U.S. CONSUMER PRODUCT SAFETY COMMISSION

CPSC Staff Workshop on Electronic Filing of Certificates as Included in Proposed Rule on Certificates of Compliance

AUDIO TRANSCRIPTION

Thursday , September 18, 2014

CPSC Headquarters 4330 East West Highway Bethesda, Maryland

Diversified Reporting Services, Inc.

(202) 467

- 92002

STAFF:

PATRICIA ADAIR, CPSC

JOHN BLACHERE, CPSC,

JACQUELINE CAMPBELL, CPSC

CAROL CAVE, CPSC

JIM JOHOLSKE, CPSC

ELLIOTT K AYE , CPSC

J OHN MULLEN, CPSC

BONNIE NOVAK, CPSC

MARY TORO, CPSC

PANELISTS:

BOB BERCZIK, Food Safety and Inspection Service

ROY CHAUDET, Environmental Protection Agency

ANN COMSTOCK, UPS Supply Chain Solutions

JONATHAN GOLD, Vice President, Supply Chain and Customs Policy, National Retail Federation.

ERIKA JONES, Bicycle Products Suppliers Association

ALAN KAUFMAN, Toy Industry Association

MIKE LAHAR, National Customs Brokers and Forwarders Association

NANCY MACPHERSON, Lego3

PANELISTS (C ontinued):

KATHLEEN MCGUIGAN, Senior Vice President for Legal and Regulatory Affairs, Retail Industries Association

MICHAEL MULLEN, Express Association of America

SEAN MURRAY, National Association of Foreign Trade Zones

MARK SHACKLETTE, Director, Cust oms Brokerage Compliance, UPS

BRENDA SMITH, U.S. Customs and Border Protection

PARTICIPANTS:

