Census Proposal Would Make Warehouses, FTZs the USPPI for In-Transit Shipments

The rule, released Oct. 30, would expand the types of parties that qualify under those export scenarios as the U.S. Principal Party in Interest, which is the party responsible for submitting export filings in the Automated Export System. The rule proposes that warehouses, storage facilities or foreign-trade zones be considered the USPPI in these scenarios because they have “knowledge and control of the goods destined to be exported.”

Census said customs brokers have typically been the USPPI in these cases, but that “may no longer be practical” if the goods are stored in a warehouse, storage facility, or FTZ for months or even years after entering the U.S. “In many cases, additional parties other than the customs broker have knowledge and control” of those goods, Census said.

Census drafted the proposal, which it previewed in July (see 2407160047), after seeing an uptick in “inquiries” about transactions involving imports handled by customs brokers that were later exported. It’s seeking public comments about the change, including the “potential value of clarifying” who can be listed as the USPPI in these situations.

The agency also is proposing that the Electronic Export Information for these exports should include the entry number attached to the original import.

Census said this change could help the agency collect the data it was hoping to gather as part of a 2021 proposed rule that would have required U.S. parties filing EEI for foreign-produced goods to declare the origin for their item under a new data element in AES (see 2112140033). Census hasn't yet finalized that rule; agency officials said Census received significant pushback from companies and trade groups that said the change would lead to costly compliance challenges (see 2203160026, 2301230008 and 2309130002).

But if the rule issued this week is finalized, it would give Census “a linkage to the CBP entry data where the [country of origin] data can be obtained to achieve" the 2021 rule's "statistical purposes," the agency said. Census is also proposing to clarify that when the customs broker is the USPPI, the broker needs to “obtain consent” from its client before sharing information about the import in EEI filed in AES.

The rule also proposes several other revisions to “ensure clarity, accuracy, and consistency throughout” the Foreign Trade Regulations, including by adding, removing and revising various definitions. One change could clarify that no EEI filing is required for goods moving in-transit through the U.S., Puerto Rico or the U.S. Virgin Islands “from one country or area to another where such goods do not enter the United States for consumption or warehousing.”

Other changes would revise certain EEI filing requirements for exports subject to Drug Enforcement Agency regulations; revise the list of information that a USPPI and an authorized agent provide in a routed export transaction; and clarify language about AES downtime, confidentiality, penalties and voluntary self-disclosures. Other proposed revisions make grammatical and style changes to the FTR.

Census said it’s seeking feedback on all the proposed changes and how they would affect export filers. It specifically asked industry to provide information about how long it would take a company to “make programming changes to potentially adapt to the changes in this proposed rule and interface to the AES.” It also asked whether companies will need to put in place new “business practices” to “come into compliance with the changes,” and how long that would take.

Public comments are due by Dec. 30.