U.S. Customs and Border Protection (“CBP”) recently released guidance that updates CBP’s process for setting bond amounts.  This new document, which we have linked below, replaces a 1991 directive on the same topic.

https://www.cbp.gov/document/guidance/guide-public-how-cbp-sets-bond-amounts

Bond amounts are generally set using a formula which is equal to 10 percent of the duties, taxes and fees paid in the previous 12 months (this formula can change if an importer has unpaid invoices from CBP within that same period).  CBP reviews this formula for each importer on a regular basis and, if necessary, issues notices for increased bond amounts whenever the formula yields a number higher than an importer’s current bond amount.  These types of “bond insufficiency” notices can lead to demands for collateral by sureties and cause “bond stacking” issues where CBP increases bond amounts multiple times in a calendar year necessitating the need for multiple bonds. To this point, CBP’s new guidance specifies that it will apply this formula to an importer’s “total estimated” duties in the previous 12 month period whereas the 1991 guidance applied the formula against the duty “paid.”  This change may result in more frequent demands from CBP for increased bond amounts especially where there are unexpected duty increases (even if the additional duty bills are subject to protest) or the potential for additional duty assessments as the result of a change in the deposit rate in an antidumping or countervailing duty proceeding.

Although many of the remaining changes were clerical in nature, (e.g., updating references to “Customs” with references to “CBP”), there are several other important amendments in the new Guidance including the following:

• A new a section addressing eBond transmissions.
• A new Appendix identifying special classes of merchandise subject to regulation by Partner Government Agencies that provides minimum bond amounts in those cases (e.g., flammable fabrics regulated by the Consumer Product Safety Commission).
• Previously only Activity Code 1 (Importer or Broker) bonds were set in increments of $10K up to $100K and then increments of $100K for larger bonds.  The new guidance applies this standard to ALL continuous bonds.
• Updated guidance regarding bonds for Foreign Trade Zones (“FTZ”) including a minimum $50K bond for each activated FTZ and a list of circumstances when FTZ bond amount increases are required (e.g. substantial alterations to the zone area, change in character to the merchandise admitted into the zone).

We encourage importers and brokers to review this document carefully to determine whether it will impact current bonds or bonds that are scheduled to renew in the near future.  Should you have any questions, please feel free to contact any of our attorneys.