QUIN DODD, independent product safety attorney

HAILEY MANN, American Plastic Toys

SHEILA MILLARD, Keller and Heckman

FRED MILLS

- WINKLER, SGS Consume r Testing Labs

TIM SAYLOR, Baby Jogger Company

CHRIS SMITH, IKEA4

C O N T E N T S

ITEM PAGE

I. OPENING REMARKS 5

II. INTRODUCTIONS 9

III. PANEL SESSION 9

JACQUELINE CAMPBELL 10

NANCY MACPHERSON 2 5

KATHLEEN MCGUIGAN AND JONATHAN GOLD 3 5

SEAN MURRAY 5 5

MARK SHACKLETTE 6 9

ALAN KAUFMAN 7 8

MIKE LAHAR 8 7

ERIKA JONES 94

MICHAEL MULLEN 101

IV. QUESTIONS & ANSWERS FOR MORNING SESSION 10 9

V. OVERVIEW OF CPSC'S RISK ASSESSMENT

METHODOLOGY 1 66

VI. AUTOMATED COMMERCI AL ENVIRONMENT (ACE)

FILING REQUIREMENTS AND AGENCY PILOTS PANEL 1 81

BOB BERZET 203

ROY CHAUDET 214

MIKE LAHAR 2 27

MARY ANN COMSTOCK 2 34

VII. QUESTIONS AND ANSWERS FO R AFTERNOON SESSION 2 44

VIII. CLOSING REMARKS 2 695

P R O C E E D I N G 1

I. OPENING REMARKS 2

MS. CAVE: Good morning, everyone, and welcome 3

to the CPSC Staff Workshop on the Electronic Filing of 4

Certificates. For those of you who don't know me, my 5

na me is Carol Cave. I'm the Assistant Executive 6

Director here at the CPSC for the Office of Import 7

Surveillance. 8

Thank you very much for coming today to this 9

public workshop on such an important issue. We're 10

very, very excited to have you all here. Befo re we get 11

started, I'd just like to address a few housekeeping 12

issues. If you can, please take note of the emergency 13

exits around you in the event we need to exit 14

expeditiously. If you can, please silence your cell 15

phones. We have several people on the web, so we don't 16

want that disturbing their ability to hear and see 17

what's going on. 18

The restrooms, for those of you who don't 19

know, are actually located on this floor. They're just 20

on the other side of the elevators. If you only exit 21

to use the restro oms or to use your phone in the lobby 226

area, you don't really need to go back through security 1

when you come back in here. But, if you do leave for 2

lunch, when you go out, you will need to come back 3

through security when you return to the H earing R oom. 4

A s for lunch, there's several places around 5

this building to grab something to eat. There's maps 6

on the tables just outside the hearing room near the 7

guard's desk, if you're looking for places. We will be 8

starting promptly at 1:30 after lunch today, so if you 9

can make your lunch quick to get back through security, 10

that would be great. 11

As for the workshop itself, we have over 200 12

participants watching on the web and potentially 150 13

people in person in this room. The workshop will be 14

recorded, and Webcast is part of the public record. We 15

encourage all interested parties to submit relevant 16

comments through regulations.gov. Written comments on 17

this must be received by Friday, October 31st of this 18

year. We will be taking questions from folks on the 19

webinar and asking those questions as time permits 20

during the day today. 21

The e

- mail for sending those questions is 227

actually on this slide here. It's the e

- filing web 1

address that you see here. The transcript for today's 2

workshop will be added to the docket at regulations.gov 3

under the docket number you see here, CPSC

- 2013

- 0017. 4

The PowerPoint presentations will also be available to 5

everyone on www.slideshare.net/USCPSC. 6

So , why are we all here today? The U.S. 7

Consumer Product Safety Commission in May of 20 13 8

proposed to require the electronic filing of 9

certificates for regulated imported consumer products 10

with U.S. Customs and Border Protection at the time of 11

filing the CB P entry, otherwise known as the 3661, or 12

the time of filing the entry or the entry sum mary, the 13

7501, if both are filed together. 14

Based on the comments received, staff felt it 15

was extremely important to host a public workshop that 16

focused on this specific aspect of the proposed rule. 17

Shortly after the Commission issued an NPR on May 13th , 18

President Obama issued an Executive Order, 13659, 19

streamlining the export/import process for America's 20

businesses, which require certain federal agencies to 21

significantly enhance their use of technology to 228

modernize and simplify the trade processing 1

infr astructure. 2

Specifically, the EO requires applicable 3

government agencies to use CBP's international trade 4

data system, or A utomated C ommercial E nvironment , 5

otherwise known as ACE, to create a single window 6

through which businesses will electronically sub mit 7

import

- related data for clearance. Participating 8

agencies have until December of 2016 to establish such 9

systems, such as ACE, as the primary means of receiving 10

standardized import data. 11

We are here today to encourage stakeholders to 12

find common grou nd to advance CPSC's surveillance 13

efforts at the ports of entry. The inclusion of any 14

panelist, product , technology, or data should not be 15

interpreted as endorsement or the approval of the views 16

contained by either the Commission or the staff. CPSC 17

are n ot answering questions today but here to listen. 18

This workshop is about new developments and 19

new information. The workshop is about developing 20

dialogue to move forward and not stay behind. We will 21

speak to each other and not at each other, and we will 229

keep an open mind while being respectful to each other. 1

II. INTRODUCTIONS 2

Special thanks goes to the CPSC team, 3

specifically Celestine Kish, Mary House, Jacqueline 4

Campbell, among many others who have made today 5

possible. Thank you to our partners at CBP , 6

specifically Brenda Smith, and the other participating 7

government agencies, Roy Chaudet from EPA, Mary 8

Stanley, and Bob Berczik from FSIS, who agreed to take 9

time out of their extremely busy schedules to further 10

the vision of the one U.S. government a t the border. 11

Last, but not least, a special shout out to our 12

stakeholders who volunteered to participate in this 13

valuable workshop today. 14

III. PANEL SESSION 15

Our first speaker this morning is Jacqueline 16

Campbell, the project manager for the 1110 rule. She 17

will give a quick overview of the current testing and 18

certification requirements, and then we will jump right 19

in to public comments and concerns. 20

At the end of each session, staff will ask 21

panelists questions, and folks in the audience can step 2210

to the microphone, which is located on your left of the 1

conference room, to ask questions. We do ask that 2

those of you who do come to the microphone, please 3

identify your name and your company. 4

I look forward to hearing our speakers today 5

and hope to gain a better understanding of the 6

challenges that certifiers encounter. Thank you. 7

Jacqueline, I welcome you to the podium. 8

PRESENTER: JACQUELINE CAMPBELL 9

MS. CAMPBELL: Thank you, Carol. Can everyone 10

hear me okay? Yes? Okay, great. 11

Good morning. As Carol mentioned, my name is 12

Jacqueline Campbell. I'm a member of the CPSC staff 13

and serve as the project manager for the update to the 14

certificate rule, codified at 16 CFR part 1110. Now, I 15

will say this is a lot of dry information. 16

I'm going to be providing an overview of the 17

requirements for certificates of compliance. I want to 18

make sure that we all have this information to have 19

kind of a baseline understanding of what the 20

requirements are so that that can inform our discussion 21

for the rest of th e day. 2211

Before I get started, I do want to point out 1

-- I guess I should get my slides first. Before I 2

want to get started, I do want to point out, as Carol 3

did, this is a CPSC staff presentation and has not been 4

reviewed or approved by and may not refl ect the views 5

of the Commission. 6

During my presentation this morning, three 7

main topics will be covered. We'll review the 8

statutory requirements regarding certificates. 9

Basically, the what, when, who, and how of certificates 10

that are dictated by C ongre ss. Next, we will cover the 11

regulatory requirements for certificate, both in the 12

existing 1110 rule and some of the proposed amendments 13

to the rule that relate to our workshop today. 14

Finally, we will discuss considerations related to 15

electronic filing of certificates. 16

Section 14(a) of the CPSA, as amended by the 17

CPSIA, states that all regulated consumer products must 18

be tested and certified as compliant with any 19

applicable consumer product safety rule under the CPSA 20

or similar rule, ban, standard, or re gulation under any 21

other law enforced by the Commission. 2212

The authority covers requirements for testing 1

and certification for regulated non

- children's and 2

children's products. Furthermore, section 3 of the 3

CPSIA grants the Commission the authority to imp lement 4

the requirements of the Consumer Product Safety 5

Improvement Act of 2008. The statute defines what a 6

certificate is, when it is needed, and who issues it. 7

A certificate certifies two things; one, that 8

a regulated consumer product has been tested a nd two, 9

based on the results of that testing, the product 10

complies with any applicable rules, bans, and 11

standards. There are different requirements for 12

certification for children's versus non

- children's 13

products which will be discussed at a later slide. 14

The CPSA requires two types of certificates, 15

G eneral C onformity C ertificates , or GCCs, for 16

non - children's products and C hildren's P roduct 17

C ertificates, or CPCs, for children's products based on 18

third party testing. The Commission created a third 19

type of certificate through the 1109 rule, a component 20

part certificate, which is not required and will be 21

discussed in more detail later in the presentation. 2213

One of two types of certificates is 1

statutorily required for regulated consumer products, 2

based on the product and the age of its intended user. 3

A GCC is required for any non

- children's regulated 4

consumer product. It is based on a test of each 5

product or a reasonable testing program , sometimes 6

referred to as an RTP. Testing can be performed by a 7

first pa rty or in

- house testing laboratory. 8

Additionally, the requirements of a reasonable 9

testing program are not very prescriptive and can be 10

designed to best accommodate a product or process 11

unless it's otherwise specified in a regulation. This 12

requirement i s laid out in section 14(a)(1) of the 13

CPSA. 14

A CPC is required for any regulated consumer 15

product intended primarily for children 12 years old or 16

younger. It is based on testing performed by a 17

CPSC

- accepted third party laboratory. This requirement 18

is la id out in section 14(a)(2) of the CPSA. 19

Additionally, periodic testing and material 20

change testing is required for these products and may 21

require issuance of a new certificate. Both 2214

certificate types must comply with the certificate 1

requirements in 16 C FR part 1110. 2

Now that we have covered what a certificate is 3

and the types of certificates available, let's discuss 4

specifically what products require certificates. Not 5

all consumer products require a certificate. Only 6

regulated consumer products that are imported for 7

consumption, or warehousing, or that are distributed in 8

commerce require certificates. 9

A regulated consumer product is defined as a 10

product subject to a consumer product safety rule under 11

the CPSA or similar rule , ban, standard, or regul ation 12

under any other law enforced by the Commission. While 13

our topic today is based on imports, this requirement 14

also includes domestically manufactured products. 15

There are a number of cases where certificates 16

are not required for consumer products. C ertificates 17

are not required for products that are not subject to a 18

consumer product safety rule. If there is no rule, 19

standard, or ban to which a product is subject, the 20

product does not require a certificate. 21

Certificates are not required for products 2215

subject to a rule under section 15(j) , because the 1

Commission has determined that these rules are not 2

consumer product safety rules that require testing and 3

certification to the voluntary standards. 4

The Commission has issued two rules under 5

section 15(j ), drawstrings in children's upper 6

outerwear and immersion protection on hair dryers. 7

These products are required to conform to the voluntary 8

standard, but they do not need to be certified. 9

However, note that there may be other rules to which 10

these produ cts may need to be certified. For example, 11

for children's upper outerwear, you'd likely need to 12

certify that product to the general wearing apparel 13

rule, 16 CFR part 1610. 14

As stated in the previous slide, products 15

imported for consumption, warehousing, or distribution 16

in commerce require a certificate. If a product is 17

imported for reasons other than immediate or future 18

consumption, a certificate is not required. For 19

example, component parts intended to be integrated into 20

or assembled with a finished pr oduct do not require a 21

certificate if they will not be sold individually. 2216

The certificate is required for the finished 1

product. However, just because a certificate is not 2

required does not mean that compliance is not required. 3

If a product is a compone nt part of a children's 4

product, a plastic toy, for example, it still must 5

comply with any applicable rules such as lead or 6

phthalate content. If these products are introduced 7

into commerce later, a certificate would be required at 8

that time. 9

Who is res ponsible for issuing a certificate, 10

and when do they do it? The statute requires that 11

manufacturers, importers, and private labelers are 12

responsible for issuing certificates for finished 13

products. Certificates need to be issued before 14

products are import ed or distributed in commerce. 15

Certificates have a number of statutory 16

requirements in terms of content, form, and 17

availability. The statute states that minimum 18

certificate content requirements

-- Congress requires 19

that a certificate include some way to identify the 20

product, a list of all rules to which the product is 21

subject, the identity of the entity issuing the 2217

certificate, and the laboratory that performed 1

testing

-- in the case of a children's product, this 2

would be a CPSC

- accepted third party labo ratory

-- the 3

dates when and location where the product was 4

manufactured and tested, each party's name, full 5

mailing address, and telephone number, and finally, the 6

contact information for the individual responsible for 7

maintaining the records of test resu lts. The statute 8

requires certificate content to be legible and in 9

English. The certificate may have the same content in 10

another language. 11

Congress included three requirements for 12

certificate availability in the statute. Certificates 13

must accompany th e product or shipment of products 14

