Overview
Title
Automated Commercial Environment (ACE) Electronic Export Manifest for Rail Cargo
Agencies
ELI5 AI
Imagine there’s a new rule that says train drivers have to tell mom and dad in charge of safety all about their train and what it's carrying before they leave. This helps keep everyone safe and makes sure they don’t lose important papers, but it might cost some money and time to do it right.
Summary AI
The proposed rule by the U.S. Customs and Border Protection (CBP) under the Department of Homeland Security mandates that rail carriers electronically submit export manifest data for trains leaving the U.S. This new regulation aims to enhance cargo security by requiring pre-departure information through the Automated Commercial Environment (ACE), improving risk assessment, and ensuring compliance with U.S. export laws. The rule also outlines the parties eligible to submit data and specifies timelines for data submissions to minimize the risk of undocumented and potentially hazardous cargo leaving the country. Additionally, the economic analysis suggests that the regulation could result in significant cost savings for both CBP and the trade industry by streamlining the export process and reducing reliance on paper documentation.
Abstract
This document proposes a new regulation pursuant to the Trade Act of 2002 requiring the submission of export manifest data electronically to U.S. Customs and Border Protection (CBP) in the Automated Commercial Environment (ACE) for cargo transported by rail for any train departing the United States. The proposed regulation would mandate the electronic transmission of rail export manifest information, identify the parties eligible to transmit information, and describe the time frames prior to departure of the train in which the information is due. This rule would enable CBP to address important cargo security concerns while providing efficiencies to the trade.
Keywords AI
Sources
AnalysisAI
The proposed rule by the U.S. Customs and Border Protection (CBP) under the Department of Homeland Security aims to shift the submission of export manifest data for rail cargo to an electronic format. This regulation requires the carriers of trains departing from the U.S. to send their cargo data via the Automated Commercial Environment (ACE) system. The primary motivation is to enhance cargo security by ensuring detailed pre-departure information is submitted, allowing for better risk assessments and compliance with U.S. export regulations. The rule outlines the timeline for submitting this data and specifies the eligible parties responsible for these submissions.
General Summary
This lengthy document is a formal proposal for an added regulation by CBP, focusing on the electronic submission of export data for rail cargo. Under the new regulation, export data must be provided 24 hours before a train departs the U.S., allowing authorities to better assess risks and prevent potential hazards. The proposal suggests that this could lead to substantial cost savings, decreased reliance on paper documentation, and improved communications between CBP and related parties in the trade industry.
Significant Issues and Concerns
One main concern is the document's complexity, making it challenging for the layperson to grasp the regulation's full implications quickly. There's also an absence of detailed justification for the costs associated with maintaining the ACE system or an exact breakdown of the anticipated $3.9 million savings from the pilot period. Furthermore, while the document forecasts high compliance rates with the proposed submission deadlines, it doesn’t thoroughly explore potential operational challenges nor does it consider technological hurdles that may arise. The broad cost estimates given for participants adjusting their systems present a significant range, yet lack a definitive rationale.
The enforcement aspect discusses penalties up to $100,000 per departure for violations, but with limited information on how these penalties will be assessed. Finally, the limited sample size from participating carriers might not present a comprehensive industry-wide outlook on challenges or compliance behavior.
Impact on the Public
Broadly, the public may benefit through enhanced national security due to stricter control over exported goods. The regulation is designed to prevent illicit activities, like smuggling, thus promoting safer borders. On the downside, initial compliance efforts may disrupt regular business operations, perhaps causing delays until systems are in place and functioning smoothly.
Impact on Specific Stakeholders
For rail carriers and other trade members, transitioning to electronic submissions may streamline operations, reduce paperwork, and potentially decrease errors associated with manual entry. These improvements align with many industries that have already switched to electronic documents for better efficiency. However, smaller businesses might endure more significant burdens if they lack the existing infrastructure or resources to adapt quickly.
CBP anticipates both costs and savings from implementing the new system. Enlarging the scope of electronic submissions might lead to efficiency improvements in border operations. Nevertheless, these potential savings are tied to effective system use and consistent compliance across all parties. With technological or process-related disruptions not entirely ruled out, there’s an underlying risk that projected benefits do not materialize as anticipated.
