Customs Law

The U.S. Court of Appeals for the District of Colombia, which hears many issues involving administrative law and government action, has overturned part of the SEC rule requiring companies to report on their web sites that their products are not free of certain minerals from the Democratic Republic of Congo and surrounding countries. The case is National Association of Manufacturers v. Securities and Exchange Commission . Before we get to the legal issues, the background provided by the Court is relevant to what is at issue. The Democratic Republic of Congo ("DRC") is an unimaginably hellish place. It has seen 15 years of war and starvation coupled with widespread human rights violations including the use of rape as a weapon. Much of that activity is undertaken by armed militias financed by the sale of gold, tantalum, tin, and tungsten extracted by primitive, unregulated mining operations in Congo. After passing through many hands, these minerals end up in products sold to c...

Union Pacific Railroad has been fighting the good fight with U.S. Customs and Border Protection over whether it is liable for penalties for illegal drugs imported via railcars that were being used by unrelated Mexican railroad companies. UP's role was to forward the electronic manifest data to CBP and pick up the railcars after CBP clearance. Keep in mind that CBP does not accept electronic manifest transmissions from Mexican railroads. In an interesting opinion , the Eighth Circuit Court of Appeals has held that CBP lacks the authority to penalize UP for the actions of Mexican drug cartels on railcars UP neither owned nor controlled. According to the opinion, UP has no railroad operations in Mexico and no control over the Mexican railroads involved. It has no ability to control employees of the Mexican railroads and no authority to secure or search trains inside Mexico. When a train arrives at the border, CBP inspects it and sends the Mexican locomotive and crew back to Mexico. ...

There is an interesting piece by Tim Warren in yesterday's International Trade Today (subscription required). The article talks about Customs and Border Protection's plans to expand the Centers of Excellence and Expertise concept beyond trusted traders. Currently, trusted traders are importers participating in C-TPAT and ISA. The CEE's are envisioned as covering entire industries regardless of whether individual companies in the industry are trusted traders. To me, that makes a lot of sense and is consistent with calling these Centers of Excellence and Expertise. The issue for CBP will be finding incentives to get importers to participate in ISA and, to a lesser degree, C-TPAT.

I was recently in Toronto to speak to the Canadian Transport Lawyers Association about the so-called Beyond the Border Action Plan . One of the initiatives under that project is a pilot at the Prince Rupert port of entry in Canada to harmonize cargo screening. The ultimate goal is to move to an environment in which cargo can be screened once and admitted twice. Here is the text of the U.S. announcement of the pilot: U.S. and Canada Announce New Pilot to Strengthen Cargo Security (Tuesday, October 23, 2012) Washington — The United States and Canada announced the launch of the Prince Rupert Pilot to strengthen cargo security at the Canada-U.S. border as part of the Integrated Cargo Security Strategy in the Beyond the Border Action Plan. The pilot focuses on harmonizing the screening process for maritime cargo between the two countries. “The Prince Rupert pilot implemented under the Integrated Cargo Security Strategy is key to the ongoing efforts to facilitate legitimate trade...

I am just back from Paris. Despite being a middle aged, well educated, reasonably well traveled person, I had never been to Paris (or anywhere in France) before this trip. I had an excellent time meeting with lawyers from throughout Europe and the North America to discuss our various practice areas. As is usually the case with these things, we had interesting discussions coupled with some exceptionally good meals and a bit of seeing the sites. I narrowly escaped an airport fiasco on the way back when I realized that I had failed to pack a bottle of wine in my checked bag. For a moment, I considered being the person in the airport you marvel at when he or she sits down to eat their smuggled sausage or when they abandon a gallon of conditioner at the security line. I blame my lack of foresight on too little sleep. A quick reshuffle of dirty clothes from the big bag to the carry on created room for the wine without undue delay to others checking in. The locals were nothing but nice an...

A legal think tank known as The Constitution Project , has issued a report on the practice of searching digital devices carried by passengers at ports of entry. This has been a hot-button issue that has pitted privacy advocates against Customs and Border Protection's security and law enforcement mandate. Here is a link to the report . The report concludes with a recommendation that the Department of Homeland Security amend its existing policy to require a reasonable suspicion of wrongdoing before conducting a digital search. Further, the report recommends that DHS secure a warrant before it is able to retain copies of data or seize the device for further review beyond a reasonable period. There are other recommendations including some dealing with potential racial profiling, privileged information, and the possibility that other law enforcement agencies will piggy back on Customs border search authority to get information that would otherwise not be available without a warrant.

