Expansion of Importer Self-Assessment Program To Include Qualified Importers of Focused Assessment Audits, 61012-61014 [2012-24592]

Agencies

• DEPARTMENT OF HOMELAND SECURITY
• U.S. Customs and Border Protection

[Federal Register Volume 77, Number 194 (Friday, October 5, 2012)]
[Notices]
[Pages 61012-61014]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-24592]


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DEPARTMENT OF HOMELAND SECURITY

U.S. Customs and Border Protection


Expansion of Importer Self-Assessment Program To Include 
Qualified Importers of Focused Assessment Audits

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

ACTION: General notice.

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SUMMARY: This document announces changes to the Importer Self-
Assessment (ISA) program and describes the requirements for 
participation in, and benefits under, the program. The ISA program 
allows participants an opportunity to assess their own compliance with 
U.S. Customs and Border Protection (CBP) laws and regulations rather 
than undergoing comprehensive CBP audits. This document announces that 
a company that has successfully undergone a CBP Focused Assessment (FA) 
audit may be eligible to transition into the ISA program without 
further CBP review within twelve (12) months from the date of the FA 
Report wherein Regulatory Audit, Office of International Trade, has 
determined that the company represents an acceptable risk to CBP, if 
the company also: Is a U.S. or Canadian resident importer; obtains 
Customs-Trade Partnership Against Terrorism (C-TPAT) program 
membership; develops a risk-based self-testing plan; and agrees to meet 
all of the ISA program requirements. An Application Review Meeting, 
which is normally required for ISA applicants, will not be required for 
participants under this new policy.

DATES: The program modifications set forth in this document are 
effective October 5, 2012.

FOR FURTHER INFORMATION CONTACT: John Leonard, Acting Executive 
Director, Trade Policy and Programs, Office of International Trade, at 
tppb-isa@dhs.gov.

SUPPLEMENTARY INFORMATION:

Background

Importer Self-Assessment Program and the Focused Assessment

    The Importer Self-Assessment (ISA) program is a joint government-
business initiative designed to build cooperative relationships that 
strengthen trade compliance. It is based on the premise that companies 
with strong internal controls achieve the highest level of compliance 
with customs laws and regulations. On June 7, 2002, the former U.S. 
Customs Service (now U.S. Customs and Border Protection (CBP)) 
published a Federal Register (67 FR 41298) notice announcing the ISA 
program and describing the requirements for participation in, and 
benefits under, the program. For the most part, the requirements for 
participation in the ISA program remain as described in the 2002 
Notice, except that the program has been expanded to accept Canadian as 
well as U.S. importers and participants must retain self-testing 
results for three (3) years.
    Upon acceptance into the ISA program, the company will immediately 
begin to receive the following benefits:
     Entitled to receive entry summary trade data, including 
analysis support, from CBP.
     Consultation, guidance, and training by CBP if requested 
and as resources permit (for compliance, risk

[[Page 61013]]

assessments, internal controls, CBP audit trails, etc.).
     Opportunity to apply for coverage of multiple business 
units.
     Removal from Regulatory Audit's audit pool established for 
Focused Assessment (FA). However, companies may be subject to a single 
issue audit to address a specific concern.
     Receipt of a written notice from CBP if CBP becomes aware 
of an error in which there is an indication of a violation of 19 U.S.C. 
1592 or 1593(a). CBP will allow thirty (30) days from the date of the 
notification for the company to assess and, if determined necessary, to 
file a prior disclosure pursuant to 19 CFR 162.74. This benefit does 
not apply if the matter is already the subject of an ongoing 
investigation or if fraud is involved.
     Consideration of the company's participation in the ISA 
program in the disposition of a case involving civil penalties or 
liquidated damages assessed against the company, although such 
participation does not preclude the issuance of a penalty or liquidated 
damages claim, or other enforcement action, if warranted.
     Assignment of a National Account Manager (NAM), who will 
ensure that issues, questions, and concerns are addressed in a timely 
fashion and are directed to the appropriate area. The NAM also helps 
coordinate the participant's activities, and provides oversight of the 
ISA account.
     Expedited cargo release.
     Expedited internal advice/consultation from Regulations & 
Rulings, Office of International Trade.
     Priority consideration for applications to participate in 
the Centers of Excellence and Expertise tests.
     Additional benefits may be tailored to industry needs.
    Please note that this list reflects the changes that have been made 
to the benefits under the ISA program since the June 2002 Federal 
Register (67 FR 41298) notice publication.
    The FA is a rigorous audit process conducted by Regulatory Audit, 
Office of International Trade, to determine whether a company's import 
activities represent an acceptable risk to CBP through an assessment of 
the company's organizational structure and its internal controls over 
compliance with applicable customs laws and regulations.