covered by the certificate, be furnished to each 15

distributor or retailer of the product, and be 16

furnished by the issuer to the Commission upon request. 17

Finally, the statute allows the Commission to 18

work with Customs and Border Protection to implement 19

electronic filing of certificates up to 24 hours before 20

a product arrives at the port. 21

That concludes the statutory requirements 2218

dictated by congress for certification. Now, we'll 1

discuss the existing and proposed rule for 2

certificates, 16 CFR part 1110. 3

After the CPSIA was enacted, the Commission 4

issued a direct final rule on certificates of 5

compliance in November of 2008. The existing rule 6

essentially codifies the minimum statutory requirements 7

for certificates but lim its who is required to certify 8

a product to importers for products manufactured 9

outside the U.S. and manufacturers for domestically 10

manufactured products, unless otherwise specified in a 11

rule. Additionally, it allows for electronic 12

certificates. 13

In addi tion to the 1110 rule for certificates, 14

the Commission has issued two other rules concerning 15

testing and certification, 16 CFR parts 1107 and 1109. 16

Both rules were issued in November 2011, but 1107 was 17

not effective until February 2013. 18

1107 is the test ing and certification rule. 19

This rule codifies certification, material change, and 20

periodic testing requirements for children's products. 21

The 1109 rule, also known as the component part rule, 2219

allows for the testing or certification of component 1

parts tha t can be used as the basis for certifying a 2

finished product. 3

Importantly, the 1109 rule also allows a 4

certifier to rely on another party's testing or 5

certification to issue a certificate, as long as the 6

certifier exercises due care. This means, for exa mple, 7

that an importer can rely on the testing or 8

certification issued by another entity, such as a 9

manufacturer or retailer, to issue their own 10

certificate as long as the importer exercises due care. 11

Component part certificates were created by 12

the 1109 rule. Any party can issue this type of 13

certificate as long as it meets the requirements of 16 14

CFR part 1109. For example, a paint manufacturer can 15

issue a certificate for its paints that can then be 16

used as the basis for a GCC or a CPC for a finished 17

pro duct. 18

Additionally, a foreign manufacturer may issue 19

a component part certificate on a finished product that 20

can be used by an importer or private labeler as the 21

basis for a GCC or a CPC. In all cases, the certifier 2220

must exercise due care when using a c omponent part 1

certificate as the basis for a GCC or a CPC. 2

The NPR to amend 1110 would require that 3

component part certificates meet the form, content, and 4

availability requirements set out in part 1110. While 5

these certificates would serve a s supportin g documents 6

for a GCC or CPC, they would not need to be filed with 7

Customs. 8

As noted earlier in the presentation, the 9

existing certificate rule was finalized in 2008. As we 10

have discussed, other CPSIA

- related rules have been 11

promulgated since that time. These rules influence the 12

certificate rule because they introduce new terms and 13

requirements that were not in place at the time that 14

1110 was first published, such as the creation of 15

component part certificates. 16

In response, the Commission published a notice 17

of proposed rule

- making in May 2013 to amend the 1110 18

rule in light of the related rules for testing and 19

certification , by defining new terms such as finished 20

product, finished product certifier, and component part 21

certificate, as well as to impleme nt section 14(g)(4) 2221

of the CPSA, which allows the Commission to implement 1

electronic filing of certificates. 2

Under the CPSA, a certificate must be issued 3

by a manufacturer, importer, or private labeler. Since 4

the existing 1110 rule was issued in 2008, t he CPSC has 5

required the importer to certify imported consumer 6

products. The NPR would continue to require that the 7

importer certify imported products. The NPR defines an 8

importer as the importer of record but does not alter 9

the requirement that the impo rter certify an imported 10

product. 11

To meet the statutory requirements that 12

certificates accompany applicable products or shipments 13

of products, the existing 1110 rule provides for paper 14

or electronic certificates. Compliant shipments 15

typically place the certificate in the shipping carton 16

or have a clearly marked URL where the certificate 17

information can be viewed. 18

The NPR would require that to meet the 19

accompany requirement, certificates be filed 20

electronically with CBP at the time of filing the CBP 21

ent ry or at the time of filing the entry and entry 2222

summary, if both are filed at the same time. For all 1

other purposes, such as providing certificates to 2

retailers or distributors, the certifier can continue 3

to use either paper or electronic certificates suc h as 4

a URL. 5

The issue of electronic filing is one of 6

efficiency for both the agency and stakeholders. With 7

electronic filing of certificates for imported consumer 8

products through CBP's Automated Commercial Environment 9

interface, or ACE, CPSC can pull d ata into our risk 10

assessment system, which my colleague, John Blachere, 11

will tell you more about this afternoon. 12

CPSC can use the data to expedite clearance of 13

shipments, identify high risk cargo for port 14

inspections, conduct enforcement actions of impor ted 15

products more effectively, use data to assess risk and 16

set agency goals, and finally, to meet the objectives 17

of Executive Order 13659 to simpl if y the process of 18

exporting and importing goods into the United States. 19

The NPR discussed two data types, p ortable 20

document files, or PDFs, and data elements. The 21

Commission prefers data elements so that the 2223

information can be loaded seamlessly into our database 1

system and used to perform analysis. 2

PDF files are not a substantial improvement 3

over paper certi ficates because the data cannot be 4

aggregated and summarized and used beyond each 5

individual shipment. Based on the comments we received 6

on the NPR, it appears that most stakeholders who 7

discussed this issue agreed that data elements are 8

preferable. 9

The agency recognizes that this process will 10

not take place overnight. Electronic filing will 11

require a phased implementation and software upgrades 12

on the part of the agency and its stakeholders. 13

Additionally, because this effort is a partnership with 14

CBP, CPSC will work closely with CBP making use of 15

their technology and experience in implementing 16

electronic filing with other government agencies. 17

In summary, we reviewed the statutory 18

requirements for certificates which are the minimum 19

conditions set forth by congress in section 14 of the 20

CPSA. We discussed proposed amendments in the NPR for 21

16 CFR part 1110, including electronic filing of 2224

certificates with CBP. And finally, we highlighted 1

some specific issues related to electronic filing about 2

which we h ope to gain more knowledge during our 3

workshop today. 4

In closing, I invite you to submit any 5

comments you have on this topic to regulations.gov, and 6

we'll give you the docket number multiple times over 7

the day. It's also on your agenda. Now, I'm going to 8

hand over the presentation to Patty Adair who will be 9

moderating the next session of stakeholder 10

presentations. Thank you very much. 11

(Applause) 12

MS. ADAIR: Thank you, Jacqueline, for that 13

really excellent presentation. My name is Patty Adair. 14

I'm on the CPSC staff. Good morning, everyone. I'm 15

going to moderate this session. This morning's session 16

is the stakeholder's presentations. One thing I want 17

to say right away is we really appreciate the 18

stakeholders being here and taking time to give th ese 19

really very excellent presentations. 20

I'm just going to do a little quick 21

housekeeping. Each presentation should last about 10 2225

minutes. We want to keep to the time. I'm going to 1

give everybody, when we get to about two minutes left, 2

I'll give every body a two

- minute warning. It's not a 3

peace sign; it's two minutes. 4

Then, after the third presentation, we're 5

going to take about a five

- minute break. With the 6

number of people in the room, it's not enough, really, 7

to do a whole lot other than just get up and stretch. 8

But, hopefully, that will be worth it for everyone to 9

have a five

- minute break. 10

Then we'll go into the next five 11

presentations. This will allow us time to have a good 12

question and answer session at the end. We'll go 13

through the protoc ol of asking questions at that point. 14

So, our first presenter, and let me get your 15

presentation up here, I want to welcome our first 16

presenter, Nancy MacPherson with Lego. Thank you, 17

Nancy. 18

PRESENTER: NANCY MACPHERSON 19

MS. MacPHERSON: Good morning, everyone. I'm 20

very happy to be here. I think one of the reasons why 21

we wanted to present some information today is we know 2226

how important it is for the staff to get some facts and 1

figures. The part about this is that we've been living 2

in this space for s ix years, so we're able to put 3

together some information, which is why we have some 4

concerns about some of the proposals. 5

You'll see that I'm the Director of External 6

Relations, but the reality is for most of my crew at 7

Lego, I was the Director of Qualit y and Compliance. 8

So, I lived and breathed every aspect of CPSIA, every 9

FAQ, every e

- mail. So, those are the kinds of things 10

that both I and Lego bring to this. 11

To simplify things, I'll tell you that we are 12

the brand owner, we are the manufacturer, we are the 13

importer, and we are the distributor. That is probably 14

not the case for most people. But that gives us, like 15

everyone else who has a supply chain, a unique set of 16

processes that they have to accommodate as we go 17

forward here. 18

So, I'm going to s tart with

-- CPSC had asked 19

if we would address our current procedures and how we 20

do certificates, how our certificate accompanies the 21

product, and also the challenges that providing 2227

information 24 hours ahead of time might propose or 1

might pose for us. 2

So, I've put four concerns here. I want to 3

talk, really, about three of them. The fourth one we 4

just sort of address because it was part of the ask, 5

but I don't have really a lot more to say than is 6

written here. 7

I think the three things that we are re ally 8

concerned about are some of the assumptions that are 9

used in terms of the burden that this would propose. 10

I'll show some numbers. The other piece is we do 11

utilize a Foreign Trade Zone as part of our import 12

process, and we have some concerns about th e fact that 13

that's not addressed about times of import, things like 14

that. 15

Then, as I was saying, the process 16

flexibility, there is no single supply chain or import 17

process. We've had this kind of discussion through 18

many of the aspects of CPSIA. Hopeful ly, we can show 19

that there are different ways to provide both CPSC and 20

CBP the information that you need. 21

So, with Lego, it's always facts and numbers, 2228

how many bricks we make and all that. But I think this 1

hopefully will help to tell the story. Ninety percent 2

of what we sell in the U.S. we produce at our own 3

factory in Mexico, in Monterrey. We move it across the 4

border in Texas into a distribution center outside of 5

Dallas, which is an FT Z

. 6

The 2013 activity and 2014, which is good for 7

us, it's highe r, is that every week we ship a million 8

and a half finished goods from the factory. We use 80 9

to 160 trucks per week, depending upon the season and 10

how much we're producing. 11

When we get to the DC and our order management 12

people process orders, we ship o ut 100 to 150 trucks, 13

which is from an FTZ, our point of import. We have 14

1,150 SKUs in an average season, in high season about 15

1,500 SKUs. Of course, each of those would have its 16

own certificate. 17

So, this is what concerns us. When we look at 18

some of t he assumptions that are used in the proposed 19

rule, it's talking about very small volumes of 20

shipments, it's talking about very small volumes of 21

certificates. If you look at what we would do in a 2229

high season week, we are importing 1,500 products per 1

week. That's 1,500 certificates. That's 15,000 data 2

elements. Then, the next week, we're going to ship 3

some other variation of those 1,500. 4

Is the responsibility going to be there to 5

continually have to provide this information 24 hours 6

in advance? Also re cognize that we're shipping it out 7

of an FTZ. So, that's typically how we react at a toy 8

company, but things do get better. 9

I'm not going to go through this in great 10

detail because certainly the time, but there's three 11

points I want to make here. This is our little flow of 12

goods, and our little trucks, and little CPSC 13

inspectors, and all of that. If you've got to put a 14

presentation together, you've got to have a little fun 15

with it. 16

The accompany part, and I'm going to get into 17

our certificate process in just a minute, but our 18

products are accompanied by the certificate from the 19

moment that they come off the production line, but it 20

happens even sooner. This is the complexity. 21

We've all figured out how to integrate 2230

certification in all of the testing into our processes. 1

When we create that master data on that item, the 2

virtual item is created a year before we produce it. 3

At that time, we created a unique certificate number 4

and the URL for that. 5

So, that follows it through the system from 6

the momen t the item is created until the retailer opens 7

the box at the end. The reason we've had to do that is 8

because of the numbers that I've shown you. How else 9

could we ensure that the certificate would accompany? 10

So, that's the first part. The second part is 11

it crosses the border. The FTZ status is important to 12

us, and here's why. Fifty percent of our product turns 13

over every year. It's new. So, the first time we run 14

that item, we're producing it in the factory. It comes 15

off the end of the line. Reme mber, we're running 16

multiple lines. 17

The quality folks do all our checks, check it 18

out, make sure it's good. At the same time, they 19

sample the finished goods to go to the third party lab. 20

To continue the process flow, those go on trucks. 21

Those go acros s the border physically. They go into 2231

the FTZ. 1

They go into the FTZ on QA status hold so they 2

cannot ship. And they cannot ship until the test 3

report comes in, and our quality team goes into the 4

system, says the certificate can no w be released, you 5

kno w, the URL is there. It's now released, and it 6

verifies that the item comes off hold and that the 7

