President’s Report
By Jeffrey Coppersmith
     
What a ride! This being my first year as president of NCBFAA, I have come to the realization that as soon as you think things are going to settle down, they don’t. Not that I wasn’t prepared for the job, it is just like any company or organization, it takes a significant portion of ones time to watch over and guide to be sure things continue in the proper direction. After laying out my vision of goals to accomplish during my tenure as President at the first Board Meeting last June, I feel that we have made great strides this year. Even though we have numerous issues in front of us within the next 12 months, we have the people and the resources to meet the challenges.
      The Educational Institute is one of the three major contributors to the NCBFAA, shared by the Membership and Conference revenues, and one of the issues I would like to focus on in this report.
      Starting off my term as President, I was informed that Cindy Allen, the NCBFAA Educational Institute Director was being considered for a position with CBP, and if she got it she was going to accept. Given that possibility, it became critical that we insure as smooth and transparent a transition as possible. She had done a tremendous job for the Association and during her tenure the NEI received critical acclaim. We needed an astute person to take over that department and we were fortunate to find Brian Barber, who comes from a brokerage background and was himself a CCS. Following a quick orientation from Cindy before she left for CBP, Brian took over the responsibilities of the NEI and has run with it ever since. He has big plans for the future of the NEI and we welcome him to our staff. Seasoned EI committee member Jan Fields agreed to chair the Committee, and has since assembled both Policy and Content Committees, while becoming a key factor in the success of the NEI. I want to thank Jan and her dedicated volunteers who have once again risen to the challenge and have given so generously of their time and knowledge to make the NEI the success it is today and will be in the future.
      As you will see in the more specific NEI Report, we have made great progress this year. Our goal is to become recognized as the premier education provider in the international trade arena. Along with our membership; there are importers, exporters, and our partners from various federal regulatory agencies that both contribute and attend our numerous training events. Seminars, webinars, committee meetings, conferences, videos and case studies are a few of the ways we reach out and educate the trade nationwide. To complement the very successful Certified Customs Specialist (CCS) import related course, 2010 brought the launch of our inaugural Certified Export Specialist (CES) export course, with the ultimate goal of expanding the audience into the outbound side of our industry as well. Brian’s strategy, with the help of Cecilia Ferrara who is also new to NCBFAA, includes significant growth of additional vital offerings to our industry in the coming year, so we thank all of our members for your continued support of the programs.
      Customs issues were a significant part of my life this year. I traveled to Washington, DC over a half dozen times last year after being elected President in April. This was not only to familiarize myself with the NCBFAA office, but also to meet with CBP Commissioner Alan Bersin. During our first meeting, which was a basic "meet and greet" between the two of us in his conference room, I found him to be not only very personable, but also interested in what we do and how we do it. He appreciates a straight discussion and I have been just that with him. Several other meetings with CBP included various other NCBFAA committee members, officers, and counsel, as well as a variety of CBP officials. We have what I feel is an excellent working relationship with CBP, and continue to be very involved in collaborating with them on issues mutually beneficial to all of us.
      There are three outstanding topics that are currently on the table between NCBFAA and CBP: (1) ACE-It is still a work in progress. We wish it could be a reality but until we are confident that it is working ALL THE TIME, we cannot endorse moving our members over to the ACE platform. As a test company with ACE I am very aware of the problems that exist with ACE and even though I look forward to the day when this new platform will become a reality, we are still not there. (2) IPR – Many of our members are aware of the lawsuits filed by Nike against a handful of brokers for allegedly being part of a scheme to import counterfeit Nike shoes. Even though the broker had no idea that the goods were even tennis shoes, Nike has alleged that the broker had a responsibility to investigate the contents of the shipment and has asserted that the broker is liable for the importer’s attempt to import counterfeit goods. We have directed our Customs Counsel to prepare an Amicus brief to support members who have been improperly accused in these lawsuits. And last but not in any way, least, (3) Re-write of 111 regulations. This could have the greatest impact on our industry since the introduction of ABI. We have a committee that is meeting regularly with CBP as part of the re-write, so I have planned a special session at the Annual Meeting during the Annual Conference, to insure NCBFAA has an opportunity to get input from our membership at large.
      Meetings: We have also made significant, timely modifications in terms of the quarterly meeting schedule for two of our principal standing committees. In past years, Area representatives on the Board of Directors and member guests of the Customs and Forwarding/NVOCC Committees in attendance for the quarterly Board Meetings had to choose which meeting to attend since they were held concurrently just prior to the Board of Directors meeting in cities nationwide. This year, we have changed the schedule for alternating committee meetings to follow one another. By scheduling an early start, we are able to afford any regular member choosing to attend both meetings the opportunity to do so. With substantially larger attendance at each meeting, we are able to get more input from a broader base, while sharing the details of these important meetings with you, the members. This also diminishes redundancy and allows the committee chairman to discuss a somewhat abbreviated report at the Board of Directors meeting, while also focusing on the committee suggestions and proposals to the Board, since most were at the meetings earlier that morning.
      Financially the Association is strong and getting stronger. Although our membership has never been larger, we had some challenges the past few years and made some sacrifices to ensure the future success of the organization. The Board ultimately voted for an increase in the membership dues, albeit a very slight increase. After the members of the Board discussed the issue in great detail, and all important concerns were addressed, it passed unanimously. We need to continually consider additional funding for the endless financial needs of the Association with regards to any potential legal defense. Each year we are hit with one or more situations that require us to spend our limited resources to defend our industry. Even though it is money very well spent, it is in addition to our previously budgeted funds. My goal, in the foreseeable future, is to establish a legal defense fund that can help offset these extraordinary costs. I also want to thank those many members who, when paying their dues this year, have commented positively on the increase, and work of the association.
      Legislative issues ranked high on a recent branding survey, and Kathy Murray did a fantastic job last year in support of the Association Political Action Committee. Ours is a heavily regulated industry and it is essential that the Association be at the table when the legislation that generates these regulations is deliberated. We must be able to provide support to those in Congress who share our vision of an effective but efficient regulatory scheme that protects without unduly impeding commercial activity. With a strong and well-funded PAC we can do just that.
      I was proud to represent the NCBFAA at a number of meetings this past year including the IFCBA meeting in Buenos Aires and the FIATA meeting in Bangkok. We are truly recognized as the US Association representing brokers and forwarders, and it’s evident that we are recognized and need to share the dais in that capacity due in part to the impact of US events eventually leading to changes worldwide.
      Before I close, I would like to thank some of the many people who have helped me so much this year.
      Rene Romero, who stepped up to be Chairman of our Annual Conference, has done an outstanding job. I am so excited about all the wonderful things he has planned in beautiful Arizona and again next year in Florida.
      Mary Peglow has led a very successful GAC and she also agreed to do it one more time in 2011. The venue will change this year to the Hyatt Regency Washington on Capitol Hill, which is a great place to meet, and is located closer to our friends on Capitol Hill.
      Ken Bargteil for his tireless devotion to our Association and to our industry deserves tremendous gratitude. Ken and his countless hours of work for the NCBFAA must be recognized and our combined "Thank You" could not be more deserved.
      Paulette Kolba deserves a thank you as well for her personal quest to promote our partnership with the Department of Commerce. Through her diligence, we have once again become a major partner with that part of government devoted to the promotion of U.S. exports.
      Bruce Goodwin and Jeff Short continue to do a tremendous job growing our membership and making progress toward our stated goal of 1,000 members by 2012.
      David Katzman and Geoff Powell, who both consistently sharpen their pencils to pour over the budget and financial data throughout the year, deserve our gratitude.
      Thanks to the officers for their support and advice, to the attorneys for their counsel, and to the many chair people for their leadership.
      To Barbara and her Team that do an outstanding job managing the day-to-day operation of the Association, a personal thank you goes out to all of you. You guys do a wonderful job not only promoting the NCBFAA but also managing the ever-growing demands of our growth.
      2010 was a year of recovery and growth; 2011 will be even stronger. It has been a great year for me personally as well as for the Association. We have a plethora of issues on our plate for 2011, and I feel we have a tremendous number of remarkably talented professionals shaping the direction of our industry.
      This is the future we heard about years ago, and as we approach 115 years of service to the industry, we will do our best to continue to be good stewards of it.

Vice President’s Report
By Darrell Sekin, Jr

       During my first year as NCBFAA Vice President I was able to continue to support a variety of committees in a liaison and advisory capacity.
       In my role as a Senior Counselor on the Customs Committee, I participated in the Customs Committee’s monthly telephone conferences in addition to its 3-4 annual meetings with CBP. Along with that activity, I continued working on a couple of sub-committees within the Customs Committee.
       As part of our on-going effort to strengthen our ties with CBP and respond to the Commissioner Alan Bersin offer to reach out to the trade community, I had the opportunity together with President Jeff Coppersmith, Treasurer Geoff Powell, Customs Counsel Alan Klestadt, and Legislative Representative Jon Kent to meet in Washington with the Commissioner and his staff. So successful was this meeting, that Commissioner Bersin invited all of us to return December 6 to Washington for a further exchange of ideas with him and his staff.
       I also work closely with the Affiliated President’s Network (APN) as the NCBFAA’s Officer representative and participated in their monthly teleconferences that Scott Larson conducts. This APN activity is a very valuable grassroots initiative for the NCBFAA. It allows the Presidents from various regional Associations around the country to share their experiences within their areas with brokers and freight forwarders throughout the country in the hope that it might provide solutions to any challenges and guidance for those encountering similar circumstances.
       The Regulatory Affairs Committee (RAC) chaired by Roger Clarke is another other committee in which I have been participating. This committee convenes monthly teleconferences and has been working hard with FDA on their regulations and how they envision regulating the industry and filers of information with them.
       

