2006 NCBFAA Annual Report

(Part II)

Customs Committee Report

By Ken Bargteil

Preface – In previous reports, the Chairman sought to belie criticism that NCBFAA doesn’t do much; that we are a waste of time and money. Anyone who still believes that cannot have read those reports. In a departure from those previous Annual Reports, this account will focus exclusively on the big issues that the Committee worked during 2006. Anyone interested in a more detailed examination of the Committee’s agenda for 2006 will find 27,560 words devoted to that in meeting reports already posted to FABnet.

As the fifth Annual Report of the Customs Committee submitted by the writer, it also marks something of a new beginning. The Chairman’s reappointment by the newly elected NCBFAA President, Mary Jo Muoio is a source of personal validation that fully rewards prior efforts, and recognizes the outstanding contribution of the Committee members during the preceding four years. The challenge is now renewed for us all to carry on the important work of NCBFAA’s Customs Committee with the dedication, energy, and perseverance necessary to justify the confidence and faith with which it has been endowed.

Tribute – One cannot speak of the Customs Committee experience for 2006 without honoring the memory of its long term Customs Counsel, Harvey Isaacs. In the five short years that it was my exceeding good fortune to benefit from the inestimable counsel of Harvey Isaacs, I came to appreciate not only the immeasurable scope of his knowledge and experience, but also his unequaled wisdom and sound judgment, crucial to achieving our purposes. In recalling Harvey Isaacs as a legal resource, dealing in superlatives is unavoidable, but to end there would be to do a horrendous disservice to his legacy.

NCBFAA occupied a place in Harvey Isaacs’ heart that called forth a fullness of service one cannot purchase. To say that he loved the community of customs brokers that he represented would be but the echo of a whisper of his feelings. Harvey Isaacs became my friend, my best friend, and my respect for him as a lawyer was finally just the surround for the kind of deep and abiding affection that reveals the best in those it touches. He was a mensch. He made me laugh. He called me nephew; I called him uncle. His good deeds live on, and I honor his memory.

Roster – The Customs Committee was reconstituted in 2006 with four new members. Bill Skinner succeeded Cary Weinberg as the Area 2 Representative, Penny Ricas succeeded Myra Reynolds as the Area 4 Representative, Joe Trulik succeeded Marie Armelagos as the Area 4 Representative, and Neto Roser succeeded Russ Jones as the Area 8 Representative. Mike Dugan accepted an appointment to the Committee as its third Senior Counselor; Bob Perkins revived the Automation Committee as its Chairman, and Michael Cerny succeeded Frank McCarthy as Chairman of the Drawback Committee. Under the Chairmanship of Cary Weinberg, the Regulatory Agencies Committee emerged from the Customs Committee as a new stand alone Committee of NCBFAA.

Customs Counsel – The process for counsel succession was only recently resolved as part of the newly organized counsel review regime. As Chairman of the Customs Counsel Selection Committee, Lee Hardeman directed his group, comprising Art Litman, Mary Jo Muoio, Kiko Zuniga and Ken Bargteil, in a businesslike fashion through the invitation and qualification process. This culminated in personal interviews of the final candidates by three representatives of the Selection Committee and a recommendation, which was adopted by the NCBFAA Board of Directors. Following a thoughtful, fair and pragmatic approach to this critical decision, NCBFAA engaged Alan Klestadt as its new Customs Counsel.

ACE – In 2006, the Customs Committee continued its support of the TSN and Trade Ambassadors for informing the development of ESAR, and raising the awareness of NCBFAA membership as the horizon for these momentous changes draws closer. In anticipation of events further off, several members of the Committee engaged directly with Cynthia Allen, in her capacity as Trade Co-Chair of the Cargo Release Subcommittee. NCBFAA continued to benefit from having members of the Customs Committee as three of the principal actors in CBP’s Trade Engagement, namely: Art Litman, Amy Magnus and Bob Perkins.

