Customs Centers of Excellence and Expertise (CEEs): Program Directives and Evolution of Responsibilities

I.                INTRODUCTION 

Numerous importers have recently raised questions concerning Customs’ initiative regarding the establishment of Centers of Excellence and Expertise (CEEs) to handle transactions in discrete industry-defined areas of responsibilities. This memorandum provides background information on CEEs and their current operational status.

CEEs are an attempt by Customs to centralize decision-making, on an industry-specific basis, regardless of the ports of entry at which imports are made. The intent is to harmonize and centralize decisions concerning the admissibility, classification, appraisement and regulation of goods on an “industry-specific” basis, rather than on a “port-by-port” basis, as has historically been the case.

For now, the CEE program is supposedly voluntary and account-based, and is being implemented on a “test” basis. Assuming the test is successful, however, Customs intends to make the CEEs a model for future processing of commercial transactions by large accounts, and, possibly, all importers.

II.              BACKGROUND 

Historically, the Tariff Act of 1930 has distributed decisionmaking to local Customs officials at the port of entry where goods are imported. Entry documents must be filed at the port where the goods arrived, or are being entered for consumption. Port officials control decisions relating to release of the merchandise, as well as determining the classification, appraisement, and rate and amount of duty owing on individual entries of goods at the port of entry.

Similarly, protests against liquidation of merchandise are filed with, and typically decided by, Customs officials at the individual port(s) of entry.  Import Specialist teams at dozens of service ports divide responsibility for the classification and appraisement of various categories of goods (and often exhibit different levels of expertise in the commodities for which they are responsible).

Although the Constitution mandates that duties be assessed uniformly throughout the United States, the result of the “port-specific” processing system has been anything but. It is not uncommon for identical or similar goods, being imported through different ports of entry, to be classified or appraised differently, or for Import Specialists to make inconsistent decisions at the time entries are liquidated, or when protests are submitted.

The automation of Customs processes has provided an opportunity to for the agency to de-couple entry processing from geography.  Remote location filing has largely eliminated the need for importers to retain Customs brokers in each port where they make entry, and electronic platforms allow Customs to distribute work among officials in various locations.

The idea behind the Centers for Excellence and Expertise (CEEs) is to centralize post-entry, and ultimately entry, work, for industry groups, in a single team of specialists. At present, the teams are “headquartered” in various locations, but Customs officials at ports of entry are “detailed” to work with various CEEs.  The Existing CEEs are as follows:

Agriculture & Prepared Products, coordinated from Miami, specializes in agriculture, aquaculture, animal products, vegetable products, prepared foods, beverages, alcohol, tobacco or similar industries.

Apparel, Footwear & Textiles, coordinated from San Francisco, specializes in wearing apparel, footwear, textile mill, textile mill products, or similar industries.

Automotive & Aerospace, coordinated from Detroit, specializes in automotive, aerospace, or other transportation equipment and related parts industries.

Base Metals, coordinated from Chicago, specializes in steel, steel mill products, ferrous and nonferrous metal, or similar industries.

Consumer Products & Mass Merchandising, coordinated from Atlanta, specializes in household goods, consumer products, or similar industries and mass merchandisers of products typically sold for home use.

Electronics, coordinated from Los Angeles, specializes in information technology, integrated circuits, automated data processing equipment, and consumer electronics.

Industrial & Manufacturing Materials, coordinated from Buffalo, specializes in plastics, polymers, rubber, leather, wood, paper, stone, glass, precious stones and precious metals, or similar industries.

Machinery, coordinated from Laredo, specializes in tools, machine tools, production equipment, instruments, or similar industries.

Petroleum, Natural Gas & Minerals, coordinated from Houston, specializes in petroleum, natural gas, petroleum related products, minerals, and mining industries.

Pharmaceuticals, Health & Chemicals, coordinated from New York, specializes in pharmaceuticals, health-related equipment, and products of the chemical and allied industries.

For now, participation in the CEE program is voluntary, and is done on an account basis. Each importer can associate only with one CEE.  Thus, for example, if a petroleum importer were associated with the Petroleum, Gas and Minerals CEE in Houston, but imported t-shirts, the post-entry work associated with the t-shirts would be handled by the Petroleum, Gas & Minerals CEE.