certificate is available. That's the point at which 8

we, as the importer, certify it. 9

So, the FTZ is important to us. Now, when 10

that item runs again, the certificate will be live. 11

But the thought of having to create racks, and trucks, 12

and things to literally hold that in the country, when 13

we have the FTZ, that's why the other guy looked like 14

he looked. 15

Then, the last piece is really making sure 16

that the understanding of the point of import is well 17

defined, because, as I said earlier, we are sending a 18

lot of trucks out every week with a variety of 19

products. I know that there's a gentleman

-- I think 20

you must be him because you're smiling. You're the FTZ 21

association. So, I just wanted you to know that. 2232

So, our process, we believe, certainly the 1

certificate accompanies. We also believe that it can 2

be available to CBP and accessed 24 hours ahead of 3

time. I will show you why. Here's the visual. This 4

is the master carton which has the certificate on it on 5

that little label. This is what the label looks like. 6

If you look at the top of the label, you will see the 7

e - cert number. I'll blow it up over here. But there's 8

the number. There's the production. 9

We actually give you the web site. If this 10

was hooked to the network, I would go in, but I didn't 11

know if it would be. We actually do our certificate 12

literally right off of our home page. So, it brings up 13

this sheet right here. You can enter a UPC, you can 14

enter an item, you can enter a little princess, or 15

whatever the set is, and then that will bring you to 16

the certificate. That's how we do it. 17

But we do it that way

-- and I know there are 18

concerns. We are the factory. We don't have a problem 19

p utting our name on our certificate. We don't have a 20

problem not having a password. But that's us, and 21

that's because of our process. 2233

So, this information is here. So, if that web 1

site is available, then you can simply go in and you 2

can bring the certi ficate up. The data elements are 3

there. So, I guess the point is, if you had another 99 4

companies up here in addition to me, you would hear 99 5

different stories. I think every aspect of CPSIA, as 6

we've tried to implement it, I think we have asked for 7

an d in many cases have been very happy to get some 8

flexibility in how we do this. But I wanted to be real 9

clear on the numbers involved here. This is the kind 10

of thing that in our supply chain would really concern 11

us about some of the current proposals. 12

So, at this point here, we actually also offer 13

to CPSC and CBP and our retailers, if they want the 14

test reports, they can actually go in. I will tell you 15

that I haven't looked in about three months, but since 16

this system went live, which is probably five years 17

ago, we've had thousands of people, we don't know who, 18

have gone in and looked at our certificates. So, it 19

seems as if people who want to see them are able to see 20

them. So, that's really, again, in respect for the 21

time, I just wanted to put that in formation out. 2234

So, our recommendations, really, are two. We 1

will likely submit more detailed comments for October. 2

But it's really providing flexibility. I think what I 3

pull out of the proposed rule is that CPSC, again, as 4

someone who has read every l ine of CPSIA at least 100 5

times, I find lines that I like. This one I like. 6

CPSC is considering allowing but not requiring the 7

certificates to be filed in advance. 8

So, we certainly hope for that level of 9

flexibility. Also, very important is that the F TZ 10

process is including when an item is imported, are 11

recognized, and integrated into any of the rule 12

changes. 13

With that, I thank you very much. 14

(Applause) 15

MS. ADAIR: Thank you, Nancy. 16

Next up we're going to have Kathleen McGuigan 17

and Jonathan Gol d. We're going to do a joint 18

presentation of the Retail Industry Leader's 19

Association and the National Retail Federation. Let me 20

get your presentation up here. 21

MR. GOLD: Good morning. We're going to be 2235

going back and forth, so this might be a little bit 1

awkward at times, but we're both up here. 2

MS. McGUIGAN: I didn't anticipate standing at 3

the podium, so we're improvising. 4

PRESENTERS: KATHLEEN MCGUIGAN AND JONATHAN GOLD 5

MR. GOLD: Again, good morning. My name is 6

Jonathan Gold, and I'm the Vice President, Supply Chain 7

and Customs Policy from the National Retail Federation. 8

NRF is the world's largest retail trade association, 9

representing all formats of retail from the United 10

States and more than 45 countries. 11

Retail is the nation's largest pr ivate sector 12

employment, supporting one in four U.S. jobs. That's 13

42 million working Americans contributing $2.5 trillion 14

annually to the GDP. Retail is a daily barometer for 15

the nation's economy. 16

MS. McGUIGAN: And I'm Kathleen McGuigan, 17

Senior Vice P resident for Legal and Regulatory Affairs 18

for the Retail Industries Association. Our members 19

include the fastest and most complex companies within 20

the retail industry, including retailers, product 21

manufacturers, and service providers, which together 2236

accou nt for $1.5 trillion in annual sales. RILA and 1

NRF members combined import a substantial and growing 2

number of the consumer products that are sold to U.S. 3

customers today. 4

I want to thank the Commission and CPSC staff 5

for holding this important workshop and for 6

reconsidering the initial proposal to amend the 1110 7

rule in the interim. We share the CPSC's goal of 8

ensuring the safety of all consumer products sold to 9

U.S. consumers. 10

Today, we hope to engage in constructive 11

discussion of the retail industr y's concerns and 12

suggestions for moving forward, and we hope to hear 13

some few clarifications from the CPSC regarding the 14

proposed rule. We offer our comments from the 15

perspective of our members who have demonstrated a 16

track record that product safety is o f the utmost 17

importance to industry. 18

Our presentation will cover four areas. We 19

will highlight some of our concerns for the proposed 20

rule, discuss the current and expected future import 21

processes, detail retailers current certification and 2237

recordkeeping practices and the cost burden of the 1

proposed electronic filing, and provide the CPSC with 2

specific recommendations for moving forward. 3

MR. GOLD: While we wholeheartedly and fully 4

support CPSC's mission of product safety, we do not 5

believe the proposed rule will efficiently and 6

effectively enhance the agency's risk targeting 7

efforts. We anticipate the proposed rule will impose 8

significant burdens and cause confusion among both the 9

trade and relevant federal agencies with regard to the 10

rule's integratio n into the increasingly complex and 11

evolving U.S. import regulatory system. 12

The proposed rule is unclear as to the exact 13

issues or problems the agency is trying to correct, the 14

objectives it is trying to achieve, and the specific 15

means by which it can ac hieve them. Given the 16

potentially wide

- ranging impact of the proposal on 17

CPSC, CBP, and the industry at large, retailers believe 18

there is insufficient justification for complete 19

rewrite of the existing on

- demand certification system 20

that has generally wor ked well for the past six years. 21

MS. McGUIGAN: Retailers have very strong 2238

concerns about the operability of the proposed new 1

certification rule, especially the proposal to mandate 2

affirmative filing certificates with CBP as part of a 3

condition of entry for consumer products subject to one 4

or more of the CPSC's mandatory rules. 5

Given the difficulty with which federal 6

agencies have struggled with implementing recent 7

congressional mandates regarding imports, retailers are 8

understandably concerned whether CPSC, CBP, and the 9

import system overall can handle and achieve 10

demonstrable safety advances from the receipt and 11

processing of potentially millions of product 12

certificates or data fields annually. 13

MR. GOLD: In addition, it's unclear whether 14

CPSC posses ses or is likely to possess the resources 15

and personnel necessary to develop and implement the 16

complex IT systems that would be required. If the 17

approach contemplated by the proposal is reliant or 18

contingent upon congressional authority to implement 19

impor t user fees or other new funding sources, the 20

agency should refrain from moving forward unless and 21

until those new resources are approved and received. 2239

I also want to note that while the notice for 1

this workshop indicated that CPSC's risk assessment 2

meth odology and proposed import user fee are not part 3

of today's discussion, we believe that CPSC must engage 4

with stakeholders to discuss these issues in the 5

context of the objectives of the proposed rule and 6

means to achieve those objectives. These issues a re 7

all interrelated and need to be discussed as such. 8

MS. McGUIGAN: Retailers ’ business models rely 9

upon efficient and predictable global supply chains. 10

Electronic filing of import documentation is more 11

efficient and cost effective than the filing of p aper 12

entries, which is why CBP and companies are moving 13

towards a paperless environment. 14

For a majority of our members, over 95 percent 15

of their import entry documents are filed manually 16

through CBPs Automated Commercial Environment , or ACE, 17

system. For a few of our members, 100 percent of their 18

C ustoms entries are paperless entries. The timely 19

clearance of cargo is critical for retailers and other 20

importers in order to meet their just

- in

- time 21

strategies. 2240

Air cargo Customs entries can be filed once 1

wh eels are up at the point of origin. Truck and rail 2

cargo entries can be filed shortly before crossing the 3

border. For ocean carriers, importers can, but are not 4

required, to file Customs entries up to five days prior 5

to arrival at the port. As a result, CBP is often able 6

to process the entry and clear the shipment in advance 7

of the good's arrival at the port. 8

Retailers and other importers have made 9

significant investments in developing IT systems to 10

support these electronic filings and have worked 11

clos ely with CBP to ensure that the process is as 12

streamlined as possible. 13

If the CPSC moves forward with its proposal, 14

it should work within the existing framework and time 15

lines for the filing of entry

- related information and 16

not develop inconsistent and p otentially incompatible 17

requirements. 18

MR. GOLD: This position is fully supported by 19

the Executive Order which was issued by President Obama 20

earlier this year, which we strongly support. The 21

Executive Order establishes a single window at the 2241

border and requires that all entry

- and export

- related 1

documentation, including documentation required by the 2

CPSC, be filed through the international trade data 3

system, or ITDS. 4

The single window will allow agencies to 5

target high risk merchandise through the coll ection of 6

key data elements and improve enforcement of safety 7

regulations at the ports while facilitating the timely 8

entry and clearance of legitimate trade. It is 9

critical that the CPSC take a leadership role on the 10

execution of the Executive Order. 11

In order to do so, CPSC must first answer 12

several important questions. First, does the proposed 13

rule align with the risk management objectives of the 14

Executive Order? As currently drafted, we do not 15

believe that it does so in an efficient and effective 16

man ner. 17

The proposed rule could require the filing of 18

the certificates of conformity initially in PDF format 19

and then ultimately through the filing of electronic 20

data fields through the use of the ACE PGA messaging 21

sets. This will require importers to file or input 2242

information, such as the name of the importer and 1

manufacturer, which is already available to the CPSC as 2

part of the current Customs entry file. 3

The CPSC is currently working with other 4

agencies as part of the Border Interagency Executive 5

Comm ittee, the BIEC, which is charged with 6

implementation of the Executive Order. We encourage 7

the CPSC to work with the BIEC subcommittee on risk 8

management to ensure that risk assessment methodology 9

is aligned with the risk principles to be established 10

by t he subcommittee. The CPSC will then be able to 11

determine what data, if any, it needs from certificates 12

of conformity to enhance its RAM. 13

MS. McGUIGAN: The Commission also needs to 14

detail specifically how its proposal will work with and 15

be integrated in to the single window. How will the 16

electronic filing of certificates be accomplished? The 17

retail industry strongly opposes a requirement to 18

electronically file PDF certificates and as an interim 19

step prior to filing electronic data fields. 20

As John prev iously discussed, we believe that 21

the CPSC should strategically target and only require 2243

importers to file those specific data fields that are 1

necessary for CPSC's risk management methodology. We 2

do not feel that the CPSC can make effective use of 3

potentia lly millions of PDF certificates presumably 4

submitted via CBP's document imaging system. These 5

documents are not searchable efficiently and therefore 6

cannot be effectively used in a way to meaningfully 7

enhance risk

- based targeting. 8

In addition, moving t o an interim system and 9

method of filing of certificate and then eventually 10

moving to a second method of electronic filing of data 11

elements at a later time would only double the burden 12

and cost associated with these new requirements on both 13

the agency and effective industries. 14

Because the proposed requirement for PDF 15

certificates would place significant burdens on 16

retailers with little or no benefit to the agency, the 17

CPSC should not move forward in that direction. 18

MR. GOLD: If electronic filing of the CPSC 19

certificates is to go forward via data elements filing 20

process, then only those data elements that are truly 21

necessary to enhance risk assessment and product safety 2244

should be required, and only after the agency has ruled 1

out other less burdensome way s to obtain the 2

information. It is critical that the agency work 3

closely with the trade on development and 4

implementation of such a rule. 5

Such a partnership, of which this workshop is 6

only the first step, will help CPSC better understand 7

the conflicts o f a global supply chain that retailers 8

and other importers deal with on a daily basis. 9

MS. McGUIGAN: Now, I'd like to turn to 10

providing some information regarding retailer's current 11

certification processes, and recordkeeping practices, 12

and the cost for another proposed electronic filing. A 13

survey of our joint membership has revealed that 14

retailers use a variety of methods to issue and 15

maintain certificates for imported products. 16

