[Federal Register Volume 88, Number 217 (Monday, November 13, 2023)]
[Notices]
[Pages 77598-77600]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-24907]



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DEPARTMENT OF HOMELAND SECURITY

U.S. Customs and Border Protection


Announcement of the National Customs Automation Program Test 
Concerning the Electronic Issuance of Demands on Surety

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

ACTION: General notice.

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SUMMARY: This document announces that U.S. Customs and Border 
Protection (CBP) will conduct a National Customs Automation Program 
test regarding the electronic issuance of demands on surety for certain 
kinds of claims, the ``Electronic Issuance of Demands on Surety'' 
(EIDS) test. Test participation is limited to sureties that receive the 
``Notice of Penalty or Liquidated Damages Incurred and Demand for 
Payment'' (CBP Form 5955A) for claims for liquidated damages or 
penalties. The EIDS test will not include any other purpose or type of 
claim for which the CBP Form 5955A is used, such as a demand for 
duties, taxes, fees, or charges other than liquidated damages or 
penalties.

DATES: The EIDS test will commence on December 13, 2023, and will 
continue indefinitely subject to any extension, modification, or 
termination as announced in the Federal Register. CBP will begin to 
accept requests from sureties to participate in the test on December 
13, 2023, and CBP will continue to accept such requests until the EIDS 
test concludes. Public comments on the test are invited and may be 
submitted to the address set forth below at any time during the test 
period.

ADDRESSES: Comments and questions concerning this notice, or any aspect 
of the test, may be submitted at any time before or during the test 
period via email to Trade Remedy Law Enforcement Directorate, U.S. 
Customs and Border Protection, at [email protected], with the subject 
line reading ``Comments/Questions on EIDS Test.''

FOR FURTHER INFORMATION CONTACT: For policy-related questions, contact 
Sandra Barbosa, Supervisory International Trade Analyst, Civil 
Penalties Branch, Civil Enforcement Division, Trade Remedy Law 
Enforcement Directorate, Office of Trade, U.S. Customs and Border 
Protection, at (202) 853-6026 or via email at [email protected], with a 
subject line reading ``Electronic Issuance of Demands on Surety Test.'' 
For technical questions related to SEACATS, please contact Daniel P. 
Travi, SEACATS Program Manager, Border Enforcement Management Systems, 
Office of Information Technology, U.S. Customs and Border Protection, 
at (571) 375-5707. For all other questions related to SEACATS, please 
contact Stephen Haigler, Chief, SEACATS/Training Branch, Office of 
Field Operations, U.S. Customs and Border Protection, at (202) 316-3898 
or via email at [email protected].

SUPPLEMENTARY INFORMATION:

I. Background

A. The National Customs Automation Program

    The National Customs Automation Program (NCAP) was established by 
Subtitle B of Title VI--Customs Modernization in the North American 
Free Trade Agreement Implementation Act (Customs Modernization Act) 
(Pub. L. 103-182, 107 Stat. 2057, 2170, December 8, 1993) (19 U.S.C. 
1411-1414). As a result of the implementation of NCAP, the thrust of 
customs modernization was focused on informed trade compliance and the 
development of the Automated Commercial Environment (ACE), an automated 
and electronic system for commercial trade processing, intended to 
streamline business processes, facilitate growth in trade, ensure cargo 
security, and foster participation in global commerce, while 
facilitating compliance with U.S. laws and regulations and reducing 
costs for U.S. Customs and Border Protection (CBP) and all of its 
communities of interest. The ability to meet these objectives depends 
on successfully modernizing CBP's business functions and the 
information technology that supports those functions, including 
modernization of the administrative enforcement process (which includes 
the assessment of penalties, liquidated damages, and seizures). CBP's 
modernization efforts are accomplished through phased releases of ACE 
component functionality, which update the system and add new 
functionality.
    Sections 411 through 414 of the Tariff Act of 1930 (19 U.S.C. 1411-
1414), as amended, define and list the existing and planned components 
of the NCAP (section 411), promulgate program goals (section 412), 
provide for the implementation and evaluation of the program (section 
413), and provide for Remote Location Filing (section 414). Section 
411(a)(2)(E) provides for an electronic penalty process as a planned 
component of the NCAP. Section 411(d)(2)(A) provides for the periodic 
review of data elements collected in order to update the standard set 
of data elements, as necessary. CBP has begun development of an 
electronic liquidated damages and penalty process, and this notice 
announces the first test of a feature of the new process. The 
electronic liquidated damages and penalty process is intended to 
enhance, but not necessarily replace, the current paper process.

