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Proposed Rule2026-02961

Electronic Bond Transmission

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Published

February 13, 2026

Issuing agencies

Homeland Security DepartmentU.S. Customs and Border Protection

Abstract

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.

Full Text

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<title>Federal Register, Volume 91 Issue 30 (Friday, February 13, 2026)</title>
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[Federal Register Volume 91, Number 30 (Friday, February 13, 2026)]
[Proposed Rules]
[Pages 6986-7042]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-02961]

[[Page 6985]]

Vol. 91

Friday,

No. 30

February 13, 2026

Part II

Department of Homeland Security

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U.S. Customs and Border Protection

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19 CFR Parts 4, 10, 11, et al.

Electronic Bond Transmission; Proposed Rule

Federal Register / Vol. 91, No. 30 / Friday, February 13, 2026 /
Proposed Rules

[[Page 6986]]

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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.

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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: <a href="http://www.regulations.gov">http://www.regulations.gov</a>.
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 <a href="http://www.regulations.gov">http://www.regulations.gov</a>, 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 <a href="http://www.regulations.gov">http://www.regulations.gov</a>.

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
<a href="/cdn-cgi/l/email-protection#5a352e3835343e1a39382a743e3229743d352c"><span class="__cf_email__" data-cfemail="ef809b8d80818baf8c8d9fc18b879cc1888099">[email&#160;protected]</span></a> or (202) 384-8935. For operational questions,
contact Kara Welty, Chief, Revenue Protection Branch, Revenue Division,
Office of Finance, at <a href="/cdn-cgi/l/email-protection#3d767c6f7c1373136a787169647d7e7f6d1379756e137a726b"><span class="__cf_email__" data-cfemail="f0bbb1a2b1debedea7b5bca4a9b0b3b2a0deb4b8a3deb7bfa6">[email&#160;protected]</span></a> 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

[[Page 6987]]

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 <a href="https://www.govinfo.gov/app/details/GOVPUB-HS-PURL-gpo15744">https://www.govinfo.gov/app/details/GOVPUB-HS-PURL-gpo15744</a> (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.
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\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).
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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

[[Page 6988]]

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.
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\2\ Out of 599,342 bonds transmitted to CBP in 2023, only 37
were submitted to the Revenue Division by email or mail.
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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 <a href="https://www.cbp.gov/document/technical-documentation/ace-cbp-downtime-policy-trade">https://www.cbp.gov/document/technical-documentation/ace-cbp-downtime-policy-trade</a>. 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 Sec. 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: <a href="https://www.cbp.gov/trade/ace/catair">https://www.cbp.gov/trade/ace/catair</a>. 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 <a href="https://www.cbp.gov/trade/automated/cargo-systems-messaging-service">https://www.cbp.gov/trade/automated/cargo-systems-messaging-service</a> 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
Sec. 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

[[Page 6989]]

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 Sec. 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 Sec. 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.
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\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.
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CBP would also permit transmission of five bond riders, as
described in proposed Sec. 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 Sec. 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\
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\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.
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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 Sec. 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 Sec. 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 Sec. 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

[[Page 6990]]

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: <a href="https://www.cbp.gov/trade/priority-issues/revenue/bonds/bond-centralization-program">https://www.cbp.gov/trade/priority-issues/revenue/bonds/bond-centralization-program</a>. 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 Sec. 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 Sec. 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 Sec. 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 Sec. 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 Sec. 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 Sec. 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 Sec. 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
Sec. 113.1 to a revised Sec. 113.2, and to add a new ``Definitions''
section for Sec. 113.1. The proposed Sec. 113.1 will define the
following terms:
<bullet> Activity code: a CBP-assigned number identifying a set of
terms and conditions for a bond securing a particular activity or
transaction.
<bullet> 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).
<bullet> Bond: a contract between principal and surety, or an
agreement by a principal secured by cash in lieu of

[[Page 6991]]

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.
<bullet> Bond amount adjustment: a retroactive amendment of a
single transaction bond's amount or limit of liability, made in
accordance with Sec. 113.23 of proposed part 113.
<bullet> Bond rider: a prospective amendment of a bond, made in
accordance with proposed part 113.
<bullet> 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.
<bullet> 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.
<bullet> 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.
<bullet> 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.
<bullet> Principal: a person, business firm, government agency, or
other organization, as identified by a CBP filing identification
number, as detailed in Sec. 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).
<bullet> Revenue Division: the centralized office within the CBP
Office of Finance responsible for bond processing and retention for all
continuous and single transaction bonds.
<bullet> Single Transaction Bond (STB): a bond securing one
transaction or activity covered by a single activity code.
<bullet> 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).
<bullet> 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).
<bullet> Term bond: a bond securing one or more transactions or
activities with the same activity code over a defined period of time.
<bullet> 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 Sec. 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 Sec. 113.2. CBP would
update the introductory text of proposed Sec. 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
Sec. 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 Sec. 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,
Sec. 113.4 provides an explanation for bonds and carnets. CBP proposes
to remove the definition for ``CBP bond'' from Sec. 113.4, as a new
definition for ``bond'' has been proposed in Sec. 113.1, obviating the
need for clarification in Sec. 113.4.
Lastly, CBP proposes to add two new provisions in subpart A. First,
in Sec. 113.5, CBP proposes to add a new provision specifying CBP
authority to require a bond by specific instruction. The language of
the proposed Sec. 113.5 is modeled on the existing language in Sec.
113.14, which CBP proposes to remove and replace with a new provision.
Second, CBP proposes to add a new provision in Sec. 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.