Successful Focused Assessment to Importer Self-Assessment Program 
Transition

    The FA is a more rigorous and thorough method of examining a 
company's internal systems for compliance with customs laws and 
regulations than the ISA review process. Therefore, CBP has decided to 
provide companies that have successfully completed the FA an 
opportunity to transition directly into the ISA program within twelve 
(12) months of their FA audit report date, which indicates that the 
company successfully passed the audit. The FA audit report is provided 
to the company by mail from Regulatory Audit, Office of International 
Trade. This new policy creates efficiencies relative to the time, 
money, and resources involved with the normal ISA application and 
evaluation process.
    CBP opens this opportunity to companies that have successfully 
undergone a FA audit only if the company also: Is a U.S. or Canadian 
resident importer; obtains Customs-Trade Partnership Against Terrorism 
(C-TPAT) program membership (those companies that are not C-TPAT 
certified will need to request certification by applying on the C-TPAT 
Portal, https://ctpat.cbp.dhs.gov, and their C-TPAT applications will 
be reviewed in an expedited fashion, within 30-45 days of receipt, 
rather than the typical 90-day schedule); develops a written risk-based 
self-testing plan; completes the ISA Memorandum of Understanding (MOU) 
as noted in the ISA Handbook, posted on the Web at https://www.cbp.gov/linkhandler/cgov/trade/trade_programs/importer_self_assessment/isa_hb.ctt/isa_hb.pdf; and agrees to meet all of the ISA program 
requirements identified in the Federal Register (67 FR 41298) notice 
dated June 7, 2002 and updated by this document.
    Qualified companies will not need to undergo the Application Review 
Meeting (ARM) that is routinely scheduled for ISA applicants that 
undergo the normal ISA application evaluation process. CBP normally 
conducts an ARM to review an ISA applicant's corporate structure as it 
relates to customs-related work, its internal control processes, its 
entry processes from purchase order to payment for certain entries 
selected by the ISA team, and to discuss the scope and methodology of 
the self-testing plan developed by the company. Companies that would 
like to participate in the ISA program under this new policy will have 
already undergone a more rigorous review process under the FA audit 
and, therefore, will not need to participate in an ARM.

Application Process

    Any interested company that has successfully completed a FA in the 
twelve (12) months prior to the publication of this document may apply 
to transition into the ISA program. After publication of this document, 
companies that successfully complete a FA have twelve (12) months from 
the date of the FA Report to apply to transition into the ISA program. 
Requests to participate must be submitted to the Chief, Partnership 
Programs Branch, Office of International Trade, U.S. Customs and Border 
Protection, 1400 L Street NW., Washington, DC 20229-1143. Applications 
must include:
    1. An ISA Memorandum of Understanding (MOU) listing the importer of 
record number(s) included in the FA and the MOU must be signed by an 
officer of the company; and
    2. A written, risk-based, self-testing plan that should include: 
The risk assessment methodology used by the company; the testing 
methodology; the frequency of self-testing activities (i.e., monthly, 
quarterly, etc.); the number of sample items to be tested; and the name 
and contact information for the person who will review the self-testing 
results. The self-testing process should be conducted at least 
annually. (www.cbp.gov/xp/cgov/trade/trade_programs/importer_self_assessment/).
    Once the company is accepted as a member of the ISA program, CBP 
will send the company an ISA certificate signed by the Assistant 
Commissioner, Office of International Trade, which indicates the date 
of acceptance into the program, an executed MOU, and a letter notifying 
it of its acceptance into the program.