Chairman’s Report
By Mary Jo Muoio
      
Every once in a while the telephone rings and you receive the call for which you have been waiting. Well that happened for all of us when I received a call from the Treasury Department. I was asked to present before the Board of the International Trade Data System. And, here comes the good part, I was asked to speak on the "Critical Role That Customs Brokers Play in the Import Process." Needless to say, they didn’t have to ask twice!
       It was a privilege to represent our customs brokerage industry. The ITDS is a project to build an electronic single window for reporting imports and exports to the U S government. Not a separate computer system, ITDS functions are being built into the trade processing systems of ACE. Currently some 48 agencies, including most of the agencies with which we work on a daily basis, are working together to implement ITDS.
       This was both an acknowledgement of the important role we play in trade processes for both the private and public sectors and an opportunity to demonstrate exactly what we do for a living. Although I have been a customs broker for my entire career, and let’s just say that it has been for a considerable time, it impressed me when I began to sketch out my presentation. We are experts, true professionals providing valuable service.
       And we can never stop adjusting our role to meet the needs of our customers. I noted to the audience that customs brokers in the US were first mentioned in law in the Act of 1789. While we are not the oldest profession on earth, we have been around since the beginning of this country, working diligently to facilitate the international commerce that contributes mightily to the economic success of our great nation.
       While our industry is busy supporting our nation’s economy, there is one organization hard at work supporting our industry, the National Customs Brokers and Forwarders Association of America, Inc., the NCBFAA. I have been affiliated with the Association for much of my working life because I believe strongly in its work. The details involved in, and the complexity of the activities surrounding, the entry and clearance of freight fills our plates and leaves most of us with little time to monitor the regulatory, legal and political tsunamis that seem to flow out of Washington, DC with regularity.
       That’s where the work of the NCBFAA comes into play. The volunteers who serve on, and chair, its committees; the officers who manage its governance; the lobbyists who monitor the Hill, all do the work that your day job precludes you from doing, protecting your interests and insuring that whatever changes to our businesses are implemented do not impose burdensome and unnecessarily onerous requirements.
       I can testify to the effectiveness of these volunteers having been one most of my professional life. I have served on committees, chaired committees, and been an officer of the NCBFAA. As the current Chairman of the Association, I can honestly say that my involvement with the organization continues to be one of the highlights of my career.
       The people on the Hill and in the regulatory agencies hold your Association in high regard because of its volunteers who represent you at hearings, in panels and during agency meetings. These decision makers in government and politics often turn to your representatives for counsel before moving forward with regulatory initiatives or code amendments that may impact some aspect of international trade. Even when they move ahead without asking our opinion, your volunteers who monitor these issues for you will provide input to insure that your views are reflected in the final outcome of the debate. I can think of no initiatives affecting international trade and our membership over the last quarter century that have not benefited from NCBFAA involvement in the debate.
       I strongly encourage all of our members to help grow the Association by advising their non-member colleagues to join the organization and help support their industry. Even if you don’t get involved as a volunteer, your membership gives you a seat at the table and whenever issues arise that may affect your business your contribution to the debate will be considered. I would even suggest that you approach your competitors about becoming part of the Association if they are not already.
       After all, one of the main purposes of the NCBFAA is to preserve and advance the transportation logistics industry. The larger our membership the more effective we can be in pursuing that goal as well as others. Remember competition will not matter if there is no industry within which to compete. By recruiting new members, you can demonstrate your support of the Association as effectively as those volunteers who serve on, and lead, the NCBFAA’s committees.
Executive Vice President’s Report
By barbara reilly
       For the last thirty plus years, (yes; I’m a card carrying member of the international trade community’s official Jurassic Park brigade!) I have served the Association community in one management capacity or another. For me, this vocation has been both enjoyable and fulfilling, but I can honestly say that my work for the NCBFAA has been the most rewarding in terms of ever increasing, significant accomplishments. Each and every year our member volunteers and Board seem to make more progress as they represent our industry constituents and 2010 was no exception.
       As you will find well documented in this Annual Report, your committees, task groups, and Board of Directors spent the greater part of their volunteer hours last year addressing those critical issues that could easily determine the difference between success and failure for your enterprises. Under the Leadership of President Jeffrey Coppersmith, the NCBFAA is prepared to go the distance for our members and industry whether it involves customs, forwarding, drawback, legislation, education, automation, carriers, legal service providers or any of the many other aspects of commerce and logistics.
       What makes the Association such a formidable champion of its members’ interests is the large cadre of subject matter experts we can call on to assist whenever circumstances require their expertise. These specialists in customs law, carrier processes, regulations, international commerce, intermodal evolution, security, and the myriad disciplines that comprise our industry’s tapestry of disciplines provide us with the knowledge base needed to confront the challenges and demands of this dynamic business. Between these experts and the partnerships that we had forged, and continued to enhance in 2010, with our colleagues in the federal regulatory arena of import and export, we continue to insure that your association is at the table representing your interests.
       One project in particular that will benefit our membership is the migration of the NCBFAA website to a new platform that kicked off in 2010. This new configuration will support the membership and more specifically, the NCBFAA Educational Institute. New technologies such as these specifically allow a broader spectrum of our members (many formerly not as engaged in face-to-face communication and participation of the organization) to participate, assist, educate and mobilize our associations’ mission. An estimated 58 million smartphones are currently used in the United States today, and that number is expected to grow to more than 160 million by 2013. People of all ages are joining the mobile revolution, with 36 percent between the ages of 35 and 54, and 17 percent 55 and older. When time is a precious commodity like it is for people struggling to utilize every moment to balance work and private time, using technology to stay connected is a necessity.
       We have recognized the potential for our innovative platform not only in member information and applications, but also in streaming industry news, blasts, events of both an educational and network sharing venue, discussion groups, and even social media like Facebook and Twitter, all of which will prove to be potentially useful opportunities for our members.
       I’d also like to point out that the mentoring aspect of the industry increased in 2010 and is more important than ever. We have indirectly encouraged mentor programs through the Affiliated Associations for a number of years and 2010 was no exception. With over 70 "first timers" attending this year’s annual conference, educational scholarships increasing, and number of certification students on the rise, it’s evident how important it is for each and every one of you seasoned industry subject matter experts to reach out to these new activists to help them understand the importance of the Association’s work in furthering the interests of the industry.
       Almost everyone has at least one mentor in his or her life. Maybe it’s a parent, relative, coach, current or former colleague, or just someone you admire or aspire to be like. However the relationship starts, mentors teach their mentees lessons they will take with them as they continue their personal and professional careers. But remember that this relationship goes both ways; mentors can learn just as much from their mentees and with today’s technological advances, it might be a good time to tap that person on the shoulder for some valuable sharing, and again renew that relationship. For mentors who aren’t comfortable with many technologies finding a mentee who can reverse mentor in that capacity adds another dimension to that relationship and makes it much more valuable for both, while also encouraging that your former mentee pass on their knowledge to even more new potential future generation industry colleagues and encourage them to explore the vital Volunteer spirit, too.
       Membership in the NCBFAA puts numerous valuable assets at your fingertips through these various tools. Whenever the need arises the Association working through its Board of Directors will marshal these resources on behalf of a single member or many members to insure a fair and equitable resolution of any concern confronting them. Because of the Association’s loyalty to, and support of, its members, the current roster is at an all-time high. I would like to personally express my appreciation to all our members who have demonstrated their confidence in, and communicated their support of, our work by joining the Association. And I would encourage you to let your colleagues and, yes, your competitors, that have yet to take the membership plunge, know how much they, too, could benefit from affiliating with the NCBFAA.
       It’s been said that less than ten percent of volunteers in most organizations do over 90 percent of the work to be done. Again, we thank each and every one of our dedicated volunteers, and encourage more members to step up and join them.
       Working in support of all these volunteer goals is the Headquarters office, which handles arrangements for most of the meetings where all this activity takes place on behalf of the members, so I would be remiss if I did not thank those on the Team who make these goals a reality and carry out the work of the Board. Those are my colleagues Kim, Jeff, Tom, Drenda, Kimberly, Ceci, Brian, Barbara and Tricia and collectively reflect over 60 years of NCBFAA experience serving you, our members. Thank you for that privilege.
NCBFAA Treasurer’s Report
By Geoffrey C. Powell
       NCBFAA ended 2010 approximately $30,000 ahead of our budget. The NEI was off on the budget by only 1.9 percent, whereas membership dues and 2010 new membership projections were off by 3.3 percent. The Annual Conference net revenues, through very strong efforts of the Annual Conference Committee and Washington staff, increased 14.3 percent, which made up for the shortfall in the other two revenue streams. Considering the 2010 economy was still coming off of one of the toughest economic periods that anyone could remember the NCBFAA’s overall financial picture is strong and bright for our continued work on behalf of our industry.
       The mission of the NCBFAA is to work on your behalf on many of the ever-changing issues that affect our industry and our members. As the membership is aware, there is a cost associated with these efforts. Between 2006 and 2008, the NCBFAA ran a moderate deficit balance at the end of the year with the full knowledge of the Officers and Board of Directors, understanding that certain critical issues require adequate funding resources to address. The officers and Board of Directors spent countless hours working together to determine the best path forward to come up with a fiscally responsible plan for the NCBFAA.
       In 2010, it determined that it was in the best interest of the NCBFAA to raise our membership dues to decrease the gap in revenues and expenses. On behalf of all the officers and Board of Directors of the NCBFAA, I would like to thank each of members for their acceptance of this increase in order for the NCBFAA to continue its efforts to work on your behalf every day. I am very pleased to report that in 2010 the NCBFAA again showed a positive net result and we are very excited about 2011 and beyond.
       Although the NEI did not meet its aggressive revenue expectations in 2010, it did take action to reduce its expenses by approximately $10,000 below budget. The NEI had some personnel changes in 2010, as a new Director took over the helm and is continuing the strategic initiatives and financial growth we have been accustomed to over the last few years with the NEI. The NEI courses continue to grow, not only through our local Associations, but also through other organizations. The NEI continues to educate our growing NEI membership in the multi-topic Webinar Programs, which has proven to facilitate our teaching and yielded very positive results. In 2011, NEI Director Brian Barber, working closely with the NEI Chair, Jan Fields, is budgeting continued growth for the NEI.
       The membership within our organization grows every month through the hard efforts of our Membership Chair, Bruce Goodwin in conjunction with our fine staff in Washington D.C. The revenue from Membership Dues is currently the largest percentage of revenues for the Association, and therefore is critical to the financial strength of our Association. After the 2011 Annual Conference, Jeff Short will devote 100 percent of his time to membership development, which has proven to yield great results for the Association in the past. As Jeff multi-tasks for the Association, some of Jeff’s other responsibilities will be assigned to other capable staff members so the Association can continue it positive revenue stream from membership growth.
       Our Annual Conference will always continue to be the best time spent learning about new issues that affect your business, seeing old friends and meeting new friends. Our Association is very dependent on the revenue generated from this annual event to continue its very important work in representing its members. The 2010 Annual Conference held at J.W. Marriott San Antonio Hill Country Report and Spa, was a very successful event, not only in the first class facilities, sessions, member attendance and total experience, but financially as well for the Association. Chairman Pancho Averill wanted to ensure that all the members of this organization were treated to a truly first class event and made sure that there was no expense spared. Compliments go out to our Washington staff, barbara reilly and Kim O’Beirne for their work with Chairman Averill in continuing to monitor the expense, yet not to the detriment of providing a first class affair.
       In 2007 we changed the budgeting process to ensure that all the committees working on your behalf are properly funded, yet properly managed, which we believe has been a very effective means to manage our budget. It has been our belief that, by creating a more detailed budget, we can better control and manage the expenses of the NCBFAA on your behalf. I am happy to report that each committee has been closely scrutinizing all the expenses for their respective committee work to ensure your investment is getting the maximum return. In addition, as the NCBFAA has developed close partnerships with other world organizations such as FIATA, IFCBA, JIG, AAEI and NACBA, we have budgeted for a number of our dedicated members to devote their time and energy to ensure that the NCBFAA remains an organization respected throughout the world.
       I have to acknowledge the professional work that our accounting manager, Kim Murphy has brought to this Association. The accounting can be very complex, but as the Committee Chairs will attest, Kim has done a fantastic job of properly monitoring and allocating expenses, and she continues to be a great asset for any and all questions regarding our finances.
       The ongoing economic circumstances continue to require us to monitor revenues and expenses closely. The trade, all the government organizations and Congress rely upon the NCBFAA for our expertise in shaping and directing the important issues we will need to address in 2011 to not only better our industry, but also to keep America secure.
       In the last report, I included the below statement, that I think is still very appropriate for 2011:

