Form 301s via email since approximately 2004. Although the bonds are sent by email, for the purposes of being entered into ACE, they are treated the same way as paper forms. As of 2024, the majority of bonds not submitted via eBond are submitted via email.

For import STBs, the bond application requires the value and nature of the merchandise. In practice, STBs were often filed at the port of entry where port personnel review and process the form manually. Before the introduction of ACE and eBond, and depending on operational priorities, the forms were sometimes processed with the entry at cargo release or after entry summary, such that cargo was released without CBP receiving an STB. Records were created and stored at the ports, so sureties rarely had consistent information and sometimes had limited involvement in reviewing the STBs, making risk management particularly difficult.

24

CBP had no centralized office responsible for overseeing, storing, or administering STBs, while continuous bonds were centralized to the Revenue Division in 2015. The majority of import STBs are now filed in ACE via eBond, pursuant to the eBond NCAP test, though some bonds are still filed and stored at the ports. This proposed rule centralizes the filing of STBs with the Revenue Division. The use of

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