Customs and Border Protection's Bond Program, 266-282 [E9-30920]

Agencies

• DEPARTMENT OF HOMELAND SECURITY
• DEPARTMENT OF THE TREASURY
• Bureau of Customs and Border Protection
• Department of Treasury

[Federal Register Volume 75, Number 2 (Tuesday, January 5, 2010)]
[Proposed Rules]
[Pages 266-282]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-30920]


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DEPARTMENT OF HOMELAND SECURITY

Bureau of Customs and Border Protection

DEPARTMENT OF THE TREASURY

19 CFR Parts 101, 113, and 133

[Docket No. USCBP-2006-0013]
RIN 1505-AB54


Customs and Border Protection's Bond Program

AGENCIES: Customs and Border Protection, Department of Homeland 
Security; Department of the Treasury.

ACTION: Notice of proposed rulemaking.

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SUMMARY: This document proposes amendments to title 19 of the Code of 
Federal Regulations to reflect the centralization of the continuous 
bond program at Customs and Border Protection's (CBP's) Revenue 
Division, Office of Finance. Pursuant to this centralization, 
continuous bonds must be filed at the Revenue Division via mail, fax, 
or in an electronic format, and the Revenue Division will assume the 
bond functions previously performed at the port level. The authority to 
approve single transaction bonds will remain with port directors. The 
changes proposed in this document support CBP's bond program by 
ensuring an efficient and uniform approach to the approval, 
maintenance, and periodic review of continuous bonds. Additionally, the 
proposed changes update provisions to accommodate the use of 
information technology and modern business practices.

DATES: Comments must be received on or before March 8, 2010.

ADDRESSES: You may submit comments, identified by Docket No. USCBP-
2006-0013, by one of the following methods:
     Federal eRulemaking Portal: https://www.regulations.gov. 
Follow the instructions for submitting comments via Docket No. USCBP-
2006-0013.
     Mail: Trade and Commercial Regulations Branch, Regulations 
and Rulings, Customs and Border Protection, 799 9th St., NW. (Mint 
Annex), Washington, DC 20229-1179.
Instructions: All submissions received must include the agency name and 
docket number for this rulemaking. All comments received will be posted 
without change to https://www.regulations.gov, including any personal 
information provided. For detailed instructions on submitting comments 
and additional information on the rulemaking process, see the

[[Page 267]]

``Public Participation'' heading of the SUPPLEMENTARY INFORMATION 
section of this document.
    Docket: For access to the docket to read background documents or 
comments received, go to https://www.regulations.gov. Submitted comments 
may also be inspected during regular business days between the hours of 
9 a.m. and 4:30 p.m. at the Trade and Commercial Regulations Branch, 
Customs and Border Protection, 799 9th Street, NW., 5th Floor, 
Washington, DC. Arrangements to inspect submitted comments should be 
made in advance by calling Joseph Clark at (202) 325-0118.

FOR FURTHER INFORMATION CONTACT: Bruce Ingalls, Chief, Debt Management 
Branch, Revenue Division, Customs and Border Protection, Tel. (317) 
298-1307.

SUPPLEMENTARY INFORMATION: 

Public Participation

    Interested persons are invited to participate in this rulemaking by 
submitting written data, views, or arguments on all aspects of the 
proposed rule. Customs and Border Protection (CBP) also invites 
comments that relate to the economic, environmental, or federalism 
effects that might result from this proposed rule. If appropriate to a 
specific comment, the commenter should reference the specific portion 
of the proposed rule, explain the reason for any recommended change, 
and include data, information, or authority that support such 
recommended change.

Background

    This document proposes amendments to title 19 of the Code of 
Federal Regulations (19 CFR) to reflect the centralization of the 
continuous bond program at CBP's Revenue Division (RD), Office of 
Finance, in Indianapolis, Indiana. Pursuant to this centralization, 
continuous bonds must be filed, reviewed and, if approved, maintained 
at the RD. It is proposed that the documentation for these types of 
bonds, including CBP Form 301, applications, riders, terminations, 
power of attorney forms, and Importer ID Input Records (CBP Form 5106), 
must be filed at the RD via mail, fax, or in an electronic format as 
prescribed by CBP. The RD will assume the bond functions previously 
performed at the port level, with the noted exception that the 
authority to approve single transaction bonds will remain with port 
directors.
    It is noted that most continuous basic importation bonds are no 
longer processed and retained on file at the ports, and the majority of 
bond sufficiency matters concerning these bonds are currently processed 
at the RD. In 2003, CBP port directors delegated the authority to 
review and process these types of bonds to the RD. Consequently, under 
existing procedures, any person who is required to post a continuous 
basic importation bond to secure a CBP transaction or multiple 
transactions has the option of filing the bond directly with the port 
director (as per 19 CFR 113.11), or indirectly to the RD. In fact, 
continuous basic importation bonds that are submitted directly to the 
port are subsequently referred to the RD by the port director. Also in 
2003, the Director of the International Trade Compliance Division 
authorized, per 19 CFR 113.15, port directors to allow the retention of 
approved continuous bonds at the RD.
    Many of the changes to 19 CFR part 113 proposed in this document 
are intended to facilitate the use of electronic submission of 
continuous bond documentation. The requirements for the electronic 
submission of bond documentation will be available on the CBP Web site, 
https://www.cbp.gov. The Web site will feature a direct link to CBP bond 
program directives.
    The changes proposed in this document implement recommendations set 
forth in a review of the continuous bond program commissioned by CBP. 
See ``Grant Thornton Review of Customs Continuous Transaction (Entry) 
Bonds,'' dated April 3, 2003. The study found that centralization of 
the continuous bond program would strengthen the effectiveness of the 
program by enhancing efficiency and uniformity. Arrangements for public 
inspection of the document may be made by calling Joseph Clark at (202) 
572-8768.
    This document also proposes non-substantive amendments to 19 CFR to 
reflect the nomenclature changes made necessary by the transfer of the 
legacy U.S. Customs Service of the Department of the Treasury to the 
Department of Homeland Security (DHS) and DHS' subsequent renaming of 
the agency as U.S. Customs and Border Protection on March 31, 2007 (see 
72 FR 20131, dated April 23, 2007). As a consequence of these changes, 
this document proposes certain non-substantive nomenclature changes to 
reflect the realities just described, and the issuance of new 
definitions in the regulations whereby the term ``Customs'' means 
``Customs and Border Protection,'' the terms ``Commissioner'' and 
``Commissioner of Customs'' mean ``Commissioner of Customs and Border 
Protection,'' the acronym ``CBP'' means ``Customs and Border 
Protection,'' and the acronym ``RD'' means ``Revenue Division.''

Explanation of Amendments

    It is proposed to amend title 19 of the CFR to reflect the 
consolidation of the continuous bond program at the Revenue Division 
(RD), the use of electronic filing for the submission of continuous 
bonds and related documentation, and the transfer of Customs and Border 
Protection (CBP) to the Department of Homeland Security (DHS). A more 
detailed explanation of the proposed amendments, other than those 
involving technical corrections or minor wording and editorial changes, 
is set forth below.