There has been activity in DHS on Customs and Border Protection policy regarding laptop searches. First, I tweeted a while back that the ACLU has sued Homeland Security for access to records regarding the searches. On August 18, 2009 Immigration and Customs Enforcement issued a directive (7-1.6) on the topic. The ICE directive continues the policy that the border search of electronic devices does not require the consent of the arriving traveler and, by implication, does not require suspicion directed at that traveler. At any point during the search, the electronic device may be detained for further review including further review by another federal agency or a third party. ICE does say that the Special Agent has the discretion to copy the contents of the device for later review and return the original to the traveler. Searches are "generally" to be completed within 30 calendar days. If outside assistance is employed, the search must be completed within a reasonable tim...

I'll be unbloggable for the remainder of the week. Just to make sure you miss me, I'll leave you with these bits of interesting information to discuss among yourselves. First, I will not be doing an analysis of Depersia v. U.S. I've talked about broker license exam appeals before and there is not much to say. Second, here is an interesting article from today's New York Times on a shake up in Mexican Customs border personnel. The intent is to fight corruption and staunch the flow of drugs (one assumes northward). Third, everybody should read this from the Journal of Commerce. The Customs Reauthorization Act of 2009 would do more than provide funding to keep the agency running. It would go a long way toward refocusing the agency on commercial facilitation. I breathe an anticipatory sigh of relief. Among other things, the bill would create a new position of Principal Deputy Commissioner for facilitation. A different deputy commissioner would be responsible for s...

I have been working on a fascinating off-topic post involving popular music, technology, and quantum physics. Instead of that, you get Guidelines for the Assessment and Cancellation of Claims for Liquidated Damages for Failure to Comply with the Vessel Stow Plan, Container Status Message, and Importer Security Filing Requirements. It is in the Customs Bulletin, see page 29. This is the much anticipated notice in which Customs and Border Protection explains how it will calculate penalty amounts relating to the ISF (formerly known as 10 + 2). Customs initially notes that the penalties related to ISF include: Liquidated damages Do not load orders Denial of carrier preliminary entry permits/special licenses to unlade Any other applicable statutory penalty (meaning 19 USC 1595a penalties) Denial of release It does not make a lot of sense for me to try and summarize the penalties here. Frankly, the Bulletin Notice does a fine job of that. For the importer part of this, a late filing ca...

Last I heard, U.S. Customs and Border Protection was trying to impose penalties against Union Pacific for what Customs considered to be lax security relating to trains entering from Mexico. In July, 2008, UP filed a suit trying to avoid the penalty by pointing out that the trains were under CBP control, not UP's. As late as March, 2009, this suit was still working its way through the courts. Here is a press release update from UP. Today, the AP is reporting that Union Pacific is donating an $800,000 rail inspection facility to CBP. Is this related? Is it part of a settlement? It strikes me an an unusual move under the circumstances.

OK, I have bad news for the Twitter side: I like my blog and my blog readers like me. I'm having a hard time balancing both. In the morning, I scour my usual sources to look for items to tweet. In the past, those would have been blog fodder. Well, they need to be again. So, here is a catch up post. After this, I'll do my best to get back to more substantive posts here. Whether that means fewer tweets, we'll have to see. First thing, according to testimony at a House Committee on Small Business, fraud and lax enforcement of laws relating to textile imports and preference programs is harming U.S. producers. I have no serious reason to doubt this, but I do wonder about what level of diligence can reasonably be expected of importers. I think importers need to spend some time thinking about their purchase order terms and conditions. I'd be looking for enforceable indemnity clauses for civil penalties and associated costs. I'd also try and negotiate a contra...

While I hate to do this, I also know that I don't have time to blog all these stories. Plus, there is no reason for me to summarize what is easily digested. So, here is a page slap. Feel free to complain in the comments. The fight to bear knives continues. Qat (khat) seized in hard drives. FOIA requests data on CBP laptop searches and here too. U.S. wins NAFTA Chapter 11 dispute. Enjoy.

Another example of a shipment of illegal drugs from Mexico coming through via the Free And Secure Trade channels.  These are important examples of two things.  First, CBP being alert and doing its job by finding these attempts at smuggling.  Second, the fact that ultimately C-TPAT, FAST, and other trusted shipper programs depend upon people.  That means there will always be risk.

