Census to Make More Parties Responsible for Export Filings of In-Transit Shipments

The final rule, released Aug. 13 and effective Sept. 15, builds on an October proposed rule that sought to add more parties that qualify under in-transit export scenarios as the U.S. Principal Party in Interest, which is the party responsible for submitting export filings in the Automated Export System (see 2410300040). Operators of warehouses, storage facilities, foreign-trade zones or bonded warehouses, along with customs brokers, may now be considered the USPPI in those scenarios.

When the customs broker is the USPPI and helps prepare the filing of Electronic Export Information by providing information from the import entry, “the customs broker must have consent from the importer of record to disclose confidential information to third parties,” Census said. When a warehouse, storage facility, foreign-trade zone or bonded warehouse operator is the USPPI, “they are responsible for the EEI based on information they have or have received from other parties to the export transaction.”

In its 2024 proposed rule, Census said it was considering the change after seeing an uptick in questions about transactions involving imports handled by customs brokers that were later exported. Although customs brokers have typically been the USPPI in these cases, the agency said that “may no longer be practical” if the goods are stored in a facility or FTZ for months or even years after entering the U.S.

Census also added new language to clarify that if the customs broker or foreign person is listed as the importer of record at the time of the import, the customs broker “shall be listed as the USPPI” in the export filing “if the goods are being exported without change or enhancement in thirty (30) calendar days or less of import.” After 30 days, the customs broker can decide whether to “retain the USPPI responsibilities,” Census said. If they choose not to, the warehouse or storage facility “in possession and with knowledge and control of the goods when the goods begin their journey to the port of export” will be the USPPI in any export filing.

The agency said it mostly received positive feedback about the change, noting that one public commenter said it would help “streamline the export process and ensure clarity in determining the responsible party.”

But at least one commenter urged Census to not move forward with the change, saying it would make certain export transactions “more difficult, protracted, tedious, and frustrating.” Another commenter asked Census to clarify that the changes could “increase compliance burden and cost,” and to acknowledge that businesses handling perishable goods, pharmaceuticals, high-value electronics and hazardous materials “would be burdened by these proposed requirements because of the delay in export clearance.”

Census said it believes the changes “add more clarity and practical solutions to existing provisions, which reduces ambiguity and, therefore, filing time and errors that delay export clearance.” It also noted that the rule was “broadly supported by other public comments.”

But Census did add new language into its regulations to address concerns from commenters that USPPIs may not always have total visibility into whether those in-transit shipments comply with U.S. export controls.

Five commenters told the agency that “USPPIs in the new scenarios may not have complete knowledge of the goods, including the export control requirements.” Two commenters asked Census to revise its civil penalty provisions “by acknowledging that the USPPI relies on other parties who have the actual knowledge of the merchandise being exported.”

Census said it agreed with those points and included a statement that says the USPPIs can “reasonably rely on information provided by other parties who have actual knowledge of the goods.” It added that it “agrees that the new parties listed in the USPPI scenarios … may not always have all the information available to comply with” the agency’s Foreign Trade Regulations. “The Census Bureau will continue to work with the CBP on their EEI penalty mitigation guidelines.”

The agency also clarified that shipments admitted into bonded warehouses and facilities, along with “in-bond movements,” aren’t impacted by this rule. It stressed that the changes are “solely for goods originating from a foreign country that move in-transit through the United States and are subsequently exported and are not entered into the commerce of the United States for consumption or warehousing.”

In its proposed rule, Census also said the changes 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 has been studying alternative ways to collect that information after receiving significant pushback from companies and trade groups that said the change would lead to costly compliance challenges (see 2203160026, 2301230008, 2309130002 and 2403270056).

The agency last year said this rule would give Census a way to collect that data by requiring export filers to use the entry number and Foreign Trade Zone Admission Number from the original import, which would “link the export to the import for the purpose of collecting the country of origin.” One commenter said this information “should be used to support automatic drawback claims, which would be a tangible benefit to exporters.”

But others opposed the change, saying there are “costs and operational challenges, such as software system limitations, to identifying a one-to-one relationship between the admission of goods to an FTZ and the entire shipment of goods exported.” Others said trade industry officials working in FTZ warehousing “lack the information technology systems to comply with the proposal” and that obtaining the country of origin from an entry number “at the shipment level of the export” may lead to inaccurately reported data.

Census said it “agrees with commenters on this proposed rule that filers would face challenges to reporting the entry number as proposed and critical data could be missed,” and it also agreed with the recommendation of collecting the country of origin data element “in place of the entry number.”

“Based on the comments received, the Census Bureau has determined it will collect country of origin, but will issue a future rule related to the implementation of it,” the agency said.

Census also revised its detention for “ultimate consignee” to clarify that the ultimate consignee may be the purchaser, not just the end-user or the foreign principal party in interest. The agency now defines the ultimate consignee as the "person located abroad who ultimately receives the export shipment, as known at the time of export. The ultimate consignee is not a foreign forwarding agent or intermediate consignee, but may be the FPPI, buyer (purchaser), or end user."

The agency also revised its definition for "intermediate consignee" to: "the person located abroad who acts as an agent for the principal party in interest and takes physical possession of the goods for the purpose of effecting delivery of goods to the ultimate consignee. The intermediate consignee may be a foreign forwarding agent or other person who acts as an agent for a principal party in interest."

The final rule makes other changes to the agency’s trade regulations, including by revising other definitions along with confidentiality protocols, penalty provisions, and the voluntary self-disclosure processes to “ensure greater clarity, accuracy, and consistency throughout the FTR.”