One of the less pleasant aspects of ACE development was the rolling implementation of mandatory eManifest. Shortcomings in the design, software, integration, training and trade preparation all contributed to delays, costs and pain at the border. As might have been predicted, the burdens for resolving an abundance of transactional problems spawned by mandatory eManifest fell most heavily on our community. Unhappily, CBP was not persuaded to tackle root cause solutions, as with the omission of slip printer programming in ACE for BRASS facilitation, but rather encouraged field offices to work with customs brokers as we dealt with the problem ad hoc, transaction-by-transaction. CBP often met complaints about eManifest problems plaguing customs brokers by exhorting us to work out a better process with the motor truck carriers. Adding insult to injury, in many cases our members received penalties for violations that could be clearly traced back to system and CBP error.

To the extent that both the problems and our role in bearing the burden were predictable, ACE eManifest stands for the proposition that our efforts in TSN and Trade Engagement are cost effective and well rewarded where these have so far proved adequate, and that there remain areas where we are not sufficiently engaged. Were a greater number of our members to dedicate a fraction of the time and energy that our 40-plus representatives in TSN, or three Trade Ambassadors have done, the benefit to our community, and trade in general would be considerable.

CCS – 2006 was a landmark year for NCBFAA’s new CCS program, and members of the Customs Committee continued to play a vital role in validating quizzes, reviewing challenges to questions from the candidates, and addressing protests arising from the final examination. This first year’s experience is testimony to the vital role played by the curriculum review corps, as well as the daunting and continuing challenge of vetting test questions and keeping course curriculum current. Among those who contributed to that effort, recognition is due Chip Bown, Dan Meylor, David Katzman and Bob DeCamp, without whom these good works would certainly have suffered greatly. The Customs Committee remains committed to working with the NCBFAA Educational Institute (NEI) toward establishing the CCS as an essential appellation in the field of customs compliance. We all look forward to the day when NCBFAA is recognized as the accrediting institution for international trade compliance specialists.

Expansion of Nationally Permitted Customs Business –One of the hot button issues that occupied the Customs Committee’s attention in 2006 was consideration of a proposal for superseding the current district permit regime by expanding the scope of the national permit. It was recognized that the potential impact of such a change was uncertain and would be far reaching. With the prospect for events outstripping our deliberations, the Customs Committee quickly brought the matter under review with the purpose of fully debating the question on its merits and developing a recommendation to the NCBFAA Board of Directors. In a remarkable display of discipline, efficiency and penetrating discourse, the Customs Committee was able to credibly explore the core issues and reach consensus. A recommendation to oppose any substantial change to the district permitting rules was made to, and adopted by the Board, and the Board’s task to the Committee for informing CBP of its position executed, all within the space of a few weeks. To the naked eye, it appears that these efforts succeeded.

Broker Penalties – While Customs Committee attention to the UPS Supply Chain Solutions 1641 penalty case awaited further developments, work on the issue of late pay penalty and mitigation guidelines for the PM Statement moved forward. Resolution of this matter was inconclusive at year-end. The principal arguments urged by the Customs Committee were that a $2,500 cap apply to the base penalty amount under Option 1, that precise language should be adopted to underpin the application of the guidelines on a per statement basis, and that provisions for exculpating circumstances not be left in doubt due to timing issues in the events flowing from a late pay. That is to say, the draft guidelines predicate remission or further mitigation of a penalty on proving that the violation did not occur or that it was the result of CBP error. There does not appear to be any insertion point for CBP to make a determination that the late pay was due to an isolated customs broker systems breakdown, snow day type circumstances, or other excusable failure. The Customs Committee filed informal comments with OR&R in this vein.

C-TPAT Minimum Requirements – Having been a key player for revisions to Importer C-TPAT Minimum Standards, the Customs Committee, with volunteers from the ranks of NCBFAA membership forming an expanded single purpose work group, turned its attention in 2006 to redrafting CBP’s formulations for minimum C-TPAT standards for customs brokers. This work group and its activity followed CBP’s selection of NCBFAA as its sole source for informing the production of these standards. As its newly designated Customs Counsel, this was the first challenge addressed by NCBFAA in which Alan Klestadt participated in that capacity. The time pressure for our first response was intense, and our new Customs Counsel rose to the challenge in exemplary fashion. The first round evoked extensive comments from several members of the work group, and the corresponding edits and recommendations were very welcome at CBP HQ. CBP accepted our edits and in response to our comments suggested that we rewrite two sections. With the door open to rewrites, the work group redrafted the entire document, and that submission became the primary source for the official Minimum C-TPAT Standards for Customs Brokers later published by CBP.

