OMB Completes its Review of CBP's 10+2 Proposed Rule

CBP and Department of Homeland Security (DHS) officials have previously stated at various trade meetings that they expected the 10+2 proposed rule to be published by the end of 2007; however, the OMB's RegInfo.gov Web site lists January 2008 as the "target" publication date.

According to a summary of the 10+2 proposed rule on the RegInfo.gov Web site, the rule would amend DHS regulations to provide that CBP must receive, by way of a CBP-approved electronic data interchange system, additional information from carriers and importers pertaining to cargo before it is brought into the U.S. by vessel. The summary notes that CBP's 10+2 proposed rule is specifically intended to implement the provisions of Section 203 of the Security and Accountability for Every (SAFE) Port Act of 2006¹.

Government Reviews Conclude More Advance Shipment Data Would Produce More Effective/Vigorous Cargo Risk Assessments

Vessel carriers are currently required to transmit certain manifest information via CBP's Vessel Automated Manifest System (AMS) 24 hours prior to lading of containerized and non-exempt break bulk cargo at a foreign port. For the most part, this is the ocean carrier's or non-vessel operating common carrier's (NVOCC's) cargo declaration. CBP analyzes this information to generate its risk assessment for targeting purposes.

Internal and external government reviews have concluded that more complete advance shipment data would produce even more effective and more vigorous cargo risk assessments. Based upon its analysis, as well as the requirements under the SAFE Port Act, CBP will be proposing to require the electronic transmission of additional data for improved high-risk targeting. Some of the data elements will be required from carriers (Container Status Messages and Vessel Stow Plan), and others will be required from importers (as defined in the proposed rule). This rule will improve CBP's risk assessment and targeting capabilities, while at the same time, enabling it to facilitate the prompt release of legitimate cargo following its arrival in the U.S.

CBP Estimates Annualized Costs of 10+2 Rule to be $390-$630 Million

As of the projected effective date of the 10+2 regulation, CBP estimates that approximately 11 million import shipments conveyed by 1,200 different carrier companies operating 50,000 unique voyages or vessel-trips to the U.S. will be subject to the 10+2 rule, with annualized costs ranging from $390 million to $630 million.

(The annualized cost range results from varying assumptions about (a) the estimated SF transaction costs or fees charged to the importers by the filing parties, (b) the potential for supply chain delays, and (3) the estimated costs to carriers for transmitting additional data to CBP.

The high end of the cost range assumes an initial supply chain delay of 1 day (24 hours) for the first year of implementation (2008) and a delay of 12 hours for years 2 through 10 (2009-2017).)

SF for Bulk Cargo Would Have Increased Annualized Costs by Approx $10 Million

CBP considered requiring an importer SF for bulk cargo as well as for containerized and break-bulk cargo. If bulk cargo were not exempt from an importer SF, the annualized costs of the 10+2 rule would be increased by approximately $10 million.

Transit Time May Increase, Especially for Shipments Consolidated in Containers

CBP states that its analysis finds that the incremental costs of the regulation are relatively small compared to the median value of a shipment of goods despite the rather large absolute estimate of present value cost, noting that the proposed regulation may increase the time shipments are in transit, particularly for shipments consolidated in containers. For such shipments, the supply chain is generally more complex and the importer has less control of the flow of goods and associated SF information. Foreign cargo consolidators may be consolidating multiple shipments from one or more shippers in a container destined for one or more buyers or consignees.

Consolidators May Advance Cut-Off Times for Receipt of Shipments/SF Data

According to the summary, in order to ensure that the SF data is provided by the shippers to the importers (or their designated agents) and is then transmitted to and accepted by CBP in advance of the 24-hour deadline, consolidators may advance their cut-off times for receipt of shipments and associated SF data. These advanced cut-off times would help prevent a consolidator or carrier from having to unpack or unload a container in the event the SF for one of the shipments contained in the container is inadequate or not accepted by CBP.

For example, consolidators may require shippers to submit, transmit, or obtain CBP approval of their SF data before their shipments are stuffed in the container, before the container is sealed, or before the container is delivered to the port for lading. In such cases, importers would likely have to increase the times they hold their goods as inventory and thus incur additional inventory carrying costs to sufficiently meet these advanced cut-off times imposed by their foreign consolidators.

¹Section 203 of the SAFE Port Act requires the Secretary of Homeland Security, acting through the Commissioner of CBP, to promulgate regulations to require the electronic transmission of additional data elements for improved high-risk targeting, including appropriate security elements of entry data for cargo destined for the U.S. by vessel, prior to the loading of such cargo on vessels at foreign seaports.

(See ITT's Online Archives or 12/26/07 news, 07122699 1, for previous BP summary on the OMB's completion of its review of CBP's 10+2 proposed rule.

See ITT's Online Archives or 11/28/07 news, 07112810, for BP summary of the discussion of CBP's 10+2 proposed rule at the November 16, 2007 COAC meeting.

See ITT's Online Archives or 01/08/07 news, 07010805, for BP summary of CBP's request for comments on its 10+2 draft (strawman) proposal.

See ITT's Online Archives or 12/13/06 news, 06121305, for details of CBP's 10+2 strawman proposal.)

RegInfo.gov summary of CBP's 10+2 proposed rule available at http://www.reginfo.gov/public/do/eoViewRule?ruleID=281302.