In conclusion, while the proposed regulation paints a promising future of improved security and efficiency, careful attention to the outlined issues and potential operational challenges is necessary to ensure successful adoption and execution.
Financial Assessment
The document outlines a proposed rule regarding the electronic submission of export manifest data for rail cargo. The primary focus of this proposal is to enhance security and efficiency in handling export manifests. The financial implications of this proposed rule are substantial and span both costs and savings that will impact U.S. Customs and Border Protection (CBP) as well as various trade members.
One key aspect of the document is the anticipated financial impact during both the pilot and regulatory periods. The document states that the total costs to CBP and trade members engaged in exporting will be approximately $9.3 million over the analyzed period (2016-2030) when discounted by two percent, with annualized costs stood at $0.7 million. Similarly, projected savings over the same period are estimated at $59.1 million, or $4.6 million annually.
The document also highlights potential penalties for non-compliance with bond conditions. Parties violating these terms could face liquidated damages of $5,000 per violation and up to $100,000 per departure, which emphasizes the financial risk and the importance placed on compliance. However, the document does not thoroughly address how these penalties might affect smaller entities, an issue that the Regulatory Flexibility Act hints at but does not explore in detail.
During the pilot period, CBP incurred initial development costs of approximately $608,000, with ongoing maintenance costs of about $101,350 annually. These expenditures were used to integrate the EEM tool into the Automated Commercial Environment (ACE). The pilot period also generated cost savings of around $3.9 million, or $393,137 annually. This level of savings is attributed to increased efficiencies in the handling and processing of electronic manifests.
The document mentions that the estimated time burden and cost for CBP officers during the pilot period amounted to $26,608, reflecting the additional time required for new processes. Test participants faced costs of around $650,273 for data submissions during the pilot period. The annual internal system cost for participants is estimated to vary widely between $10,000 and $60,000, with a midpoint estimate of $35,000.
CBP projects that during the regulatory period, cost savings will far exceed costs, with cost savings expected to be $72.1 million over the entire period, compared to $8.1 million in costs, leading to a net savings of approximately $63.9 million. However, these estimations are based on limited data from test participants, which might not be fully representative of the entire industry.
While the documentation provides detailed financial estimations, it lacks a comprehensive explanation of how these figures were calculated or verified, especially concerning the feedback from trade members. This creates an area of concern, as the financial assumptions are pivotal for decision-making regarding the rule's implementation. Additionally, the broad range in the estimated system adjustment costs suggests a need for clarity on these figures' derivation.
Overall, while the document shows potential for significant cost savings and improved efficiencies, questions remain about the accuracy of some cost projections and the broader impact on trade members, particularly smaller entities. The proposal emphasizes a favorable net economic impact but could benefit from more thorough examination and justification of the financial estimates provided.
Issues
• The document is long and complex, which makes it difficult for the average reader to understand quickly.
• The ongoing operations and maintenance costs associated with the EEM rail data tool in ACE are given as approximately $101,350 each year during the pilot period, and $117,205 annually during the regulatory period, but there is no breakdown of these costs to ensure they are justified.
• There is no clear explanation as to how the estimated savings of $3.9 million from the pilot period have been calculated in practical terms.
• The potential effects on small businesses specified under the Regulatory Flexibility Act section are not fully explored, given that the rule could impact numerous other trade members whose exact number isn't specified.
• Detailed cost savings estimates are based on feedback from trade members, but there isn't in-depth disclosure on how these were calculated or verified.
• The justification for the time burdens and costs for review and resolution of holds, both during the pilot and regulatory periods, could benefit from more data or examples to provide context and clarity.
• The rule includes potential penalties up to $100,000 per departure for violations, but there is little information on how these penalties will be applied or what constitutes a violation.
• The document presumes high levels of compliance with submission timelines but does not account for potential technological or process challenges that could arise.
• The projected cost savings and estimated examination holds are informed by a limited dataset from participating carriers, which may not represent full industry-wide challenges or behaviors.
• While the proposal emphasizes improved U.S. export security, it lacks a detailed plan for evaluating the effectiveness of this improved security.
• The total additional costs of adjusting internal systems are estimated to range from $10,000 to $60,000 per year per participant, creating a wide range of estimates without specific rationales for these figures.