Epilogue – At year’s end the Customs Committee, responding to the urgings of members, took up the question, “Does the 10 + 2 Security Filing necessarily involve activities that constitute conducting customs business?” While it was clear that adoption of a position by NCBFAA that the Security Filing falls within the definition of customs business would be contrary to the determination made by CBP, and controversial within the larger trade community, it was both proper and necessary that it should be considered by this NCBFAA Committee, and a recommendation made to the Board of Directors should a consensus be reached in committee. The potential impact of a Security Filing on the future of customs brokerage cannot be overstated, but this story was unresolved in 2006, and will have to be continued in future reports.

With thanks to Mary Jo Muoio for her confidence in my abilities and dedication to the job ahead, to my past counsel and friend, Harvey Isaacs, for much more than I can compress into this report, my Vice-Chairman, John Peterson for his untiring and indispensable support, to the Custom Committee for representing the NCBFAA membership so capably this past year, and to Alan Klestadt, our new Customs Counsel, for his eagerness to join our cause on the basis of compensation that is chiefly internal, I respectfully submit that this is the NCBFAA Customs Committee 2006 – Chairman’s Annual Report.


Ad Hoc Security Committee

By William Evans

As the Chair of the Security Committee I would like to thank the executive committee, the board and the staff of our association for your support and leadership in 2006. I also want to thank my fellow committee members, Peter Powell, Geoff Powell and Lee Connor for all your time, and your financial support.

During 2006 we again were somewhat restricted by management changes within the Transportation Security Administration. However, we did conduct five seminars at the Transportation Security Administration’s Operations Center where Geoff Powell presented an overview of the import and export process to the center’s watch commands. Geoff, we again thank you for taking so much of your time in accommodating the many last minute requests.

We have been monitoring developments in the pandemic flu issue and, as of this writing, plan to present the membership with the latest developments in an update session during our annual conference in Phoenix, Arizona, in April.

As we move forward into 2007 I see NCBFAA continuing to proactively interface with all agencies as cargo security remains in the spotlight. We will be looking into participation in the Supply Chain – Information Security Analysis Center to evaluate the benefits potentially available to our members.

NCBFAA will also be one of only 10 members of a workgroup formed by the Center for Disease Control, Division of Global Migration and Quarantine. The workgroup will advise DGMQ on developing a comprehensive, multi-agency assessment of training and education needs on quarantine and border health.


Freight Forwarding/NVOCC Report

by William App, Jr., and Joseph Meunier

This has been an extremely busy year, as the Forwarding and NVOCC Committees have dealt with a large number of issues that arose form both government activities and problems caused by various ocean carriers. As detailed below, the Committees provided Association leadership and counsel with important guidance and direction that was key to responding to these issues.

In mid-April, we met with the FMC’s General Counsel to express the Association’s concern that the OTI regulations might be construed in such a way to make it more difficult for US licensed NVOCCs to work with existing agents and other service providers in the US. This concern arose out of several enforcement cases, which indicated that the agency’s Bureau of Enforcement was interpreting the regulations to require that any party providing a portion of the NVOCC services in the US needed to be separately licensed as an OTI unless it was an affiliated branch office. We explained that this would raise havoc with NVOCC operations and constituted an inappropriate extension of FMC jurisdiction over parties not normally subject to such regulations, such as container freight stations, brokers, trucking companies.

The NCBFAA suggested that the Commission issue a notice proposed rulemaking to clarify its rules and minimize the confusion and disruption that would otherwise occur. In addition, we urged the Commission to implement a moratorium on further enforcement cases in this area until the issues can be resolved.

Thereafter, several member companies made a specific request to the FMC’s General Counsel on this topic and provided specific information relating to the nature of the relationship between their NVOCC operations and those of their agents in the United States. After a number of further discussions, the FMC’s General Counsel (January 26, 2006) indicated that under those circumstances the agents would not need to be separately licensed, thus eliminating a potential source of confusion and potential liability for the NVOCC members of the industry that do have agents in the US.