There are no laws or regulations governing the operation of CEEs. For the time being, the work of the CEEs is probably exempt from rulemaking, since it involves Customs’ internal allocation of work among its employees. However, if CEEs become the principal mode for Customs operations, changes to the Tariff Act and implementing regulations are likely to be required.

 

III.            PROGRESSION OF WORK TO CEES

Customs is phasing in the operation of CEEs over time. At present, CEE participants continue to file entries at individual ports of entry, and release decisions are made by local Customs officials at the ports. Post-entry work, such as the liquidation of entries, and issuance of Form 28 requests for information and Form 29 Notices of Action, is being handled by the industry-specific CEEs.

Over time, entry and post-entry work will likely be migrated to CEEs. If the project is successful, it will likely become the principal model for Customs’ handling of commercial transactions.

In this regard, two recent developments affect CEEs, particularly three of them --  Electronics in Los Angeles, Pharmaceuticals and Chemicals in New York, and Petroleum and Minerals in Houston.

On September 11, 2014, CBP Commissioner Kerlikowske issued a Delegation Order [Exhibit A] which gave the directors of the CEEs the same powers as Port Directors of Customs, with certain exceptions. The CEE Directors and Port Directors will exercise this authority concurrently. While decisions relating to the control, movement, examination and release of merchandise will remain with the Port Director at the port where goods were imported, authority for post-entry functions – such as issuing demands for redelivery, handling post-entry processing, decisions regarding country of origin marking, stamping, packing, classification and appraisement of merchandise, and the processing of petitions, protests, post-entry amendments, recordkeeping matters, financial matters and the like.

On January 28, 2015, Customs announced its “Phase I accelerated rollout” under which the CEE Directors of the Electronics, Pharmaceuticals and Petroleum CEEs were given the trade authority over subject entries previously handled by port directors at various ports listed in Exhibit B.

 

IV.             CEEs: WHO’S DOING WHAT?

The transition of port activities to CEEs is confusing. Customs prepared a March 2014 Centers of Excellence and Expertise Trade Process Document, which summarizes the tasks currently being conducted by CEEs, as opposed to ports.  The document can be summarized as follows:

Activity

Port Responsibilities

CEE Responsibilities

Entry and Release Processes

Receives and processes CF 3461 entry, makes release decisions

None

Entry Summary Processes

Handled by CEEs for participating accounts. Entry summaries filed by ACS or ACE; will issue “docs required” message and process electronically (email)

Duty Payment

Receives duty payment, together with cashier copy of CF 7501

Processes entry summaries with no duty due

Quota entries

Processed by ports

Census warnings

Processed by CEE

CF 28 Request for Information

Issued by CEE, response to CEEs

CF 29 Notice of Action

Issued by CEE

AD/CVD Entries

Entry summaries processed by CEE, along with non-reimbursement statements

FTZ Entries

Responsible for physical supervision of zones

Process all FTZ entry summaries after account is accepted into CEE

TIB Entries

Processed by CEE. If entry filed before CEE account accepted, CEE will still handle post-entry work

Trade Fair Entry Summaries

Processed by CEE

Liquidation of Entries

Performed by port. Bulletin notice of liquidation at port

Post-Summary Corrections

If payment being made, copy of amended 7501 and payment to port of entry

Processes the PSC

Internal Advice Requests

Transmitted electronically to the CEE

Protests and Petitions

If filed in paper, file with the port, scanned copy to the CEE

If filed electronically, note port of entry and CEE, and will be processed by CEE

Reconciliation Entries

Continue to file with reconciliation port

Enforcement processes (seizures, penalties, etc.)

Handled by the ports, who will coordinate with the CEEs

Prior disclosures

May be filed with port

May be filed with CEE

Drawback

File with one of the 4 drawback processing centers

Bear in mind that these processes apply for now, only to companies which have started CEE accounts and are participating voluntarily in the program.

That being said, we have noted cases where post-entry work for companies not enrolled in the CEE program is being handled by CEE teams. Decisions are rendered through the ports, so that there is no visibility of this to the importer.

Transactions for industries which do not have CEEs, and for non-participating companies, will continue to be handled by the ports where the entries are filed.

Please do not hesitate to contact us if there are any questions concerning CEEs or their operation.