Section 101.1 Definitions

    Section 101.1 of title 19 of the CFR (19 CFR 101.1) sets forth the 
meaning of certain terms as used throughout Chapter 1 of title 19. To 
reflect certain nomenclature changes made necessary by the transfer of 
the U.S. Customs Service from the Department of the Treasury to DHS and 
the subsequent renaming of the agency as the U.S. Customs and Border 
Protection (CBP), it is proposed to add new definitions to Sec.  101.1 
whereby:
     The terms ``Customs'' and ``Customs Service'' mean 
``Customs and Border Protection.''
     The terms ``Customs Regulations'' and ``CBP Regulations'' 
mean ``title 19 of the Code of Federal Regulations (19 CFR).''
     The terms ``Commissioner'' and ``Commissioner of Customs'' 
mean ``Commissioner of Customs and Border Protection.''
     The acronym ``CBP'' means ``Customs and Border 
Protection.''
     The acronym ``RD'' means ``Revenue Division, Office of 
Finance, Customs and Border Protection.''

Section 113.1 Authority To Require Security or Execution of Bond

    Section 113.1 of title 19 of the CFR (19 CFR 113.1) provides that 
where a bond or other security is not specifically required by law, the 
Commissioner of Customs, pursuant to Treasury Department Order No. 165 
Revised, as amended (T.D. 53654, 19 FR 7241, November 6, 1954), may by 
regulation or specific instruction require, or authorize the port 
director to require, such bonds or other security as may be considered 
necessary to protect the revenue or to assure compliance with the law.
    It is proposed to amend Sec.  113.1 to reflect:
     The transfer of authority over certain functions from the 
Secretary of the Treasury to the Secretary of Homeland Security 
effected by the Homeland Security Act of 2002;

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     The delegation of the authority to approve certain customs 
revenue functions from the Secretary of the Treasury Department to the 
Secretary of Homeland Security pursuant to Treasury Department Order 
No. 100-16, dated May 15, 2003, Appendix to part 0 of title 19 of the 
CFR (19 CFR part 0); and
     The subsequent delegation of authority from the Secretary 
of Homeland Security to the Commissioner of CBP pursuant to DHS 
Delegation Order 7010.3, dated May, 2006.

Accordingly, it is proposed to remove from Sec.  113.1 the references 
to Treasury Department Order No. 165 and T.D. 53654 and replace them 
with citations to the DHS Delegation Order. Also, language regarding 
the authority of the Commissioner to require bonds or other security by 
regulation is proposed to be removed from this section as unnecessary 
because any regulation requiring a bond will clearly state the 
authority under which the requirement is imposed. Lastly, it is 
proposed to amend this section by adding ``Director, Revenue Division'' 
as among those the Commissioner of CBP may authorize to require bonds 
or other security to reflect that continuous bonds will now be 
processed at the RD.

Section 113.11 Bond Approval; Sec.  113.12 Bond Application

    Section 113.11 of title 19 of the CFR (19 CFR 113.11) provides, in 
pertinent part, that bonds must be submitted on CBP Form 301 to the 
appropriate port director where they will undergo review for 
sufficiency. Section 113.12 of title 19 (19 CFR 113.12) sets forth the 
required elements of an application for both single transaction and 
continuous bonds.
    This document proposes reversing the order of these provisions so 
that the section pertaining to bond applications (existing Sec.  
113.12) will appear first in the regulations at Sec.  113.11, and the 
section pertaining to bond approval (existing Sec.  113.11) will appear 
at Sec.  113.12. It is also proposed to revise these provisions to more 
accurately reflect the sequence of events and current procedures that 
comprise the bond application and approval process.
    To that end, it is proposed to amend newly designated Sec.  113.11 
(existing Sec.  113.12) to more specifically identify the information 
required in a bond application, and to state that continuous bond 
applications must be submitted to the RD via mail, fax, or in an 
electronic format as prescribed by CBP. This section will provide that 
mail, fax, and electronic (e-mail) submissions must be sent to the 
addresses/fax number listed on the CBP Web site located at https://www.cbp.gov.
    It is also proposed to amend the certification requirements set 
forth in newly designated Sec.  113.11(e) (existing Sec.  113.12(c)), 
to provide for and facilitate electronic filing on the bond 
application. As noted above, this document proposes amendments to the 
continuous bond application process that would permit certain 
documentation to be submitted to the RD in an electronic format. Such 
electronic submissions will not contain a written signature or seal, as 
is required by various bond provisions throughout part 113. It is 
therefore proposed to add alternative certification language that 
states that bonds submitted electronically are legally binding to the 
same extent as if signed and under seal. Accordingly, it is proposed to 
divide newly designated Sec.  113.11(e) (existing Sec.  113.12(c)) into 
separate subparagraphs. Paragraph (e)(1) will set forth the existing 
certification language applicable to paper bond submissions and require 
that a bond be affixed with a corporate seal if required by Sec.  
113.33. New paragraph (e)(2) will state that electronic bond 
documentation containing the requisite certification language will be 
legally binding to the same extent as if signed and submitted under 
seal. New paragraph (e)(3) will state that CBP is entitled to presume, 
without verification, that submitted bond applications and related 
documentation, which include the bond, are properly executed, complete, 
accurate, and in full compliance with all applicable laws.
    The changes proposed to newly designated Sec.  113.12 involve 
separating the approval procedures applicable to single transaction and 
continuous bonds. It is proposed to add language stating that when CBP 
approves a bond, it will notify filers, sureties and principals by 
sending them a CBP- assigned bond number. It is also proposed to add a 
new paragraph (c) that states that CBP may refuse to accept any new 
obligations under a previously approved bond that requires 
modification, or where there has been a failure to comply with Sec.  
113.11(d) (failure to provide application updates) or Sec.  113.24(d) 
(failure to provide rider).
    Lastly, in order to accurately reflect the agency's name, it is 
proposed to change the name ``Customs Form 301'' where it appears in 
this section and elsewhere in part 113, to ``CBP Form 301.''

Section 113.13 Amount of Bond

    Section 113.13 of title 19 of the CFR (19 CFR 113.13) sets forth 
the guidelines for determining bond amounts. Specifically, this section 
addresses minimum bond amounts, guidelines for determining the 
sufficiency of bond amounts, and the procedures by which CBP will 
periodically review bond sufficiency and request additional security.
    As noted above, most continuous basic importation bonds are no 
longer reviewed and approved at the port level. The vast majority of 
bond sufficiency matters concerning continuous bonds are processed at 
the RD. To reflect this centralization, it is proposed to amend Sec.  
113.13 (b), (c), and (d) by replacing the references to ``port 
director'' and ``drawback office'' with a more generalized reference to 
``CBP.'' Also, it is proposed to remove the language in paragraph (c) 
that permits a principal 30 days from the date of notification to 
remedy a deficiency. If a deficiency is identified, CBP believes that 
in some instances 30 days is too long to permit the condition to 
continue. Accordingly, in recognition of the importance of bond 
sufficiency and to ensure compliance with all applicable laws and 
regulations in a more timely fashion, it is proposed to amend this 
provision to state that if a deficiency is identified, CBP may require 
additional securities for any and all of the principal's transactions 
until the deficiency is remedied. Similarly, it is proposed to amend 
paragraph (d) to state that CBP may immediately require additional 
security.