B. Authorization for the Test

    The Customs Modernization Act provides the Commissioner of CBP with 
the authority to conduct test programs or procedures designed to 
evaluate planned components of the NCAP. The test described in this 
notice is authorized pursuant to the Customs Modernization Act and 
section 101.9(b) of title 19 of the Code of Federal Regulations (19 CFR 
101.9(b)), which provides for the testing of NCAP programs or 
procedures. As provided in 19 CFR 101.9(b), for purposes of conducting 
an NCAP test, the Commissioner of CBP may impose requirements different 
from those specified in the CBP regulations.

C. Current Penalty/Liquidated Damages Claim Issuance Procedures

    Consistent with 19 CFR 162.31(a), CBP must provide written notice 
of any fine or penalty incurred to each party that the facts of record 
indicate has an interest in the claim. Pursuant to 19 CFR 172.1(a), 
when there is a failure to meet the conditions of any bond posted with 
CBP or when a violation occurs which results in assessment of a penalty 
that is secured by a CBP bond, CBP must notify the principal, in 
writing, of any liability for that penalty or liquidated damages 
incurred and make a demand for payment. CBP also must notify the surety 
on the bond of any such liability, in writing, concurrent with notice 
to the principal. Claims for liquidated damages and penalties, 
including penalties secured by bonds, are issued by the Fines, 
Penalties and Forfeitures (FPF) Office in the port having jurisdiction 
over the claim on the CBP Form 5955A.
    If the principal on the bond fails to file a petition for relief, 
or fails to comply in the time prescribed with a decision to mitigate a 
penalty or to cancel a claim for liquidated damages issued with respect 
to a petition for relief, the FPF Office having jurisdiction over the 
claim will mail a demand for payment to the surety. The surety will 
have 60 days from the date of the demand to file a petition for relief. 
See 19 CFR 172.4.

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    CBP created and maintains an electronic system entitled SEACATS \1\ 
which is internal to the federal government, and functions as a case 
management system, capturing the relevant information for processing 
and adjudication of the legal outcomes of all fines, penalties, and 
claims for liquidated damages, among other things. The system allows 
CBP officers, import specialists, entry specialists, and other 
designated employees to input pertinent penalty and liquidated damages 
claim violation data (violator name, address, legal citations, facts 
pertinent to the violation, etc.) for the purpose of producing a 
completed CBP Form 5955A for mailing. The System of Records Notice 
(SORN) for SEACATS was published in the Federal Register on December 
19, 2008 (73 FR 77764). The SORN established SEACATS as the system of 
records for persons found violating laws and regulations enforced by 
the Department of Homeland Security (DHS)/CBP.
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    \1\ The Seized Asset and Case Tracking System (SEACATS) is the 
system CBP uses to track seized and forfeited property, from case 
initiation to final resolution. CBP has retired the full name usage, 
and now the acronym ``SEACATS'' is a standalone term for the system.
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II. Description of the Electronic Issuance of Demands on Surety Test

