Bonded Carriers, In-Bond Transportation; 19 C.F.R. Part 112, 112.2; 19 C.F.R. Part 113; VF Outdoor LLC (“VF Outdoor”).

U.S. Department of Homeland Security Washington, DC 20229 U.S. Customs and Border Protection HQ H273262 January 17, 2017 CAR-02-OT:RR:BSTC:CCR H273262 ASZ CATEGORY: Carriers Mr. T. Randolph Ferguson Sandler, Travis & Rosenberg, P.A. 505 Sansome Street, Suite 1475 San Francisco, California 94111 RE: Bonded Carriers, In-Bond Transportation; 19 C.F.R. Part 112, 112.2; 19 C.F.R. Part 113; VF Outdoor LLC (“VF Outdoor”). Dear Mr. Ferguson: This is in response to your April 27, 2016, ruling request on behalf of VF Outdoor LLC (“VF Outdoor”), which this office received on April 28, 2016. In your submission, you request a ruling concerning whether certain cargo transportation services are permissible within the Customs and Border Protection (“CBP”) bonded carrier and in-bond transportation regulations. Our decision follows. FACTS The following facts are from your ruling request submission of April 27, 2016. VF Outdoor imports its own merchandise transported by ocean carriers to the Port of Los Angeles, California and the Port of Long Beach, California. VF Outdoor operates three Foreign Trade Zones (“FTZs”), which are located in Sante Fe Springs, Ontario, and Visalia, California. The Santa Fe Springs FTZ is located within port limits and the Ontario and Visalia FTZs are located outside of port limits. The VF Outdoor FTZs are for the exclusive use of merchandise owned and imported by VF Outdoor. After arrival of its merchandise, VF Outdoor must arrange for the movement of its cargo from the port of arrival to one or more of its three FTZs. Instead of using bonded carriers to move the cargo to its FTZs, VF Outdoor proposes a scenario under which it would designate its custodial bond on the Immediate Transportation (IT) or Permit to Transfer (PTT) documents and move the cargo in the name of VF Outdoor using a third party unbonded carrier at those times when bonded carriers are unavailable. These proposed transportations would be limited to cargo owned by VF Outdoor and limited to movements of cargo to its FTZs. ISSUES Whether under 19 C.F.R. § 112 a FTZ operator may use its own 19 C.F.R. § 113.63 custodial bond to secure the movement of its merchandise by an unbonded carrier from the port of arrival to its FTZ located within port limits. Whether under 19 C.F.R. § 112 a FTZ operator may use its own 19 C.F.R. § 113.63 custodial bond to secure the movement of its merchandise by an unbonded carrier from the port of arrival to its FTZ located outside of port limits. LAW AND ANALYSIS Issue 1: Transportation of Merchandise to a FTZ Within Port Limits A carrier is one who undertakes to transport goods, merchandise or people. Pursuant to CBP regulation 19 C.F.R. § 112.2(a), a bond is required to transact business as a carrier receiving merchandise for transportation in bond. A cartman is one who transports goods or merchandise within the limits of a port, and the transportation of merchandise destined for admission to a FTZ may be done under the bond of a licensed cartman or that of a bonded carrier. In addition, 19 C.F.R. § 112.2(b)(1) states that: Foreign trade zone operators […] may engage in limited cartage or lighterage under their respective bonds. A foreign trade zone operator may engage in cartage or lighterage under his bond only for merchandise destined for his foreign trade zone and may also transport merchandise to his zone from anywhere within the district boundaries (see definition of “district” at §112.1) where the foreign trade zone is located. The transportation of merchandise to a FTZ within port limits may be done under the bond of a licensed cartman, by a bonded carrier, or by the FTZ operator under its bond. VF Outdoor’s scenario is not permissible because it proposes using an unbonded trucker to transport its cargo from the port of arrival to its FTZ located within port limits. The proposed transportation would not be done under the bond of a licensed cartman, by a bonded carrier, or by an FTZ operator under its bond. Furthermore, the regulatory history for Part 112 provides further guidance. Specifically, Customs deemed it best that FTZ operators be limited to the transportation of their merchandise to their FTZs. However, as described in the regulations, a licensed cartman or bonded carrier would be permitted to transport merchandise to a FTZ. In either scenario, “once a district director has approved the respective entity’s bond, that entity may engage in transporting merchandise as provided for in these regulations.” This language clarifies that if a FTZ operator’s bond is approved, then that entity (i.e. the FTZ operator) may transport the merchandise. Therefore, a FTZ operator may use its bond only if the FTZ operator is transporting the merchandise. Issue 2: Transportation of Merchandise to a FTZ Outside of Port Limits With regard to transportation of merchandise to a FTZ outside of port limits, 19 C.F.R. § 112.11(a)(4) states that private carriers may transport merchandise from one port to another if the merchandise is the property of the private carrier and the private carrier files a bond pursuant to 19 C.F.R. § 113.63. In addition, 19 C.F.R. § 112.12(a) specifies that “all carriers […] desiring to be authorized to receive merchandise for transportation in bond shall file with the port director concerned a bond on Customs Form 301.” Private carriers, including FTZ operators, will also need to comply with the additional requirements in 19 C.F.R. § 112.12(b)(3) if they intend to operate in two or more Customs ports. VF Outdoor’s proposed scenario of using an unbonded trucker to move cargo under an IT to an FTZ located outside of port limits would not be permissible under 19 C.F.R. § 112.11(a)(4). Specifically, 19 C.F.R. § 112.11(a)(4) states that transportation of merchandise by a private carrier may be done if the merchandise is the property of the private carrier and the private carrier files a bond. The unbonded trucker would not meet either of these conditions set forth by the regulations, and consequently would not be permitted to engage in the proposed transportation. HOLDINGS A FTZ operator may not use its own 19 C.F.R. § 113.63 custodial bond to secure the movement of its merchandise by an unbonded carrier from the port of arrival to its FTZ located within port limits. A FTZ operator may not use its own 19 C.F.R. § 113.63 custodial bond to secure the movement of its merchandise by an unbonded carrier from the port of arrival to its FTZ located outside of port limits. Sincerely, Lisa L. Burley Chief/Supervisory Attorney-Advisor Cargo Security, Carriers and Restricted Merchandise Branch Office of Trade, Regulations and Rulings U.S. Customs and Border Protection