[Federal Register Volume 80, Number 4 (Wednesday, January 7, 2015)]
[Notices]
[Pages 899-901]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-00029]


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DEPARTMENT OF HOMELAND SECURITY

U.S. Customs and Border Protection


eBond Test Modifications and Clarifications: Continuous Bond 
Executed Prior to or Outside the eBond Test May Be Converted to an 
eBond by the Surety and Principal, Termination of an eBond, 
Identification of Principal on an eBond by Filing Identification 
Number, and Email Address Correction

AGENCY: U.S. Customs and Border Protection, Department of Homeland 
Security.

ACTION: General notice.

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SUMMARY: This notice announces modifications and clarifications to U.S. 
Customs and Border Protection's (CBP's) voluntary National Customs 
Automation Program eBond test, scheduled to deploy January 3, 2015. 
This test provides for the transmission in Automated Commercial 
Environment of electronic bond contracts (eBonds) between principals 
and sureties, with CBP as third-party beneficiary, for the purpose of 
linking those eBonds to the transactions they are intended to secure. 
The modifications and clarifications to CBP's eBond test concern: The 
method by which continuous bonds executed prior to or outside of the 
eBond test may be converted to eBonds by the surety and principal; a 
surety or principal's ability to terminate an eBond; the identification 
of the principal on an eBond by the filing identification number; and 
an email address correction.

DATES: The eBond test modifications and clarifications set forth in 
this notice will go into effect January 7, 2015.

ADDRESSES: Comments and/or questions concerning this notice or any 
aspect of the test may be submitted to CBP via email to 
[email protected], with the subject line identifier reading 
``Comment/Questions on eBond test.''

FOR FURTHER INFORMATION CONTACT: For policy related questions, contact 
Kara Welty, Chief, Debt Management Branch, Revenue Division, Office of 
Administration, at [email protected]. For technical questions, contact 
John Everett, Entry Summary, Accounts, and Revenue Branch, ACE Business 
Office, Office of International Trade, at [email protected].

SUPPLEMENTARY INFORMATION:

Background

I. eBond Test

    In a notice published in the Federal Register (79 FR 70881) on 
November 28, 2014, U.S. Customs and Border Protection (CBP) announced a 
plan to conduct a voluntary National Customs Automation Program (NCAP) 
eBond test. The eBond test, scheduled to deploy on January 3, 2015, 
provides for the transmission in Automated Commercial Environment (ACE) 
of electronic bond contracts (eBonds) between principals and sureties, 
with CBP as the third-party beneficiary, for the purpose of linking 
those eBonds to the transactions they are intended to secure (eBond 
system). The notice invited public comment concerning the test, 
described the eligibility, procedural and documentation requirements 
for voluntary participation in the test, and outlined the development 
and evaluation methodology to be used in the test. The eBond test terms 
and conditions set forth in 79 FR 70881 remain in effect for the 
duration of the eBond test, subject to the modifications and 
clarifications set forth in this notice and any subsequent eBond test 
modifications published in the Federal Register.

II. Modifications and Clarifications to the eBond Test

A. Continuous Bonds Executed Prior to or Outside the eBond Test May Be 
Converted to eBonds by the Surety and Principal

    In the eBond test notice published in 79 FR 70881 (also referred to 
in this notice as the ``original eBond test notice''), CBP indicated 
that continuous bonds executed prior to January 3, 2015, will be 
accessible in the eBond system for administration purposes but will not 
be subject to eBond test rules. Instead, pre-January 3, 2015 continuous 
bonds will remain subject to the CBP bond regulations in 19 CFR part 
113, and riders of such bonds must be submitted to CBP in the format 
and manner detailed in 19 CFR part 113. Similarly, after the eBond test 
commences on January 3, 2015, sureties and principals who choose not to 
participate in the eBond test will still be able to submit bonds to CBP 
in the format and manner detailed in 19 CFR part 113, and those bonds 
will be accessible in the eBond system for administration purposes.
    This notice announces a modification to the eBond test to permit 
participating sureties/surety agents, acting on behalf of the sureties 
and principals, to convert pre-January 3, 2015 continuous bonds and 
other continuous bonds executed outside of the eBond test (collectively 
referred to hereinafter as ``paper continuous bonds'') into eBonds 
subject to the rules set forth in this notice and the original eBond 
test notice. Under the terms of the original eBond test notice, a 
participating surety or the surety's agent may, via a CBP-approved 
Electronic Data Interchange (EDI), transmit limited changes to the 
terms and conditions of an active continuous eBond that are 
contractually binding on the principal(s) and surety(ies). At this 
time, such changes include:
    (1) Transmitting an addition eBond rider (clarified below to be a 
User Addition eBond rider);
    (2) Transmitting a deletion eBond rider (clarified below to be a 
User Deletion eBond rider);
    (3) Transmitting a reconciliation eBond rider;
    (4) Terminating a reconciliation eBond rider;
    (5) Transmitting a U.S. Virgin Islands eBond rider; and
    (6) Terminating the eBond.
    This notice announces a modification to the eBond test whereby a 
participating surety or the surety's agent may also transmit, via EDI, 
the same types of limited changes to the terms and conditions of an 
active paper

