Supply Chain Security:

CBP Has Made Progress in Assisting the Trade Industry in Implementing the New Importer Security Filing Requirements, but Some Challenges Remain

GAO-10-841: Published: Sep 10, 2010. Publicly Released: Oct 12, 2010.

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Cargo containers present significant security concerns given the potential for using them to smuggle contraband, including weapons of mass destruction. In January 2009, U.S. Customs and Border Protection (CBP), within the Department of Homeland Security (DHS), implemented the Importer Security Filing (ISF) and Additional Carrier Requirements, collectively known as the 10+2 rule. Collection of cargo information (10 data elements for importers, such as country of origin, and 2 data elements for vessel carriers), in addition to that already collected under other CBP rules, is intended to enhance CBP's ability to identify high-risk shipments. As requested, GAO assessed, among other things, (1) the extent to which CBP conducted the 10+2 regulatory assessment in accordance with Office of Management and Budget (OMB) guidance, (2) how CBP used information it collected and assessed to inform its efforts to implement the 10+2 rule since January 2009, and (3) the extent to which CBP has used the additional 10+2 data to identify high-risk cargo. GAO analyzed relevant laws, OMB guidance, and CBP's 10+2 regulatory assessment, and interviewed CBP officials.

CBP's 10+2 regulatory assessment generally adheres to OMB guidance, although greater transparency regarding the selection of alternatives analyzed and a more complete analysis could have improved CBP's assessment. CBP's regulatory assessment addresses some elements of a good regulatory assessment, as required by OMB, such as the need for the proposed action and evaluation of the benefits and costs. However, the assessment lacks transparency in that it does not explain how the four alternatives considered for the rule--variations in what and how many data elements are to be collected--were selected or how the preferred alternative was chosen. OMB guidance states that regulatory analyses should clearly explain the assumptions used in the analysis. If, as CBP officials stated, an update might be published in the future, greater transparency could help justify the scope of alternatives analyzed in the regulatory assessment and provide insight into CBP's decision making. Further, a more complete analysis of the uncertainty involved in estimating key variables used to evaluate costs and benefits could have improved CBP's regulatory assessment by providing better information about the circumstances under which benefits justify costs. CBP officials said that to the extent that data are available, this information could be added to an updated regulatory assessment to improve its completeness. CBP is using information it has collected, assessed, and shared with the trade industry to monitor and help improve compliance with and implementation of the 10+2 rule. For example, CBP collects daily information on the ISF compliance of importers' shipments at each U.S. port to monitor the status of ISF implementation, as well as data on vessels arriving in U.S. ports for which carriers did not supply information such as the position of each cargo container (stow plans). CBP data indicate that in July 2010, approximately 80 percent of shipments were ISF compliant, and CBP officials said that most carriers had submitted stow plans. CBP publishes answers to frequently asked questions on its Web site and has conducted outreach sessions with the trade industry to discuss errors in ISF submissions and help improve compliance. The 10+2 rule data elements are available for identifying high-risk cargo, but CBP has not yet finalized its national security targeting criteria to include these additional data elements to support high-risk targeting. CBP has assessed the submitted 10+2 data elements for risk factors, and according to CBP officials, access to information on stow plans has enabled CBP to identify more than 1,000 unmanifested containers--containers that are inherently high risk because their contents are not listed on a ship's manifest. CBP has conducted a preliminary analysis that indicates that the collection of the additional 10+2 data elements could help determine risk earlier in the supply chain, but CBP has not yet finalized its national security targeting criteria for identifying high-risk cargo containers or established project time frames and milestones--best practices in project management--for doing so. Such efforts could help provide CBP with goals for finishing this project, thus better positioning it to improve its targeting of high-risk cargo. GAO recommends that CBP should, if it updates its regulatory assessment, include information to improve transparency and completeness, and set time frames and milestones for updating its national security targeting criteria. DHS concurred with these recommendations.

Status Legend:

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  • Review Pending-GAO has not yet assessed implementation status.
  • Open-Actions to satisfy the intent of the recommendation have not been taken or are being planned, or actions that partially satisfy the intent of the recommendation have been taken.
  • Closed-implemented-Actions that satisfy the intent of the recommendation have been taken.
  • Closed-not implemented-While the intent of the recommendation has not been satisfied, time or circumstances have rendered the recommendation invalid.
    • Review Pending
    • Open
    • Closed - implemented
    • Closed - not implemented

    Recommendations for Executive Action

    Recommendation: If CBP updates its Regulatory Assessment and Final Regulatory Flexibility Analysis, the Commissioner of CBP should provide greater transparency in the updated assessment regarding the information which contributed to decisions made in developing the 10+2 rule by including information, such as: (1) a discussion of how the alternatives were selected for analysis, including alternatives that were considered but not included in the analysis, and what information CBP considered in addition to the regulatory assessment to conclude that the alternative requiring the Importer Security Filing, with an exemption for bulk cargo, and the Additional Carrier Requirements was preferable over the other alternatives analyzed; (2) an uncertainty analysis for the costs to importers for a day of delay and for the value of statistical life; and (3) to the extent data are available, estimates for lost profits borne by foreign entities.

    Agency Affected: Department of Homeland Security: United States Customs and Border Protection

    Status: Open

    Comments: In fiscal year 2010, we reviewed and reported on U.S. Customs and Border Protection's (CBP) implementation of the interim final rule for the Importer Security Filing and Additional Carrier Requirements, known as the 10+2 rule. We found that CBP's Regulatory Assessment and Final Regulatory Flexibility Analysis generally adhered to Office of Management and Budget guidance, although greater transparency regarding the selection of alternatives analyzed and a more complete analysis could have improved CBP's assessment. We recommended that, if CBP updates its assessment, CBP should provide greater transparency in the update. In April 2013, CBP officials informed GAO that CBP completed an update to the Regulatory Assessment and Final Regulatory Flexibility Analysis for the 10+2 rule on March 19, 2013. According to the CBP officials, DHS is to review the updated assessment and analysis at the same time that it reviews the final rule, which CBP officials stated CBP expects to publish in February 2015.

    Recommendation: To help guide CBP in updating the Automated Targeting System (ATS) national security weighted rule set, the Commissioner of CBP should establish milestones and time frames for updating the ATS national security weighted rule set to use 10+2 data in its identification of shipments that could pose a threat to national security.

    Agency Affected: Department of Homeland Security: United States Customs and Border Protection

    Status: Closed - Implemented

    Comments: In fiscal year 2010, we reviewed and reported on U.S. Custom and Border Protection's (CBP) implementation of the Importer Security Filing and Additional Carrier Requirements, known as the 10+2 rule. We found that the 10+2 rule data elements were available for identifying high-risk cargo, but CBP had not yet finalized its national security targeting criteria to include these additional data elements to support high-risk targeting. We recommended that CBP establish milestones and timeframes for updating the targeting criteria. In December 2010, CBP provided GAO with a project plan for integrating the data into its targeting criteria. On January 18, 2011, CBP implemented the updated targeting criteria to address risk factors present in the Importer Security Filing data. These actions are consistent with our recommendation.

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