[[Page 6992]]

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 Sec. 113.11, CBP proposes to replace the existing provisions
detailing bond application requirements with new requirements for
electronic bond transmission. Proposed Sec. 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 Sec. 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 Sec. 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 Sec. 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 Sec. 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:
<bullet> Neutrality bond (Activity Code 9, bond terms and
conditions found in current and proposed Sec. 113.71);
<bullet> Intellectual Property Rights (IPR) bond (Activity Code 15,
terms and conditions found in current and proposed Sec. 113.70);
<bullet> Any bond with two or more sureties, pursuant to proposed
Sec. 113.37(d)(1), unless all sureties on the bond share the same ACE
filer code;
<bullet> Any re-insurance agreement, pursuant to proposed Sec.
113.37(d)(2);
<bullet> Cash in lieu of surety pursuant to current and proposed
Sec. 113.40. Such bonds must be transmitted by the principal on the
bond.
<bullet> Bonds without surety or cash deposit. Such bonds must be
transmitted by the principal on the bond.
<bullet> 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 Sec.
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 Sec.
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 Sec. 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 Sec. 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

[[Page 6993]]

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, Sec. 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
Sec. 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 Sec. 113.13 as
``Sufficiency of bond.''
This document proposes minor amendments to Sec. 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 Sec. 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 Sec.
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 Sec. 113.13(b)(5) with the
word ``obligations'' to be consistent with terminology used elsewhere
in part 113. Lastly, in Sec. 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 Sec. 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 Sec. 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 Sec. 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 Sec. 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 Sec. 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 Sec. 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
Sec. 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 Sec. 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 Sec. 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 Sec.
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 Sec. 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

[[Page 6994]]

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 Sec. 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 Sec. 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
Sec. 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
Sec. 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 Sec. 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 Sec.
113.12(b).
Finally, CBP proposes to amend Sec. 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 Sec. 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 Sec. 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 Sec. 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.
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\6\ In addition, Sec. 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.
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Thus, the proposed Sec. 113.21(a) requires that bonds and riders
transmitted to CBP identify principals, authorized users, and sureties
as follows:
<bullet> 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.
<bullet> 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.
<bullet> Surety: each surety obligated on the bond would be
required to be identified by its CBP-assigned three-digit surety code,
pursuant to proposed Sec. 113.37. The transmission would also be
required to include the surety-assigned identification number for the
surety agent on the bond, pursuant to Sec. 113.37(c)(1). Lastly, if
two or more sureties are identified on the bond, the transmission would
be required to comply with Sec. 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 Sec. 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:
<bullet> Type: The type of bond being transmitted, i.e., STB or
continuous bond.
<bullet> Designation: The bond designation type corresponding to
the purpose of the transmission--new bond, additional STB, substitution
bond (pursuant to Sec. 142.4(b)(2)), superseding bond (pursuant to
Sec. 142.4(b)(1)), STB bond amount adjustment, bond rider, void an
unobligated STB, or termination of an existing bond.
<bullet> 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.

[[Page 6995]]

<bullet> Amount: The amount of the bond, stated in whole U.S.
dollars.
<bullet> Date of execution: The date the bond is transmitted to CBP
via EDI or by email.
<bullet> Effective date of a continuous bond: This is the first
date on which the bond may be obligated, subject to the provisions of
Sec. 113.26. Because an STB is effective for the identified
transaction, regardless of the date, the effective date for STBs would
not be required.
<bullet> 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, Sec. 113.22 requires witnesses to the signatures of
each party to a bond. Because bonds submitted consistent with Sec.
113.11 would not need signatures, witnesses would no longer be required
for these bonds. Therefore, CBP proposes to remove and reserve Sec.
113.22 in its entirety.
CBP proposes to update Sec. 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 Sec. 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 Sec. 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 Sec. 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
Sec. 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 Sec. 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 Sec. 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 Sec. 113.24(c) lists required information that is specific to
the type of bond rider being transmitted. This information would
include:
<bullet> 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 Sec. 113.26.
<bullet> 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 Sec. 113.26.
CBP proposes to remove existing Sec. 113.25, as seals will not be
required for electronically transmitted bonds.
CBP proposes to update Sec. 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
Sec. 113.26(a) with the continuous bond provision in existing Sec.
113.26(c), forming a new provision addressing the effective date of
term bonds in Sec. 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
Sec. 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

[[Page 6996]]

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 Sec. 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 Sec. 113.30, CBP proposes to replace references to the paper bond
process with references to electronic bond transmission. CBP proposes
to clarify Sec. 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 Sec. 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 Sec. 113.40. CBP
further proposes to amend Sec. 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 Sec. 113.35, which permits individuals to act
as sureties, and, as a result, paragraph (b)(2) would not be needed.
In Sec. 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 Sec.
113.21.
CBP is proposing to revise the requirements in Sec. 113.33
applicable to corporate principals. In Sec. 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 Sec.
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 Sec. 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 Sec. 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 Sec. 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 Sec. 113.23,
and that authorized users are not liable for the transactions of other
principals or authorized users on the bond.

