CBP Discussing Lower Standard of Care, Optional Submission of Some Data Under 21CCF

As CBP moves toward collecting data from “non-traditional” parties earlier in the supply chain as part of its reimagined 21st Century Customs Framework, major questions include the standard to which that data will be held, as well as how CBP will enforce those standards on supply chain actors beyond the agency’s jurisdiction, CBP and industry officials said during a panel discussion July 18.

Earlier entry data has from the 21CCF’s inception been a key part of the discussion. CBP hopes to capture data directly from supply chain actors from the moment a transaction begins, starting with sales data from the online marketplace if one is involved, then ingredient and country of origin information from the manufacturer and container seal data showing any tampering during shipment, said Gail Kan, acting executive director-trade policy & programs at CBP.

“All of that can be happening in real time and being provided to CBP at a much earlier point of time than we're getting it today,” said Kan, speaking at CBP’s Trade Facilitation and Cargo Security Summit. That could result in the earlier filing of the entry by the broker or importer, and in turn the earlier release of the shipment.

CBP intends to make these types of filing arrangements optional, in an acknowledgement that the technologies required are not available to all, Kan said. “You have bigger companies out there that are going to be able to take advantage of technology differently than the smaller companies, the mom and pops or the foreign sellers sitting at home selling on the different marketplaces,” she said.

“In the formal context, we are giving individual entities the option, the importers the option of being able to provide this type of data to CBP, rather than make it mandatory to accommodate the differences that we know the trade is going to experience as we move forward into the next 50 or so years,” Kan said.

But for those who chose to use it, the inclusion of filing by non-traditional actors in the entry process will raise enforcement concerns, said Lenny Feldman of Sandler Travis, speaking on the same panel. “Are we concerned that a party that CBP does not have jurisdiction over now has the right to file that information that we will be used for targeting?” Feldman asked. “Is it ready for prime time?”

Currently, the law says filers of entry data must exercise reasonable care or, for brokers, reasonable supervision or control, Feldman said. But that may be “too high of a bar” for data streaming in “from all these parties across the globe earlier on in the process,” he said. “Are we looking at a strict liability standard, a penalty right off the bat if you get the data wrong? I'd hope not. But maybe we have to look at what's reasonably reliable or how parties can reasonably verify data, and if not, a reasonable belief would be appropriate,” Feldman said.

Similarly, CBP also is looking at using Importer Security Filing data for screening purposes, as it adds “another layer of liability or exposure for these parties who really might be trying their best to provide the data, but again, it might be more difficult to assure its accuracy, Feldman said. “Maybe CBP is not expecting that same level of accuracy, but they're expecting an indication of what's coming in having an idea of what they need to stop and again, that's important.”

Homing in on the responsibilities of parties in the new entry process in both the formal and informal contexts will be critical, especially with so many foreign actors involved, Feldman said. “Do we need a bond” to “show that they have some connectivity to the U.S. and they are going to be held accountable?” he asked. “And what do we do about these foreign parties who are going to be providing this data, if in the past we have not had jurisdiction over them and frankly, we probably never will?”

According to Kan, CBP has begun to tackle some of these questions, at least in the context of revisions to 19 USC 1321 on low value entries. Part of CBP’s approach is to have “one data set,” where security filings for manifest purposes will “be able to transfer seamlessly into the entry side,” Kan said. To accomplish that, the agency will have to “break through that wall” created by the “Security Act prohibition about not being allowed to use certain data,” but also “make it palatable enough for the trade” by being cognizant about concerns around the standard of care, she said.

CBP has “reached consensus” that to apply reasonable care, at least in the de minimis context, is “not the right way to go,” and instead is “adopting that Security Act concept of reasonably reliable, which is a much lower standard,” Kan said.

“In putting that standard into the de minimis context, what we wanted to do was make sure” parties that aren’t accustomed to sending CBP data “are comfortable providing data to us that might not be at the same quality initially as the entry data set,” Kan said. They will be held to “a lower standard, which is palatable hopefully to the trade since they're used to it today in the security context,” she said. “For everything else that we consider to be entry data we'll hold them at the reasonable care standard or a different standard, depending on how we regulate.”

“Having that flexibility and having that cognizant awareness of the discomfort of asking for all of this new data upfront under too high of a standard is all built into the 1321 [Section 321] provision, as we've agreed upon from our discussions,” Kan said.