Post-ISA Acceptance Requirements

    ISA participants are required to comply with the requirements noted 
in the ISA Handbook.
    Companies that are transitioned into the ISA program will be 
required to submit an annual notification letter to CBP within thirty 
(30) days of their two year anniversary date of acceptance into the ISA 
program, which is the date that the Assistant Commissioner, Office of 
International Trade signs the ISA MOU. The annual notification letter 
is due every twelve (12) months thereafter. The annual notification 
letter is meant to ensure that the program participant continues to 
meet the requirements of the ISA program and to inform CBP of any 
business modifications that may have a potential impact on the 
company's customs operations. The annual notification letter must be in 
writing and addressed to the Chief, Partnership Programs Branch, Office 
of International Trade, U.S. Customs and

[[Page 61014]]

Border Protection, 1400 L Street NW., Washington, DC 20229-1143. More 
information about the annual reporting requirements can be found in 
Appendix H of the ISA Handbook.
    ISA participants will not be subject to any routine or periodic on-
site reviews or audits, other than consultations with NAMs for support 
and compliance improvement purposes. However, a participant may be 
subject to an on-site audit to address a specific issue related to an 
identified trade compliance risk.

Procedures for Discontinuance

    An ISA program participant may be subject to discontinuance from 
participation in the program for any of the following reasons:
     Failure to follow the terms of the MOU;
     Failure to exercise reasonable care in the execution of 
participant obligations under the program.; or
     Failure to abide by applicable laws and regulations.
    If the Executive Director, Trade Policy and Programs (TPP), Office 
of International Trade believes that there is a basis for 
discontinuance of ISA program privileges, the ISA program participant 
will be provided a written notice proposing the discontinuance with a 
description of the facts or conduct warranting the action. The 
participant will be offered the opportunity to appeal the Executive 
Director's decision in writing within ten (10) calendar days of receipt 
of the written notice. The appeal must be submitted to the Assistant 
Commissioner, Office of International Trade, U.S. Customs and Border 
Protection, 1400 L Street NW., Washington, DC 20229. The Assistant 
Commissioner, Office of International Trade, will issue a decision in 
writing on the proposed action within thirty (30) working days after 
receiving a timely filed appeal from the participant. If no timely 
appeal is received, the proposed notice becomes the final decision of 
the Agency as of the date that the appeal period expires. A proposed 
discontinuance of a participant's participation privileges will not 
take effect unless the appeal process under this paragraph has been 
concluded with a written decision adverse to the participant.

Procedures for Immediate Discontinuance

    In the case of willfulness or those in which public health, 
interest, or safety so requires, the Executive Director, Trade Policy 
and Programs, Office of International Trade may immediately discontinue 
the participant's participation privileges upon written notice to the 
participant. The notice will contain a description of the facts or 
conduct warranting the immediate action. The participant will be 
offered the opportunity to appeal the Executive Director's decision 
within ten (10) calendar days of receipt of the written notice 
providing for immediate discontinuance. The appeal must be submitted to 
the Assistant Commissioner, Office of International Trade, U.S. Customs 
and Border Protection, 1400 L Street NW., Washington, DC 20229. The 
immediate discontinuance will remain in effect during the appeal 
period. The Assistant Commissioner, Office of International Trade, will 
issue a decision in writing on the discontinuance within fifteen (15) 
working days after receiving a timely filed appeal from the 
participant. If no timely appeal is received, the notice becomes the 
final decision of the Agency as of the date that the appeal period 
expires.

    Dated: September 26, 2012.
Allen Gina,
Assistant Commissioner, Office of International Trade.
[FR Doc. 2012-24592 Filed 10-4-12; 8:45 am]
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