[[Page 6997]]

CBP proposes to remove Sec. 113.35 and Sec. 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 Sec. 113.37. Alternatively, principals may elect to
secure their transactions and activities with cash in lieu of surety,
pursuant to Sec. 113.40.
CBP proposes to rename Sec. 113.37 from ``Corporate sureties'' to
``Surety requirements,'' because the elimination of individual sureties
means that all sureties are corporate sureties. In Sec. 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 Sec. 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 Sec. 113.21. In addition, each surety will be required to establish
and maintain an ACE Portal account.\8\
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\8\ Instructions on how companies may apply for an ACE Secure
Data Portal account can be found at: <a href="https://www.cbp.gov/trade/automated/getting-started/portal-applying">https://www.cbp.gov/trade/automated/getting-started/portal-applying</a>.
---------------------------------------------------------------------------

In Sec. 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 Sec. 113.21(a)(2)(ii) now details the electronic
requirement. Instead, Sec. 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
Sec. Sec. 113.37(d), (f) and (g). Under proposed Sec. 113.37(c), a
power of attorney must be transmitted to CBP using the ACE Portal,
replacing the requirement in existing Sec. 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 Sec. 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 Sec. 113.37(d) has been moved to Sec. 113.37(c) in the
proposed regulations. CBP proposes to eliminate Sec. 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 Sec. 113.37(f),
which covers requirements for bonds with two or more sureties, the new
Sec. 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 Sec. 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 Sec. Sec. 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 Sec.
223.11 of title 31, Bureau of the Fiscal Service Regulations (31 CFR
223.11), CBP has added a new paragraph Sec. 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 Sec. 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 Sec. 113.38(a), which corresponds to a new bond condition for
all bonds proposed in Sec. 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
Sec. 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 Sec.
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

[[Page 6998]]

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 Sec.
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 Sec. 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 Sec. 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:
<bullet> Required email transmission: requiring the surety to
transmit all bonds via email (barred from EDI transmission);
<bullet> 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;
<bullet> Time limitations: limiting the surety's ability to
underwrite bonds on a daily, weekly, monthly, or some other periodic
basis;
<bullet> Volume limitations: limiting the total number of active
bonds a surety may underwrite at any one time;
<bullet> 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;
<bullet> Transaction or activity limitations: limiting the activity
codes for which a surety may underwrite a bond;
<bullet> Geographic limitations: limiting a surety to underwriting
bonds for activities or transactions in specific locations or ports of
entry;
<bullet> Commodity limitations: limiting a surety to underwriting
bonds for activities or transactions involving specific merchandise or
commodities (e.g., bonds for steel products only);
<bullet> Temporary suspension of a surety: CBP will accept no new
bonds from this surety for a defined period of time;
<bullet> 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 Sec. 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
<a href="https://www.fiscal.treasury.gov/surety-bonds/list-certified-companies.html">https://www.fiscal.treasury.gov/surety-bonds/list-certified-companies.html</a>.
---------------------------------------------------------------------------

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

[[Page 6999]]

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 Sec. 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 Sec. 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 Sec. 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 Sec. 113.75.
---------------------------------------------------------------------------

6. Proposed Amendments to Subpart G
CBP proposes to renumber the existing Sec. 113.61 to be Sec.
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 Sec. 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 Sec. 113.61(a)(5), incorporating the proposed
delinquency interest provision in Sec. 113.38(a), and the principals'
and sureties' agreement to pay such interest, into the bond itself. In
proposed Sec. 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 Sec. 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 Sec. 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
Sec. 113.61(c) that the terms and conditions required by CBP for a
specific bond control if they conflict with provisions of proposed
Sec. 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 Sec. Sec. 113.62 through 113.75, to provide
the corresponding activity code for each bond, and to identify
consolidated bonds. Further, CBP proposes to update Sec. 113.62 to

[[Page 7000]]

clarify that an active continuous bond is obligated at the time entry
is filed.
CBP also proposes to amend Sec. 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 Sec. 113.74.
In addition, CBP proposes to amend Sec. 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 Sec. 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 Sec. 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:
<bullet> Sec. 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.
<bullet> Sec. 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.
<bullet> Sec. 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.
<bullet> Sec. 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.
<bullet> Sec. 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.
<bullet> Sec. 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.
<bullet> Sec. 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.
<bullet> Sec. 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.
<bullet> Sec. 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.
<bullet> Sec. 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.

[[Page 7001]]

<bullet> Sec. 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 Sec.
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
<bullet> Sec. 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.
<bullet> Sec. 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.
<bullet> Sec. 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.
<bullet> Sec. 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.
<bullet> Sec. 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.
<bullet> Sec. 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.
<bullet> Sec. 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.
<bullet> Sec. 10.61 Withdrawal permit. CBP proposes to replace
references to the paper process with references to the electronic
process in part 113.
<bullet> Sec. 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.
<bullet> Sec. 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.
<bullet> Sec. 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.
<bullet> Sec. 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.
<bullet> Sec. 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.
<bullet> Sec. 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.
<bullet> Sec. 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.
<bullet> Sec. 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.
<bullet> Sec. 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
<bullet> Sec. 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.
<bullet> Sec. 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.
<bullet> Sec. 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
<bullet> Sec. 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.
<bullet> Sec. 12.8 Inspection; bond; release. CBP proposes
amendments to paragraph (a) to replace references to the paper process
with references to the electronic

