Brokers Win Change to Bankruptcy Law, Alcohol Excise Cuts Made Permanent in COVID-19 Package

Customs brokers, after many years of lobbying (see 09021315), won a change to the treatment of duties transferred to them by importers that later go bankrupt. The brokers had argued that these duties should not be subject to clawback provisions under the U.S. Bankruptcy Code, where payments to vendors within 90 days can be seized by the bankruptcy courts for redistribution.

This change will sunset one year from now. The National Customs Brokers & Forwarders Association of America said it had been pushing for this change for more than 20 years, but acknowledged their lobbying will have to continue.

This was one of several trade-related provisions in the massive omnibus and COVID-19 relief package that is expected to pass Congress late on Dec. 21.

The bill says that the Consumer Product Safety Commission “shall ensure, to the maximum extent feasible, that investigators are stationed at ports of entry to protect the public against unreasonable risk of injury from consumer products, with the goal of covering no fewer than 90 percent of all consumer products entering the United States that are risk-scored in the Risk Assessment Methodology system.” The bill says the CPSC will have to train at least 16 additional full-time workers at the ports of entry, including ports of entry for de minimis shipments.

The bill also requires CPSC to produce a public report within 180 days that will assess the risk to consumers associated with reducing inspection activity during the COVID-19 pandemic. The report must also document what the CPSC found through a sampling of de minimis shipments from all types of ports of entry where they are processed, including express carriers, international mail and air cargo. The bill instructs CPSC to analyze trends in de minimis products from high risk countries, including both consumer product safety violations and counterfeiting issues.

The agency is to “detail plans and timelines to effectively address targeting and screening of de minimis shipments to prevent the entry of violative consumer products ... taking into consideration projected growth in e-commerce,” Congress wrote. CPSC should also establish metrics to evaluate its efforts to reduce the number of de minimis shipments with unsafe products entering into commerce, and recommend the staffing and technology it would need to achieve these goals.

The lower excise taxes on beer, wine and distilled spirits for both smaller producers and on part of production from large companies were made permanent in this bill. It modifies requirements for in-bond transfers of bottled distilled spirits and beer, so that transfers in bond can be done to mingle beer, with the receiving party responsible for the tax payments. The treasury secretary will issue regulations detailing the conditions of in-bond transfer.

In the case of in-bond transfers of bulk distilled spirits, they can be done within premises owned by the same person, company or interrelated companies; in the case of transfers related to bottling or storage, the spirits have to stay under the ownership of the distiller or processor that initiated the transfer.

Starting in 2023, reduced rates for imports will be administered as refunds by the Treasury Department, rather than determined upon entry by CBP, the Appropriations Committee explained, with refunds at least quarterly, with interest.

The bill also says just bottling spirits does not make the alcohol the property of a craft distiller.