This story was tipped to me from a couple sources in response to my previous post about how C-TPAT is being marketed wrong.  I'll give the nod to the Blog Man O' Law for the link .  The article shows that yes, indeed, smuggling happens in commercial shipments.  Apparently, it also happens in the Free and Secure Trade (FAST) environment. Keep in mind, my point was not that this does not happen.  My earlier point was only that Customs and Border Protection's presentations rely too heavily on non-commercial, terror- and drug-related shipments to make the point in an audience of sophisticated business people.

Here is an interesting article from JOC on the continuing effort by the United States to assess penalties against Union Pacific for its alleged negligence in allowing contraband to be smuggled into the U.S. via its trains from Mexico. The theory is that UP is transmitting manifest data to Customs and that the manifest data is often wrong due to the fact that it fails to disclose the illegal drugs that UP does not even know are there. The proposed penalty is $33.6 million.  Another suit in Texas seeks $4.1 million. I hereby declare that I may have a bigfoot , D. B. Cooper , and the Ark of the Covenant in my trunk, but I don't know that for certain. Assuming UP is a C-TPAT member, isn't the better approach to kick it out of C-TPAT and figure out a way to increase inspections until UP, the Mexican railroad that control over the rail cars before they cross the border, and Customs and Border Protection can find a mutually agreeable way to sure up the security?

I have absolutely no doubt that C-TPAT, the Customs-Trade Partnership Against Terrorism, makes America a safer place. Every participating importer, carrier, warehouse, foreign manufacturer, etc. agrees to take reasonable steps to insure the safety of the supply chain. This means, for example, limiting the access to shipping containers, using secure container seals, and vetting truck drivers. Logic dictates that C-TPAT makes it more difficult for a terrorist organization to slip weapons, components of weapons, or even people into the supply chain of an unknowing importer. I am glad that Customs has this program and I appreciate the efforts of the voluntary participants. My problem is the way Customs sells the program. I've had the opportunity to sit through lots of C-TPAT recruitment sessions and they all proceed along the same lines. First and foremost, there is the reminder that the horrors of September 11 are the origin of C-TPAT. This, of course, puts the audience into a s...

Just a quick note. This may be a sign of change at DHS. This comes from an internal draft letter regarding how DHS manages privacy issues. Among the issues discussed is searches of digital media by Customs and Border Protection (which is unnamed in the letter): Border Searches and Seizures of Stored Digital Information. This is currently a highly visible and sensitive issue. While certain DHS components may have legal authority to conduct border searches, there is a significant difference between looking at paper documents and searching through the volume of digital information that can be carried by travelers. The Privacy Office should have a role in reviewing current policies and practices for searches and seizures of digital information and developing guidelines to integrate privacy protections into these processes. That is exactly the kind of thinking about discretion I like to see. Legal authority to do something does not make it a good idea.

Sources within U.S. Customs and Border Protection (CBP) have confirmed that late Friday a decision was made by the Office of Management and Budget (OMB) and Department of Homeland Security (DHS) not to delay the implementation date for the 10+2 rule.

UPDATE: CHECK OUT THE DISCUSSION IN COMMENTS. I MAY HAVE JUMPED THE GUN A BIT. UPDATE 2: HERE IS THE MEMO . The Obama Administration has halted the implementation of all pending regulatory changes until they are reviewed. This throws lots of Customs and Border Protection activity into limbo. For now, the Importer Security Filing (AKA 10 + 2), aspects of the Lacey Act, the country of origin rules, etc. are on hold. I suspect that these things will move forward unless there is a coordinated outpouring of opposition from the trade. In the big picture, I think these issues are not likely to strike the new administration with the same force as, for example, putting a drilling rig on every beach from Maine to Florida. But, all we can do is wait and see. Another thing to watch will be action or inaction on trade agreements. Columbia, Korea, and others have been stalled. The Obabma people have not been kind to FTAs until this point. So, we wait on that as well.

Customs and Border Protection has published a 2008 year in review of its Customs-Trade Partnership Against Terrorism program.  Here are some interesting 2008 statistics: Certified 1,448 new members Validated 3,469 supply chains Added 50 supply chain specialists Suspended 121 members Removed 118 members Completed 52 appeals (26 denied, 18 approved, 8 reduced suspensions For those of you who may not know, C-TPAT is a voluntary program under which members agree to undertake reasonable steps to secure their supply chain from container stuffing to delivery to the ultimate consignee.  The program requires considerations of physical security to the merchandise, plant location security, network access security, and personnel policies including background checks at hiring and appropriate measures when an employee leaves. The benefits of membership include fewer intensive examinations at the time of entry and the possible participation in the Importer Self Assessment program. And, as they say, ...