[[Page 7002]]

process in part 113. Additionally, CBP proposes a minor technical
correction to replace a reference to ``customs'' to ``CBP''.
<bullet> Sec. 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.
<bullet> Sec. 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.
<bullet> Sec. 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.
<bullet> Sec. 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.
<bullet> Sec. 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.
<bullet> Sec. 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.
<bullet> Sec. 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.
<bullet> Sec. 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.
<bullet> Sec. 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.
<bullet> Sec. 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.
<bullet> Sec. 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.
<bullet> Sec. 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
<bullet> Sec. 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.
<bullet> Sec. 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.
<bullet> Sec. 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.
<bullet> Sec. 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
<bullet> Sec. 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.
<bullet> Sec. 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.
<bullet> Sec. 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.
<bullet> Sec. 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.
<bullet> Sec. 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.
<bullet> Sec. 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.

[[Page 7003]]

Part 24
<bullet> Sec. 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.
<bullet> Sec. 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
<bullet> Sec. 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
<bullet> Sec. 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.
<bullet> Sec. 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.
<bullet> Sec. 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 (Sec. Sec. 113.27 and 113.51, respectively).
<bullet> Sec. 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.
<bullet> Sec. 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.
<bullet> Sec. 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
<bullet> Sec. 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 Sec. 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
<bullet> Sec. 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.
<bullet> Sec. 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.
<bullet> Sec. 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.
<bullet> Sec. 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.
<bullet> Sec. 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.
<bullet> Sec. 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 Sec. 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
<bullet> Sec. 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
<bullet> Sec. 125.42 Cancellation of liability. CBP proposes
amendments to remove references to the paper process and the CBP Form
301.
Part 127
<bullet> Sec. 127.37 Insufficient proceeds. CBP proposes
amendments to paragraph (a) to remove references to the paper process
and the CBP Form 301.
Part 128
<bullet> Sec. 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
<bullet> Sec. 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,

[[Page 7004]]

and to change ``Customs'' to ``CBP'' where appropriate.
Part 133
<bullet> Sec. 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.
<bullet> Sec. 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.
<bullet> Sec. 133.26 Demand for redelivery of released
merchandise. CBP proposes amendments to remove a reference to the CBP
Form 301.
<bullet> Sec. 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.
<bullet<ls-thn-eq> Sec. 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.
<bullet<ls-thn-eq> Sec. 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.
<bullet<ls-thn-eq> Sec. 113.48 Demand for redelivery of released
articles. CBP proposes amendments to remove a reference to the CBP Form
301.
Part 134
<bullet<ls-thn-eq> Sec. 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 Sec.
134.53 where appropriate.
Part 141
<bullet<ls-thn-eq> Sec. 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.
<bullet<ls-thn-eq> Sec. 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.
<bullet<ls-thn-eq> Sec. 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.
<bullet<ls-thn-eq> Sec. 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.
<bullet<ls-thn-eq> Sec. 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.
<bullet<ls-thn-eq> Sec. 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.
<bullet<ls-thn-eq> Sec. 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.
<bullet<ls-thn-eq> Sec. 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.
<bullet<ls-thn-eq> Sec. 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.
<bullet<ls-thn-eq> Sec. 141.92 Waiver of invoice requirements. CBP
proposes amendments to paragraph (c) to remove references to the CBP
Form 301.
<bullet<ls-thn-eq> Sec. 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
<bullet<ls-thn-eq> Sec. 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.
<bullet<ls-thn-eq> Sec. 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.
<bullet<ls-thn-eq> Sec. 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
<bullet<ls-thn-eq> Sec. 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.
<bullet<ls-thn-eq> Sec. 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.
<bullet<ls-thn-eq> Sec. 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.
<bullet<ls-thn-eq> Sec. 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.

[[Page 7005]]

<bullet<ls-thn-eq> Sec. 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.
<bullet<ls-thn-eq> Sec. 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.
<bullet<ls-thn-eq> Sec. 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.
<bullet<ls-thn-eq> Sec. 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
<bullet<ls-thn-eq> Sec. 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.
<bullet<ls-thn-eq> Sec. 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.
<bullet<ls-thn-eq> Sec. 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.
<bullet<ls-thn-eq> Sec. 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
<bullet<ls-thn-eq> Sec. 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
<bullet<ls-thn-eq> Sec. 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
<bullet<ls-thn-eq> Sec. 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 Sec. 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
<bullet<ls-thn-eq> Sec. 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.
<bullet<ls-thn-eq> Sec. 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.
<bullet<ls-thn-eq> Sec. 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
<bullet<ls-thn-eq> Sec. 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
<bullet<ls-thn-eq> Sec. 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
<bullet<ls-thn-eq> Sec. 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

[[Page 7006]]