    As part of its ongoing efforts to modernize the liquidated damages 
and penalty process, CBP engaged in regular outreach with internal and 
external stakeholders, including, but not limited to, FPF Officers, 
sureties, and trade associations. Through this outreach, CBP determined 
that the issuance of the CBP Form 5955A is time consuming and may not 
result in timely action on liquidated damages or penalties claims by 
sureties. As a result of these discussions, CBP developed the 
Electronic Issuance of Demands on Surety (EIDS) test, which will enable 
CBP to test the transmission of the CBP Form 5955A to the surety 
electronically by email, at the time the document is mailed to the 
principal on the bond, for claims for liquidated damages or penalties. 
Participating sureties will continue to receive a paper copy of the CBP 
Form 5955A by mail. The EIDS test will not include any other purpose or 
type of claim for which the CBP Form 5955A is used, such as a demand 
for duties, taxes, fees, or charges other than liquidated damages or 
penalties.
    The EIDS test is voluntary, and sureties who wish to participate 
must comply with all the conditions set forth below. Test participants 
must provide an email address to which CBP will send CBP Form 5955A 
notices. The email address provided will be maintained and stored in 
SEACATS. Participating sureties must inform CBP immediately of any 
changes to the email address used to receive the notices.
    Participating sureties will receive a daily email from CBP. The 
email will contain a zip file listing up to 50 electronic notices of 
claims for liquidated damages or penalties secured by the receiving 
surety's bonds. Each zip file will be password protected, with the 
password being sent as a separate email, in tandem with the daily email 
containing the zip file. A surety could receive multiple emails in a 
day if the number of demands against its bonds for that day exceeds 50. 
Each email will indicate the total number of demands issued to the 
surety that day, which, if more than 50 demands are issued to a surety 
on a single day, could exceed the number of demands attached to an 
individual email. The relevant FPF Office will be copied on each email 
that includes notices that fall within its jurisdiction. Participating 
sureties will also receive paper copies of the Form 5955A. For 
participating sureties, the date the email with zip file and password 
is sent will be the date of demand for purposes of establishing the 
petition response period of 60 days as required by 19 CFR 172.4.
    Participation in the test will provide test participants with the 
opportunity to test and give feedback to CBP on the EIDS test design 
and scope. Participation may also enable test participants to determine 
whether receiving the CBP Form 5955A electronically allows them to 
better track and reference demands on their bonds, to communicate more 
effectively with their clients and CBP, and to better understand when 
their bonds become obligated. Consequently, participation may allow 
sureties to better manage and validate their bond issuance and bond 
obligation processes.

III. Eligibility Requirements, Application Process, and Acceptance Into 
the Test

    CBP is opening this test to sureties that receive the CBP Form 
5955A. Participating sureties must have the ability to receive zip 
files at the email address provided and to open zip files and PDF 
documents. Every surety must have a 3-digit surety code to be eligible 
to participate in the test.\2\
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    \2\ Inquiries regarding the 3-digit surety code should be 
directed to the CBP Office of Finance, Revenue Division at 
[email protected].
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    Sureties interested in participating in the EIDS test should submit 
an email to the Civil Enforcement Division at [email protected] stating 
their interest and ability to meet the eligibility criteria described 
in this notice. The email will serve as an electronic signature of 
intent to participate and must also include the email address to which 
the electronic notices will be sent, a point of contact name, and 
telephone number.
    CBP may, in its discretion, decline to permit an interested surety 
from participating in the EIDS test, to include, for example, if CBP 
determines that a surety has neglected or refused to pay a valid demand 
made on the surety company's bond or otherwise has failed to honor an 
obligation on that bond or if CBP determines that any other 
unacceptable compliance risk exists. If CBP declines an interested 
surety's request to participate in the EIDS test, CBP will provide 
notice and an opportunity to respond, which will follow the procedures 
detailed below for proposed suspensions from test participation.
    CBP will notify applicants by email if they are selected to 
participate in the test. Applicants will also be notified once CBP has 
verified their ability to receive email notifications that they are 
permitted to participate fully in the test. Test participants will 
receive technical, operational, and policy guidance through all stages 
of test participation.

IV. Misconduct Under the Test

    Misconduct under the test may include failure to abide by the rules 
and procedures established under this test, failure to exercise 
reasonable care in the execution of participant obligations, or the 
failure to comply with any applicable laws or regulations that have not 
been waived. If a test participant fails to abide by the rules, 
procedures, or terms and conditions of the EIDS test as provided in 
this notice, and all other applicable Federal Register notices, or 
fails to comply with any applicable laws and regulations, then the 
participant may be suspended from participating in this test. 
Additionally, and in accordance with the procedures below, CBP may 
suspend a test participant based on a determination that an 
unacceptable compliance risk exists.
    If the Director, Civil Enforcement Division (CED), Trade Remedy Law 
Enforcement Directorate, Office of Trade, finds that there is a basis 
to suspend a participant from participating in the test, then CBP will 
provide a written notice, via email, proposing the suspension with a 
description of the facts or conduct supporting the proposal. The test 
participant will have the opportunity to reply to the Director's email 
within ten (10) business days of the date of the written notice. When