[[Page 900]]

continuous bond accessible in the eBond system.
    In accordance with 19 U.S.C. 1623, and consistent with the 
Electronic Signatures in Global and National Commerce Act, 15 U.S.C. 
7001, et seq., the test participant surety/surety agent's act of 
transmitting to CBP, via EDI, a change to a paper continuous bond 
(including, but not limited to, the six types of changes described 
above) constitutes a binding representation to CBP that: (1) The 
transmitting surety/surety agent has the authority to bind both the 
surety(ies) and the principal(s) to the conversion of the identified 
paper continuous bond to an eBond, including but not limited to the 
modification of the terms and conditions of the identified paper 
continuous bond to the terms and conditions of the eBond test; and (2) 
Pursuant to the transmitting surety/surety agent's authority, both the 
surety(ies) and the principal(s) intend to be bound by the converted 
eBond, including the terms and conditions for the eBond set forth in 
the eBond test. Furthermore, any transaction that identifies or uses 
the converted eBond as security constitutes the re-affirmation of the 
principal responsible for the transaction that it intends to be bound 
by the terms and conditions of the identified or used converted eBond. 
Once the surety(ies) and principal(s), acting through the transmitting 
surety/surety agent, have converted a paper continuous bond to an 
eBond, the eBond cannot be converted back into a paper continuous bond.
    Because the elements of paper continuous bonds are similar to 
eBonds, but not identical, certain elements of the paper continuous 
bond will not be used as part of the converted eBond. These unused 
elements are: Broker Filer Code; Transaction Date; Port Code; Principal 
Name and Physical Address; Principal Signature; Principal Seal (or 
check box); Mailing Address Requested by the Surety, Surety Name and 
Physical Address; Surety Signature; Surety Seal (or check box); 
Principal Name, Co-Principal Name and Physical Address; Co-Principal 
Signature; Co-Principal Seal (or check box); Section III Names; Co-
Surety Name and Physical Address; Co-Surety Signature; and Co-Surety 
Seal (or check box).

B. CBP Filing Identification Number as Primary eBond Identification 
Marker

    In several places in the original eBond test notice, CBP referenced 
the concept of an eBond or eBond rider containing listed ``names.'' In 
that document, CBP also noted, at 79 FR 70885, that the importer 
identification number and surety number will be the primary eBond 
identification markers and CBP will not be collecting the name and 
address of the principal or surety on the eBond as this data will be 
available to CBP via other components of ACE.
    In this document, CBP is clarifying the eBond test terms and 
conditions to reflect that the ``CBP filing identification number'' 
(see 19 CFR 24.5), and not a ``name,'' will be the method of 
identifying the principal on an eBond. Accordingly, there are several 
references to the use of eBond ``names'' that require clarification in 
the original eBond test notice as follows:
     At 79 FR 70883, in the section entitled, ``Terms and 
Conditions for eBonds,'' the sentence reading ``[T]he principal(s) and 
surety(ies) agree that any charge against the eBond under any of the 
listed names is as though it was made by the principal(s)'' is 
clarified by changing the term ``listed names'' to ``listed CBP filing 
identification numbers.''
     At 79 FR 70885, in the section entitled ``Continuous Bonds 
Executed Prior to eBond Test Will Be Accessible in eBond System,'' the 
sentence reading ``[T]he importer identification number and surety 
number will continue to be the primary identification markers used by 
CBP when verifying adequate bond coverage for activities that require 
it,'' is clarified by changing the words ``importer identification 
number'' to ``CBP filing identification number'' to reflect that the 
filing identification number is not always associated with an importer.
     At 79 FR 70884, in the section entitled, ``Terms and 
Conditions for eBond Riders,'' and subsections pertaining to 
``Addition'' and ``Deletion'' eBond riders, CBP is clarifying these 
terms and conditions by changing the existing reference to ``names'' 
transmitted with these eBond riders to ``CBP filing identification 
numbers'' and further clarifying that these two types of eBond riders 
are ``user'' riders.
    The changes are set forth below:
    (1) User Addition eBond rider. The principal(s) and surety(ies) 
agree that the CBP filing identification numbers transmitted with this 
eBond rider identify unincorporated units of the identified principal 
or trade or business names used by the identified principal in its 
business, that the identified eBond covers its business, and that the 
identified eBond covers any act done in those names or under the CBP 
filing identification numbers to the same extent as though done by the 
identified principal. The principal(s) and surety(ies) agree that any 
such act shall be considered to be the act of the identified principal.
    (2) User Deletion eBond rider. The principal(s) and surety(ies) 
agree that the CBP filing identification numbers transmitted with this 
eBond rider of unincorporated units of the identified principal or 
trade or business names used by the identified principal in its 
business are deleted from the identified eBond effective upon the date 
of approval of this eBond rider by the appropriate CBP bond approval 
official.