Let me just provide just two examples. The 17

vast majority of retailers us e third party testing labs 18

to conduct product safety testing of children's and 19

general use products. The retailer or the third party 20

testing lab on behalf of the retailer will issue a 21

certificate of conformity based on a passing test 2245

report. 1

In one scen ario, the lab notifies the foreign 2

supplier of the passing test results and maintains 3

copies of the test reports and certificates of 4

conformity in the lab's IT system. The foreign 5

supplier includes the test report number on the 6

contracting invoice which i n turn becomes part of the 7

support documentation for the entry for one or more 8

shipments. So, this test report can be supporting 9

documentation for multiple shipments. 10

Under this scenario, the certificate of 11

conformity is not tied to a specific entry. I nstead, 12

upon demand, the importer can produce the certificate 13

of conformity by referencing the test report number on 14

the invoice and retrieving it from the lab's IT 15

systems. 16

A few importers require that a copy of the COC 17

in paper or PDF format be part of the custom's entry 18

support documentation. The CPSC has access to copies 19

of these certificates that are part of paper entries. 20

However, as we discussed earlier, the vast majority of 21

our members file Customs entries electronically and, 2246

therefore, only fil e the required data fields. If the 1

CBP or CPSC has questions about a paperless entry, the 2

importer provides the additional documentation, 3

including certificates, upon request. 4

Retailers also use multiple methods to 5

maintain their certificates. Over 50 percent of our 6

members maintain certificates on an internal IT system. 7

Between 30 and 40 percent of our members use third 8

party service providers, such as testing labs, to store 9

and maintain their certificates on their behalf. A 10

small percentage maintain paper copies of their 11

certificates. 12

It's critical to note, however, that the 13

certificates that are currently being maintained either 14

in paper or PDF format, and they are not being 15

maintained in data field format that can be transmitted 16

electronically. Additionally, for the majority of our 17

members, their certificate or COC storage systems are 18

separate and distinct from their IT system's use for 19

Customs entries. Most critically, only two members out 20

of our total combined membership indicated that their 21

C OC storage systems currently have the capacity to 2247

interface with and transformation to their import entry 1

IT systems. 2

MR. GOLD: The burden and cost of developing 3

and implementing new IT systems to transform specific 4

components of the certificates into d ata fields and tie 5

those data fields to import entry systems would be 6

substantial. To understand the magnitude of the 7

burden, we believe it would be helpful to provide the 8

CPSC with information regarding the volume of retail 9

imports. 10

In a joint survey o f our members company's 11

total annual import FOB value ranged from $300,000 to 12

over $10 billion per year. The number of Customs 13

entries filed annually ranged from 1,500 to 270,000. 14

Over 60 percent of our members file consolidated 15

entries where one custom s entry covers multiple 16

shipments. 17

The number of entry lines or individual 18

products listed on an entry ranged from 1 line to over 19

1,000 lines. The total percentage of imports to CPSC's 20

requirements range from a low of 10 percent to a high 21

of close to 90 percent. Our members issue an average 2248

of 10,000 certificates of compliance annually in 1

connection with imported merchandise. 2

The overwhelming majority of our members 3

currently do not have a process in place to connect or 4

attach certificates to individua l Customs entries. 5

Your processes will need to be developed to comply with 6

any at

- entry filing requirement. 7

Their survey also revealed that the cost 8

estimates for initial implementation of the proposed 9

electronic filing will average over $300,000 per 10

co mpany and range from a low estimate of about $50,000 11

to a high estimate of $2 to $3 million. These 12

estimates only include the internal IT training and 13

salary cost. They do not include costs for annual 14

maintenance and compliance or any additional charges 15

from custom's brokers, express carriers, or other 16

entities within the supply chain. 17

Using the average of $300,000 per company, the 18

combined total cost of initial implementation for the 19

entire retail industry will be staggering. Not all 20

retailers and imp orters have the same level of 21

resources to invest in new technologies and systems. 2249

With the diversity of importer's practices for 1

issuing and retaining certificates and the significant 2

financial burden incurred by industry implementing the 3

proposal, it i s critical that the CPSC work closely 4

with the regulated community to develop a final rule 5

that achieves the CPSC's product safety goals with 6

minimally burdensome requirements and reasonable time 7

line for implementation. 8

MS. McGUIGAN: We'd now like to s pend the rest 9

of our remaining time talking about our recommendation 10

to the CPSC about how to move forward. We have three 11

specific recommendations. The first recommendation is 12

that the CPSC should suspend the current rule

- making 13

process and repropose a n ew rule only after it is 14

actively engaged with stakeholders and relevant 15

government agencies. 16

The proposed 1110 rule has generated 17

significant interest and concern amongst stakeholders. 18

In light of the numerous issues that still need to be 19

addressed and the devastating impact that a poorly 20

crafted rule would have on our industry and the agency, 21

we recommend that the CPSC not move forward to a final 2250

rule based on the initial proposal. 1

Instead, the CPSC should take this opportunity 2

to essentially take a timeout to collaboratively engage 3

with stakeholders and CBP. This time will allow CPSC 4

to become more informed about the complexities of 5

global trade and international supply chains, 6

coordinate risk management strategies within the BIEC, 7

and understand th e system requirements and limitations 8

of PGA messaging set data. 9

If, after significant coordination with other 10

government agencies and external stakeholders, the CPSC 11

determines that additional data is required to enhance 12

its risk assessment methodology, the CPSC should then 13

repropose the rule and seek comments on the new 14

proposal. 15

As part of this process, many trade 16

associations, including RILA and NRF, have strongly and 17

repeatedly urged the CPSC to establish a stakeholder 18

engagement group of whatever title or nature where 19

discussions like this can be undertaken regularly and 20

without unnecessarily restrict constrictive limits. 21

Many federal agencies, including CBP , engaged with 2251

stakeholder groups before undertaking bold new 1

proposals and mandates such a s those set forth in this 2

proposal. 3

We understand that the Commission has concerns 4

that a CPSC stakeholder working group could trigger 5

potential administrative burdens under the Federal 6

Advisory Committee Act. One potential solution could 7

be to set up a CPSC subcommittee under the current CBP 8

Customs and Oversight Advisory Committee, or COAC, 9

which could address these kinds of entry

- related 10

issues. COAC has been able to do this with other 11

agencies in coordination with CBP. 12

MR. GOLD: Recommendation n umber 2, the CPSC 13

should follow the CBP's example regarding the use of 14

pilot programs and phase

- in time lines with 15

implementing new entry

- related requirements. 16

Again, we fully support the concept of 17

risk

- based targeting and think CPSC can use the key 18

dat a elements to achieve this. However, the agency 19

needs to first determine what data elements it really 20

needs to make a risk

- based determination. 21

While risk

- based targeting of imports is 2252

somewhat new to the agency, through its partnership 1

with CBP, CPSC h as an excellent opportunity to learn 2

from CBP's example. The CPSC only needs to look at how 3

CBP developed both its 24

- hour rule and its import 4

security filing programs to find good examples of 5

robust , risk

- based targeting systems that were 6

developed in pa rtnership with the trade. 7

CBP partnered with the trade from the outset 8

by providing str aw man proposals for public comments 9

before NPRMs were even proposed. The agency then 10

closely collaborated through the entire process, 11

provided for pilot programs bef ore a final rule was 12

published with a long phase

- in for enforcement. 13

CBP also conducted extensive outreach and 14

education with the importing community even after the 15

final rule was published. Throughout the entire 16

process, CBP took care to ensure that le gitimate trade 17

was not stopped at the ports. We believe this is a 18

good model for CPSC to follow. 19

Our final recommendation is that CPSC should 20

establish a strong public

- private product safety 21

partnership program with industry. Our collective 2253

members str ongly support the different public private 1

partnership programs which have been developed, 2

including the Customs Trade Partnership Against 3

Terrorism, the Importer Self

- Assessment Product Safety, 4

the Centers for Excellence and Expertise, and CBP's new 5

Trust ed Trader program. 6

Under these programs, importers take on 7

additional responsibilities annual reporting 8

obligations in return for being accorded a variety of 9

benefits, including expedited clearance, fewer 10

detentions and inspections, and consideration of 11

participation in partnership programs as a mitigating 12

factor in CBP penalty actions. 13

Under ISA

- PS, a company allows CPSC and CBP to 14

review and vet its product safety and import compliance 15

program as well as provide substantial reporting to the 16

agency. W hile we don't believe the certificates should 17

be required to be filed as a condition of entry, we 18

recommend that ISA

- PS participants should be exempt if 19

this is in fact required by the final rule. 20

These importers should be allowed to continue 21

with the cu rrent on

- demand system exempting ISA

- PS 2254

members or allow the CPSC to focus its limited 1

resources on high

- risk importers, provide a significant 2

benefit to importers, and spur an increase in 3

participation in ISAPS. 4

MS. McGUIGAN: We want to conclude by tha nking 5

the CPSC for the opportunity to participate in today's 6

workshop and to provide the views of retail industry on 7

the proposed rule. As we noted at the beginning of our 8

presentation, our combined membership imports a 9

substantial percentage of the consu mer products sold in 10

the United States anda s a result, will be significantly 11

impacted by the CPSC's actions on this issue. 12

While our members fully support the mission, 13

goals, and programs of the agency, we believe the 14

initial proposal to amend the 1110 r ule needs to be 15

reworked to achieve the stated goal of improving 16

product safety. 17

MR. GOLD: Our members welcome and appreciate 18

the opportunity to continue working with the Commission 19

on developing a rule that would not only improve CPSC's 20

risk

- based targ eting, but will do so in a manner that 21

will not unduly burden the trade or the Commission. 2255

With dwindling resources for all, it is important that 1

this initiative be conducted through a full partnership 2

that will benefit everyone involved. 3

Thank you, and we're happy to answer any 4

questions. 5

(Applause) 6

MS. ADAIR: Thank you so much, John and 7

Kathleen. 8

Now, it's my pleasure to welcome Sean Murray 9

with the National Association of Foreign Trade Zones. 10

Let me get your presentation up here. 11

PRESENTER: SEAN MURRAY 12

MR. MURRAY: Thank you very much, and good 13

morning. On behalf of the National Association of 14

Foreign Trade Zones, we really appreciate the 15

opportunity to be here. And I also appreciate Nancy's 16

comments in warming you up for what I'm about t o say. 17

We did not coordinate that. But my comments are going 18

to echo a lot of what she says but provide, I think, 19

greater depth and texture reflecting the variance in 20

the membership in the NAFTZ. 21

The NAFTZ is a really unique organization in 2256

that it rep resents the Foreign Trade Zone community in 1

the United States. But it also represents both public 2

entities and private entities because we have public 3

grants of authority that go out to grantees in the 4

various ports around the country and their members. 5

We also have the big multi

- national companies 6

who are doing manufacturing, distribution operations in 7

Foreign Trade Zones. And then we have the small users, 8

who may people have never heard of, who just happen to 9

be located in little ports and places all around the 10

country who happen to do international trade activity. 11

The proposed rule impacts all of these types of people, 12

and it's important to understand that it does impact a 13

great variety of different types of businesses. 14

Foreign Trade Zone activity, I'm going to 15

focus on these things in a fair amount of detail here. 16

But Foreign Trade Zone activity is a significant 17

percentage of import and export activity in and out of 18

the United States. It's something that many people are 19

not very familiar with at a ll, but as it shows here, 20

12.4 percent of import activity, that was 2012 21

statistics, it went up slightly for 2013, and you can 2257

see from the billions in activity of domestic and 1

foreign merchandise passing through zones and exports 2

going out of zones. 3

At the bottom, it shows over 3,000 different 4

firms that were active in zone activity last year. As 5

I said, some of these firms are very big firms everyone 6

would be familiar with. Many of them are very small 7

firms, small companies, small distribution operati ons 8

that really do not have a lot of resources outside of 9

the locality that they're located in. 10

FTZs have a very unique function within the 11

trade world. That's part of what makes them very 12

useful to a lot of companies, such as Lego, as we 13

heard. They a re used to store and stage merchandise 14

outside of the U.S. Customs territory. It allows 15

people to bring merchandise into the United States 16

without going through the Customs entry process on the 17

front end. Instead, you do something called an 18

admission. I 'll try to avoid Foreign Trade Zone jargon 19

here. It's confusing even for people who use them. 20

In addition to simply moving merchandise 21

through a zone on its way into the Customs territory, 2258

you can, of course, also directly export things out 1

that never c ome into the U.S. commerce. You can also, 2

with U.S. Foreign Trade Zone's board approval, do 3

production activity in the zone. 4

So, an awful lot of companies are bringing 5

parts in to U.S.