The Budget Committee will:

  • Closely scrutinize all expense accounts
  • Monitor more closely all spending against the budget and report any discrepancies
  • Continue to make suggestions on how to improve the finances to the Board through the Executive Committee
  • Work with all parties to explore ways of spending our limited funds to the best benefit of the Association.

The Board of Directors should:

  • Support the work of the Association and its committees by actively working with the committees and encouraging firms to attend the seminars and conferences of the Association
  • Actively solicit new members and sponsors for the Annual Conferences
  • Actively support and encourage a positive PR effort on behalf of the Association
  • Listen carefully to financial suggestions and act in the best interest of all members

Our Washington staff should:

  • Carefully monitor expenditures, making sure that expenditures are properly approved and coded to the proper account
  • Monitor administrative expenses and make suggestions for possible savings in these expenditures
  • Pursue possible alternative sources such as grant money and reductions in expenses such as the use of interns.

       The year 2011 will present a real challenge to all of us. Our Annual Conference Committee is working hard to make sure that this is the most successful conference ever. We face a year of Government agencies promulgating new regulations based on the laws passed last year. Furthermore, we need to make sure our industry can successfully operate under Homeland Security Department. The CCS program, CES Program and NEI will go into high gear. The bottom line is that there are going to be increased demands on us to spend money to represent the interests of our members. We all need to help make sure that the money is there to be spent and that it is spent to benefit our members.

NCBFAA Customs Committee Report
By Kenneth Bargteil
       Introduction – This is the ninth Customs Committee Annual Report submitted by the current Chairman, and while the number nine suggests solidity, even culmination, in gathering one’s thoughts about the past year the pervading sense is one of flux and instability. One naturally asks why does the visceral diverge so strongly from the expected? For years the Customs Committee has made steady progress toward improved relations and growing influence with Customs. At this point shouldn’t the story be one of accomplishment and dominion. A close examination of the Committee’s agenda reveals how reasonable expectation for and emotional response to our present state can best be rationalized. Review of the Customs Committee’s agenda identified 35 discreet issues. Analysis allowed for these to be organized into four tiers of relative and descending importance, and that is how these issues will be presented in the following report.

First Tier

        1. Part 111 Rewrite –

Second Tier

 

        6. Entry Reform

 

        15. ACH Suspension –

Fourth Tier

 

      The fourth tier agenda items included the following; $20 de minimis for Quarterly PEAs, ACH Duty Refunds, Bond Application with Power of attorney, Cargo Examination Targeting on manifest data, CPSC Cargo Detention, Instructions on CBP entries dealing with CPSC Partial Detention, C-TPAT Revalidation for Brokers C-TPAT Revalidation Survey, Entry Deletion, Summary Cancellation, In Bond Entries and Prefiled Consumption Entries at Inland Point, ISF Enforcement Issues, ITAR and Export Controls, ITAR License Lodging & Procedures, Lacey Act Amendments Update, Management by Account, OGA HTSUS Flags, Port Code Changes, Pre-arrival Commercial Targeting, Prospective AD/CVD, draft RLF Guidelines, RLF Handbook, and Unknown MID.
       Conclusion – The work of the Customs Committee relies on the voluntary efforts of its members, its subcommittees, task and work groups, its dedicated and esteemed counselors and senior advisors. For the invaluable efforts of all, the Chairman is forever grateful and indebted. The Chairman would like to express special thanks to Dan Meylor, as Vice Chairman of the Customs Committee for 2010. While Dan Meylor has been extremely helpful from the first day of the Chairman’s tenure, his work in 2010 was, to say the least, impressive.
       This report bears witness to the manifold challenges and achievements of the NCBFAA Customs Committee, but as presaged in the introduction, 2010 ended without wrestling a single First Tier agenda item to ground. Our business climate has become unsettled and weighty, even existential challenges lay ahead. Now, more than at any time during the Chairman’s tenure, the Customs Committee has a vital role to play for the future of our industry. Now, more than ever before, the Customs Committee needs the full support of the NCBFAA Board of Directors, Officers and Membership.