Ultimately, an NVOCC, Team Ocean Services, filed a petition at the FMC seeking clarification about the propriety of working with unlicensed agents in the United States. The FMC did initiate a proceeding, which was assigned Docket No. 06-08, In the Matter of the Lawfulness of Unlicensed Persons Acting as Agents for Licensed Ocean Transportation Intermediaries. The Association’s Forwarder and NVOCC Committees considered the issues raised in that proceeding and ultimately filed comments pointing out that licensed NVOCCs do rely heavily on the services provided by agents. Those comments pointed out that it would be a logistical nightmare for NVOCCs to work only with licensed agents as (1) there are so many different agency relationships involved, (2) the identity of agents change frequently and (3) many agents do not perform the type of functions that would qualify them to obtain licenses. We accordingly argued that while it might be prudent for NVOCCs to have written agreements with certain of their agents, that was a private matter and the FMC should not require any written documentation or prescribe the content of those agreements. On the other hand, the NCBFAA argued that the situation was different for ocean forwarders, and that the existing regulations limited the type of agency relationships forwarders could have to those that performed bona fide sales functions. These formal comments are available on FABnet. As of this date, the Commission has not issued a ruling on the issue.

On April 18, the Association filed formal comments in response to Notice of Proposed Rulemaking that had been issued by the Census Bureau concerning the mandatory use of the Automated Export System (AES) for filing shippers’ export declaration (SED) data. Essentially, the NCBFAA urged that the Census Bureau issue appropriate and meaningful guidelines when promulgating the final rules which would both keep penalties for noncompliance reasonable and ensure that forwarders are not held responsible for violations that were not their fault. The Association also urged Census to institute a phased-in compliance period in order to give the trade sufficient time to understand the new rules and implement appropriate compliance procedures.

In anticipation of the final rules requiring a specific authorization for forwarders to transmit SED data electronically, we revised the NCBFAA form of Power of Attorney so that the members would be in compliance with the new rule once the final regulations come out.

On April 19, we attended a meeting, together with Jon Kent, with staff of the Senate Finance and Judiciary Committees relative to the Association’s concerns with S.378 on Port Security, which provides for substantial mandatory penalties for violations of the CPB manifest regulations. Since the bill would specifically make NVOCCs responsible equally with the carriers for any violations, and since NVOCCS cannot always be certain that the information they are submitting - particularly with respect to vessel or aircraft specific data - is accurate, we were working to either remove NVOCCs from the coverage of the bill or have the bill amended to require that parties be specifically found to be negligent or otherwise directly responsible before any penalties can be assessed. At the conclusion of the meeting, Committee staff agreed that the issues we raised warranted attention and promised to work with us as the bill moves forward to accomplish these objectives.

Consequently, we met again with these staffers, along with counsel on the Judiciary Committee, to further discuss these issues. Again, staff agreed that the issue of NVOCC liability needed to be discussed further before the bill goes any further.

The NVOCC Committee determined, at the March 2006 committee meeting, that it would be useful to develop a standard form bill of lading terms and conditions that would be appropriate for use by all members. This document was intended to take into consideration recent developments of cargo liability law, NVOCC and shipper obligations under the new security and manifest reporting regulations and other current issues that would affect NVOCC liability. A draft of such a document was completed, was approved by both the NVOCC and Forwarder Committees and by the Board of Directors. In addition, the document was submitted to several of the underwriters that write marine cargo insurance for NVOCCs, all of whom approved the form of the document and it is now available to members.

One of the disturbing trends that surfaced during the year was the tendency of the steamship lines to seek to recover detention and/or demurrage charges from customs brokers and NVOCCs even when there was no legal liability for such claims. In most cases, the carriers have placed provisions in their bills of lading and tariffs that include “agents” within the definition of “merchants”, and then come back against the broker or NVOCC if the demurrage or detention bills are not paid. We have spent a great deal of time trying to reason with counsel for the carriers, have arranged a number of meetings and have discussed these issues with the forwarder, NVOCC and customs committees of the Association.