- located production facilities and 6

conducting manufacturing operation s. And only when 7

they've concluded the manufacturing operation, are they 8

filing a C ustom s entry into the United States. As you 9

can imagine, this says you're bringing something into 10

the country, but it's different from what is entered 11

into the Customs ter ritory. We're gong to talk about 12

some of the challenges that that poses. 13

As a result of the unique nature of Foreign 14

Trade Zones, we have our own Foreign Trade Zone board 15

regulations. We have a separate section in the Customs 16

regulations that applies t o Foreign Trade Zones. And 17

there's a lot of specialized practice that's built up 18

over the years. 19

We very much appreciate the Commission 20

recognizing both in its presentation and the proposed 21

rule the existence of Foreign Trade Zones. In my role 2259

as gener al counsel to the National Association of 1

Foreign Trade Zones and as simply a member of the 2

Association over the years, one of the things I've been 3

tasked to do an awful lot is work with other government 4

agencies in order to get them to clarify their 5

pract ices towards Foreign Trade Zones. It's, honestly, 6

a very, very big challenge to do so. Simply getting 7

many of them to acknowledge that Foreign Trade Zones 8

exist is a very difficult thing. So, we appreciate the 9

official recognition. 10

One of the concerns that we have is that 11

there's no written recognition in the proposed rule. 12

In our experience, and this would apply to many, many 13

agencies, not specific to any one, is that when you 14

actually put operations into practice, and this is 15

pushed out around the c ountry, a lot of people at local 16

levels, Customs personnel at local levels, but also 17

agency personnel, when they don't have specific written 18

guidance that they can go see, and regulations, they're 19

left questioning. 20

We can say, oh, it's back in a Power Po int 21

that we saw this one time, it's in a proposed rule, but 2260

they're not familiar with it. So, we really are 1

pushing, and so is here, for some specific 2

acknowledgment in the regulations of the unique nature 3

of Foreign Trade Zone activity. 4

Some specific t hings that we would like to 5

see. I noted earlier, merchandise comes into Foreign 6

Trade Zones through something called an admission 7

process but lack a recognition that admission is not 8

entry, that your requirements are applying to the 9

Customs entry side of the operation. 10

We also would be bringing things out of zones. 11

So, as I said, many people bring component parts into 12

Foreign Trade Zones, manufacture something else out of 13

them, and then file a Customs entry, recognizing that 14

you're focusing on what's e ntered into the Customs 15

territory is important to us. 16

We're going to see , two slides from now , 17

discussion of inventory control methodologies. This is 18

something I'll save for that, but that poses, I think, 19

a difficulty for the Commission. But it's somet hing 20

that Foreign Trade Zone operators and users are using 21

every single day, inventory control methodologies to 2261

track products moving through zones. 1

The CPSC documentation will only be required 2

to be filed with the Customs entry summary. I know 3

there's some discussion about entry versus entry 4

summary. I'm not sure how it would be here about the 5

distinction between the 3461 document and the 7501. 6

It's a big deal for Foreign Trade Zones which one we're 7

focusing on. We prefer the entry summary, certainly , 8

and making also clear that we don't get into any issues 9

when we are exporting merchandise from a Foreign Trade 10

Zone out of the United States. 11

A few of the challenges that we want to 12

specifically bring up. The first one is this concept 13

called weekly en try. This is something that Nancy 14

mentioned. It's a big, big benefit, something that 15

many Foreign Trade Zone operators really, really love 16

about the program. It has statutory authority. I 17

included the site here. 18

But it's a process whereas many of the se 19

Foreign Trade Zone operations are shipping 24/7 out of 20

the door. Since the merchandise hasn't been entered 21

into the Customs territory, when it leaves the zone, 2262

you'd be filing Customs entries 24/7. It poses great 1

difficulties. 2

So, many years ago now a statute was passed, 3

1484(I), that authorizes something called weekly entry, 4

which allows you to file a weekly entry on what's 5

leaving the zone. The process allows for Customs to 6

receive an estimate

-- I'm kind of going over this kind 7

of quickly here, b ut what happens is the Foreign Trade 8

Zone operator files an estimate with Customs of what 9

they will ship for the week. Then, after the end of 10

the shipping week, then they file the actual data of 11

what was actually shipped out of the zone. 12

So, Customs is aware of what's going to be 13

leaving on an estimated basis. But what actually left 14

the zone is then reported to them after the fact. A 15

large number of companies use this, and it is critical 16

to the success of their operations. 17

Filing certificates at the time of entry or at 18

the time of entry summary is problematic under weekly 19

entry. For some other agencies, we've had to develop 20

specialized programs to deal with the weekly entry 21

process in a parallel way to the Customs process. 2263

The next thing I want to talk about is FTZ 1

inventory control systems. You have to obviously track 2

your merchandise as it moves through the zone to 3

satisfy Customs requirements that nothing is getting 4

into the Customs territory without their approval

. 5

There are a couple of ways that companies 6

choose to do this. One way is a lot tracking 7

methodology. Another way is a unique identifying 8

number, UIN system. There's no one way to do things. 9

Certain companies it just worked better to do one more 10

than the other. Most companies do use this UIN system, 11

a record identity. 12

The challenges that it poses is that you're 13

not tracking things. In a lot environment, you're 14

designating a lot and you're tracking that specific lot 15

into the zone and out of the zone. That works well in 16

somethin g like pharmaceutical operations, me t als, and 17

things like that where you look at a lot and you see 18

the lot move. 19

In other operations, it doesn't work so well. 20

So, people use things like UIN methodologies, FIFO. 21

And so, what is actually tracked through the zone are 2264

layers of zone inventory. And what you're reporting on 1

the entry is not necessarily what went out, actually. 2

You're de cre mentin g the layer out of what's moving out 3

of your zone inventory control records. It's all 4

tracked. It's all controll ed. Customs comes in. They 5

inspect it. They know it's there versus what you've 6

shipped. But you're handling it by zone inventory 7

methodology. 8

Something else we'd also appreciate that would 9

be recognized is the idea that you can use zones as a 10

place t o bring merchandise into compliance. I think 11

some people take this for granted, but it would be 12

helpful if people would actually recognize this as a 13

source of solutions. 14

In fact, for many people they identify issues 15

as the merchandise is coming to the U nited States. 16

It's on the water coming in and they say “W hat do I do 17

about it ?” . I'm going to run into the issue. You put 18

it into the zone. You fix the compliance issue. Then 19

you file the Customs entry. It would be great if that 20

could be recognized i n some form by the Commission. 21

Finally, just some general comments. This is 2265

and will be burdensome on the industry as proposed. 1

I'm going to hit a couple different points since I'm 2

going quickly here. The uploading process would be a 3

significant burde n, we think, to many importers to 4

upload documentation. The cost burden we think in the 5

proposed rule undervalues the difficulty of doing this 6

for many, many companies. 7

There are also concerns about keeping 8

information private. Nancy talked about how i n their 9

situation they're just going back to their own 10

factories. But, in many cases, you have people who 11

have multiple suppliers, multiple factories, and 12

they're competing with people, and they don't want 13

people to see exactly who they're using. That's a big 14

challenge. 15

I just left a trade show yesterday to come 16

here. At that trade show, many of the exhibitors are 17

companies that go all around the world sucking up trade 18

documentation, processing it, and selling it to other 19

people. That's exactly what t hey do for a living. So, 20

that kind of data being available is something that 21

people can grab onto and want to use for sales purposes 2266

to people's competitors. 1

And then, not on the slides, but I thought I 2

should probably address the things that you 3

specif ically noted in your workshop you're looking for 4

information on. Just very quickly, e

- certificates, we 5

would support data elements as opposed to PDFs being 6

uploaded. We think that's a much better process, much 7

more efficient, ultimately. 8

The question a bout using ABI to transfer 9

certificate data to CBP, something that other people 10

might pick up on and talk about today but we think is 11

important is to note that some companies are 12

self

- filers, even in the zone environment. They do 13

have direct access into A BI. 14

The majority of people use Customs brokers. 15

So, they're a step removed from the process. I think 16

some people practically think the broker is really just 17

this extension of the right hand of the companies, but 18

there's a lot of gaps in communications that can occur. 19

So, it's not a seamless process when you have to give 20

information to a broker to submit through ABI. 21

Matching certificates to the products, that's 2267

a big difficulty for an awful lot of people. I 1

analogize this to other work I do with cli ents working 2

on things like NAFTA certificates of origin. There is 3

an art and there's a science to this. It's very hard 4

to do a lot of the time. 5

But one of the things that Customs puts on 6

people as their burden is it's your burden as the 7

importer to be able to demonstrate the link. They 8

don't define it very specifically how you tie that 9

NAFTA certificate to your imports; they let you do it 10

on your own. They require you to prove it on your own. 11

So, ultimately, that burden is placed back on the 12

importe r's shoulders. 13

With regard to a phased

- in approach, one thing 14

we would suggest is that you wait until ITDS and ACE 15

implementation so we don't go through two steps of 16

implementation. A big concern would be that we do 17

something in the next year and then a year after that 18

we're changing it all again. So, we wouldn't want to 19

do that. One step implementation would be certainly 20

better. 21

You suggested measures like by tariff 2268

classification, by port, or by entry type. We don't 1

think that entry type would be a very good way to do 2

this because we think when you say typ e 0 1 entries, 3

that's gong to cover the vast majority of the entries. 4

We are typ e 0 6 entries, for example, coming out of 5

Foreign Trade Zones. That would be a much smaller 6

percentage. 7

By port, t hat's hard because a lot of our 8

users are all over the country. They're not 9

necessarily doing things by port, until you try to 10

force them to do it that way. By HTS, there is 11

precedent for that. The Lacy Act implementation by 12

A PH IS , they did it by HTS. It seemed to work okay, so 13

that's something we'd be interested in. And in talking 14

to people within the Association, they're big fans with 15

the idea of the CPSC issuing a list by HTS of regulated 16

products. That would be very helpful to the industry. 17

With that, I think I'll conclude. Thank you 18

very much for your time. We appreciate the opportunity 19

to contribute. 20

(Applause) 21

MS. ADAIR: Thank you, Sean, and to everybody 2269

who has already presented. We've gotten a lot of great 1

information. It seems like it might be a good time 2

also to remind people about the docket. We can always 3

get information submitted that way. 4

We are due for a break. We're a little bit 5

ahead, so we thought we'd go for a 10

- minute break 6

instead of 5. So, I'm going to call everyb ody back at 7

10:25 a.m. Thank you. 8

(Brief recess.) 9

MS. ADAIR: I'd like to welcome our next 10

presenter. Our next presenter is Mark Shacklette from 11

UPS. Take it away, Mark. 12

PRESENTER: MARK SHACKLETTE 13

MR. SHACKLETTE: All right, great. Thank you 14

ve ry much. Thank you to the CPSC for organizing the 15

forum today and bringing us all together. We certainly 16

appreciate the interest shown by CPSC and the 17

opportunity for all of us in the trade to provide 18

comments. 19

So, my name is Mark Shacklette. I'm the 20

Director of Customs Brokerage Compliance at UPS. I'm 21

going to focus on a couple of main things today. I'm 2270

going to talk about the role of the Customs broker, as 1

you can see here, since that's what I oversee at UPS. 2

I'm also going to talk about the impac t the proposed 3

rule would have on an express consignment operation, 4

such as UPS. 5

So, just talking about the Customs broker 6

here, our role is that of a trade facilitator. We 7

don't have any financial interest in the goods. I 8

think it's important that we talk about, you know, the 9

definitions of the importer, the importer of record, 10

because in the NPRM, it's stated that it would require 11

importers to certify that the products comply with all 12

CPSC rules, bans, et cetera. 13

But then, as we heard this morning a lready, it 14

defines the importer as being the importer of record, 15

which can include the purchaser, the owner of the 16

merchandise, and it can also include a validly licensed 17

Customs broker who serves as the importer of record. I 18

think it's very important to note here that many 19

Customs brokers serve as the importer of record. So, 20

this would hold us basically responsible for these 21

shipments. 2271

So, in the express consignment world, there's 1

a high percentage of the goods where the Customs broker 2

serves as the IO R, or the importer of record. And also 3

you see it quite a bit on the northern border for 4

shipments from Canada where the broker is serving in 5

that role. 6

So, we feel that the definition of the 7

importer and the importer of record really needs to be 8

limite d to parties that, you know, have real knowledge 9

about the shipment, because brokers are certainly not 10

well suited for the responsibility of issuing safety 11

certificates. We lack the knowledge about the product 12

details. 13

I think the Lego presentation was great. All 14

those details that you talked about, we certainly don't 15

know that and we don't have access to that information. 16

We don't know about the manufacturing process. We 17

certainly don't fully understand all the rules, and 18

regulations, and standards t hat apply to all the 19

different products that we handle on a daily basis. We 20

certainly don't take title to the goods, so we're not 21

able to test the goods or certify them through a third 2272

party. We don't have any of that information. 1

One thing, too, that this could create would 2

be that shifting the burden to a Customs broker could 3

actually create like a compliance loophole. So, if 4

you've got some unscrupulous shippers or importers who 5

want to avoid conforming, they would want to have the 6

Customs broker se rve as the importer so they themselves 7

could avoid some of the penalties that they could face. 8

So, it really could create a loophole which I think 9

none of us want to see. 10

As we go on to the next slide here, we'll just 11

talk about some of the challenges. A lot has been 12

mentioned already this morning about reporting and the 13

extensive amount of data that would need to be reported 14

and how it would be reported. So, there's a tremendous 15

amount of data. Certainly, we're concerned about how 16

it would be reporte d and the costs of that, especially 17

the small

- and medium

- sized businesses. We heard 18

earlier an entry that has a thousand lines in it. Just 19

think about all of the data that would be required to 20

be submitted. 21

In the NPRM, it talked about how the costs 2273

t hat would be assessed by, like, a Customs broker for 1

reporting this information would be minimal. But if 2

you've got 1,000 lines and you've got to report 3

information for 1,000 lines, it's not going to be a 4

minimal cost, because it's going to cost me, as a 5

Customs broker, a significant amount of time to report 6

all of that information if I had to provide it all 7

electronically, if I had to go into my system and do 8

some type of key entry. 9

Also, you can say, well, you can automate the 10

process with your importe rs and it would be fine for 11

large importers, and we could do it, but the costs of 12

integrating our systems is obviously significant. But 13

then, once again, small

- and medium

- sized enterprises, 14

they're not going to be able to do something like that, 15

typicall y, with their Customs brokers. So, you have a 16

lot of additional costs that will be added well beyond 17

what is stated in the NPRM. 18

We've talked about what we would do at time of 19

entry versus time of summary. Even if it were done at 20

time of summary, I thi nk my opinion is that a lot of 21

brokers would not want to wait until time of summary 2274

for fear that they could never collect the information 1

that they need to report. 2

So, brokers are held to standards by Customs. 3

We could be penalized as a broker for not fulfilling 4

our obligations as a Customs broker. If we feel like 5

we're not going to be able to get the information, you 6

know, 10 days later at time of entry summary when 7

payment is made, we might elect to say, hey, we're not 8

comfortable submitting the entr y because we don't have 9

the information we need right now, and we're going to 10

hold the shipment up. So, then you come up with not 11

only costs for all of the data and all of the fees that 12

we would pass along because of all the time it takes 13

for us to do thi s work, but then also the fees that 14

you'd have for, like, warehousing costs, because the 15

shipments are going to be held up, and they'll be held 16

as long as it takes for us to receive that information. 17

On the next slide, continuing on, but I'm 18

going to shi ft my focus here over to really talk about 19

the express consignment side of the UPS business. So, 20

we really have two sides of our business. As a Customs 21

broker, we handle all the volume that comes in through 2275

our small pack import service. Then we serve a s a 1

Customs broker too for truck freight and rail freight 2

and ocean and all that stuff as well. 3

But on the express side of our business, we 4

are frequently the importer of record and most, I would 5