Third TierWhen the Customs Committee learned that an NCBFAA member had been summarily suspended from participation in periodic monthly statement due to a glitch at the bank when transitioning its account, the Vice Chairman immediately contacted the Director, Revenue Financial Operations and reached agreement that innocent mistakes over which the customs broker has little or no control should neither be dealt with automatically nor with extreme measures. The Director agreed that CBP needed to understand what had caused the lapse and work with the customs broker when that was appropriate to the circumstances. Even so, in a similar fashion to removal from RLF or ABI, drastic measures that may have been appropriate during the initial stage of NCAP programs when those programs were largely untested must be sunset as those programs mature and come into wide and regular use. This issue will remain on the Customs Committee agenda for 2011.
       16. CBP Visit Reports – The Chairman brought this matter onto the Customs Committee agenda as the result of experience in Miami and Cleveland, requiring the filing of FoIA requests to obtain the results of CBP compliance reviews at the company’s customs brokerage departments. The Executive Director for Trade and Policy Programs agreed that an official policy was needed to ensure that visit reports would be voluntarily made available to the customs broker in a timely manner following a compliance review, even when there was no compliance discrepancy, but that such a policy might only issue if it were agreed that work on other matters of importance to our members would be delayed. The Customs Committee rejected this bargain, and suggested that CBP simply refrain from these visits until it could publish the needed policy. At the conclusion of 2010 no policy memorandum had issued, and it was unclear whether CBP had ceased its compliance reviews of customs brokers.
       17. RLF Final Rule & PAIRED Demise – The final rule for Remote Location Filing (RLF) was published in the Federal Register on December 20, 2009, at 74 FR 69015 and became effective on January 29, 2010. At the request of NCBFAA, termination of the PAIRED Program was postponed for one year. On the effective date of this final rule RLF testing as an NCAP pilot program ended, and CBP lost its ad hoc discretion over the rules governing that type of filing. One of the exceptions adopted by CBP during RLF testing was published in CSMS #03-002699 dated November 14, 2003, and titled EIP/RLF Invoice by Request Feature. This administrative message required that for all land border imports by truck, invoice by request was inoperative and for RLF entry the filer must transmit the entire invoice through AII.
       It was pointed out to CBP at the September 29, 2010, Customs Committee meeting that CSMS #03-002699 itself became inoperative on January 29, 2010, and that CBP lacked authority to enforce that exception. On December 29, 2010, CBP posted CSMS 10-000295 rescinding the earlier CSMS and allowing invoice by request on land border imports by truck. – Another agenda item that was driven by the EAA was an increase in the value limit for informal entry and administrative exemption. In the final round the EAA urged CBP to increase the limit for informal entry to $2,500 and for §321 to $800. While the Customs Committee consented to the proposed increase for informal entries, it opposed any increase over $300 for sections. Although CBP indicated in a meeting with the Chairman, Customs and D.C. Counsel that an increase for §321 based on inflation would be roughly $280, there was no indication by the end of 2010 how this matter would fall out.
       7. ACE Strategy – ACE development continued to falter in 2010 with the further postponement of M1, delay of imaging, and failure of Post Summary Correction (PSC). eBond was sidelined in favor of a scaled down eSTB solution. The flow of resources into the ACE importer portal was unchecked. Restoration of the 40 most important sets of data edits remained an unfulfilled promise, and when 2010 came to a close, at the most fundamental level, ACE was still unattractive to filers. If there was a single bright spot in the unease we know as ACE, it is that the new Executive Director for the ACE Business Office is someone known to all of us in her earlier existence as a highly competent customs broker, and in her previous position as an effective educator and proponent of our sector. As leader of the ACE team, Cindy Allen will bring to CBP an intimate understanding of what core functionality means to us and a practical approach to development priorities.
       The NCBFAA was indeed very lucky that it was able to fill the void left by Cindy Allen’s departure at the NEI, and in Customs Committee’s Automation Subcommittee. With the succession of Fred Klemashevich to Chairman, the Automation Subcommittee did not miss a beat. In fact, we already have a major breakthrough due to these changes. Cindy Allen carried with her to CBP the desire for a new adjunct to trade support for ACE development. One of the reasons that ACE has been plagued by fits and starts is that once the Trade Support Network (TSN) trade requirements were approved by CBP and passed off to the technical staff for conversion into technical requirements and coding, important elements and intent was lost in translation. At the end of 2010, and with Fred Klemashevich in the lead, the NCBFAA Automation Subcommittee was preparing to engage with CBP and contracted programming staff to work through technical requirements for the next big development piece, cargo release.
       8. Broker Recordkeeping NPRM – At the end of 2010, more than seven months after the comment period closed on May 24, 2010, CBP had not yet published a final rule implementing the modifications to Parts 111 and 163 Customs Regulations for Customs Broker Recordkeeping Requirements Regarding Location and Method of Record Retention at 75 FR 13699. Our best guess is that the final rule has gone through agency review at DHS, Treasury and OMB, and is currently nestled on the desk of the CBP Director for Trade Facilitation & Administration where the Director is brooding over it. One can only hope that a nine-year gestation period is close to an end, that a hatchling will soon come to roost on the pages of the Federal Register as a final rule, bearing a strong resemblance to the proposal that Customs Counsel and the Chairman put forward so long ago.
       9. Broker Records Confidentiality – CBP rulings HQ 116025 dated September 29, 2003, and HQ 116190 dated June 14, 2004, issued to UPS Supply Chain Solutions, Inc. created such an absurd guideline for confidentiality of records relating to the business of a customs broker’s clients that many routine and commonplace business practices, including those done by CBP, were called into question. While it was hoped that in the intervening six years CBP had come to understand the need to conform its governance to real world conditions and relax the regulations to the extent necessary to produce good public policy, alas that did not happen. Changes to Part 111 Customs Regulations in CBP’s NPRM for the Permissible Sharing of Client Records by Customs Brokers at 75 FR 66050 invited comments by December 27, 2010. After addressing glaring problems with the proposal for several weeks, the Customs Committee concluded that the best recommendation would be to scrap the NPRM altogether and start over in close consultation with NCBFAA. The full text of NCBFAA comments were posted to the NCBFAA website.
       10. 1641 Penalties – Running through Customs Committee conversations throughout 2010 was the theme that Import Specialists and FP&F Officers were taking a more aggressive approach to customs broker enforcement matters. This reinforced a growing concern that a perceptible disconnect between the policy makers and program chiefs in the Office of International Trade (OIT) and Customs Officers reporting up through the Office of Field Operations (OFO) was becoming a gulf, and that the Customs Committee could not bridge that gulf while remaining tightly tied to OIT.
       On November 23, 2010, Customs Counsel, D.C. Counsel and the Chairman met with Assistant Commissioner Tom Winkowski and the Acting Deputy Assistant Commissioner Todd Owen. The Chairman was prepared with a folio full of examples for ad hoc process, misdirected policy administration and improper practices. These included the use of CBP Form 28s to request reconstructed entries, powers of attorney and evidence of validation from customs brokers, followed by letters of reprimand when submissions were not made timely. Even before the Chairman had covered a third of the examples the Assistant Commissioner agreed that his Office should be represented at Todd Owen’s level for future meetings of the NCBFAA Customs Committee.
       11. FDA Penalties – Shared on the Regulatory Agencies Committee (RAC) agenda, the prospect of CBP enforcing penalties against, or disqualifying customs brokers for RLF based on FDA audits was taken up by the Customs Committee. Although Customs Counsel finds no legal basis for such an enforcement action, it did not seem prudent simply to dismiss it out of hand. As the year progressed, FDA seemed to reach a similar conclusion, shifting its threatened enforcement action to public posting of customs broker compliance rates on its website. There can be no doubt that FDA believes it needs more effective means to discipline customs brokers that they believe contribute to the filing of erroneous data in OASIS. It is hoped that the NCBFAA RAC will be able to lead FDA to a better understanding of our role as filers, and find productive means for compliance improvement that will avoid a controversy over the coercive powers of FDA vis-à-vis our members.
       12. Broker Management – Introduction to the Customs Committee of Anita Harris as the new Broker Compliance Branch Chief was delayed until September 28. Chief Harris has indicated her desire to develop a close relationship with the NCBFAA Customs Committee, and interaction with her in 2010 was always cordial and positive.
       Notice of recent inconsistency within the CBP field offices regarding employee lists required by 19 CFR 111.28(b), and how that subpart relates to 111.30(d) brought this matter onto the Customs Committee agenda in 2010. At various times, Assistant Commissioner Baldwin has offered that the Triennial Report required by 111.30(d) should be eliminated. It was decided that this issue would be best dealt with by the national association within the context of the Part 111 rewrite.
       13. Broker Self-Assessment Pilot – Under the leadership of Chip Bown, the Customs Committee Broker Self-Assessment (BSA) Contact Group worked primarily with Cynthia Whittenburg, Director for Trade Facilitation & Administration, Richard Wallio, Partnership Programs Chief and Angela Chambers, National Account Manager to devise the framework for a BSA flexible enough to accommodate a wide variety of customs broker business models and sizes. Unfortunately, CBP turned the pilot program over to their Regulatory Audit unit, and the pilot took on the character of a focused assessment and training exercise for junior auditors.
       Whether or not BSA held the potential for a mutually beneficial program, the pilot was sufficiently off track to make recovery efforts unappealing. NCBFAA filed comments observing that there was no reasonable expectation for BSA developing into a cost effective program for improving customs broker compliance, nor that it would attract a significant number of volunteers. CBP concurred and BSA development was terminated.
       14. Broker License Application Process – After many years of appealing to CBP for a quicker and more reliable process for the customs broker license application process, the Office of Trade Facilitation & Administration rolled out a new concept that would remove it from the field offices and reposition processing to align with the Global Enrollment Centers that are currently located at 20 major U.S. airports.Without question, the single most important development in 2010 was the invitation received through the CBP Director for Trade Facilitation & Administration to engage with the Office of International Trade for rewriting Part 111 – Customs Brokers of the Customs Regulations. This undertaking is fraught with both opportunity and uncertainty. While the invitation bespeaks a new found appreciation at CBP Headquarters of the need to include NCBFAA in a collaborative fashion with respect to matters relating to our role in the customs process, it comes absent reliable experience for dealing with CBP in such endeavors. Our first step in meeting the challenge of reforming the regulatory framework on which our businesses are built was to organize a Core Committee around which it is anticipated that the Part 111 Rewrite Task Group will be formed.
       2. National Permits – Although the NCBFAA Board of Directors adopted an official position on April 22, 2006, opposing any change to the law or regulations that would dissolve the current permitting requirements at the district level, as well as any new test or pilot that would allow for customs broker filing without regard to district permits, opposition within our ranks to this position has not abated. That fact alone would not require re-examination of the matter, but customs brokerage is a dynamic enterprise within a quickly evolving logistics environment, and under pressure from Michael C. Mullen and the Express Association of America (EAA), CBP has put the question to NCBFAA. After consultation with Customs and D.C. Counsel, the Chairman concluded that NCBFAA interests would not be served to simply rest on a four-year-old vote.
       There is no question that many customs brokers miscalculated the relative merits and competitive impact of RLF. It is not easy to predict the impact of fundamental change. Yet it seems reasonable that the best prospects for preserving the traditional customs brokerage business profile is to identify how change is affecting the market and to adapt our value proposition accordingly. Re-examination of the permitting scheme should provide the Customs Committee with another opportunity to suss out the potential advantages of alternative templates.
       In an effort to find consensus within our membership the Customs Committee Chairman organized an encompassing Ad Hoc Permit Advisory Subcommittee (PAS). The PAS was commissioned to brainstorm the issue and generate alternate schemes for the full Customs Committee to study and debate. Handled correctly this process cannot fail. It will either lead to consensus around an alternate foundation for supervision and control or reassert a previously held NCBFAA position. Failure can only come from alienating members by refusing to discuss their proposals and ignoring their positions. The PAS continued its deliberations into 2011.
       3. Filer Code Misuse – On October 4, 2010, the CIT disposed of the Lizarraga filer code suspension case with Slip Op. 10-113, establishing that customs brokers have a due process right in filer codes and the government cannot suspend codes without a hearing, and the process of drafting language to clarify filer code misuse [19 C.F.R. 142.3a(d)] was underway at CBP. This task also fell to the Office of Trade Facilitation & Administration. The Director, Cynthia Whittenburg, agreed to send draft language to Customs Counsel for review and to begin discussions between CBP and the NCBFAA Customs Committee. CBP’s interest to have input from our Customs Committee can only be seen as another positive development and an opportunity of vital importance.
       Equally important is that the undertaking by NCBFAA’s Board of Directors, on recommendation of its Customs Committee, to enter the case as amicus curiae was successful on multiple levels. Commenting on that undertaking, the Chairman observed, "It has to be reassuring when one is battling a powerful government agency to have one’s colleagues shoulder to shoulder in the fight. Still, it would be missing the point to think that this was all about a single member. NCBFAA quickly identified an issue in this case of grave concern to all its licensed members. We all shared a strong interest in its outcome." At the end of the year, CBP had not yet forwarded draft language for this purpose.
       4. Nike Lawsuits and PoA Validation – The litigation prosecuted by Nike Inc. against the least capable in our community to offer a defense may simply be borne of frustration with the government’s inability to curtail the tide of infringing merchandise overflowing our borders, but it rests on uncertain legal theory and mistaken assumptions regarding the role customs brokers play in the supply chain. In concert with its lawsuits, Nike proposed a set of procedures by which customs brokers would proactively verify and confirm the legitimacy of its clients, powers of attorney, and even the documentation used to declare and enter imported merchandise. One might infer from these actions that customs brokers who do not adopt Nike’s procedures for exposing importer identity theft and blocking infringing goods would be at risk for costly litigation. While rights holders clearly suffer from burgeoning infringement, does that justify using the courts to force upon customs brokers a choice to either share the burden for arresting the flow of infringing imported merchandise into our consumption or share the risk of prosecution when that merchandise is seized by CBP.
       To meet the challenge posed by the Nike lawsuits, and on recommendation by the Customs Committee, the NCBFAA Board of Directors commissioned Customs Counsel to prepare an amicus brief in case it should be needed. To meet the challenge posed by the procedures proposed by Nike, and urged by CBP with respect to validating a party’s right to make entry and validating the power of attorney by which the customs broker is authorized to file on the importer’s behalf, the Customs Committee began a dialogue, including the Large Broker and Forwarder Committee. At first this was done with the intention of negotiating with counsel for Nike to dismiss its lawsuits. When that failed, the effort continued largely as a defensive measure. At that point the challenge facing our Customs Committee was to find regulatory language that while not creating an undue burden, would satisfy CBP and provide a reasonable defense against rights holders who otherwise might extract a greater price.
       These efforts met with resistance on two fronts. Some members argued that NCBFAA should not engage in any endeavor that brings a new regulatory burden on our businesses, and that the Nike lawsuits were without legal merit and non-threatening. Another group of members contended that imposing a regulatory requirement for validating the power of attorney would cause importers to engage customs brokers that would make entry in their own name, and that unless there were parallel requirements for vetting clients, power of attorney validation would distort the competitive environment to their disadvantage. Although the year came to an end before this debate was resolved, during its September 26 meeting the Customs Committee instructed Customs Counsel to draft language that would support both power of attorney validation and client vetting, and to include importer obligations in Part 141 to satisfy any new customs broker requirements in this context.
       5. Commissioner Bersin’s Grand Bargain – As keynote speaker for the Government Affairs Conference luncheon on September 27, 2010, CBP Commissioner Alan Bersin told our attendees that the NCBFAA played a pivotal role in Customs’ past and that we will play an equally important role in his agency’s future. He went on to say that he looked forward to working with our Association to keep trade flowing, our country safe, and our economy strong. The Commissioner used his speech to introduce his concept of a "grand bargain" for our organizations. In his concept customs brokers would play posse to CBP’s role as marshal, on the look out for suspicious importers, CBP’s eyes and ears in the larger trade community.
       While an expanded role as CBP’s trusted partner for detection of supply chain anomalies has the appeal of riding with the white hats, there can be no pay day, and even a casual glance reveals problems. Customs brokers lack the immunity from civil litigation that every CBP officer enjoys. CBP doesn’t depend on remittances from suspects to meet payroll, nor is the agency likely to become entangled in any ensuing investigation, an eventuality to which customs brokers remain vulnerable. … and while customs brokers may be perfectly situated and attuned for discerning anomalies and detecting risks, they are wholly untrained in enforcement. In that light the partnering role that customs brokers may be asked to adopt could resemble one of informants more closely than posse.