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). <a href="https://www.cbp.gov/sites/default/files/2024-06/cbp_fy_2023_trade_fact_sheet_06.2024.pdf">https://www.cbp.gov/sites/default/files/2024-06/cbp_fy_2023_trade_fact_sheet_06.2024.pdf</a>. 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\
----------------------------------------------------------------------------------------------------------------
Single transaction bonds Continuous bonds
Activity code Activity code name ----------------------------------------------------------------------------
Count Total amount 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 N/A N/A 7,018 615,965,000
Merchandise.
3............. International 324 59,339,063 8,379 1,211,290,000
Carrier.
3A............ Instruments of N/A N/A 965 34,247,000
International
Traffic.
3A3........... Combo 3 & 3A....... 0 0 30 16,540,000
4............. Foreign Trade Zone N/A N/A 1,369 588,040,000
(FTZ).
5............. Public Gauger...... 0 0 37 1,720,000
6............. Wool & Fur Products 0 0 N/A N/A
Labeling Acts
Importation.
7............. Bill of Lading..... 0 0 N/A N/A
8............. Detention of 0 0 N/A N/A
Copyrighted
Material.
9............. Neutrality......... 0 0 N/A N/A
10............ Court Cost for 252 122,136 0 0
Condemned Goods.
11............ Airport Security N/A N/A 1,700 84,563,000
Bond.
12............ International Trade 0 0 0 0
Commission (ITC).
14 *.......... In-Bond Export N/A N/A 0 0
Consolidation
(IBEC).
15............ Intellectual 0 0 35 505,500
Property Rights
(IPR).

[[Page 7007]]

16............ Importer Security 90,944 909,440,000 87 3,930,000
Filing (ISF).
17............ Marine Terminal N/A N/A 39 4,500,000
Operator.
19............ User Fee Facility.. 0 0 1 4,100,000
20............ Vehicle Export 0 0 0 0
Consolidator.
----------------------------------------------------------------------------
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 eBond and resulting centralization of STB processing and
storage would mitigate some of the risks for sureties and afford better
protection of the revenue for CBP.
---------------------------------------------------------------------------

\24\ Industrial Economics, Inc. Report for CBP, ``Customs Bonds;
eBond Baseline Analysis,'' dated August 9, 2019. The document is
available in the docket.
---------------------------------------------------------------------------

The information submitted in the paper bond application for
continuous import bonds includes the general nature of the merchandise,
as well as an estimate of the total amount of customs duties and taxes
due to CBP for all merchandise imported by the principal(s) and
authorized user(s) in the previous 12 months. The estimate is then used
to calculate the bond amount. In the event that the principal(s) and
authorized user(s) did not import any merchandise in the previous 12
months, a statement of the estimated duties and taxes for the next 12-
month period is required. Processing for continuous bonds differs from
STBs and is centralized. Continuous bonds were entered manually into
the Automated Commercial System (ACS), the precursor to ACE, and are
now entered into ACE itself, when not filed via eBond, by personnel in
the Revenue Division.
EBond is an automated system providing for the transmission of
electronic bond contracts, in lieu of paper bonds.\25\ The eBond system
allows only sureties or their authorized agent, rather than other
parties to the transaction, to submit both STBs and continuous bonds
electronically and without the use of a paper CBP Form 301. The
electronic nature of eBond and the fact that it is usable outside of
business hours eliminates many processing delays. As of 2024, as part
of the eBond NCAP test, 99% of bonds are filed via eBond (see Table
2).\26\ For those importers or sureties not yet using the eBond system,
paper continuous

[[Page 7008]]

bonds can still be submitted via mail or email to the Revenue Division,
pursuant to the regulations, though as of January 1, 2015, 99% of all
continuous bonds not submitted with eBond were submitted via email.\27\
Bond information from the paper application which has been sent by mail
or email is then input into the eBond system as part of processing.
---------------------------------------------------------------------------

\25\ 79 FR 70881 (November 28, 2014).
\26\ Bond information provided by CBP's Revenue Division subject
matter expert on March 5, 2020.
\27\ A small number of STBs continued to be submitted on paper
at the ports.

Table 2--Bonds Filed Annually From 2015-2024
----------------------------------------------------------------------------------------------------------------
Number of bonds
Year transmitted via Number of bonds Total bonds filed
eBond input by CBP
----------------------------------------------------------------------------------------------------------------
2015................................................... 185,805 5,594 191,399
2016................................................... 432,453 2,657 435,110
2017................................................... 586,511 1,283 587,794
2018................................................... 555,006 93 555,099
2019................................................... 570,139 110 570,249
2020................................................... 537,781 99 537,880
2021................................................... 589,775 57 589,832
2022................................................... 604,916 117 605,033
2023................................................... 599,305 37 599,342
2024................................................... 571,982 39 572,021
--------------------------------------------------------
Total.............................................. 5,233,673 10,086 5,243,759
----------------------------------------------------------------------------------------------------------------
* Source: ACE.

The eBond system allows sureties to electronically transmit bond
information into ACE. By doing so, the bond can be linked to the
transaction or activity it secures. The eBond system allows bonds to be
submitted at any time, including outside of CBP's business hours. So
long as all required data elements are submitted, an eBond can be used
immediately, eliminating delays due to mailing, correction of errors or
omitted data elements, and data entry.
Costs of the Rule
Pre-Regulatory Costs
CBP built the eBond system in preparation for the eBond test in
2015. In addition, the processing of continuous bonds was centralized
to the Revenue Division in 2015, so CBP is already prepared to
implement eBond. Because eBond is a part of ACE, the costs to develop
the system are not tracked separately, but CBP estimates these pre-
regulatory and pre-test costs to have been approximately $3,600,000,
based on the estimated labor costs attributed to this development.\28\
Because this information was provided in 2020 dollars, CBP adjusted the
estimate for inflation and estimates that the cost to develop and
implement eBond in ACE was approximately $4,257,058 in 2024 U.S.
dollars.\29\ The eBond system was developed and paid for in preparation
for the 2015 eBond test. As they are related to this rule, CBP reports
these in the total costs in this analysis, for transparency purposes.
However, CBP considers these are sunk costs that cannot be avoided by
forgoing the rule.
---------------------------------------------------------------------------