As part of that effort, we developed a position paper that was intended to be sent to the carriers, trade press and regulatory agencies for the purpose of educating third parties about the issues and hopefully persuading the carriers to desist from at least pursuing customs brokers for such charges. These efforts were coordinated with those of the Association’s Carrier Best Practices Subcommittee, which has now met with a number of carriers in an effort to reform and standardize their practices regarding billing for detention and demurrage. In addition, we have met with a number of carriers and were able to enlist the active assistance of one of the lines on this issue during a session of the Government Affairs Conference in September.

As an outgrowth of this effort, the Association formed the Carrier Practices Subcommittee which has now had several meetings with members of both the steamship line and rail industries in attempts to develop efficient and standardized practices for moving containers in a way that would minimize unnecessary demurrage and detention. Indeed, this continuing dialogue has already achieved positive results in persuading various carriers to halt efforts to collect demurrage and detention claims against a number of members. Although this will require additional effort over the coming year, we are optimistic that the effort will continue to yield positive results and that NCBFAA members will cease being plagued with inappropriate detention and demurrage charges.

In August, the Association was contacted by and invited to provide testimony to an organization created by Congress called the Antitrust Modernization Commission (AMC), which was created to study the effects of the antitrust laws and whether antitrust immunity should be continued in a number of areas. Since one of the areas being studied was the Shipping Act, the AMC was requested to present its views. Consistent the Association’s past public statements on the issue, we submitted and testified that antitrust immunity was anachronism and should be eliminated at the earliest possible date. In particular, the Association’s testimony recited the clear abuses of the antitrust laws to which NVOCCs were subjected as a result of the collective action of the carriers. One example was the contracting abuses committed by the Transpacific Stabilization Agreement members several years ago, where they discriminated against NVOCC cargo in their service contracting practices. More recent examples were the assessment by the carriers of various types of surcharges that are not cost-justified, as well as the collective decisions that are being made on free time and demurrage/detention rules.

The Association also indicated that the FMC did not appear to have the necessary resources that would be required to effectively police inappropriate conduct by the carriers. The Association accordingly recommended that if immunity for the carriers was to be continued, substantial changes needed to be made in the statute and substantially more authority and resources needed to be provided to the Commission. However, in the absence of such changes, we argued that antitrust immunity should be eliminated and urged the AMC to support this when it ultimately issues its report to Congress. A copy of the NCBFAA’s statement to the AMC is available on FABnet.

The NVOCC Committee and Transportation Counsel have been a frequent contact for the government in its efforts to develop an appropriate policy to address cargo liability issues on international intermodal traffic. This topic has been of great concern recently, as a number of insurance companies have attempted to circumvent the uniform, coherent liability arrangements that are intended under multimodal bills of lading, including the form bill of lading recommended for use by the NCBFAA to its NVOCC members. This is going to be an issue of some concern in the future until the Supreme Court, or Congress, ultimately issues conclusive guidance. Until then, the Committees and counsel will continue to meet with the various governmental parties and members of the industry to reduce the possibility that members will be forced to deal with unexpected claims that exceed the limitations of liability established under the Carriage of Goods by Sea Act.

Finally, the NVOCC has worked closely with the Customs Committee in responding to the CBP initiative adding the so-called 10+2 data elements in the 24-hour rule security filing that is required for import cargo. After surveying a number of members, the Committee recommended that the NCBFAA suggest certain changes to ensure that NVOCCs would be able to remain an essential part of this transportation chain.


Membership Committee Report

By Bruce Goodwin

The success of any organization lies with its membership. As has been said over and over, the talented group of professionals that make up the leadership and general membership are what makes the NCBFAA the success that it is. As membership makes up approximately 45% of our income annually, it is incumbent upon all of us to share with others why we are members of the NCBFAA. Last year at this time our membership totals were 785 total members (639 Regular, 26 Associate and 120 Affiliate). As of the end of February 2007 those total numbers are 838 members (680 Regular, 30 Associate and 128 Affiliate). Not bad, but it can be better. Without your membership and financial support, the NCBFAA would not be able to voice its opinion on the regulatory and legislative issues that are the utmost concern to our Association and our customers.

