Prince Law Group News

Recently CBP has implemented a new policy extending the role of Focused Assessments (”FA”).   Over the past few months, companies undergoing a FA that are not C-TPAT members are being subjected to a Supply Chain Security Observation (”SCSO”) and required to complete a C-TPAT type questionnaire.  The obvious issue with such a broadening of power under a FA is that membership in C-TPAT is technically voluntary while complying with a FA is mandatory. 

Although CBP has historically used various methods to persuade companies to join C-TPAT, this new approach appears to be far reaching for the Regulatory Audit division of Customs and beyond even CBP’s self-disclosed purpose in conducting a FA.  In CBP’s Focused Assessment Manual, CBP expressly provides that with the implementation of C-TPAT, the Regulatory Audit members will not use the results of a FA to determine the level of cargo examinations to which a company should be subjected.  CBP’s own guidelines set forth the risk factors (e.g., value, classification, ADD/CVD, transshipment, etc.) to be considered during a FA and those risk factors do not include supply chain security. 

At this point, it appears as though all companies have complied with CBP’s request to conduct a SCSO as part of a FA.  If you have received a SCSO request from CBP and would like further guidance on this issue, please contact Prince Law Group.     

Mattel has agreed to pay the U.S. Consumer Product Safety Commission (CPSC) a $2.3 million fine stemming from the 2007 recall of toys that contained dangerous levels of lead.  CPSC has never imposed such a steep fine for allegations of importing or distributing a regulated product.   

CBP to require all imports of containers with residual chemicals to be manifested and entered in compliance with all Customs laws.  After months of anticipation, in the July 17, 2009 Customs Bulletin, U.S. Customs and Border Protection (“CBP”) issued its final determination regarding the modification of Letter Ruling HQ 113129 (Jul. 12, 1994) which had previously provided for the treatment of containers with residual chemicals as Instruments of International Traffic (IIT) and therefore not subject to entry.  See Customs Bulletin, Vol. 43 No. 28 (Jul. 17, 2009).  Effective, August 16, 2009, all entries of containers with residual chemicals, regardless of the amount (no de minimis exception), must be classified, manifested, and entered in compliance with general Customs laws. 

CBP is implementing this change in order to be consistent with CBP’s treatment of similar commodities (petroleum slops) and to protect the safety and security of CBP personnel who examine the containers.  CBP received fourteen (14) industry comments regarding the proposed change.  Most notably, a number of commenters argued that requiring the filing of an entry for empty containers (with residue) is a new requirement and therefore must be submitted to OMB as a new information collection request and/or is a new significant rulemaking that requires publication and notice in the Federal Register. CBP disagreed, stating the new requirement is merely bringing empty containers (with residue) in line with customs legal requirements from which they were incorrectly exempted in the past.       

We recommend the all importers immediately work with their logistics team to determine the impact of implementing processes and procedures necessary to file entries on each empty container.  Given the Effective Date of August 16, 2009, there is only a short window of time to address this change.  We anticipate there will be an industry effort to counter this new requirement, or at a minimum, a request to move-back the Effective Date.

PLG is currently assisting several companies as they make operational adjustments in order to comply with this new regulation and will gladly assist your company as well. 

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