       Customs brokerage is first and last a business, not a public service. The principal – agent relationship defines that business. As a professional the customs broker is required to use its expertise, experience and labor in furtherance of the legitimate interests of its clients. Any role that tends to compromise the allegiance of customs broker to client must be subjected to very careful scrutiny.
Legislative Representative’s Report
By Jon Kent
       2010 was a year where the Congress failed to enact any significant trade or customs legislation – that’s the bad news. The good news is that there were no brutal battles on Capitol Hill for customs brokers, freight forwarders and other transportation intermediaries, where we were forced to preserve our livelihood and oppose destructive legislation. Yet, saying this, our legislative year was not uneventful.
       First came a new Commissioner at CBP. Selected as a "recess appointment" that places him in office until the end of 2011, Alan Bersin has forced a frenetic pace at Customs, challenging his staff with new ideas and out-of-the-box thinking. This has created a challenging environment because not all these new ideas are welcome. On the other hand, his approach provides customs brokers with opportunities that can greatly benefit the industry. This in turn has focused the spotlight on customs modernization and generated interest on Capitol Hill. Although a customs reauthorization bill made no progress last year, with staffers working primarily behind the scenes, there has been a renewed commitment to fashion a bill in 2011. Of particular interest to NCBFAA have been drawback reform, reorganization within CBP, and the "firewall" that keeps security data beyond the reach of commercial enforcement. Privately, CBP has sought language related to terminating a broker’s right to continue in business.
       In the forwarding and NVO realm, there has been considerable interest in removing ocean carriers’ antitrust immunity. House Transportation Chairman Jim Oberstar (D-MN) introduced legislation that addressed this issue and included prohibitions against numerous actions taken by the carriers during the economic downturn. This generated criticism of the Oberstar bill, such as concern about the bill’s overly prescriptive regulatory posture. This has resulted in a much more limited approach in the new Congress. NCBFAA is particularly interested in seeing that any new legislation addresses our opposition to tariff filing.
       Our attention also has been focused on air cargo issues, which returned to the fore with an unsuccessful attempt to deliver explosives from Yemen to be detonated in the US. This reawakened Congressional pressure for 100 percent cargo screening for inbound passenger aircraft, as well as comparable measures for all-cargo aircraft. This issue will continue throughout 2011, since TSA now says that it will mandate 100 percent screening for passenger aircraft by the end of the year.
       Looking forward from a legislative perspective, NCBFAA will face an even more unpredictable future from a revamped Congress. "Tea party" Republicans have vowed to maintain an austere federal budget, resulting in spending reforms in the House that will deny funding to a broad range of programs, like ACE and customs commercial operations. A presidential campaign will begin in earnest later in the year, cutting off any bipartisan dialogue that may develop. And, the Senate is evenly divided now, yet depends on 60 percent votes to pass legislation. Still, the new year begins with the best of intentions: a serious effort to pass the Free Trade Agreements, completion of a bipartisan customs bill, and the possibility of less divisive political dialogue in the near term. I believe that our interests will be best served if we proceed as though our glass is half full; espousing what is in our best interests and working to pass good legislation.
Freight Forwarding/NVOCC Report
By William App, Jr.
       The Forwarding and NVOCC Committees were extraordinarily active this past year and, those efforts enabled us to report a number of important, successful outcomes that will substantially benefit the forwarding industry.
       First and foremost, of course, is the victory with respect to the NVOCC tariff exemption. In a decision issued February 25, 2011, the Federal Maritime Commission has agreed to permit U.S.-licensed NVOCCs from having to publish rates in their tariffs. These exempt rates, which are now to be referred to as Negotiated Rate Agreements (or NRAs) will significantly reduce the cost, burden and regulatory risk involved in having to memorialize negotiated rates in NVOCC tariffs. At the same time, they will provide NVOCCs and their shippers with significant flexibility to develop rate and service packages in a commercial, non-regulatory framework that will likely revolutionize ocean shipping.
       Unfortunately, the decision is somewhat limited in that it benefits only U.S.-licensed NVOCCs. In other words, the exemption is not currently applicable to foreign-based unlicensed NVOCCs even if they are properly registered and bonded with the Commission. This is unfortunate, as the NCBFAA did argue in favor of the broader exemption. However, the Association was unable to persuade a majority of the commissioners to extend the exemption to cover foreign-based NVOCCs as well. Nonetheless, as two of the commissioners did support the broader exemption, the agency indicated its intent to initiate another proceeding in the near future to solicit public comment that would possibly modify the rule in the next year.
       We have outlined the requirements of the FMC's decision in the February 28 edition of the Monday Morning eBriefing and a copy of the Commission's decision is on the NCBFAA website. Accordingly, there is no reason here to outline the specifics of the holding or the various requirements that need to be met to qualify for the exemption. We encourage all members to read the details that we have set forth very carefully.
       Although this relates to air rather than ocean forwarding, the Committees' efforts were also a significant contributing factor to the very favorable and important decision issued by the Ninth Circuit in a case that protects the right air forwarders have to bring actions against the airlines for cargo damage. In a decision issued February 11, 2011 in Chubb Insurance Company v. Menlo Worldwide Forwarding, Inc., the U.S. Court of Appeals for the Ninth Circuit decided that the air forwarder involved there (UPS) could properly sue the airlines (Qantas) in an indemnification action to recover cargo damage payments it had to make to the underlying shipper. The case involved the interpretation of the two-year statute of the limitations under the Montreal Convention. The court, overturning the precedent that had ruled to the contrary with respect to the Warsaw Convention, concluded that indemnification actions are separate and apart from actions to recover for the actual damage and that the forwarder could therefore bring its action against the airline even if the original two-year statute of limitations had run. This was extremely important, because the cargo interest had waited until the expiration of the two-year period from the date of the loss to bring its own action against the forwarder. If the court had not ruled as it had, the forwarder would have been forced to sustain the loss even though the damage had been caused by the airline.
       The NCBFAA had consulted and cooperated closely with counsel for UPS throughout the litigation. It had even provided an affidavit in the lower court action explaining why the courts should treat this situation differently under the Montreal Convention than they had under the Warsaw Convention.
       The Forwarding Committee has continued to monitor the various U.S. and foreign government investigations of airlines and forwarders with respect to antitrust issues that arise out of the movement of ocean and air cargo. As part of this, the Committee has provided the membership with guidance concerning the possible participation of air forwarders in the settlement of the civil class action suits that are pending against Lufthansa and various other airlines.
       In a related vein, the Committees have taken note of the recent interest shown by the U.S. Department of Justice concerning the role of forwarders and NVOCCs in transactions that may be subject to the U.S. Foreign Corrupt Practices Act. It has been widely reported that one large forwarder was required to pay a significant penalty due to its role in providing forwarding and logistics services with respect to goods moving into Africa. The Committees accordingly have begun planning an educational, outreach effort to the members to explain the elements of the FCPA and provide important guidance on how to avoid involvement in such matters. As part of that effort, the Committees have arranged for an unusual but important session relating to the FCPA to be presented at this year's Annual Conference on Tuesday, April 5. Included on one of the panels will be the chief of the FCPA Section from the U.S. Department of Justice Criminal Section.
       Reacting to the complaints and frustrations of a number of members relating to the imposition of penalties by U.S. Customs and Border Protection (CBP) of the AES requirements, the Committees have been meeting regularly with CBP headquarters in an attempt to better rationalize the enforcement practices of the various CBP ports. These meetings have been extraordinarily successful, have led to the dissemination of guidelines from CBP headquarters to various ports that have been instrumental in either eliminating or significantly reducing the amount of penalties imposed by the ports for violations of the AES regulations. While it is clearly important that forwarders and NVOCCs inputting data do so accurately, it now appears that CBP's imposition of penalties will be reserved for the more substantive occurrences in which the filing party has truly been negligent in how it has implemented its responsibilities.
       Similarly, the Committees have met with representatives both from CBP and Census to get the agencies to agree on a uniform interpretation of the requirements of the AES regulations. In many instances, the two agencies interpreted the regulations differently. (For example, they had inconsistent views on what was the appropriate port of departure when shipments move out of the United States by land to Canada and Mexico for ultimate export.) These differences have led to confusion and, in some instances, the imposition of penalties. It appears that the Committees' sessions with the government have also been very successful in getting the two agencies to adopt a uniform, appropriate interpretation of the regulations.
       During the past year, the Committees worked closely with the FMC in the agency's investigation that looked into the capacity shortages during 2010. When the Commission initiated its Fact-Finding Investigation No. 26, Vessel Capacity and Availability in the United States Export and Import Trades, the Committees facilitated having various members provide confidential testimony to the agency that ultimately was an essential part of the record of this investigation. The Commission subsequently accepted the Fact-Finding Report and Recommendations of Commissioner Dye, and adopted a series of steps that were intended to bring the ocean carriers, ocean transportation intermediaries, and shippers into a framework that improves the efficiency of the shipping industry.
       As part of that, the FMC formed something called the International Ocean Transportation Working Group that is to meet on the various service issues that were revealed during the investigation. Essentially, the working group is hoping to develop guidelines that would improve carrier commercial practices (including those involving booking cancellations and rolling cargo), shipper commercial practices (including minimum quantity estimates) and overall export capacity and forecasting. This group would include several ocean carriers, shippers, and the NCBFAA in the hope that the carrier and container shortage crisis that adversely affected commerce during the middle part of 2010 is not repeated.
       During the year, the People's Republic of China (PRC) announced its intention to require NVOCCs to file tariffs with the Shanghai Shipping Exchange. The Committees initially persuaded the U.S. government, which was in the process of negotiating a new bilateral maritime treaty with the PRC, to use its influence to have the PRC drop this requirement before it was implemented. Unfortunately, the PRC government refused to yield on this issue. Accordingly, the Committees provided the members with guidance on how to register and comply with these new requirements.
       The Committees have also been meeting with officials of the U.S. Bureau of Industry and Security (BIS) during the past year. The NCBFAA believes it is extremely important to better educate BIS as to the role that forwarders and NVOCCs play in exporting goods from the United States, so that the government no longer regards forwarders in the same light as the underlying exporters. From BIS's standpoint, the Association is providing a forum that the U.S. Department of Commerce can use to better educate U.S. shippers of the exporting opportunities that are available, as well as the type of governmental assistance that may help facilitate improving U.S. exports.
       Members of the Committees have continued to work with the Carrier Best Practices Committee, which involves members of both the NCBFAA and the steamship line and rail industries. These meetings have the goal of eliminating as many operational problems that arise from regulatory initiatives and carrier business practices as possible. Among the issues discussed during the past year have been implementation of mandatory AES, ACE ocean e-manifest, overweight container requirements, 10+2 ISF requirements, inconsistent accessorial fees, booking lead times, various clean and green truck initiatives, bill of lading amendments and more flexibility on detention/demurrage/per diem issues. These efforts continue to achieve positive results both in increasing efficiency and reducing the incidence of inappropriate and unnecessary claims that the carriers previously submitted against NVOCCs and brokers for issues such as demurrage and detention charges.
       In a similar vein, the Committees have met with organizations representing domestic motor carrier property brokers who have been attempting to improve the professionalism of that particular industry. In view of the potential adverse side effects that the legislation might have on customs brokers and ocean forwarders, the Committees have been meeting with them in the hopes of modifying any draft legislation language so as to preclude adverse, unintended consequences from those initiatives. We are continuing to follow up with this.
       The Committees continue to work closely with the NCBFAA's educational institute to support the Certified Export Specialist (CES) Certification Program. The program is now complete and testing for those qualified to grandfather as a CES has already commenced. As we noted previously, the online course has been praised as one the most comprehensive programs available in our industry and has become an invaluable, priceless, educational opportunity for training members of OTI staffs.
       Another significant legislative initiative relates to the possible elimination of steamship line antitrust immunity. The Association has been a member of an ad hoc coalition of interest groups that are looking to introduce legislation in the current year that would significantly reduce the immunity the carriers currently enjoy. The Association is playing an active role in shaping the content of that legislative effort and we hope to have more to report on at this year's Annual Meeting.
       In view of the overlap of so many of the issues that the Committees address, the Committees have recommended to the Board that the Forwarding and NVOCC Committees be combined into a single Transportation Committee, and at the same time create three new subcommittees – namely, the Forwarding, NVOCC and Air Freight Subcommittees. The Board approved this initiative at its last Board Meeting and that initiative is set for ratification by the membership at large at this year's Annual Meeting.
       The Committees look forward to continuing their work during 2011 and invite all members either to directly participate in their activities or take advantage of the opportunity to raise any issues that appear to be of general concern.
Regulatory Agency Committee Report
By Roger Clarke
       In April 2010 the Regulatory Agency Committee (RAC) was reformed based on the same structure as a standing Association committee with one representative from each of the NCBFAA nine areas. While not required by the Association By-laws the chairman felt it would be in the best interest of the Association’s membership to have a broad based representation. The chairman also felt that a liaison representative from any regional association with a formal PGA Committee would also be an asset to this committee. An open invitation has been made through the committee members. The Pacific Coast Council of Customs Brokers & Freight Forwarders Associations, Inc. and the Northern Brokers Associations have accepted the invitation and are working with the RAC for mutual benefit.
       The RAC continued with a monthly phone conference meeting to help reduce the operating costs of the Association. The committee will try to conduct a formal face to face meeting at each year’s NCBFAA GAC and Annual Conference. The committee has been extremely fortunate to have top level representatives from the FDA Prior Notice Center, FDA Import Operations and Policy office, Consumer Product Safety Commission, and the ITDS Product Identification Sub-committee attend some of our phone meetings. Candid discussions were conducted on issues affecting both the agencies’ level of compliance and the Association’s operational concerns.
       In May, BottomLine Solutions, Inc., a private consulting firm hired by the Food and Drug Administration to review and compile a report on improvements to the agencies import operations, contacted the committee. BottomLine Solutions, Inc., conducted a survey was of both the agencies internal personnel and nine trade associations. The NCBFAA RAC Committee responded with a six-page statement containing 40 issues and recommendations for improvement in FDA Import Operations.
       During its monthly conference calls, the committee discussed other areas of concern such as:
  • FDA Prior Notice Center continuing problem of incorrect manufacture information. An ongoing discussion of the CBP MID code structure and the filer inability to make corrections or determine just what data is being pulled from the CBP transmission and converted into the FDA data base. The committee will continue to pursue this issue.
  • FDA Prior Notice Center not receiving the FDA ultimate consignee data (first destination point) as part of the Prior Notice transmission.
  • Structure of the FDA FEI number. Creation and duplicate FEI numbers generated by FDA for the same location.
  • Establish agency guidelines for creation of both MID and FEI identifiers to correct and improve the corrupted data base.
  • Address specific FDA District delays.
  • Monitor the PREDICT programming in implemented Districts to help determine its effectiveness. Attempt to have FDA commit to advancing the PREDICT programming to other ports and start implementation of ITACS.
  • Develop a proposal for a FDA binding ruling program. The committee has presented a proposal to the NCBFAA management and suggested outreach be conducted to other importer association for suggestions before it is presented to FDA for review.
  • Have FDA create a centralized procedure of notification of importer change of address.
  • Work with CPSC on their new examination and enforcement procedures.
  • Determine what options are open to bring product into compliance and the mechanics of completing the procedure.
  • Work with CPSC on future webinars through the NCBFAA NEI.
  • The committee worked with the NCBFAA Associated Presidents Network (APN) in developing an FDA port level contact list. The prepared list was presented to the Association office for distribution to the membership.