Section 113.14 Approved Form of Bond Inadequate

    Section 113.14 of title 19 of the CFR (19 CFR 113.14) states that 
if none of the conditions contained in subpart G of part 113 is 
applicable to a transaction sought to be secured, the port director may 
draft conditions to cover the transaction and the bond may be executed 
upon approval by the Director, Border Security and Trade Compliance 
Division at CBP Headquarters.
    As a result of the centralization of the bond program, continuous 
bonds will no longer be approved at the port level. The issuance of 
single transaction bonds, however, will remain under the authority of 
port directors. It is therefore proposed to amend Sec.  113.14 to 
reflect that either the Director, Revenue Division or the port 
director, as appropriate, will draft conditions to secure a transaction 
when the conditions contained in subpart G of part 113 do not apply. It 
also proposed to remove the reference to ``Director, Border Security 
and Trade Compliance Division'' and provide, instead, that additional 
bond conditions to secure a transaction, where the conditions

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contained in subpart G of part 113 do not adequately secure the 
transaction, must be approved by the Executive Director, Regulations 
and Rulings, Office of International Trade.

Section 113.15 Retention of Approved Bonds

    Section 113.15 of title 19 of the CFR (19 CFR 113.15) provides, in 
pertinent part, that all bonds approved by the port director, except 
the bond containing the agreement to pay court costs (condemned goods), 
shall remain on file in the port office unless the port director is 
directed in writing as to other disposition.
    It is proposed to amend this section to provide that approved 
continuous bonds will be retained on file at the RD or approved CBP 
back-up sites and approved single transaction bonds will remain on file 
at the port office.

Section 113.21 Information Required on the Bond

    Section 113.21 of title 19 of the CFR (19 CFR 113.21) prescribes 
the information required on the bond.
    This document revises paragraph (e) by removing the requirement 
that lines must be drawn through all blank spaces and blocks on the 
bond and adds language stating that CBP is entitled to presume, without 
verification, that submitted bond applications and related 
documentation, which include the bond, are properly executed, complete, 
accurate, and in full compliance with all applicable laws.

Section 113.22 Witnesses Required

    Section 113.22 of title 19 of the CFR (19 CFR 113.22) sets forth 
the witness requirements applicable to bonds. The witness requirement 
originated during a time when bonds were approved at the district 
level. If a party unknown to the Customs district office sought to 
execute a bond, witnesses were required to verify the party's identity. 
It is proposed to remove this section. CBP recognizes that the witness 
requirement is unnecessary inasmuch as a party who makes entry under a 
bond is obligated by that bond.

Section 113.23 Changes Made on the Bond

    Section 113.23 of title 19 of the CFR (19 CFR 113.23) describes the 
types of changes that may be made to a bond and the process by which to 
effect such changes. Paragraph (c) describes the type of changes that 
are permitted to a bond after it is signed, but prior to approval by 
CBP. Paragraph (d) provides that, except in limited circumstances, the 
port director will not permit changes to a bond after it has been 
approved and if changes are desired, a new bond is required.
    This document proposes to amend Sec.  113.23(c) to provide that CBP 
will not permit substantive changes to be made to a bond after it has 
been signed. In such circumstances the existing bond will be cancelled 
and a new bond must be executed. To reflect the centralization of the 
continuous bond program at the RD, this document also proposes to amend 
paragraph (d) by replacing the reference to ``port director'' with a 
more general reference to ``CBP.''

Section 113.24 Riders

    Section 113.24 of title 19 of the CFR (19 CFR 113.24) sets forth 
the terms pertaining to when riders may be attached to a bond and 
prescribes their appropriate formats. Paragraph (a) describes the types 
of riders that port directors may accept. Paragraph (b) describes where 
riders must be filed. Paragraph (c) requires that riders be attached to 
their related bond. Paragraph (d) prescribes the format of the rider 
and requires that riders be signed, sealed, witnessed and executed.
    Although the riders listed in Sec.  113.24(a) are the most common 
types of riders, they are not intended to represent an exhaustive list. 
For this reason, it is proposed to revise the first sentence of 
paragraph (a) so as to make clear that the list of enumerated riders is 
not comprehensive. Also, as a result of the centralization of the 
continuous bond program, it is proposed to state, in paragraph (b), 
that riders must be filed at the RD. Due to the fact that riders may be 
in an electronic format, it is proposed to amend paragraph (c) to state 
that riders submitted in this manner must contain a reference to the 
related bond's CBP-issued bond number. As this rulemaking proposes to 
remove the witness requirement set forth in Sec.  113.22 from the 
regulations, it is similarly proposed to remove this requirement from 
paragraph (d) and to require that riders submitted in an electronic 
format contain the certification language set forth in newly designated 
Sec.  113.11(e)(2). Lastly, to encourage the submission of complete and 
correct bonds, it is proposed to add a new paragraph that states that 
CBP may refuse to accept new conditions under a previously approved 
bond where there has been a failure to provide CBP with a required 
rider.

Section 113.25 Seals

    Section 113.25 of title 19 of the CFR (19 CFR 113.25) sets forth 
the requirements for bonds under seal. This section provides that seals 
must be affixed adjoining the signatures of the principal and surety 
and that bonds under seal must meet the requirements of the law of the 
State in which the bond was executed.
    As this document proposes to permit bonds to be submitted to the RD 
electronically, the seal requirements set forth in Sec.  113.25 require 
modification to accommodate electronic filing. It is proposed to 
separately describe the certification requirements applicable to paper 
bond submissions, and those applicable to bonds submitted in an 
electronic format. To that end, it is proposed that continuous bonds 
submitted electronically do not have to be affixed with a seal; 
however, where the law of the State in which the bond is executed 
requires a seal, the party executing the bond must include electronic 
certification language (set forth in newly designated Sec.  
113.11(e)(2) of this chapter, discussed supra), whereby the applicant 
certifies that he or she is acting under authority of the corporation 
and the certification constitutes legally binding evidence of the 
corporate seal. Additionally, it is proposed to require that where the 
law of the State in which the bond is executed requires a seal, the 
party executing the electronic bond must retain a copy of the paper 
seal and make such seal available to CBP for inspection upon request. 
This section also includes language stating that CBP is entitled to 
presume, without verification, that submitted bond applications and 
related documentation, which include the bond, are properly executed, 
complete, accurate, and in full compliance with all applicable laws.