say all, all of us in the express consignment world 6

serve as the importer of record for a significant 7

amount of the shipments that we handle. We do this in 8

order to streamline the process so we don't have to go 9

out and collect a power of attorney from everybody who 10

ships with us, or a Customs bond. 11

So, it's do ne for convenience and it's done 12

importantly for just

- in

- time inventory. It really 13

helps to move the process. We have shipments from 14

pickup to delivery, international shipments, that would 15

take less than 24 hours. 16

So, there's a lot of things, a lot of 17

processing that occurs in the middle of the night. It 18

would be impossible to get ahold of anybody if we had 19

to go out and collect a POA or a Customs bond at that 20

time of night. 21

So, this would have a devastating impact on 2276

our business, because what it wo uld do is if we're held 1

legally responsible for issuing the certificates and 2

legally responsible for the correctness of them and 3

that they're all done properly, we would have to say we 4

can no longer serve in this role as the importer of 5

record because the risk that we have today has just 6

manifested itself tenfold. So, we'd no longer be able 7

to do that. 8

So, we would be forced to go out and collect 9

powers of attorney for every shipment that came in. We 10

would be then forced to go out and obtain Customs bon ds 11

for all those shipments. So, I'm looking at what my 12

staffing would be if I had to do that. My staffing 13

requirements would be increased by I couldn't even 14

estimate, but it would be a significant amount. So, we 15

would have to do that. 16

This would also overwhelm our facilities, too, 17

because our facilities are made to handle, like, our 18

peak season volume and to warehouse volume at that time 19

of year. Well, this would go way beyond any peak 20

season type volume that we have. We would run out of 21

warehouse sp ace pretty quickly, and we'd also need a 2277

lot more people, once again, to staff those warehouses. 1

Ultimately, all these costs are going to be passed 2

along to the consumer. 3

So, if we sum it all up here at the end, you 4

know, I think there are a lot of oppo rtunities here to 5

make improvements to the NPRM. Some things we would 6

like to suggest, of course, is that we would want to 7

modify the language to exempt brokers who serve as the 8

IOR, just to state that a Customs broker never 9

qualifies as an importer. 10

We would like to take a look at adding a de 11

minimis rule for products of a low value, such as 12

Customs has, the de minimis section 321, as Customs 13

refers to it, shipments under $200, to look at some 14

type of a de minimis rule for this. 15

We certainly are in fa vor of a Trusted Trader 16

Program. There's a lot of very, very good importers 17

out there. We've already heard from some today, and 18

we've already heard about some today. So, certainly a 19

Trusted Trader Program would be terrific. To have some 20

type of a blank et certificate program would also be a 21

very good step. 2278

So, those are some of the things that we feel 1

like, you know, would add a lot of value to the NPRM. 2

We certainly appreciate the opportunity to get up here 3

and speak today. Thanks, everybody, for yo ur 4

attention. Appreciate it. 5

(Applause) 6

MS. ADAIR: Thank you so much, Mark. 7

Let me bring to the podium, welcome to the 8

podium, Alan Kaufman from the Toy Industry Association. 9

Let me get your presentation up here. 10

PRESENTER: ALAN KAUFMAN 11

MR. KA UFMAN: Good morning, everyone. First 12

of all, TIA would like to thank the CPSC for providing 13

the opportunity for us to present today and to share 14

our comments. 15

First of all, before I launch into the 16

presentation, we want to say at the outset that we 17

cer tainly recognize that the CPSC has legitimate goals 18

here, that they're trying to improve targeting and make 19

sure that they're going after a product which is high 20

risk or potentially violative, and I think also to 21

confirm compliance with the testing and cer tification 2279

rule. So, certainly we recognize that what the 1

Commission is trying to do here makes a lot of sense. 2

In the interest of time, I'm going to go 3

through the first couple of slides fairly quickly here, 4

but I wanted to focus on a couple of things. About 5

TIA, I think the focus here is we have about 750 6

members. Our members represent about 85 percent of the 7

U.S. toy market by sales volume. About 75 percent of 8

those 750 members are small and medium enterprises. 9

So, we're very sensitive to administ rative burdens that 10

might be created by some of these regulatory 11

requirements. 12

A few of our members, some of them I'm sure 13

you recognize, some you may not. Just a real quick 14

snapshot of what the industry looks like. The one 15

thing I'd like you to focus on here is the fact that 16

there are about three billion units sold in the U.S. 17

every year. About 85 percent of those are imported. 18

So, that's what we're going to be dealing with here. 19

Here's our viewpoint. The current 1110 rule 20

and current toy importer practices, there was a lot of 21

flexibility that was allowed. I think those of you who 2280

sort of lived through the implementation of CPSIA would 1

agree that there were a lot of hoops that everybody had 2

to jump through in a fairly short period of time. 3

There was a lot of, you know, near panic, I think, 4

among importers trying to figure out exactly how to 5

comply with some of these new requirements. But each 6

importer developed systems that were best suited to 7

their operations and their supply chains. 8

At this p oint, there haven't been any issues 9

raised by CPSC to date with the current systems the 10

companies have in place. We haven't heard that CPSC is 11

not getting what they need. So, certainly we would say 12

that the current systems adequately meet the needs of 13

th e CPSC and importers, and everybody has kind of 14

adapted. Importers have adapted to the current level 15

of administrative burden. 16

Our issues with the proposed changes to the 17

1110 rule, first of all, there's no evidence that those 18

proposed changes would imp rove safety. We also feel 19

that it would add significant costs for our industry. 20

We also have noticed, we've worked very closely with 21

the commercial targeting and analysis center. 2281

We feel that the current targeting methodology 1

seems to adequately identi fy higher risk imports. It 2

seems to be pretty good at focusing in on them. In 3

fact, what we find is that more goods are being 4

targeted than can be efficiently inspected. So, the 5

limiting factor seems to be port staffing and 6

expertise, in our view. Ther e's no evidence that 7

electronic submission of COCs would improve targeting 8

efficiency or the safety of imported product, which is 9

the ultimate goal. 10

The benefits of the current on

- demand system, 11

it allows for certificates to be produced on request so 12

tha t CPSC isn't inundated with a number of certificates 13

that they're not necessarily going to look at. I think 14

Nancy referred to it as just creating a bigger haystack 15

to look for the needle in. 16

It meets the needs of CPSC and CBP while it 17

minimizes importer burden. A very important point is, 18

and I think some of the proposals that were made by 19

CPSC, it would work very well for someone who is sort 20

of a very narrow slice of the importing world. Someone 21

who imports very large volumes of a small number of 2282

SKUs by ocean in full container loads probably wouldn't 1

be a huge burden. 2

Unfortunately, our industry looks very 3

different from that. I know that that's true for a lot 4

of other industries that import. So, due to those 5

varying supply chain management systems , that sort of a 6

one - size

- fits

- all system is probably not workable for 7

the vast majority of importers. 8

Costly changes to the current requirements, I 9

think that there's been a significant underestimation 10

of what the costs would be to industry. The 11

requir ement of certificates to be filed at entry would 12

be costly for the toy industry, again, because we have 13

a number of very small importers. Most of them would 14

probably have to do it by PDF. That's not efficiently 15

searchable. We think that would create a b urden not 16

only for our industry but also for CPSC to try and look 17

at those certificates in a timely manner. 18

A lot of our goods come in in consolidated 19

freight. What that means is that very often retailers 20

will take possession of goods in the Far East. They 21

will consolidate those goods from multiple 2283

manufacturers into a single container. In some cases, 1

for very small manufacturers, you actually have 2

multiple importers in a single container. So, what 3

happens is if you target product from one of those 4

im porters, you actually end up holding goods from 5

non - target importers who just happen to be co

- loaded in 6

that same container. 7

Again, systems have worked pretty well since 8

2008. We would need to revamp them. Every importer 9

would have to take a look at wh at they were doing and 10

make, we feel, significant and potentially expensive 11

changes. Again, we don't see the benefit of making 12

those changes. 13

The Regulatory Flexibility Act analysis 14

contemplated a typical shipping system. As I said, I 15

think it would wo rk pretty well for those people who 16

fall into that typical bucket. But it dramatically 17

underestimates the number of shipments, at least for 18

our industry, and the certificates the companies would 19

be responsible for maintaining and submitting. 20

Also, our i ndustry is very seasonal. We have 21

a huge shipping peak as we come into the holiday 2284

season. So, what happens is during part of the year, 1

shipment volume is low, but it peaks in the fourth 2

quarter of the year. So, the average really doesn't 3

tell us. If y ou look at the average over the year, it 4

really doesn't tell you what you need to know. 5

The RFA estimate was that importers ship fewer 6

than 12 shipments annually. We have a number of 7

importers who do more than 12 a day. So, that figure 8

would be applica ble only to the smallest importers. As 9

I said, some of our major members are far in excess of 10

12 a day during peak shipping season. 11

Consolidated cargo co

- loads from multiple 12

importers, it will further complicate certificate 13

submission. You'd have to ma ke release of all cargo, 14

depending on all importers timely submitting 15

certificates. So, again, through no fault of your own, 16

you could have your product held up because someone 17

else who was co

- loaded with you hadn't submitted what 18

they needed to submit. 19

Regardless of the number of shipments, each 20

container might have a number of different products 21

together. If you think about how many certificates 2285

might be required if you have, let's say, 50 or 100 1

lines, that's 50 or 100 certificates that have to be 2

su bmitted for that single container. Then, when you 3

add in the fact that some people are taking advantage 4

of the component testing rule, you would have component 5

certificates backing that up. 6

So, you might have several hundred 7

certificates that would have to be submitted for a 8

single container, all of them electronically as PDFs. 9

So, the RFA estimate needs to be revised exponentially 10

upward, in our view, and we think the costs associated 11

with filing entries will likewise increase many fold. 12

Methods of i mportation vary. Again, this 13

seems to work really well for ocean freight, but we 14

have a lot of manufacturers who manufacture in Mexico 15

and bring product in by rail or by truck. We have FTZ 16

users. I won't belabor that because I think it's been 17

covered ad equately by prior speakers. 18

You could have a situation where trailers are, 19

you know, at a factory. The product gets loaded into 20

the trailer. When the trailer is full, it goes. So, 21

you have multiple products in that trailer. You would 2286

have to make sur e that you had the certificates for the 1

particular product that was in that container, and you 2

would have to submit that electronically while that 3

trailer was in transit to the border. 4

On top of that, CBP isn't yet able to handle 5

the influx of data that' s been proposed. So, in other 6

words, to a certain extent, we're putting the cart 7

before the horse. We're proposing costly requirements 8

with a large administrative burden on industry when CBP 9

currently isn't able to take those data and we're not 10

sure when or if they will be. So, I think it's 11

premature for CPSC to require submission of that data 12

when the agency that's controlling the data portal 13

isn't ready for it. 14

Several others have talked about the idea of a 15

multi

- stakeholder group that includes indus try, CBP, 16

CPSC. I think hearing from import specialists, Customs 17

brokers, and logistics companies I think would be key 18

here because they know exactly how the nuts and bolts 19

of all of the various importers that they deal with, 20

how their systems work. I th ink their input would be 21

valuable. 2287

I think we have to resolve a few issues. Does 1

CBP have the bandwidth to handle the volume of data 2

that will be generated? When will the ACE system be 3

ready to handle those data? What's the time line for 4

implementatio n of the single

- window system that was 5

contemplated by the Executive Order? 6

For the RAM pilot, we're supportive of the RAM 7

program. We would urge CPSC to expand the program 8

beyond the pilot. Again, we think that electronic 9

submission of certificates pr obably doesn't improve

-- 10

w e think the targeting system works pretty well now. 11

We don't see the incremental benefit of electronic 12

submission of certificates to that targeting process. 13

Thank you very much. 14

(Applause) 15

MS. ADAIR: Thank you, Alan. 16

Let me welcome Mike Lahar from the National 17

Customs Brokers and Forwarders Association to the 18

podium. Let me get your presentation up here. 19

PRESENTER: MIKE LAHAR 20

MR. LAHAR: Thank you. I would like to thank 21

the CPSC for this opportunity to present some comments 2288

from the NCBFAA. I work for A.N. Deringer as a member 1

of the NCBFAA, but the organization actually represents 2

almost 1,000 member firms across the United States with 3

tens of thousands of jobs at stake. 4

The NPRM proposed changes to 16 CFR 5

1110

- 3 (b)(13) that places the burden on the importer of 6

record to provide the compliance certificate for 7

finished products manufactured outside the United 8

States that are not being delivered directly to a 9

consumer in the U.S. is an issue for us. 10

The proposed c hange would define the importer 11

as the importer of record as defined under the Tariff 12

Act of 1930. Pursuant to the Tariff Act, the importer 13

of record is either the owner or purchaser of the 14

merchandise or, when appropriately designated, may be a 15

person ho lding a valid Customs broker's permit or 16

license or brokerage firm. 17

In the first instance, the proposed rule must 18

be modified to eliminate any reference to Customs 19

brokers. A Customs broker is licensed by U.S. Customs 20

to transact Customs business on beh alf of third 21

parties. 2289

Customs business is defined as those 1

transactions with the Customs service involving the 2

entry and admissibility of merchandise. Customs 3

brokers do not have any particular knowledge regarding 4

product safety requirements and are not in a position 5

to certify compliance of any particular product. 6

Our involvement in the international supply 7

chain should not require us to assume additional 8

responsibility and liability for issues that we have no 9

control over. We respectfully submit tha t assigning 10

this responsibility to a class of persons that do not 11

have the requisite product knowledge to certif y 12

compliance with the CPSIA requirements does not further 13

goals of the Commission. Reference to Customs brokers 14

as a class of persons who could potentially be 15

responsible to provide for product compliance 16

information is inappropriate and should be removed from 17

the final rule. 18

We also submit that the term importer, as 19

defined in the proposed rule, is overly broad and does 20

not consider that many importers are actually service 21

providers who are not in a position to certify 2290

compliance of an imported product. 1

The proposed rule should be modified to 2

clarify that the certification obligation belongs to 3

the beneficial party of interest who has knowled ge 4

about the imported product. The beneficial party of 5

interest should be defined as a party with a financial 6

interest in the imported goods, such as the owner, 7

purchaser, or distributor of the merchandise. 8

Failure to make these changes could result in 9

some brokers refusing to allow importers with CPSC 10

goods to use their Customs bond. This would restrict 11

trade and have an unfair impact on small or 12

inexperienced importers who historically tend not to 13

have their own Customs bond. 14

The proposed section co ntemplates requiring 15

that certificates of compliance for imported products 16

be filed with CBP at time of entry. This is a 17

substantial change from the current rule which requires 18

that certificates be available when the product itself 19

is made available for i nspection and furnished upon 20

request. Unless the Commission mandates that 21

certificates of compliance must be generated 2291

electronically in a uniform format, this requirement 1

will impose a huge burden on the Customs brokerage 2

community. 3

First, there are su bstantial programming 4

challenges to be overcome by both the government and 5

private industry before this can become a reality. As 6

the Commission is well aware, CBP is in the midst of 7

developing a programming for the ITDS system as well as 8

in the final stre tch of programming for the ACE system. 9

It is imperative that CPSC coordinate with CBP so that 10

the certificate of compliance data can be managed 11

through ACE. 12

In this regard, we note that there's currently 13

no programming being developed in ACE to flag tho se 14

items which require certificates of compliance. 15

Without such system edits, it is highly unlikely that 16

most Customs brokers will be able to discern the 17

products which may require a certificate. It is 18

equally unclear how CBP will enforce the requirement s 19

without these system edits. 20

Unless the Commission mandates that certifying 21

parties transmit their data electronically, directly to 2292

CBP or via a web posting, the reality is most of these 1

certificates will be generated in hard copy, and 2

Customs brokers w ill be required to reformat, 3

transcribe, and transmit the data to Customs prior to 4

entry. 5

Given the uniqueness of the information set 6

forth in the certificates of compliance, these 7

documents will be subject to very little overlap with 8