\28\ This estimate is based on the original estimate obtained
for system development costs to CBP and was reported in
undiscounted, 2020 dollars. Source: Email correspondence with CBP's
Office of Trade Transformation on June 19, 2020, based on ACE
development budget information.
\29\ CBP used the GDP implicit price deflator change from 2020
Q1 to 2024 Q1 which was approximately 18.25%. CBP multiplied this
percent change by the 2020 cost estimate to reflect the cost
estimate in 2024 U.S. dollars. CBP referenced the GDP implicit price
deflator from the Federal Reserve Bank of St. Louis Economic
Research Data located publicly here: <a href="https://fred.stlouisfed.org/series/GDPDEF">https://fred.stlouisfed.org/series/GDPDEF</a>.
---------------------------------------------------------------------------

Set-Up Costs
To use eBond, a surety must obtain a filer code from CBP, which is
separate from the surety code all sureties must already have. There is
no fee for a filer code, but it may take a week or so for CBP to
provide due to internal coordination among CBP offices. Once the surety
has a code, it may file bonds via eBond, the CBP-approved EDI. Sureties
must have an ACE account/profile before securing their filer code.
However, sureties generally already have ACE accounts for other
activities and would not need to establish a new account to use eBond.
Ongoing System Maintenance Costs
The eBond system is a part of core ACE development, and as a
result, its maintenance costs are not tracked separately.\30\ ACE
development and maintenance are ongoing and would take place regardless
of whether or not eBond were implemented. As a result, CBP does not
consider eBond maintenance a significant additional cost to CBP.
---------------------------------------------------------------------------

\30\ Information provided by CBP's Office of Trade
Transformation subject matter expert on June 15, 2020.
---------------------------------------------------------------------------

Costs to Sureties
As stated above, to use eBond a surety must have a filer code and
an ACE account. The vast majority of sureties already have an ACE
account and using eBond does not require any additional programming or
software. They may obtain a filer code, which is separate from the
surety code provided by the Revenue Division, by applying to CBP. It
may take up to a week for CBP to provide the filer code due to
coordination requirements between offices. Once the surety has its
filer code, using eBond is the same as filling in a CBP Form 301, but
electronic. Instead of typing information into the form and sending it
by email to the Revenue Division, the surety would fill in the
electronic fields and submit the information into ACE, where the system
validates and stores the data submitted, and the information can be
retrieved for review by CBP. Whereas with a form sent by email, Revenue
Division employees would process the form and manually input the
information into ACE, eBond allows bond information to be automatically
added to ACE. So long as the eBond system does not detect any errors,
such as missing information or an incorrectly entered filer code, the
bond is usable immediately. Because sureties generally have an ACE
account already and because eBond does not require additional
information relative to the CBP Form 301, CBP does not

[[Page 7009]]

believe sureties would face additional costs to submit bond
information.
Delinquency Interest
The proposed rule institutes delinquency interest to be paid by the
surety in the event that the surety fails to pay any amount due to CBP
under the surety's bond, excluding liquidated damages and penalties
assessed against the bond principal, within 30 days of the date CBP
notifies the surety of the amount due.\31\ Interest would accrue by 30-
day periods. Although some sureties and importers would likely face
increased costs due to this additional interest, CBP typically only
includes costs of remaining in compliance with regulations in the
analysis, not the costs that result from failing to comply with
established regulations. Improving enforcement with existing
regulations is a benefit of the rule, not a cost.
---------------------------------------------------------------------------

\31\ Proposed 19 CFR 113.38.
---------------------------------------------------------------------------

Cost Savings of the Rule
Automation of Bond Processing in ACE
Paper bonds are filled out and sent in or filed by sureties and
must be manually entered into the eBond system by CBP personnel.\32\
Upon receipt, CBP reviews the paper bonds checking for errors, and if
there are no errors, CBP transcribes each individual form into the
eBond system. CBP estimates that typically reviewing a bond requires
CBP personnel about five minutes and transcribing the paper bond into
eBond takes about another five minutes.\33\ Although it only takes
around ten minutes for CBP to review and transcribe each individual
form into the eBond system, the volume of forms received each day leads
to delays in the processing of paper bonds. For instance, in the
scenario that a paper bond is submitted, and no errors are identified
during CBP review, it can take up to five days from when the surety
submits the paper bond to when CBP actually transcribes the paper bond
into the eBond system. Additionally, if errors are identified on the
paper bond during CBP review, the filer must correct them, and CBP must
re-process the form, which further delays the processing of the paper
bond into the eBond system. Transcribing a paper bond is inherently
vulnerable to errors and processing delays. Bonds are only reviewed and
transcribed during business hours, and manual entry by CBP personnel
can lead to transcription errors.
---------------------------------------------------------------------------