Section 113.26 Effective Dates of Bonds and Riders

    Section 113.26 of title 19 of the CFR (19 CFR 113.26) prescribes 
the effective dates of bonds and riders for both single transaction and 
continuous bonds. Paragraph (a) of this section provides that bonds and 
riders may be filed up to 30 days before the effective date in order to 
provide CBP with adequate time for administrative review and 
processing. Paragraph (e) states that a rider to delete trade names and 
unincorporated divisions of a corporate principal will be effective on 
the date identified in the rider if the date is at least 10 business 
days after the date the port receives the rider.
    In an effort to permit both bond filers and CBP additional time for 
the filing and processing of bonds in advance of their effective date, 
it is proposed to extend the 30-day time period to 60 days. It is also 
proposed to require that

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the effective date of a rider is the date stated, so long as that date 
is at least 15 business days from the date CBP receives the rider.

Section 113.27 Effective Dates of Termination of Bond

    Section 113.27 of title 19 of the CFR (19 CFR 113.27) sets forth 
the effective dates of bond terminations made by the principal or 
surety, and describes the effect of such termination.
    It is proposed to make changes to paragraph (a), which provides for 
bond termination by the principal, and to paragraph (b), which provides 
for bond termination by the surety, to ensure that the terms of these 
provisions conform to one another. To that end, it is proposed to amend 
paragraph (a) to require that a principal's request to terminate a 
continuous bond be sent to the RD and that the termination will take 
effect on the date requested if that date is at least 15 business days 
from the date the termination request was received by the RD. 
Otherwise, the termination will be effective on the close of business 
15 business days from the date the termination request was received by 
the RD. It is proposed to amend paragraph (b) to require that a 
surety's notice of bond termination be sent to the RD, as well as to 
the principal. The surety's obligation under a bond will terminate on 
the date requested by the surety in the written notice of termination 
so long as that date is at least 15 business days from the date a 
request meeting all requirements was received by CBP. It is proposed to 
add language to both paragraphs (a) and (b) stating that once the RD 
has received a bond termination request, the termination cannot be 
withdrawn. Lastly, it is proposed to add language to paragraph (c) that 
provides that when a principal intends to continue to engage in the 
same activity as that secured by a bond to be terminated pursuant to 
this section, and the principal has submitted a replacement bond to 
secure that continued activity, no termination requested by a principal 
or surety will take effect until CBP has reviewed and approved the 
replacement bond.

Section 113.32 Partnerships as Principals

    Section 113.32 describes the various partnership requirements and 
liabilities as they pertain to bonds.
    It is proposed to revise paragraph (a) of this section by removing 
the bond requirements that pertain specifically to limited 
partnerships. As CBP's importer records in the automated systems make 
no distinction between limited partnerships and other partnerships, it 
is not necessary to collect this information from limited partnerships. 
It is also proposed to replace the more specific reference to ''port 
director or drawback office'' in paragraph (a) with a more general 
reference to ``CBP.''

Section 113.33 Corporations as Principals

    Section 113.33 of title 19 of the CFR (19 CFR 113.33) sets forth 
the requirements pertaining to corporations that execute a bond as 
principal. This section also describes when a power of attorney is 
necessary for either a corporate officer or attorney, and states that 
the provisions of this section apply to a corporate subsidiary that 
joins its parent corporation by signing the bond as co-principal.
    As the proposals in this document would permit continuous bonds to 
be submitted to the RD in an electronic format, this document proposes 
to amend Sec.  113.33 to reflect the use of this technology. It is also 
proposed to clarify within this section that a Limited Liability 
Corporation (LLC) is included within the concept of corporation.
    In paragraph (a), it is proposed to remove the signature 
requirement as this requirement is discussed in paragraph (b). In 
paragraph (b), it is proposed to add language stating that where the 
bond of a corporate principal is submitted in an electronic format, the 
bond must contain the certification language set forth in newly 
designated Sec.  113.11(e)(2) and the party executing the bond may be 
required to retain a copy of the seal, as per Sec.  113.25 as it is 
proposed to be amended. Also, it is proposed to add language stating 
that CBP is entitled to presume, without verification, that submitted 
bond applications and related documentation, which include the bond, 
are properly executed, complete, accurate, and in full compliance with 
all applicable laws. It is proposed to amend paragraph (c) by removing 
the language that states that a power of attorney will not be required 
if the person signing the bond on behalf of the corporation is known to 
the port director or drawback office to be the president, vice-
president, treasurer, or secretary of the corporation. Due to the fact 
that most bonds will now be sent to a centralized location at the RD, 
personal knowledge of an individual's position within a company is an 
unrealistic concept upon which to base the need for a power of 
attorney. It is also proposed to add in paragraph (c) that CBP is 
entitled to presume, without verification, that submitted bond 
applications and related documentation, which include the bond, are 
properly executed, complete, accurate, and in full compliance with all 
applicable laws. Lastly, it is proposed to amend paragraph (d) by 
replacing the reference to ``port director'' with ``RD.''

Section 113.35 Individual Sureties

    Section 113.35 of title 19 of the CFR (19 CFR 113.35) prescribes 
the criteria applicable to individuals who sign as sureties on a bond.
    The types of changes proposed to this section are the same as those 
discussed above (i.e., references to ``port director'' and ``Customs'' 
are replaced with references to ``CBP''). Regarding the surety 
qualifications set forth in Sec.  113.35(b), it is proposed to remove 
the requirement in paragraph (b)(2) that states that a married woman 
may be accepted as a surety, unless the State in which the bond is 
executed prohibits her from acting in that capacity. Similarly, it is 
proposed to remove the reference to married women in paragraph (b)(3). 
CBP will permit individuals who are legally authorized to act as 
sureties to do so. Also, it is proposed to amend paragraph (b)(4) which 
currently provides that each individual surety must have property 
available as security within the limits of the port where the contract 
of suretyship is to be approved. The local property requirement is no 
longer relevant and it is therefore proposed to amend the regulations 
to provide that individuals who sign as sureties on any type of bond 
must possess property within the customs territory of the United 
States. Lastly, it is proposed to amend paragraph (d) to remove the 
reference to ``special agent-in-charge'' and replace it with a 
reference to ``Immigration and Customs Enforcement (ICE).'' This change 
is necessary to reflect the fact that the former Customs Service 
special agents-in-charge are now part of ICE as a result of the 
transfer of the U.S. Customs Service to DHS and the subsequent division 
of the Customs Service into CBP and ICE.