        The NCBFAA Customs Committee asked the RAC for assistance in determining how FDA handles tariff number changes and corrections to the 2011 HTSUS. The issue was discussed with the Division of Import Operations and Policy and it was determined that Mr. Ted Poplawski in that office was the responsible party for such corrections. Mr. Poplawski briefed the committee on the process and asked for the Association member’s help in determining where changes and correction are required. Once the correction or change is verified Mr. Poplawski sends a request to CBP for actual correction to the tariff database. Determination of the CBP process was referred by to the Customs Committee. Mr. Poplawski’s contact information and required information was published in the NCBFAA Monday Morning Briefing for membership review.
       Mr. Douglas Bailey, ITDS Product Information Committee chairman briefed the committee on the published "ITDS Guidance For Using E-commerce Data To Manage Product Admission At International Borders." Several unique approaches were presented and discussed on a more encompassing universal description of products and processes for a better classification by various agencies. The RAC hopes to continue discussion and input as ITDS is developed.
       On December 14, 2010, a special meeting was held with the Office of Import Operations and Policy to discuss several proposals being considered by the FDA Import Operations Task Force Committee. The NCBFAA RAC commented on several supported proposals such as more outreach and training, compliance webinars, a better and more user friendly product code builder, a centralized information webpage and better guidance documentation. The committee also heard several proposals which were of concern like filer enforcement via CBP memorandum of understanding, higher level of filer review, posting negative filer review on a public webpage, and enforcement action conducted at the FDA District level. FDA reached out to the NCBFAA RAC for feedback as they move forward with their importer operations improvements. FDA will consider including NCBFAA representation as they move forward with their import operations review. The RAC will continue dialog with FDA to try to achieve a fair and equable enforcement protocol.
       On December 23, FDA requested the RAC assistance in securing volunteer filer firms to participate in a pilot program for testing the Import Trade Auxiliary Communication System (ITACS) in the PREDICT Districts of Los Angeles, New York, Seattle, and San Francisco. The ITACS electronic function is scheduled to start testing in the spring of 2011 and to be implemented nationwide along with PREDICT during the balance of 2011. The RAC reached out to the local associations through the APN committee. The RAC is in the process of compiling a volunteer list and assisting FDA in ITACS training.
       On January 7, 2011, FDA published the "FDA Transparency Initiative: Improving Transparency To Regulated Industry." An FDA management task force developed this document from both internal input and comments from the trade. The report contains 19 suggested steps to meet the FDA transparency goals. Many of the NCBFAA RAC suggestions and comments made in the Import Operations paper are incorporated in the 19 transparency steps. The RAC will continue to review this document making appropriate comments when it is in the best interest of our membership. FDA has suggested the NCBFAA respond on the positive aspects, concerns, and our suggested priorities as FDA moves forward with implementation. The RAC supports the task force goal to implement a better trade understanding of regulatory requirements and foster a more effective means of communications.
       The RAC will continue to build bridges for both a better understanding of the expected levels of compliance and requirements and also convey the capabilities and limitations of our membership. We ask all NCBFAA members to help the RAC by communicating both positive actions and areas of concern of participating government agencies.

