COAC Approves Draft Instructions for New CBP 301 Bond Form, Next Up STBs

(Effective January 1, 2012, a new version of the CBP Form 301 is required to be used (with additional activity codes) for continuous and single transaction bonds, along with the new CBP Form 301A (addendum), which is to be used when there are more than two co-principals. Both forms have an expiration date of 03/31/2014. U.S. Customs and Border Protection (CBP) has stated that it will no longer accept the old 301 bond forms that have an expiration date of 12/31/2010.¹)

New 301 Bond Form’s Shortcomings Can Be Addressed with New Instructions

The COAC Bond Committee stated that the new bond form has shortcomings, and there have been instances of bond rejections in several ports as a consequence. The Committee states that once the new instructions are officially approved and issued, this incidence of rejections should dramatically decrease.

(They note that among the problems with the new form is the listing of three activity codes that are not in the regulations and cannot be enforced. As the Office of Management and Budget (OMB) takes up to a year to approve a new form, the best approach was thought to be a revision of the instructions.)

New Instructions Would Replace Inconsistent Port Directives

The Bond Committee also stated that new, clearer procedural instructions were needed as over the years, CBP ports have independently issued their own instructions to supplement the instructions on the CBP Form 301, which were often inconsistent among the ports.

CBP officials lauded the efforts of the Bond Committee in working with CBP to update the CBP Form 301 Bond instructions to make them clearer and more useful, stated that it was a valuable exercise, and reflected CBP's interest in working in partnership with the trade.

Bond Subcommittee to Look at STB Centralization Next

The COAC Bond Subcommittee next plans to work with CBP officials on a plan to centralize the Single Transaction Bond (STB) system and process, which would implement the recommendation outlined in the DHS-OIG report from June 2011 entitled "Efficacy of Customs and Border Protection's Bonding Process." CBP will work with the trade to address several of the recommendations contained in this report on STBs.

(They noted the DHS OIG report found that 60% of the STBs sampled would have resulted in a loss of revenue to CBP had the agency needed to act on the bond, and that the centralization of STB policy was needed. See ITT's Online Archives 11121609 for summary of OIG report as discussed at the December 7, 2011 COAC meeting, which also stated that CBP was interested in starting a STB centralization pilot fairly soon.

See ITT's Online Archives 12012411 for summary of CBP amending a 2001 Memo to say that STBs may be used for informals that use a CBP Form 3461.

See ITT's Online Archives for other summaries to date from the February 21, 2012 Advisory Committee on Commercial Operations of Customs and Border Protection (COAC) meeting (1) ACE funding crunch, ACE fixes, the ACE Simplified Pilot for air cargo and ACE Simplified Summary 12022319, (2) Draft Criteria for Brokers to Pre-Certify Importers for the Importer Self Assessment (ISA) program 12022425, and (3) Plans for an ANPR on the rewrite of the Broker Part 111 regulations 12022733.)

¹Changes in Section II of the new CBP Form 301 (Customs Bond) include the listing of the following activity codes:

• Airport security bond (code 11)
• International Trade Commission (ITC) exclusion bond (code 12)
• In-Bond Export Consolidator Bond (code 14)
• Intellectual Property Rights (IPR) (code 15)
• Importer Security Filing (ISF) (code 16)
• Marine Terminal Operator -continuous bond only- (code 17)

Other changes are contained in Sections II and III of CBP Form 301 such as (partial list):

• Space for the broker filer code and surety reference number is provided at the top of the form.
• The form identifies Activity Codes 2 (Custodian of bonded merchandise), 3a (IIT), 4 (FTZ), and 17 (MTO) as “continuous bond only” activity codes. (“STB only” would continue to be noted for activity codes 6-10.)
• Activity Code 4 is described as “foreign trade zone,” rather than “foreign trade zone operator.”
• The “complete name” of all trade names or unincorporated divisions that will be permitted to obligate the bond needs to be listed.
• The physical address (as opposed to just the address) of the principal is required. In addition, instead of providing for a second “principal”, a second entity is called a “co-principal”. The physical address of this second co-principal and the surety (and any co-surety) is also required.
• Instead of requiring the seals of the principal(s) and surety(s) to be imprinted on the form, the form would have a check box to indicate that these entities have a seal in accordance with regulations.

(See ITT’s Online Archives 11121566 for summary of the new form’s changes, with links to CBP Form 301 and 301A.)

COAC Bond Subcommittee CBP Report (dated 02/13/12) available here.

COAC Bond Subcommittee Trade Executive Summary (dated 02/12/12) available here.