Section 113.37 Corporate Sureties

    Section 113.37 of title 19 of the CFR (19 CFR 113.37) sets forth 
the rules pertaining to corporations executing a bond as surety.
    This document proposes to amend paragraph (e) to state that where a 
corporate surety submits a continuous bond to the RD in an electronic 
format the bond must contain the certification language prescribed by 
newly designated Sec.  113.11(e)(2) and the party executing the bond 
must retain a copy of the seal in accordance with Sec.  113.25(b). It 
is proposed to add to paragraph (e) that CBP is entitled to presume, 
without verification, that

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submitted bond applications and related documentation, which include 
the bond, are properly executed, complete, accurate, and in full 
compliance with all applicable laws.
    In Sec.  113.37(f), it is proposed to amend the last paragraph in 
the ``Corporate Sureties Agreement for Limitation of Liability,'' in 
the signature block, to require that an authorized CBP officer, and not 
specifically the Port Director or Director of the Drawback Office, sign 
the Agreement.
    Section 113.37(g) prescribes how corporations may execute powers of 
attorney to act on their behalf. Paragraphs (g)(1)(iii) and (g)(5)(iii) 
within this section pertain to the identification of specific ports on 
the CBP Form 5297 where an agent or attorney is authorized to act. As 
centralization of the bond program requires that all continuous bonds 
and the accompanying CBP Form 5297 be filed and processed at the RD, 
the identification of specific ports in this regard is no longer 
necessary, and it is proposed to remove these provisions from the 
regulations.
    Sections 113.37(g)(1)(v) and (vi) provide that the corporate surety 
power of attorney must contain the signatures of two principal officers 
of the corporation and be under seal. If the CBP Form 5297 is submitted 
to the RD in an electronic format, it is proposed to require that the 
document contain the certification language prescribed in newly 
designated Sec.  113.11(e)(2) and the corporate surety retain a copy of 
the seal as per Sec.  113.25(b).
    As noted above, as a result of the centralization of the bond 
program, it is proposed to amend Sec.  113.37(g)(2) to provide that a 
corporate surety power of attorney executed on a CBP Form 5297 in 
conjunction with a continuous bond must be filed at the RD via mail, 
fax, or in an electronic format. The RD will retain a copy of the CBP 
Form 5297 and return a RD-validated copy to the grantee.
    Section 113.37(g)(3) provides that if a grantee desires to use a 
power of attorney at a port covered by the power of attorney, other 
than the port where the power of attorney was filed, but before the 
first computer printout reflecting this power of attorney is received, 
the CBP Form 5297 must be filed in triplicate (original and two 
copies), rather than duplicate. As notice of approval of a power of 
attorney is electronically transmitted to the ports, it is proposed to 
remove this provision from the regulations.
    It is proposed to add a new paragraph (g)(5) to Sec.  113.37 that 
provides that CBP is entitled to presume, without verification, that 
submitted bond applications and related documentation, which include 
the bond, are properly executed, complete, accurate, and in full 
compliance with all applicable laws.

Section 113.38 Delinquent Sureties

    Section 113.38 of title 19 of the CFR (19 CFR 113.38) prescribes 
the extent to which a principal or surety on a CBP bond which is in 
default will be accepted on another CBP bond.
    It is proposed to amend Sec.  113.38(c)(1) to state that an 
internal advice request made pursuant to Sec.  177.11 should be 
directed to the Executive Director, Regulations and Rulings, Office of 
International Trade. It is proposed to amend paragraph (c)(2) to 
reflect the centralization of the continuous bond program at the RD by 
adding that the Director, Revenue Division, in addition to the 
Commissioner, may instruct CBP officers to not accept a bond secured by 
a corporate surety for the reasons specified. It is also proposed to 
require in Sec.  113.38(c)(4) that a copy of the notice of CBP's 
refusal to accept a surety's bonds, if not originating from the RD, 
must be sent to the Director, Revenue Division.

Section 113.39 Procedure To Remove a Surety From Treasury Department 
Circular 570

    Section 113.39 of title 19 of the CFR (19 CFR 113.39) sets forth 
the procedures by which CBP may seek to remove a surety company from 
Treasury Department Circular 570, which sets forth the list of approved 
surety companies.
    The changes proposed in this document would amend this section by 
removing references to port director and Fines, Penalties, and 
Forfeitures Officers and replacing them with a more general reference 
to ``appropriate CBP officer.'' This change is to reflect the fact that 
CBP personnel from the RD may also initiate the surety removal process.

Section 113.40 Acceptance of Cash Deposits or Obligations of the United 
States in Lieu of Sureties on Bonds

    Section 113.40 of title 19 of the CFR (19 CFR 113.40) prescribes 
the terms by which cash deposits or other types of U.S. obligations 
(i.e., certificates of indebtedness, Treasury notes, Treasury bills) 
may be accepted by CBP in lieu of sureties on bonds.
    To reflect the delegation of authority discussed earlier in this 
document, it is proposed to amend paragraph (a) of this section to 
include the Secretary of Homeland Security as among those who may 
authorize the enforcement of bond laws and regulations. To reflect the 
centralization of the continuous bond program at the RD, it is also 
proposed to amend this paragraph by stating that the Director, Revenue 
Division, and not the Port Director, is authorized to accept cash 
deposits in lieu of sureties on bonds. It is also proposed to add 
clarifying language that provides that cash deposits or other types of 
U.S. obligations accepted by CBP in lieu of sureties on bonds must be 
in an amount equal to the face amount of the bond that would be 
required if CBP were to elect to accept a bond. It is also proposed to 
amend the language to make clear that the option to deposit cash or 
U.S. obligations is at the option of the importer.
    Paragraph (b) is amended to reflect that the Director, Revenue 
Division, and not the port director, is authorized to sell U.S. 
obligations in case of any default in the performance of any of the 
conditions of the bond.
    In Sec.  113.40(c), it is proposed to amend the heading and text to 
reflect that the provision pertains to United States obligations, as 
well as cash deposited in lieu of sureties on the bond.
    Lastly, it is proposed to add new paragraphs (d) through (g) to 
clarify CBP's requirements with regards to these alternatives to surety 
bonds.

Section 113.43 Extension of Time Period

    Section 113.43 of title 19 of the CFR (19 CFR 113.43) provides that 
the port director, in certain circumstances, may extend the 120 day 
time period within which a document for which a bond or stipulation is 
given must be produced (see 19 CFR 113.42). The port director may 
extend this period for an additional period of 2 months.
    To lend more specificity to the time frames cited in this 
provision, it is proposed to state in paragraph (a) that the port 
director may extend the time period to produce documents for a period 
``not to exceed 60 days.'' It is also proposed to use the more specific 
60-day time frame in paragraph (b) that provides for late applications 
for bond extensions.

Section 113.62 Basic Importation and Entry Bond Conditions

    Section 113.62 of title 19 of the CFR (19 CFR 113.62) prescribes 
the conditions applicable to basic importation and entry bonds.
    The proposed changes to this section are predominantly editorial in 
nature, with the exception of a change proposed to paragraph (a) which 
clarifies that the bond covers payments of duties, taxes and other 
charges made via periodic monthly statement, and to paragraph

[[Page 272]]

(a)(3) which would remove the reference to port director and replace it 
with a reference to ``CBP'' to reflect the fact that pursuant to the 
consolidation of the bond program at the RD, most bonds will no longer 
be filed with the port director.