NCBFAA Educational Institute Report
By Janet Fields
       2010 was a transitional year for the NCBFAA Educational Institute; the year beginning with Director Cynthia Allen, who later transitioned to US Customs and Border Protection as the Executive Director of the ACE Business Office in Washington, DC. In July of 2010 we positioned Brian Barber, Licensed Customs Broker and Certified Customs Specialist in the Educational Institute and in September of 2010 named Brian the Director. Brian brought to us 12 years of industry experience and is complimented by Cecelia Ferrara, a recent graduate from the University of Maryland, College Park. Her strong IT background in social media, website maintenance, graphic design and customer service added another dimension to our NEI staff.
       Our core CCS and CES programs were strong in 2010. The Certified Customs Specialist program welcomed approximately 300 students during the year and continues to gain recognition within our industry, uniquely requiring continuing education points in order for participants to maintain their certification. We have also renewed our partnership with the CSCB, whose highly acclaimed CCS Program in Canada has gained industry wide recognition. Our Certified Export Specialist program has been made available for open enrollment any time the student is ready, just prepare to learn and learn a lot! The CES program is easily one of the most comprehensive programs covering all modes of transportation to truly become an expert in International Trade.
       During 2010 we re-established the NEI committees; consisting of a Policy Committee for oversight made up with the current Association President, chairmen of the Transportation and Customs committees as well as past NEI Chairman, created to provide consistency in policies and continuance of the programs regardless of the players. We’ve established a Content Committee made up with the experts in our industry who will be responsible for the case studies as well as the overall integrity of our programs. Our annual case studies will allow our specialist to maintain their required points with free opportunities to take six import (CCS) case studies and six export (CES) case studies. Two of the 12 studies will apply points to both disciplines for those students maintaining both a CES and a CCS.
       Webinars. What more can we say? With 25 webinars offered in 2010 and literally thousands of attendees, we’ve become the "go to" place for instant updates on time sensitive issues, as well as core competency education on subjects such as Powers of Attorney, Marine Cargo Insurance, ADD/CVD and Compliance. In December 2010, the NEI was pleased to partner with CBP for a webinar presentation on Textile Enforcement. This presentation was well received and the NEI was grateful to have access to Janet Labuda, Director, Textile /Apparel Policy and Programs Division for her final presentation to the trade before her retirement in January 2011. Our 2010 ended with the Bureau of Industry and Security contacting our Freight Forwarding Committee Chairman, Paulette Kolba, for our assistance in broadcasting announcement and comment solicitation for a recent NPRM. Within one week, our NEI Director, Brian Barber was able to host a webinar with Paulette Kolba, Bernie Kritzer and Undersecretary Eric Herschhorn with 675 registrants proving our success in reaching not only our membership, but those in the international arena as well.
       Goals for 2011 will be to provide additional publications to compliment our Power of Attorney book, including such topics as Marine Cargo Insurance and Customs Bonds. The NEI continues to move forward each year and we look towards even more growth and opportunity in 2011.
Ocean Carrier Best Practices Committee Report
By John T. Hyatt and Melzie Wilson
       We are now entering the sixth year since our first meeting March 3, 2005, in Houston, Texas (at the time, two carrier representatives accepting NCBFAA’s invitation to participate: APL and Maersk.) Since then we have met quarterly, discussing issues that impact broker, forwarder and carrier services to their mutual clients. A number of "electronic" solutions have evolved wherein information can be secured on-line expediting inbound/outbound clearance and movement of cargo.
       This past year the committee held three meetings in Phoenix, Chicago and Houston, respectively. Carrier participation has been robust, with 12 carrier representatives at Phoenix, 15 at Chicago and Houston. Major topics addressed were equipment and ship space accessibility; carrier on-line services; chassis management pools; door moves; CBP dock "highline" exams; ACE-E manifest development; 10+2 graduated enforcement; overweight containers; China 172 Decree; vessel sharing and AMS; CESAC; EU 24 hour rule; preparing for increased U.S. Ag exports; new 2010 INCOTERMS; clean truck programs; pre-loading exams from overseas; and HAZMAT placarding responsibility.
       The committee continues to work with the carrier industry and its coordinating association, OCEMA (Ocean Carriers' Equipment Management Association,) to arrive at mutually agreed guidelines concerning the use of intermodal equipment for the industry to which all can subscribe. Carrier participation has included American President Lines (APL); China Ocean Shipping Company (COSCO); Compañia Sud Americana de Vapores (CSAV); Compagnie Générale Maritime (CMA-CGM); Evergreen Line; Hanjin Shipping Co., Ltd.; Hapag Lloyd; Hyundai Merchant Marine; A. P. Moller-Maersk Line; Mediterranean Shipping Company (MSC); Mitsui OSK (MOL); Nippon Yusen Kaisha (NYK Line); Orient Overseas Container Line (OOCL); Wan Hai Lines; and Zim Container Line.
       We continue collaborative efforts with TOPAS (Terminal Operators and Port Authorities Subcommittee for EDI Standards Development of the American Association of Port Authorities [AAPA]); and with CESAC (Customs Electronic Systems Action Committee,) forging resolution of technical issues between the Transportation Industry and CBP/ACS and Automated Environment/International Trade Data System (ITDS,) participating government agencies for both imports and exports to/from the U.S.
NCBFAA Drawback Committee Report
By Michael V. Cerny
       For the Drawback Committee, 2010 represented a year of changes at Customs and Border Protection (CBP) and with the national election. With help from Jon Kent, the Committee addressed changes to the drawback section of the Senate Customs Reauthorization bill. We also worked with the House Ways & Means Committee on its proposed version of Reauthorization. While politics and the focus on other legislative priorities ultimately resulted in Reauthorization slipping away in the last Congress, we remain hopeful that the new Congress will again take up a Reauthorization bill that will include drawback modernization language. Once again, our committee wishes to thank Jon Kent for his advice and guidance during the past year and looks forward to working with him in 2011.
       The retirement of William Rosoff at OR&R also marked a milestone. Mr. Rosoff had been primarily responsible for drawback policy and the rulings process for many years and his retirement formally handed that position to Ms. Carrie Owens, a newcomer to CBP from the Department of Commerce. Ms. Owens took over just as other longtime OR&R drawback staff also retired and this has resulted in a slowdown in rulings being issued at Headquarters. One challenge for our committee in 2011 will be to work with CBP to ensure that the drawback rulings process continues to function in an efficient manner.
       The Committee applauded the withdrawal of Notices of Proposed Rulemaking issued by CBP and the Alcohol and Tobacco Tax and Trade Bureau seeking to eliminate drawback of certain excise taxes under substitution unused merchandise drawback. When the Notices were issued, a number of members expressed concerns that the proposed regulatory changes would have an adverse impact. The Committee confirmed this interpretation and worked quickly to submit very detailed comments arguing that the NPRM should be withdrawn. The Committee was very satisfied with the withdrawal of the NPRMs in 2010. However, we remain concerned that Treasury will seek to implement these concepts either in subsequent regulations, or through proposed language in CBP legislation.
       The Committee’s 2011 goals are to continue our leadership on drawback issues, to keep our members informed of proposed changes, and to solicit comments from our members regarding important developments. Of particular interest is the development of ACE and its impact on drawback. The Drawback Committee members and its Chairman remain available to discuss these issues, or any other issues related to drawback, with interested members of NCBFAA. All members of NCBFAA with interest in drawback are encouraged to attend our meetings and conference calls.
Bylaws Committee Report
By Lee Hardeman
       This year, we undertook to recommend to the Board of Directors a small change to the standing committee structure. At the request of the President and Freight Forwarding Committee Chair, we drafted wording that would roll the Freight Forwarding Committee and the NVOCC Committee into a single Transportation Committee. The purpose of the proposed change is to allow for better coordination of efforts in these areas. The proposed change will be presented for approval at the 2011 Annual Conference.
Counsel Review Committee Report
By Lee Hardeman
       The Counsel Review Committee undertakes a review of one of our three counsels each year so that each counsel is reviewed every three years. We established approximately 25 criteria for each position in 2003, and we have refined those over the years. In 2010, we undertook to review Transportation/General Counsel. This was concluded in Q1 of 2011. We are scheduled to undertake review of our Washington Counsel later this year.
Membership Committee Report
By Bruce Goodwin
       When President Jeffrey Coppersmith assumed the NCBFAA Presidency, one of the first goals he set was having membership break the 1,000-member mark by the 2012 Annual Conference. Thru the September 2010 Board meeting, we had 891 total members (756 regular members, 109 affiliate members and 25 associate members). Lofty goals set in an up & down economy where association memberships are not at the top of any companies list for an expense. In 2009, we broke a record for membership growth in one year with 106 new members and in 2010, we welcomed 96 new members. So, as you can see reaching 1000 is not out of the question, but we will need help from the Executive Committee, the Area Directors, the Membership Committee and most of all the membership. As I have stated in the past, we are all salesman for the NCBFAA and it is imperative that if we are to continue growing into a stronger association, we need members.
       As you all are aware, we have just implemented a slight increase in our membership fees and the comments that we are hearing are "the small increase is worth it for what the NCBFAA does for us." Why do we receive comments from our members like that? It is because we keep our members updated and connected to industry changes whether it be with ISF and pending ISF enforcement issues, 1641 penalties and sanctions, ACE updates, new bond instructions, National Permits, FCC matters or POA validation. We are represented on Capitol Hill and constantly asked what our Association’s stance is on pending legislation that will affect our business and our clients business, whether it concerns CBP, FDA or FMC issues. Not to mention that our members receive weekly updates in our Monday Morning eBriefing or our constantly updated website. This Association has for 114 years represented the interest of customshouse brokers, freight forwarders, OTIs and NVOCCs.
       As most of you are aware, membership dues comprise between 35 - 40 percent of our budget. Without our membership, the Annual Conference wouldn’t be as successful as it is. The numbers that are starting to show great interest in our Educational Institute wouldn’t be there. This list goes on and on, so each of you get involved in bringing on board one or two new members for 2011 so we can reach the goal President Coppersmith has set.
       I would like to take this opportunity to thank barbara reilly and her Washington Staff, especially Jeff Short. We appreciate any and all comments from the membership.
       Thank you!
Air Freight Subcommittee Report
By Scott Case and Donna Mullins