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responding to a proposed suspension from the test, the participant 
should address the facts or conduct charges contained in the notice and 
state how compliance has been or will be achieved.
    If no timely response is received, the proposed suspension becomes 
the final decision of CBP as of the date that the response period 
expires. If a timely response is received, the Director, CED, will 
issue a final decision in writing, by email, on the proposed suspension 
within thirty (30) business days after receiving the response from the 
test participant, unless such time is extended for good cause. 
Suspension of a test participant's privileges will take place either 
when the proposal becomes final, if the participant fails to timely 
respond to the proposed suspension, or upon the final adverse decision 
issued by the Director after the participant has responded. The 
decision to suspend a surety from participation in the test may be 
appealed to the Executive Assistant Commissioner, Office of Trade, 
within fifteen (15) days of the date of CBP's final adverse decision, 
by submitting an email entitled, ``Appeal--EIDS Suspension'', to the 
Executive Assistant Commissioner, CBP, at [email protected], and 
attaching a copy of the decision being appealed. The surety filing the 
appeal must set forth its reasons for appealing the Director, CED's 
final decision. The Executive Assistant Commissioner's decision is not 
subject to further review.

V. Test Evaluation Criteria

    All interested parties are invited to comment on any aspect of this 
test at any time. To ensure adequate feedback, participants are 
required to take part in evaluation of the test. CBP needs comments and 
feedback on all aspects of this test, including the design, conduct and 
implementation of the test, to determine whether to modify, alter, 
expand, limit, continue, end, or implement this program. Comments 
should be submitted via email to [email protected], with the subject 
line reading ``Comments/Questions on EIDS Test.''
    The EIDS test is intended to evaluate the feasibility of sending 
via email the CBP Form 5955A to sureties. CBP will evaluate whether the 
test: (1) improves CBP's ability to quickly, safely and securely 
transmit the CBP Form 5955A to the surety; (2) enables sureties to 
better track claims posted against their bonds; (3) enables sureties to 
timely respond to claims; (4) obtains buy-in from stakeholders 
(including FPF Officers, sureties, and trade associations); and, (5) 
facilitates legal compliance with the laws, regulations, policies, and 
instructions enforced by CBP. At the conclusion of the test, an 
evaluation will be conducted to assess the efficacy of the information 
received throughout the course of the test. The final results of the 
evaluation will be published in the Federal Register and the Customs 
Bulletin as required by section 101.9(b)(2) of the CBP regulations (19 
CFR 101.9(b)(2)).
    Should the EIDS test be successful and ultimately be codified under 
the CBP regulations, CBP anticipates that this data would greatly 
enhance CBP's penalty and liquidated damages notification process, 
reduce risk, and improve compliance operations. CBP would also 
anticipate greater visibility into bond claims, which will support 
better decision-making during and after the case resolution process.

VI. Confidentiality

    Data submitted and entered into SEACATS may include confidential 
commercial or financial information which may be protected under the 
Trade Secrets Act (18 U.S.C. 1905), the Freedom of Information Act (5 
U.S.C. 552), and the Privacy Act (5 U.S.C. 552a). The electronic notice 
of demand on surety will only contain that information that is 
currently provided on the paper CBP Form 5955A. However, as stated in 
previous test notices, participation in this test or any of the 
previous NCAP tests is not confidential and, therefore, upon receipt of 
a written Freedom of Information Act request, the name(s) of an 
approved participant(s) will be disclosed by CBP in accordance with 5 
U.S.C. 552.

John P. Leonard,
Acting Executive Assistant Commissioner, Office of Trade.
[FR Doc. 2023-24907 Filed 11-9-23; 8:45 am]
BILLING CODE 9111-14-P