Section 113.64 International Carrier Bond Conditions

    Section 113.64 of title 19 of the CFR (19 CFR 113.64) pertains to 
international carrier bond conditions. Paragraph (a) describes a 
principal's and surety's agreement to pay penalties, duties, taxes, and 
other charges. The last sentence of paragraph (a) prescribes the 
penalties (liquidated damages) applicable to principals who fail to 
timely pay passenger processing fees to CBP.
    In an effort to more clearly describe when an obligor will be 
subject to liquidated damages for failure to timely pay certain fees, 
it is proposed to restructure this section so as to create a new 
paragraph (b) that specifically addresses situations where an obligor 
must pay liquidated damages for failure to timely submit passenger user 
fees, railroad car processing fees, and express courier consignment 
fees. It is also proposed to clarify that this section applies not only 
to collected fees, but to fees that were required to be collected but 
not timely remitted to CBP.

Sections 133.21, 133.25, 133.42 Bonds Related to Allegations of 
Counterfeit Trademarks

    Sections 133.21, 133.25 and 133.42 concern bonds relating to 
allegations of counterfeit trademarks. It is proposed to amend these 
provisions to allow these bonds to be continuous bonds.

Executive Order 12866

    Executive Order 12866 requires Federal agencies to conduct economic 
analyses of significant regulatory actions as a means to improve 
regulatory decision making. Significant regulatory actions include 
those that may: ``(1) [h]ave an annual effect on the economy of $100 
million or more or adversely affect in a material way the economy, a 
sector of the economy, productivity, competition, jobs, the 
environment, public health or safety, or State, local, or Tribal 
governments or communities; (2) [c]reate a serious inconsistency or 
otherwise interfere with an action taken or planned by another agency; 
(3) [m]aterially alter the budgetary impact of entitlements, grants, 
user fees, or loan programs or the rights and obligations of recipients 
thereof; or (4) [r]aise novel legal or policy issues arising out of 
legal mandates, the President's priorities, or the principles set forth 
in this Executive Order.'' These proposed amendments do not meet the 
criteria for a ``significant regulatory action'' as specified in 
Executive Order 12866.

Regulatory Flexibility Act

    The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) requires 
Federal agencies to examine the impact a rule would have on small 
entities. A small entity may be: A small business (defined as any 
independently owned and operated business not dominant in its field 
that qualifies as a small business per the Small Business Act); a small 
not-for-profit organization; or a small governmental jurisdiction 
(locality with fewer than 50,000 people).
    The entities affected by this proposed rule are importers and 
various other parties who file continuous bonds with CBP as required by 
CBP regulations. ``Importers'' are not defined as a ``major industry'' 
by the Small Business Administration (SBA) and do not have a unique 
North American Industry Classification System (NAICS) code; rather, 
virtually all industries classified by SBA include entities that import 
goods and services into the United States. Thus, entities affected by 
this proposed rule would likely consist of the broad range of large, 
medium, and small businesses operating under the customs laws and other 
laws that CBP administers and enforces. These entities include, but are 
not limited to, importers, brokers, and freight forwarders, as well as 
other businesses that conduct various activities under continuous 
bonds.
    The proposed amendments, if adopted as final, would align 
regulations with current common practice and improve efficiency by 
explicitly requiring importers to file continuous bonds at the Revenue 
Division via mail, fax, or in an electronic format. The changes 
proposed in this document support CBP's bond program by ensuring an 
efficient and uniform approach to the approval, maintenance, and 
periodic review of continuous bonds. Additionally, the proposed changes 
update provisions to accommodate the use of information technology and 
modern business practices by removing requirements for signatures and 
seals on electronic submissions.
    Because these amendments to the regulations affect such a wide-
ranging group of entities involved in the importation of goods to the 
United States, the number of entities subject to this proposed rule 
would be considered ``substantial.'' It is not anticipated that there 
will be additional costs associated with filing continuous bonds with 
the Revenue Division instead of the local port, and many importers 
already file continuous bonds directly with the Revenue Division. 
Additionally, these changes to the regulations would confer a benefit 
to the entities as a result of the removal of the requirement for 
signatures and seals on electronic submissions. The effects of these 
amendments, however, would not rise to the level of being considered a 
``significant'' economic impact. We welcome comments on this 
conclusion. If we do not receive any comments contradicting our 
findings, we may certify that this rule will not have a significant 
economic impact on a substantial number of small entities at the final 
rule stage.

Paperwork Reduction Act

    The collection of information contained in this proposed rulemaking 
was previously reviewed and approved by the Office of Management and 
Budget (OMB) in accordance with the requirements of the Paperwork 
Reduction Act of 1995 (44 U.S.C. 3507) under control number 1651-0050. 
There are no new collections of information proposed in this document.

Signing Authority

    This document is being issued in accordance with 19 CFR 0.1(a)(1).

List of Subjects

19 CFR Part 101

    Administrative practice and procedure, Customs duties and 
inspections, Organization and functions (Government agencies).

19 CFR Part 113

    Bonds, Customs duties and inspection, Imports, Reporting and 
recordkeeping requirements, Surety bonds.

19 CFR Part 133

    Bonds, Copyrights, Counterfeit goods, Customs duties and 
inspection, Imports, Reporting and recordkeeping requirements, 
Restricted merchandise, Seizures and forfeitures.

Proposed Amendments to the Regulations

    For the reasons stated above, it is proposed to amend parts 101 and 
113 of title 19 of the Code of Federal Regulations (19 CFR parts 101 
and 113) as follows:

PART 101--GENERAL PROVISIONS

    1. The general authority citation for part 101 is revised to read 
as follows:


[[Page 273]]


    Authority: 5 U.S.C. 301; 6 U.S.C. 101, et seq.; 19 U.S.C. 2, 66, 
1202 (General Note 3(i), Harmonized Tariff Schedule of the United 
States), 1623, 1624, 1646a.
* * * * *
    2. Section 101.1 is amended by adding five new definitions, in 
alphabetical order, to read as follows:


Sec.  101.1  Definitions.

* * * * *
    CBP. The term ``CBP'' means Customs and Border Protection.
    Commissioner or Commissioner of Customs. The terms ``Commissioner'' 
or ``Commissioner of Customs'' mean Commissioner of Customs and Border 
Protection.
    Customs or Customs Service. The terms ``Customs'' or ``Customs 
Service'' mean Customs and Border Protection.
    Customs Regulations or CBP Regulations. The terms ``Customs 
Regulations'' or ``CBP Regulations'' mean Chapter 1 of title 19 of the 
Code of Federal Regulations (19 CFR Chapter 1).
* * * * *
    RD. ``RD'' means Revenue Division, Office of Finance, Customs and 
Border Protection.
* * * * *

PART 113--CBP BONDS

    3. The general authority citation for part 113 is revised to read 
as follows:

    Authority: 6 U.S.C. 101, et seq.; 19 U.S.C. 66, 1623, 1624.
* * * * *
    4. The part 113 heading is revised to read as set forth above.


Sec.  113.0  [Amended]

    5. Section 113.0 is amended by removing the word ``Customs'' and 
adding in its place the term ``CBP''.
    6. Section 113.1 is revised to read as follows:


Sec.  113.1  Authority to require security or execution of bond.