\32\ As stated above, before eBond, importers often filled in
STBs pre-signed by the surety, though sureties filled out continuous
bonds.
\33\ Paperwork Reduction Act Supporting Statement for CBP Form
301, accessed on March 27, 2025, publicly available at <a href="https://www.reginfo.gov/public/do/PRAViewDocument?ref_nbr=202009-1651-004">https://www.reginfo.gov/public/do/PRAViewDocument?ref_nbr=202009-1651-004</a>.
According to this supporting statement CBP assumes that CBP staff
incur a ten-minute time burden to review and process CBP Form 301s.
CBP assumes that automating the bond transcribing process saves CBP
staff half (five minutes of time savings) of the ten-minute time
burden listed in the supporting statement because they no longer
need to manually transcribe bonds into ACE, but staff still incur a
time burden to conduct sufficiency reviews.
---------------------------------------------------------------------------

Processing for continuous bonds was centralized at the Revenue
Division in 2015, though the regulations still require bonds outside
the eBond test to be sent using paper, email, or facsimile, and the
information in those transmissions must be transcribed into the eBond
system. For STBs, bonds can be filed at the port or with the Revenue
Division. If the bond is filed at the port, manual processing may take
more time due to operational priorities there. Delays may also occur in
finding and retrieving documents for sufficiency review and other
activities after bonds are in use. Industry participants noted that
problems with processing lags and transcription errors were prevalent
when using paper or forms sent via email.\34\ Since the beginning of
the eBond test in 2015, the vast majority of bonds have been filed via
eBond, which has alleviated many of these concerns (see Table 2 above
for the number of bonds filed via eBond vs. paper during the test
period).
---------------------------------------------------------------------------

\34\ Industrial Economics, Inc. Report for CBP, ``Customs Bonds;
eBond Baseline Analysis,'' dated August 9, 2019. The document is
available in the docket.
---------------------------------------------------------------------------

When a surety submits a bond through eBond, the system immediately
rejects the bond if it encounters certain errors or missing
information. The surety can make corrections and re-submit the bond as
soon as it would like. This functionality significantly reduces
processing times. When paper bonds had to be submitted, returned, and
re-submitted, processing could take up to 15 days, most of which is
wait time rather than active processing time. With eBond, for both the
voluntary test period and regulatory period, these simple corrections
can be made immediately. This also reduces the burden for CBP, as
employees would no longer need to review bonds for completeness and
correctness before processing, or work with sureties to fill in all
necessary information, a process which can take up to 15 days.
Additionally, CBP personnel no longer need to transcribe bond
information into ACE for bonds transmitted via eBond, saving about five
minutes per bond submitted. During the voluntary test period from 2015-
2024,\35\ sureties filed 5,233,673 bonds via the eBond system (see
Table 2 above). To estimate the time savings to CBP from automating the
bond transcribing processing, CBP multiplied the number of bonds filed
each year by the time savings per bond of five minutes (0.083 hours).
In total, CBP expects that during the test period CBP experienced a
total time savings of 436,139 hours or on average 43,614 hours
annually. To estimate the cost savings, CBP multiplied the time savings
each year by the average hourly loaded wage rate for a CBP trade and
revenue employee ($85.50).\36\ CBP estimates that during the test
period, CBP's total cost savings from no longer having to manually
transcribe paper bonds or those sent by email into ACE was
approximately $37.3 million or on average $3.7 million annually. Table
3 displays CBP's estimates for the time and cost savings from 2015-2024
from the eBond test.
---------------------------------------------------------------------------

\35\ Note that the eBond voluntary test period will continue
until the proposed rule goes into effect and is bounded by the year
2024 only for purposes of analysis.
\36\ CBP bases this wage on the FY 2024 salary, benefits,
premium pay, non-salary costs and awards of the national average of
CBP Trade and Revenue positions, which is equal to a GS-11, Step 1.
Source: Email correspondence with CBP's Office of Finance on July
17, 2024.

Table 3--Estimated Time and Cost Savings to CBP during the Test Period, 2015-2024
[Time in hours, cost savings in undiscounted 2024 U.S. dollars]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Number of bonds
Year transmitted via Time savings per Total time Wage rate Total cost
eBond bond savings savings
--------------------------------------------------------------------------------------------------------------------------------------------------------
2015..................................................... 185,805 0.083 15,484 $85.51 $1,324,015
2016..................................................... 432,453 0.083 36,038 85.51 3,081,588
2017..................................................... 586,511 0.083 48,876 85.51 4,179,380
2018..................................................... 555,006 0.083 46,251 85.51 3,954,880

[[Page 7010]]

2019..................................................... 570,139 0.083 47,512 85.51 4,062,715
2020..................................................... 537,781 0.083 44,815 85.51 3,832,138
2021..................................................... 589,775 0.083 49,148 85.51 4,202,638
2022..................................................... 604,916 0.083 50,410 85.51 4,310,531
2023..................................................... 599,305 0.083 49,942 85.51 4,270,548
2024..................................................... 571,982 0.083 47,665 85.51 4,075,848
----------------------------------------------------------------------------------------------
Total................................................ 5,233,673 ................. 436,139 ................. 37,294,282
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Totals may not sum due to rounding.