C. Termination of an eBond

    In the original eBond test notice, in the section entitled 
``Termination of an eBond'' located at 79 FR 70885, CBP prescribed the 
manner by which a surety may electronically terminate an eBond on which 
it is obligated.
    This notice announces a modification to the eBond test termination 
procedures whereby a surety wishing to terminate an eBond must notify 
the principal(s) at the same time notice of termination is sent to CBP. 
In addition, a surety may request that a termination go into effect 
sooner than the prescribed 15 calendar days from the date of the 
termination notice if the surety can establish, to the Director of the 
Revenue Division's satisfaction, that good cause exists for terminating 
the eBond in lesser time. CBP is also modifying the eBond test to 
permit a principal to terminate an eBond on which it is obligated by 
means of emailing a termination request to CBP. A principal may not 
terminate an eBond via EDI.
    The modified eBond test terms and conditions pertaining to 
termination of an eBond are set forth below:
Termination of an eBond by Surety/Surety Agent
    A surety may, with or without the consent of the principal(s), 
electronically terminate an eBond on which it is obligated. The surety 
must notify the principal(s) of the termination at the same time the 
electronic notice of termination is transmitted to CBP. The effective 
date of the termination must be stated in the electronic notice of 
termination, and must be at least 15 calendar days from the date of the 
electronic notice of termination, unless the surety can show to the 
satisfaction of the Director of the Revenue Division (RD) that good 
cause exists for terminating the eBond in lesser time. A request for a 
termination effective date that is less than 15 calendar days from the 
date of the electronic notice of termination must be emailed to 
[email protected] in accordance with the email conventions 
described in CBP's Policies and

[[Page 901]]

Procedures for eBond (FRN eBond Test Participants), which is available 
at http://www.cbp.gov/trade/trade-community/programs-administration/bonds/ebond. If an eBond is terminated, no new customs transactions may 
be charged against the eBond. The surety, as well as the principal, 
remains liable on a terminated eBond for obligations incurred prior to 
termination.
Termination of an eBond by a Principal
    A request by a principal to terminate an eBond must be emailed to 
[email protected] in accordance with the email conventions 
described in CBP's Policies and Procedures for eBond (FRN eBond Test 
Participants), which is available at http://www.cbp.gov/trade/trade-community/programs-administration/bonds/ebond. A principal may not 
terminate an eBond via EDI. The termination will take effect on the 
date requested in the termination request if that date is at least 15 
calendar days from the date of the termination request. If no 
termination date is requested, the termination will take effect on the 
15th calendar day following the date of the termination request. If an 
eBond is terminated, no new customs transactions may be charged against 
the eBond. The surety, as well as the principal, remains liable on a 
terminated eBond for obligations incurred prior to termination.

D. Correction of Email Address

    The original eBond Test notice contained an erroneous email address 
for the contact to whom technical questions may be sent. Technical 
questions may be emailed to John Everett, Entry Summary, Accounts, and 
Revenue Branch, ACE Business Office, Office of International Trade, at 
the following email address: [email protected].

    Dated: January 2, 2015.
Brenda Smith,
Assistant Commissioner, Office of International Trade.
[FR Doc. 2015-00029 Filed 1-6-15; 8:45 am]
BILLING CODE 9111-14-P