    Where a bond or other security is not specifically required by law 
or regulation, the Commissioner of CBP, pursuant to DHS Delegation 
Number 7010.3, or any successive order, may by specific instruction 
require, or authorize the Director, Revenue Division or the port 
director to require, such bonds or other security considered necessary 
for the protection of the revenue or to assure compliance with any 
pertinent law, regulation, or instruction.
    7. In Sec.  113.2:
    a. The heading text is amended by removing the word ``Customs'' and 
adding in its place the term ``CBP'';
    b. The introductory text is amended by removing the word 
``Customs'' and adding in its place the term ``CBP'';
    c. Paragraph (c) is amended by removing the word ``shall'' and 
adding in its place the word ``will'', and by adding the word ``as'' 
before the word ``he''; and
    d. In paragraph (d), the first sentence is amended by removing the 
word ``entry'' and adding in its place the word ``transaction''; the 
second sentence is amended by removing the word ``shall'' and adding in 
its place the word ``will''; and the third sentence is amended by 
removing the word ``Customs'' and adding in its place the term ``CBP''.
    8. Section 113.4 is amended by revising paragraph (a) and amending 
paragraph (b) by removing the words ``Customs laws or regulations'' and 
adding in their place the words ``customs laws or CBP regulations''.
    The revision of Sec.  113.4(a) reads as follows:


Sec.  113.4  Bonds and carnets.

    (a) Bonds. All bonds required to be given under the customs laws or 
CBP regulations will be known as CBP bonds.
* * * * *
    9. Section 113.11 is revised to read as follows:


Sec.  113.11  Bond application.

    Each person who is required by law, regulation, or specific 
instruction to post a bond to secure a single or continuous (multiple) 
CBP transaction must submit a bond application in addition to the CBP 
Form 301, as follows:
    (a) Single transaction bond application. A port director may 
require a person who will be engaged in a single customs transaction to 
file a written bond application. The application for a single 
transaction bond may be in the form of a letter. The application must 
contain the information set forth in paragraph (c) of this section, 
where applicable, and must be filed at the port where the transaction 
will occur. When the proper bond in a sufficient amount is filed with 
the entry summary or with the entry, or when the entry summary is filed 
at the time of entry, an application will not be required.
    (b) Continuous bond application. To secure continuous (multiple) 
transactions, a bond application containing the applicable information 
set forth in paragraph (c) of this section must be submitted to the CBP 
Revenue Division (RD). The application may be in the form of a letter, 
and must be submitted to the RD via mail, fax, or in an electronic 
format (as prescribed by CBP) to the addresses/fax number listed on the 
CBP Internet Web site located at https://www.cbp.gov (see direct link to 
CBP bond program directives).
    (c) Required bond application information. (1) Applications for 
both the single and continuous transaction bonds described in 
paragraphs (a) and (b) of this section must contain the following 
information numerically identified in the following order:
    (i) Importer name;
    (ii) Importer number;
    (iii) Importer's physical address;
    (iv) Name, number, and address of any co-principals or 
unincorporated divisions/trade names that will use this bond (if 
applicable);
    (v) Description of the nature of the relationship between 
principal, co-principals, or unincorporated divisions/trade names that 
will use this bond (if applicable);
    (vi) A listing of any other importer numbers or bond numbers 
associated with the principal and all co-principals or unincorporated 
divisions/trade names;
    (vii) A description of the merchandise to be entered, including 
country of origin designations and applicable Harmonized Tariff 
Schedule of the United States (HTSUS) numbers;
    (viii) A description of the merchandise to be imported during the 
subsequent 12 months (if applicable), including country of origin 
designations and applicable HTSUS numbers. This will include imports of 
all the business entities that will be listed on the bond. If it is 
anticipated that the nature of the merchandise to be imported will 
change in any material respect during the subsequent 12 months, the 
change must be identified;
    (ix) For continuous bonds, the total entered value and total amount 
of all duties, taxes, and fees paid to CBP for the previous 12 months, 
plus the total estimated entered value and total estimated amount of 
all duties, taxes, and fees that will be paid to CBP during the 
subsequent 12 months. The total amount of duties, taxes and fees is the 
amount that would have been required to be deposited had the 
merchandise been entered for consumption even though some or all of the 
merchandise may have been entered under bond. If no imports were made 
during the 12 months prior to the application, the application letter 
should indicate ``zero'' and provide a statement of all duties, taxes, 
and fees it is estimated will accrue on all importations during the 
subsequent 12 months. If it is anticipated that the value of the 
merchandise to be imported will change in any material respect during 
the

[[Page 274]]

subsequent 12 months, the change must be identified. These estimations 
will include the import activity of all business entities that will be 
listed on the bond;
    (x) The type of bond applied for, including the proposed bond 
amount, activity code, and effective date;
    (xi) The printed name, title, phone, and fax numbers of a company 
officer or attorney-in-fact signing on behalf of principal;
    (xii) A certification statement (see paragraph (e) of this 
section); and
    (xiii) Signature of applicant and date. Electronic applications 
that contain the certification statement prescribed in paragraph (e)(2) 
of this section will be considered legally binding to the same extent 
as if signed and submitted under seal.
    (2) In addition to the data elements set forth in paragraph (c)(1) 
of this section, CBP may require the bond applicant to submit 
additional information as is deemed necessary for CBP to evaluate the 
application. Such information may be commodity-specific or company-
specific.
    (d) Application updates. If CBP approves a bond based upon the 
application, the principal on the bond must submit a new application to 
the issuing office (to the CBP Revenue Division in the case of 
continuous bonds) containing an update of the information required by 
paragraph (c) of this section whenever there is a material change in 
such information.
    (e) Signature and Certification--(1) Paper bonds. Paper bonds must 
be signed by the applicant, affixed with the corporate seal where 
required (see Sec.  113.33), and contain the following certification:

    I, --------, certify that the factual information contained in 
this submission is true and accurate, that the corporate seal (if 
applicable) complies with Sec.  113.25 of this chapter, and any 
information provided that is based upon estimates is based upon the 
best information available on the date of this document.

    (2) Bonds submitted in an electronic format. Bond applications 
submitted in an electronic format must contain the following 
certification and are legally binding to the same extent as if signed 
and submitted under seal:

    I, --------, certify that the factual information contained in 
this submission is true and accurate and any information provided 
which is based upon estimates is based upon the best information 
available on the date of this document. I also certify that I am 
acting under authority of -------- corporation and this 
certification constitutes evidence of the corporate seal and 
complies with Sec.  113.25 of this chapter.

    (3) Presumption of proper execution. CBP is entitled to presume, 
without verification, that submitted bond applications and related 
documentation, which include the bond, are properly executed, complete, 
accurate, and in full compliance with all applicable laws.
    10. Section 113.12 is revised to read as follows:


Sec.  113.12  Bond approval.