To determine the number of bonds that would be transmitted via
eBond in future years, CBP used the growth in eBond transmissions
during the test period. CBP used the number of eBond transmissions for
the years 2019 through 2024 to estimate that, on average, the annual
increase of bonds submitted through eBond was around 0.06 percent.\37\
CBP used this average annual increase (0.06 percent) to estimate the
number of bonds that would be filed through eBond in future years.
Table 4 displays CBP's projections for the number of bonds that would
be filed under the terms of the proposed rule for the five-year
regulatory period of this analysis from 2025 to 2029. During the
regulatory period CBP anticipates that approximately 2.87 million bonds
would be transmitted via eBond or, on average, 573,091 annually.
---------------------------------------------------------------------------

\37\ CBP used the number of bonds transmitted via eBond from
2019 through 2024 and calculated a compounded annual growth rate of
around 0.06 percent: ((571,982/570,139)[supcaret](1/5)-1). CBP
anticipates that this growth rate will be relatively constant in
future years.

Table 4--Projected Number of Bonds Filed Via eBond 2025-2029
------------------------------------------------------------------------
Number of
Year bonds
------------------------------------------------------------------------
2025....................................................... 572,351
2026....................................................... 572,721
2027....................................................... 573,091
2028....................................................... 573,461
2029....................................................... 573,831
------------
Total.................................................. 2,865,454
------------------------------------------------------------------------

To estimate the time savings to CBP from eBond during the
regulatory period, CBP multiplied the estimated number of bonds filed
each year by the estimated time savings to CBP trade and revenue
employees per bond submitted, five minutes (0.083 hours). In total, CBP
expects that during the regulatory period CBP would experience a total
time savings of 238,788 hours or, on average, 47,758 hours annually. To
estimate the cost savings, CBP multiplied the time savings each year by
the average hourly loaded wage rate for a CBP trade and revenue
employee ($85.51). CBP estimates that during the regulatory period
total cost savings to CBP employees from no longer having to manually
transcribe bonds into ACE would be approximately $20.4 million or on
average $4.1 million annually. Table 5 displays CBP's estimates for the
number of bonds filed through eBond, and the transcription time and
cost savings to CBP employees over the regulatory period of analysis.
In the scenario that CBP identifies an error during review of a paper
bond, the bond must be sent back to the surety to be corrected,
resubmitted and then reviewed again by CBP. The additional time burdens
associated in such a scenario would be eliminated for bonds submitted
via eBond. However, CBP was unable to estimate the time savings from
this type of scenario being eliminated because CBP does not track how
often paper bonds must be corrected and resubmitted. CBP requests
comments on how often paper bonds required corrections and needed to be
resubmitted to CBP, and the associated time burdens with making these
corrections.

Table 5--Estimated CBP Time and Cost Savings During the Regulatory Period, 2025-2029
[Time in hours, cost savings in undiscounted 2024 U.S. dollars]
----------------------------------------------------------------------------------------------------------------
Number of Time savings Total time Total cost
Year bonds per bond savings Wage rate savings
----------------------------------------------------------------------------------------------------------------
2025............................ 572,351 0.083 47,696 $85.51 $4,078,480
2026............................ 572,721 0.083 47,727 85.51 4,081,113
2027............................ 573,091 0.083 47,758 85.51 4,083,749
2028............................ 573,461 0.083 47,788 85.51 4,086,385
2029............................ 573,831 0.083 47,819 85.51 4,089,024
-------------------------------------------------------------------------------
Total....................... 2,865,454 .............. 238,788 .............. 20,418,751
----------------------------------------------------------------------------------------------------------------
* Totals may not sum due to rounding.

[[Page 7011]]

Benefits of the Rule
Improved Tracking, Awareness and Reduced Processing Delays
In addition to the cost savings CBP anticipates, there are
potential benefits to sureties as a result of this proposed rule.
Although continuous bond processing was centralized at the Revenue
Division in 2015, STBs could still be filed at the port. The use of
eBond centralizes STB filing, allowing importers, sureties, and CBP to
keep better track of the number and value of STBs in use.\38\ With the
proposed rule in place, STBs would no longer be filed on paper at the
ports, but would be transmitted via eBond.\39\ With greater
centralization and better tracking, sureties are more aware of their
liability exposure and can better manage their risk. CBP would also
benefit from improved traceability of bonds and greater efficiency in
retrieving and managing bond records.
---------------------------------------------------------------------------

\38\ The majority of STBs are already filed via eBond as part of
the NCAP test, though data limitations at the ports prevent CBP from
calculating the exact number of STBs filed at ports. The proposed
regulations align the regulations with practice and require the few
STBs still filed at ports to move to eBond.
\39\ Exemptions allowing for or requiring the use of bonds sent
via email are listed in proposed 19 CFR 113.11(c). Bonds sent via
email will also be transmitted to and processed by the Revenue
Division, not filed at any port.
---------------------------------------------------------------------------

The eBond system also significantly reduces or eliminates
processing delays. So long as the required data elements are all
submitted through eBond and ACE accepts the bond, the bond is available
to secure a transaction or activity, including outside of CBP business
hours. Without eBond, processing can take up to 15 days if information
is left off or if errors need to be corrected, and bonds can only be
accepted during business hours when CBP personnel are available to
process them. Although processing of bonds submitted on paper, by
email, or by facsimile takes only about five minutes when there are no
errors or data omissions, CBP personnel must work through all the bonds
they receive, whereas eBond can process a bond in seconds, depending on
system traffic. Eliminating this waiting period does not constitute a
time savings and CBP is unable to monetize the benefit of avoiding it,
but the immediate certainty that a bond has been accepted and processed
is an important benefit for importers and sureties. As

[…truncated; see source link]

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Indexed from Federal Register on February 13, 2026.

This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.