       Last year, two events affected the state of air cargo within the United States. One was planned and prepared for; the other created a chain reaction that continues to reverberate today. On August 1, 2010, the Transportation Security Administration moved forward with 100% screening of cargo which was loaded to passenger aircraft. Leading up to that date, both the public and private sectors committed staff and resources, made significant financial investments and made every effort possible to keep the trade apprised of the looming deadline.
       Remarkably, it passed without major incident.
       TSA, to their credit, made every reasonable effort to talk shippers, forwarders, airlines, Congress and anyone who would listen about what the impact would be if screening wasn’t partially moved off the airport and into the warehouses and docks of forwarders and shippers. Their message seems to have resonated, as many forwarders became Certified Cargo Screening Facilities (CCSF’s) for either their own cargo or in a third-party capacity where they are screening on behalf of others. Shippers have been reticent to embrace the CCSF concept because of the kind of unfettered and 24-hour access that TSA demands as part of the program, as well as background checks performed on employees with access to cargo. However shippers in industries where cargo does not take well to screening, whether intrusive or non-intrusive, have seen the value and are participating in large numbers. These industries include pharmaceutical, high-tech, high-value and hazardous shippers.
       Things were progressing until the Yemini plot was uncovered in October. This opened up an entirely new issue in front of Congress and one where the prevailing view became one of extending screening to both all cargo AND passenger carriers. The impact on this would have been detrimental and costly considering the different types of cargo (including oversized and bulk pieces), which move on cargo aircraft. TSA is still engaged with the House and Senate in attempting to show them that the many layers of security deployed in air cargo ARE safe and protect air passengers and commerce. Further, it has accelerated TSA’s timetable for screening inbound cargo.
       TSA has implemented a series of regulatory changes designed to close some of the loopholes that allowed these incidents to take place. Audits of CCSF’s and their processes have led to several very high profile closures of Indirect Air Carriers (IAC’s) operating in places like Indianapolis and Dallas. TSA is continuing to work with the trade and stepped up facility visits and audits of CCSFs to insure full compliance.
       What cannot be understated is that violating the TSA’s rules carry severe civil and criminal penalties because of the way in which they are structured. What also must be respected is that TSA is extremely committed to work with the shipping community and when they take an action as severe as suspending or revoking an IAC or CCSF operating authority, there have been demonstrable and repeated violations.
       In conjunction with the changed regulations, TSA is investigating and piloting a program to get advanced shipping data to screen through CBP’s targeting systems. This is in the very early stages and whether or not it evolves into a "24-hour rule for airfreight" remains to be seen. There are a host of technology and security challenges attached to identifying who is allowed to transmit this data and how to handle an interdiction if something is identified as being high-risk.
       Another significant development this year was the implementation of the European Union Advanced Manifest Filings. On January 1, 2011, all goods entering the European Union are required to transmit advanced information about the contents and origin of the shipment. The import aspects of the EU Security Requirements are collectively known as the ICS (Import Control System). ICS is, in turn, part of the EU’s overall AIS or Automated Import System. The ruling will also encompass FROB (Freight Remaining on Board) as well as trans-shipments.
       The data required for ICS EU Security filings will be sent to participating carriers to complete the filing. Carriers also have the option to nominate designated agents to file directly on their behalf. The information required for the EU 24-Hour Rule is subject to change.
       The EU will require information about the goods scheduled to enter an EU port prior to arrival. Similar to the AMS 24-hour regulations in effect in the United States, the data elements must be transmitted no later than 24-hours prior to vessel departure from the point of origin. The data must be sent to the EU country where the first port of entry occurs. The European Commission has a web page regarding the Safety and Security Amendment of the Community Customs Code; it can be accessed at: http://ec.europa.eu/taxation_customs/customs/security_amendment/general_overview/index_en.htm.
       While the Yemini ink cartridge issue shadowed over the lithium battery issue, lest we forget the Lithium battery rule hangs in the balance. Air cargo industry officials are keeping their fingers crossed that President Obama’s recent executive order requiring agencies to take a second look at regulations and weed out obsolete, wasteful or overly costly rules will derail a Department of Transportation proposal to curtail the amount of lithium batteries allowed on aircraft. The rulemaking would require the ubiquitous power packs to be treated as full hazardous material, meaning new packaging, labeling, documentation, training and other procedures. It would also limit storage onboard the plane to cargo compartments accessible to the crew or locations equipped with a fire suppression system. All industry sectors uniformly oppose the proposal, saying the U.S. should just follow improved international standards promulgated by the International Civil Aviation Organization in 2009. They say the DOT’s cost/benefit analysis seriously underestimated compliance costs to businesses and consumers by several billion dollars. No one knows if the draft final rule was changed in any way following the open comment period. The Office of Management and Budget is doing its own economic analysis of the proposed rule.
       Shippers and carriers are also taking solace in the fact that Rep. James Oberstar, the powerful chairman of the House Transportation and Infrastructure Committee who introduced a bill in 2009 pushing for many of the changes the DOT subsequently recommended, lost his seat in the November election. House Republican leaders have instructed committee chairman to take an inventory of rules that hurt job creation. Perhaps the president’s National Export Initiative will also give pause to regulators. Although the vast majority of lithium batteries on planes are imported for cell phones, laptops and so on, batteries could be components of electronics that are manufactured in the U.S. and then exported.

 

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