NCBFAA Says Expansive Proposed HFC Compliance Requirements 'Untenable' for Brokers

EPA’s proposed expansion of liability for compliance with hydrofluorocarbon import requirements to all parties that could perform the role of importer of record “blurs the roles” of parties to a transaction and adds confusion as to who is responsible with meeting EPA requirements, the National Customs Brokers & Forwarders Association of America said in comments posted by EPA on Dec. 19.

Submitted in response to EPA’s Nov. 3 proposed rule on HFC allocation methodologies for 2024 and beyond, the NCBFAA comments say the proposal’s language on compliance responsibilities puts customs brokers in an untenable situation, and would have the perverse result of duplicative quarterly reporting that would far outlive the parties’ involvement in the entry itself.

“When it comes to HFC import compliance, the agency is saying anybody who could serve as an importer of record is an importer of record for purposes of liability,” the NCBFAA said. Doing so “is effectively designating multiple importers of record for each shipment,” the NCBFAA said.

“This unprecedented approach turns the ‘importer of record’ concept on its head. Essentially, EPA is telling the parties: somebody make sure it’s a compliant shipment. Yet, these other ‘importers of record’ generally do not have the knowledge of the product/supply chain for this transaction to fulfill that role. They do not need to, since they are not the importer of record for the shipment in question,” the broker group said.

The proposal “naively assumes that any one party with limited knowledge regarding the entire supply chain and with potential limitations (e.g., language or limited import experience) has the leverage to coerce the actual importer of record to assure, maintain and, as necessary, improve its compliance,” the NCBFAA said. “This is generally not the case.”

“And the result is harsh, with potentially strict penalties imposed on parties who have not done anything wrong and do not have the knowledge or control over the transaction to ensure compliance,” it said.

The approach would be particularly problematic for customs brokers, who can perform the role of importer of record but rarely do, the NCBFAA said. Where they aren’t importer of record, brokers’ knowledge of a transaction is “based on the representations of our client and is generally limited to information provided regarding the merchandise rather than its unique technical specifications,” the NCBFAA said.

“In the ordinary course, customs brokers simply do not receive sufficient information about the product or have visibility into the supply chain that would enable them to independently opine about the EPA-related specifics of the product,” the trade group said. “Customs brokers also lack the technical training which would make them knowledgeable resources for this type of information.”

“It is essential that the EPA recognize and respect this distinction between the importer and the filer: as filers, we are responsible for the accurate transmittal of the data; while our client, the importer, is responsible for the accuracy of the data on the documentation that they provide to us,” the NCBFAA said. “We urge the EPA to exempt customs brokers from liability as ‘an importer of record’ when performing their licensed role as the agent who files entry on behalf of the importer.”

The requirement that “each person meeting the definition of an importer is jointly and severally liable for a violation of the quarterly reporting requirements and the advance notification requirements” is also problematic, the NCBFAA said.

“The quarterly notification responsibilities are an ongoing responsibility of the importer of record that extend far beyond entry,” the trade group said. “By applying those ongoing reporting requirements to anyone who ‘could’ theoretically have been the importer of record, the EPA attempts to create an ongoing contractual relationship among the parties well beyond the point of entry. This is inconsistent with commercial reality.” Nor is the non-importer of record likely to have access to the detailed information required for quarterly reporting, it said.

“Rather than creating a free-for-all enforcement atmosphere, EPA would be better served by pinpointing explicit responsibility on the importer of record and pursuing vigorous enforcement against that party when noncompliance occurs,” the NCBFAA said.