As I stated in my short verbal report at last year’s annual meeting, we are all salesman for the NCBFAA and should be shouting the praises of our Association at all functions sharing the benefits of membership, whether it be a voice in Washington DC, being alerted about industry updates via the Monday Morning e-Briefing, the Quarterly Bulletin, the Who’s Who Annual Directly, the Certified Ocean Forwarders Program and the NCBFAA Shippers Association.

Continuing education is of utmost importance in our industry. The expansion of our Educational Institute with the inception of the Certified Customs Specialist program encourages and facilitates professionalism in our industry. This shows CBP that we are serious about what we do and want to keep current with all the changes within CBP and related agencies. Shortly there will be a further expansion with the new program for forwarders. We further help in training employees with our Third Thursday Seminars. As you can see, the NCBFAA is very busy making your membership dollars worth every cent.

In closing, I want to thank my committee members for their input and guidance. I appreciate the comments and help from the membership. I would like to also thank those members that have brought in a new member this year. I also ask each member to try and bring in one new member by this time next yearas you are all salesman 
for our Association. Stay involved if you already are and get involved if you are not!


NCBFAA National Educational Institute

By Robert Perkins

Continuing education is the foundation for our industry to remain a viable alternative to the importing and exporting community as subject matter experts. The National Educational Institute (the educational arm of the NCBFAA) is the formal structure to offer that continuing education and industry certification for our NCBFAA membership. As the recently appointed Chair of the National Educational Institute, my hope is to continue to sustain the opportunities of educational growth and industry recognition for this organization.

Under the expert guidance of NCBFAA Chairman Kiko Zuniga, the previous National Educational Institute (NEI) Chair, the organization’s foundation for growth began. Kiko recognized the Canadian Society of Customs Brokers (CSCS) currently possessed a comprehensive customs educational program for formal certification. Through his liaise with that Association’s leadership Kiko constructively implemented the NCBFAA’s program under the auspices of the National Educational Institute. Using the infrastructure of the CSCB’s certification program to build the NEI infrastructure, Kiko devised a strategic plan that would serve the member’s present and future educational interests. Without Kiko’s innovative vision, the implementation of the certification program would have taken many years of organic effort.

Today, we have many opportunities for NEI growth (grounded by the foundation created by Kiko) to create awareness in the importing community that Customs Brokers are more than the providers of data or just documentation facilitators. Customs Brokers are individuals and firms that offer expert customs statutory and regulatory knowledge. In addition, our members add front line value to the importing community that requires uninterrupted supply chains.

We understand that the NEI is a growing entity, and as such, will experience some growing pains as our programs mature and we customize the program for our member’s needs. The good news is this: we conducted our inaugural class, achieving a passing rate over 70%, certainly in line with the historical results of the CSCB’s trends and far better than the passage rates of the Customs Broker’s exam administered by the Customs and Border Protection Agency. However, we are not resting on our successes, we are continuing to review the program and add changes as is necessary to improve the delivery. We recognize the importance that the NEI continues to focus on process improvement to meet our member’s learning requirements. Therefore, we will continue to aggressively solicit input from our past and present students for change.

Two initiatives we are reviewing consist of added benefits we can offer our CCS members and the technical capabilities to construct a more streamlined process to capture and store CCS continuing educational credits. The formal initiative will help CCS members to keep track of their continuing education requirements. A third initiative we have addressed is the use of reference material while taking quizzes and exams. We understand that certain questions require the use of the tariff, the laws, or regulations. We determined the most reasonable approach is to allow students access to those references for scheduled quizzes and exams. We believe this decision comports to the practices of the CSCB (who we model) and those of the Customs and Border Protection Agency.

The NEI is your certification and continuing educational program, therefore, I hope you share your ideas, suggestions, and opinions with me since you are the most important catalyst for constructive change and sustained growth.


Drawback Committee

By Michael V. Cerny

During 2006, the Drawback Committee continued to work with CBP and industry leaders through the Trade Support Network to revise drawback statutes and regulations in an effort to streamline drawback procedures under the new Automated Commercial Environment.