    (a) Single transaction bonds. The director of the CBP port where a 
single transaction bond is filed will approve a bond that is in proper 
form and that provides adequate security for the transaction. CBP is 
entitled to presume, without verification, that submitted bond 
applications and related documentation, which include the bond, are 
properly executed, complete, accurate, and in full compliance with all 
applicable laws.
    (b) Continuous bonds. Continuous bonds must be filed with the 
Revenue Division (RD). The RD bond team will determine whether the 
continuous bond is in proper form and provides adequate security. CBP 
is entitled to presume, without verification, that submitted bond 
applications and related documentation, which include the bond, are 
properly executed, complete, accurate, and in full compliance with all 
applicable laws. If approved, the RD will notify the filer, surety, and 
principal by issuing a CBP-assigned bond number. Only one continuous 
bond for a particular activity will be authorized for each principal.
    (c) Previously approved bond. CBP may refuse to accept any new 
obligations under a previously approved bond that requires 
modification, including where the principal or surety has failed to 
comply with Sec.  113.11(d) or Sec.  113.24(d), or where the principal 
has failed to deposit the required financial instruments as described 
in Sec.  113.40(a) for cash-in-lieu of surety bonds.
    11. In Sec.  113.13:
    a. The first sentence in paragraph (a) is amended by removing the 
words ``Customs bond shall'' and adding in their place the words ``CBP 
bond must'', and the second and third sentences in paragraph (a) are 
amended by removing the word ``shall'' each place that it appears and 
adding the word ``will'';
    b. The introductory text of paragraph (b) is amended by removing 
the words ``the port director or drawback office in the case of a bond 
relating to repayment of erroneous drawback payment (see Sec.  113.11) 
should at least'' and adding in their place the words ``CBP will''; 
paragraph (b)(2) is revised; and paragraph (b)(4) is amended by 
removing the word ``Customs'' and adding in its place the term ``CBP'';
    c. Paragraph (c) is revised; and
    d. Paragraph (d) is amended by removing the words ``a port director 
or drawback office'' and adding in their place the term ``CBP''; by 
removing the word ``Customs'' and adding in its place the words ``all 
applicable''; and by removing the words ``he shall'' and adding in 
their place the words ``CBP may immediately''.
    The revision of Sec.  113.13(b)(2) and (c) reads as follows:


Sec.  113.13  Amount of bond.

* * * * *
    (b) * * *
    (2) The prior record of the principal in complying with CBP demands 
for redelivery, the obligation to hold unexamined merchandise intact, 
and other requirements relating to enforcement and administration of 
customs and other laws and CBP regulations;
* * * * *
    (c) Periodic review of bond sufficiency. CBP will periodically 
review each bond on file to determine whether the bond is adequate to 
protect the revenue and ensure compliance with applicable law and 
regulations. If CBP determines that a bond is inadequate, the principal 
will be promptly notified in writing. Additional securities for any and 
all of the principal's transactions may be required until the 
deficiency is remedied.
* * * * *
    12. Section 113.14 is revised to read as follows:


Sec.  113.14  Approved form of bond inadequate.

    If CBP determines that none of the conditions contained in subpart 
G of this part is applicable to a transaction sought to be secured, the 
Director, Revenue Division or, in the case of a single transaction 
bond, the port director, will draft conditions that cover the 
transaction. Before execution of the bond, the conditions must be 
submitted to Headquarters, Attention: Executive Director, Regulations 
and Rulings, Office of International Trade, for approval.
    13. In Sec.  113.15:
    a. The first sentence is revised; and
    b. The second and third sentences are amended by removing the word 
``shall'' each place that it appears and adding the word ``will''.
    The revision reads as follows:


Sec.  113.15  Retention of approved bonds.

    Except for bonds containing the agreement to pay court costs

[[Page 275]]

(condemned goods--see Sec.  113.72), single transaction bonds that are 
approved by the port director will remain on file at the port office 
and approved continuous bonds (including bonds relating to repayment of 
erroneous drawback payments containing the conditions set forth in 
Sec.  113.65) will remain on file at the RD. * * *
    14. In Sec.  113.21:
    a. Paragraph (a)(1) is revised;
    b. Paragraphs (b) and (c) are amended by removing the word 
``shall'' each place that it appears and adding the word ``must'';
    c. Paragraph (d) is amended by removing the word ``shall'' and 
adding in its place the word ``may''; and
    d. Paragraph (e) is revised.
    The revision of Sec.  113.21(a)(1) and (e) reads as follows:


Sec.  113.21  Information required on the bond.

    (a)(1) Identification of principal, co-principal, and sureties. The 
names of the principal, co-principal, and sureties, and their 
respective places of residence, must appear in the bond. In the case of 
a corporate principal, co-principal or surety, its legal designation 
and the address of its principal place of business must appear.
* * * * *
    (e) Presumption of proper execution. CBP is entitled to presume, 
without verification, that submitted bond applications and related 
documentation, which include the bond, are properly executed, complete, 
accurate, and in full compliance with all applicable laws.


Sec.  113.22  [Removed and Reserved]

    15. Section 113.22 is removed and reserved.
    16. In Sec.  113.23:
    a. The heading and text of paragraph (a)(2) are amended by removing 
the words ``or erasures'';
    b. Paragraph (b) is amended by removing the word ``erasures,'' and 
by removing the word ``shall'' and adding in its place the word 
``must''; and
    c. Paragraphs (c) and (d) are revised.
    The revisions of Sec.  113.23(c) and (d) read as follows:


Sec.  113.23  Changes made on the bond.

* * * * *
    (c) After signing, prior to approval. If minor alterations, other 
than modifications or interlineations (i.e., changes that go to the 
substance of the bond), are made to the bond after it is signed, but 
prior to its approval by CBP, the consent of all the parties must be 
indicated on the bond. When a modification or interlineation is 
desired, the existing bond will be cancelled and a new bond will be 
executed.
    (d) After approval. Except in cases where a change in the bond is 
expressly authorized by regulations or instructions from the 
Commissioner of CBP, CBP will not permit a change as defined in 
paragraph (a) of this section after the bond has been approved. When 
changes are desired, the existing bond will be cancelled and a new bond 
is required which, when approved, will supersede the cancelled bond.
    17. Section 113.24 is revised to read as follows:


Sec.  113.24  Riders.

    (a) Types of riders. The Revenue Division (RD) may accept bond 
riders,including the following types:
    (1) Name change of principal/trade name/unincorporated division. A 
bond rider to change the name of a principal/trade name/unincorporated 
division on a bond may be used only when the change in name does not 
change the legal identity or status of the entity. If a new corporation 
is created as a result of a merger, reorganization or similar action, a 
bond rider cannot be used and a new bond will be required.
    (2) Address change. A bond rider may be used to change the address 
on a bond.
    (3) Addition and deletion of trade names and unincorporated 
divisions of a corporate principal. A bond rider may be used to add to 
or delete from a bond trade names and the names of unincorporated 
divisions of a corporate principal that do not have a separate and 
distinct legal status.
    (b) Where filed. A bond rider must be filed at the RD.
    (c) Attachment of rider and, where applicable, CBP Form 5106 to 
bond. All riders expressly authorized by the