Over the past four years, various members of the Drawback Committee have been actively involved with the Customs Trade Support Network. The TSN is a group made up of individuals from Customs, the brokerage committee, importers, exporters, manufacturers and others in the trade. The primary mission of the TSN over the past four years has been the development of the ACE computer system. 

After much negotiation, the TSN Drawback Subcommittee developed a concept paper that reflected a consensus program raising drawback claims to the entry summary line item level similar to the way that petroleum drawback is done under 19 USC 1313(p). Products and components of the same 8-digit HTS code would now be considered identical. All drawback would thus become substitution drawback and multiple substitutions would be allowed. By contrast, substitution drawback today is limited to a very subjective determination of whether unused merchandise is commercially interchangeable or whether components used in manufacturing are of the same kind and quality. Moreover, substitution today can only take place once, requiring claimants to trace the item using serial numbers or an inventory accounting method after the substitution has taken place.

During 2006, the TSN Drawback Committee worked with legislative counsel in the Senate and finalized language for a new drawback statute based upon the language first drafted by the TSN Drawback Subcommittee. Members of our committee were instrumental in developing this legislation.

The Committee presented a panel of CBP and industry experts at the Annual Conference in Fort Lauderdale in April 2006. The panel provided our membership with a complete analysis of the proposed legislative changes as well as an update of other important matters having an impact on drawback. The presentation was well intended and resulted in an excellent question and answer session with the panel.

Members of the committee spent significant time during 2006 working with Jon Kent and staff at Senate Finance and House Ways & Means seeking an appropriate vehicle for this important legislation. While the session ended without the bill finding that vehicle, the committee is encouraged by the continued enthusiasm for the bill in this new Congress, particularly from CBP and the new Senate Finance Majority staff.

The committee will continue to work with Mr. Kent and congressional staff towards passage of this legislation in 2007. The urgency of this effort is now being heightened by the advancement of the ACE computer system and the need to have this law in place in order to program ACE for the new drawback law. Members of the committee expect to spend many hours again this year up on the Hill educating new staffers on this legislation.

The committee plans an aggressive schedule of meetings in 2007 to keep members informed of the status of the proposed statutory and regulatory changes, as well as to identify other issues affecting drawback. The committee plans at least one in-person meeting of the Drawback Committee during the year and, depending on the advancement of the legislation, that meeting will likely be at the Government Affairs Conference in September.

CBP has expressed concern over GAO reports that have criticized the current drawback program and CBP has intimated that they may seek certain changes in policies and regulations as they relate to the current drawback law. In addition, members on the TSN Drawback Subcommittee have been asked to help CBP automate the existing drawback process so that it can be included in the A2 release of ACE. The goal of the committee will be to maintain continual contact with members so that we can immediately discuss the ramifications of proposed CBP changes as well as any modifications of those changes that will benefit our members. During the first half of this year, we expect to spend considerable time discussing and commenting on drawback’s proposed integration into ACE.

The committee has also opened its meetings to all interested members. While there are not vast numbers of members that are interested in drawback issues, the committee needs to be the sounding board for those that are involved in the practice. To that end, we are encouraging all interested members to participate in our meetings and the Drawback Committee Chairman will be readily available to any member that has a question or issue regarding drawback.


Counsel Review Committee

By Lee Hardeman

           During 2006, the Counsel Review Committee evaluated Harvey Isaacs, our venerable Customs Counsel, General Counsel, and good friend. We found that NCBFAA was being EXTREMELY well served by Mr. Isaacs. His resignation in July caused us to issue a Qualification and Invitation (Q&I) for Customs Counsel in July, to which we received five responses.

Harvey’s death in October was unexpected and untimely, and his loss will be keenly felt by our Association on both personal and professional levels. In the face of this tremendous loss, the Committee subsequently reviewed the five applicants for Customs Counsel, interviewed the top contenders, and recommended to the Board of Directors Alan R. Klestadt, a long time friend of NCBFAA and a partner in affiliate member Grunfeld, Desiderio, Lebowitz, Silverman, and Klestadt.

During 2007, the Counsel Review Committee will establish a Q&I for General Counsel based on forthcoming decisions from the Executive Committee and the Board of Directors. Once the Q&I is established, we will proceed with selection of General Counsel.




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