other data elements required to make entry. This will 9

require a large amount of independent data input and 10

will increase the cost of clearing imported 11

merchandise. 12

Further, the import community will be required 13

to transmit this data before the merchandise arrives in 14

the U nited States. The Commission must consider the 15

complexity of the supply chain and recognize that many 16

shipments will require multiple certificates of 17

compliance and in some cases be issued by multiple 18

parties of interest. 19

Under the proposed rule, this i nformation 20

would have to be received and transmitted to Customs 21

prior to the arrival of the merchandise in order to 2293

avoid delays. The 24

- hour rule suggested in the NPRM 1

does not recognize routine contingencies of divergence 2

in the international supply cha in. 3

We strongly believe the certificate of 4

compliance should not be an entry requirement, as this 5

will greatly impede the flow of goods into the country 6

without yielding the corresponding compliance benefit. 7

We believe that the current standard of requi ring the 8

certificate of compliance to be available at the time 9

the merchandise is presented to Customs is a workable 10

solution. 11

The plain reality is that neither the 12

Commission, Customs, n or the trade is prepared at this 13

point to manage the consequences o f requiring the 14

transmission of compliance certificate data as a 15

condition of entry. 16

Thank you. 17

(Applause) 18

MS. ADAIR: Thank you very much, Mike. 19

I'd like to welcome to the podium Erika Jones 20

with the Bicycle Products Suppliers Association. 21

Erika, let me get your presentation up. Thank you so 2294

much. 1

PRESENTER: ERIKA JONES 2

MS. JONES: Thank you for the chance to be 3

here today and to share some concerns about the aspect 4

of the proposed rule that addresses electronic filing 5

of certificates. Alan and I did not coordinate, but 6

our presentations are very similar. So, you're going 7

to hear an echo in the room on many of the themes that 8

Alan raised, as well as Nancy on a number of the 9

concerns that the Bicycle Industry has are also 10

previewed by Nancy's presentation this morning. 11

A little bit of background. The Bicycle 12

Product Suppliers Association represents more than 70 13

manufacturers, importers, and suppliers of bicycle 14

parts, accessories, and services who serve the 15

specialty bicycle retailer. So, I want to underscore 16

that from the get

- go, that this is not the mass market 17

bike market; this is the specialty bikes. They're both 18

children's products and adult products, but they are in 19

the specialty market. 20

BPSA members are interested in this rule 21

bec ause they manufacture import and sell three 2295

categories of regulated products that are required to 1

have Certificates of Compliance, bicycles under part 2

1512, bicycle helmets, and aspects of clothing that are 3

subject to standards. Some of them diversify int o 4

other areas, but these three are common to the BPSA 5

membership. In addition, the proposal contemplated the 6

possibility of expanding the certificate requirement to 7

replacement parts, which would exponentially increase 8

the burden of the proposed rule. 9

O ur position is that the CPSC has 10

underestimated the costs of compliance for the 11

industry, that the proposed tracking requirements would 12

be difficult to manage, and that it's premature to 13

require mandatory electronic filing. You've heard this 14

from several people today. 15

One of the themes that I think there may be 16

some confusion among some of us in the room is the 17

difference between an electronic filing and a manual 18

upload of an electronic document. The concern that we 19

have, and you've heard it echoed from others today, is 20

that it's one thing to electronically file a PDF 21

document, which would be uploaded electronically but 2296

that still requires a manual entry sitting at a 1

computer by a human to push that up to through the 2

internet to the system. 3

We understa nd that this is the requirement 4

that would go into effect, if it were to go into effect 5

now, that CB P is just not equipped to take a data field 6

entry. It would have to be uploaded through the system 7

I just described by a person at a computer for every 8

sin gle shipment. This is extremely labor intensive. 9

It also introduces the potential for human 10

error, that the wrong certificate will be associated 11

with the wrong box, which right now, as both Alan and 12

Nancy have suggested, there's been a lot of investment 13

up front in complying with 1110 in ways that work for 14

the individual members of the Association, and 15

precisely to try to work out systems that are not going 16

to have that potential for error. 17

So, the certificate is assigned at the time 18

the package is cre ated or the product is packaged, and 19

that certificate then stays with that shipment all the 20

way through to the retailer as required by the rule. 21

But if, instead, we have to now upload a PDF for every 2297

one of those boxes and we've lost that control 1

mechanis m of having that bar code, or that electronic 2

certificate, or that paper certificate, if that's the 3

way it's done, staying with that product is an 4

opportunity for human error that is going to 5

potentially degrade rather than improve the system. 6

Then, if re placement parts are included, there are 7

tremendous additional practicability problems. 8

Specifically, for the bicycle industry, the 9

NPRM estimated that there were 1,900 bicycle models 10

sold annually, and the NPR acknowledged that this was 11

based on an extra polation of the estimate of children's 12

bicycle models. 13

But as the industry explained some years ago 14

when the lead content and other rules were coming into 15

effect for children's bicycle models, the number of 16

children's bicycle models was decreased signifi cantly 17

in order, really, to manage the certification 18

requirements for children's products. But the adult 19

bicycle models didn't have the same effect. 20

The BPSA membership estimates 7,170 bicycle 21

models are being sold right now in 2014 through the 2298

independ ent distributor channel. These would be 1

specialty bicycle retailers. And this has increased 2

since we filed our comments in 2013 when the number was 3

in the 6,000 range. 4

It's gone up this year, thanks to the 5

healthier economy, but that also means that th e number 6

estimated in the NPR is that much more off of the 7

reality. It's important to note that this is just the 8

specialty bicycle channel. This does not include mass 9

market channels. There's a lot more that are sold that 10

way. 11

The NPR also estimated t hat a certificate of 12

compliance would be issued once a year. Pausing on 13

that for a moment, because I'm going to explain why 14

that's not the right estimate, but if it were correct 15

that it would only be a once

- a - year job, using the 16

7,170 estimate, the increm ental cost would exceed 17

$450,000 a year, not the much smaller number estimated 18

in the NPR, and far more when mass market bicycles, 19

helmets, and clothing are included. 20

But that is on the assumption that this is a 21

once - a - year task. It's not, as explained by Nancy and 2299

Alan and others today. It's an everyday task, and 1

there was no estimate of the time and effort that would 2

be required to upload manually into the electronic 3

system these PDFs that would have to accompany each 4

shipment. There was no estimate given to that. 5

And then, it's also the case that many bicycle 6

models will have to have a new certificate more than 7

once a year if they change a component or they change a 8

supplier, or there may be other reasons why that 9

certificate has to be changed. So , the one

- year 10

estimate is too low, once a year, and the idea that we 11

would only have to engage in this labor once a year is 12

erroneous because the proposal would require it to be 13

done for each shipment. 14

There are also tracking requirements in the 15

proposa l that if we understand them correctly, go way 16

beyond the current requirement to identify the month 17

and year of the manufacturer. As we read the proposal, 18

there would be a requirement to identify the scope of 19

finished goods by the start date, the start an d end 20

date, the lot number, starting serial number or serial 21

number range. This goes way beyond what we're 22100

currently doing, way beyond what we think is really 1

required by the law. 2

We're not certain what the value would be 3

added by these requirements, bu t it would be extremely 4

difficult to add this to the current certificate of 5

compliance that's being generated. And it would be 6

complicated further if it's extended to components and 7

after

- market parts, which are rarely date coded or 8

serialized now. The b icycle industry supply chain is 9

just simply not equipped to do this. 10

As others have mentioned, it is our 11

understanding that the CBP's ACE system is not ready to 12

take data elements yet. As others have mentioned, we 13

believe the only process to file these would be the 14

labor

- intensive manual upload of PDFs. It's not clear 15

to us that CBP would even accept PDF attachments. This 16

is something we look forward to hearing this afternoon 17

from the other speakers. But, in any event, it would 18

impose great costs and introduce the potential for 19

human error, and there would be no commensurate 20

improvement in consumer product safety. 21

So, our conclusion, we don't believe that 22101

electronic filing of GCCs with the CBP should be 1

required. We think the current system is worki ng well. 2

We don't believe that true electronic filing is ready 3

yet, that labor intensive manual uploads would be 4

required. 5

We think the current system of making the GCCs 6

available on request is working well. We're not aware 7

of issues or problems in the bicycle industry. The 8

additional costs, which have been greatly 9

underestimated, have not been justified and certainly 10

don't show that they will produce an improvement in 11

safety. 12

Thank you very much. 13

(Applause) 14

MS. ADAIR: Thank you, Erika. 15

Let me bring up our final presenter this 16

morning, Michael Mullen from the Express Association of 17

America. 18

PRESENTER: MICHAEL MULLEN 19

MR. MULLEN: Well, thanks very much. I also 20

want to thank CPSC for holding this event. I mean, in 21

our view, it's always been an agency that's been, you 22102

know, more than ready and willing to sit down with the 1

trade and talk things over. This is another great 2

example of your ability to take that approach. 3

Of course, the disadvantage of going last is 4

that absolutely everything I was going to say has 5

already been said. But the advantage of going last is 6

that absolutely everything I'm going to say has already 7

been said. So, I could go real quickly through this. 8

Knowing these slides are all that's standing between 9

you and lunch w ill maybe be an additional plus. 10

So, the Express Association of America has 11

four members who are the largest express carriers in 12

the world and together account for around 70 percent of 13

the air cargo that's coming into the United States on 14

any given day. This is just a little bit about 15

collectively what these companies comprise in the way 16

of resources and revenues. Thirty million shipments a 17

day are up there in the air somewhere in one part of 18

the supply chain or another. There's virtually no 19

place on e arth that isn't service d by one of these 20

companies. 21

I just wanted to spend a minute sort of going 22103

through the express package operational chain. I'm not 1

going to go through every aspect of this, but you could 2

take this and apply it to any two countries on earth. 3

Put one country at one end and another country at the 4

other end, and this is still basically the way the 5

process works. 6

I'm going to talk about it for a product 7

coming from overseas into the United States. But it 8

starts at some overseas custo mer location where the 9

product is submitted into the system. That is where 10

the shipper has his interface with this system. In 11

other words, the person with the most knowledge about 12

this product is back there at the very front end of it. 13

Information in t he form of documents, either 14

on paper or more often electronically, is captured at 15

that point. It's entered into the express company's 16

proprietary systems. Those blue boxes across the top 17

are the physical movement of the shipment. The rest of 18

it is the way the data is managed. So, after it's been 19

turned in, we start putting together the manifest. 20

Of course, for those of you who are familiar 21

with it, a new wrinkle on this started a couple years 22104

ago, the requirement for air cargo advanced screening 1

info rmation which is a subset of seven data elements 2

that are provided purely for CBP and TSA to conduct a 3

security review of the shipment to identify any risks 4

to the safety of aviation. 5

So, the manifest is submitted in accordance 6

with the Trade Act, which is four hours before the 7

flight arrives in the United States. In the meantime, 8

the broker's side of the house has been putting 9

together the information for entry, which is this box 10

down here. 11

I would say

-- colleagues, correct me if I'm 12

wrong -- that th at's the first time that somebody with 13

a knowledge of this requirement for something like a 14

Certificate of Safety, it actually starts intervening 15

in the process of looking at the data and saying what 16

do we know about this product. You're essentially at 17

th e arrival point at that point. 18

So, the shipment arrives. It's scanned. I 19

would say each of these orange boxes is a place where 20

the shipment is scanned by the express company's 21

proprietary system. By that time, CBP has done their 22105

targeting on the manif est information. A certain 1

percentage are selected. They're inspected. If it's 2

going to be a problem with it, it gets caged. The 3

great majority move into the domestic where it gets 4

delivered. 5

So, the point I want to make about this is the 6

box at the bottom. This is a very tight circle. 7

Everything I've shown you here has to be completed 8

within 24 hours. And anything that causes a 9

disruption, any sort of additional requirement that 10

causes this cycle to be thrown off, can result very 11

easily in a mis

- delivery, because the demands of this 12

are really stringent. So, that's the concern in the 13

express industry. 14

So, some of the key issues

-- this, again, has 15

been gone over pretty well

-- the Trade Act requires 16

the party with the best knowledge of the info rmation on 17

a shipment as being the one who should be responsible 18

for providing it. And for product safety issues, it's 19

been

-- the point's been made many times, that party 20

with the best information is the importer, or the owner 21

of the goods. 22106

And the imp orter record concept has been 1

explained. It's a kind of a matter of convenience to 2

allow the financial aspects of the transaction to be 3

completed. 4

For products being sold online, the seller 5

should be the responsible party. And as been made 6

(sic) by som e real experts here, the brokers cannot be 7

in a position to have to certify the product as in 8

complian ce

. 9

And another point is that I don't think a lot 10

of big importers like

-- maybe Lego is a good example 11

-- really want carriers and sort of third party 12

brokers being in the position of representing them on 13

safety issues. That goes to a company's brand, and 14

they want to be in charge of making sure that those 15

requirements are met. 16

So, just a couple of ideas. Again, some of 17

this has been said. It reall y would be helpful to 18

start with CPSC providing a list of the products that 19

are going to have Rule 1110 applied to them, and by HTS 20

number. The issue of submitting the certificates 21

electronically has been pretty well gone over. I have 22107

learned a lot today about the difficulties of 1

submitting them in pdf, so I'm not sure

-- I think that 2

issue needs a lot more discussion. CBP's document 3

imaging system is going to be the part of ITDS and ACE 4

that has the capability to do that. C BP

-- maybe we'll 5

hear this a fternoon

-- says that it can search on data 6

elements. So we need to find out a little bit more 7

about that. 8

But providing the certificate of release

-- of 9

certification post

- release, as we do now, I think is 10

obviously the way that we all feel is best to continue. 11

And if the IOR has to get in the position of holding 12

the goods, pending receipt of the certificate, if the 13

cost in time delays are really going to increase (sic). 14

But I would say whatever is decided on this in 15

the final analysis

-- and hopeful ly any revision of the 16

rules should make this perfectly clear, that it has to 17

apply 100 percent equally to the U.S. Post Office as it 18

does to everyone else. So

-- and I'm a little 19

surprised, actually, that they're not here today, 20

because they have huge eq uities in this. But they are 21

a carrier, like everyone else, and volume

- wise, I 22108

wouldn't be surprised if they're the largest for a lot 1

of these shipments that you're worried about. And this 2

has to apply to them 100 percent. 3

So, looking a little longer

- t erm, I think 4

that, really, if you look at CPSIA, what it means, 5

essentially, is that CPSC has a trade facilitation 6

mission now, because if you have a responsibility to 7

stop non

- complying products, I think that inherently 8

means you have a responsibility to clear 9

highly

- compliant products, and the agency has to look 10

at it that way. 11

The private sector can't be in the

-- put in 12

the position of doing what are essentially enforcement 13

actions. They could be helpful, they could provide 14

data, they could do a lot of things, but they can't be 15

the ultimate enforcer out there. And this issue of 16

establishing an ongoing dialogue on these issues is 17

really important. 18

And another speaker mentioned the idea 19

that

-- maybe it was John

-- that it's not a difficult 20

thing now to create a working group that would be 21

effective for this under the auspices of the COAC. I 22109

am a member of such a group right now that was created 1

to look at data quality issues with FDA, and it's 2

working very well, and it's under FACA auspices, it's 3

fu lly legal, and it's a way to bring in any expert from 4

the private sector that you need to sit at the table. 5

In the end, CPSC has to identify what the 6

information is they really need for risk targeting. 7

And the overriding factor of the executive order on 8

ITDS is that government has to develop a common 9

approach to risk management, one that works for all the 10

agencies with any kind of border clearance 11

responsibility. And there is a discussion going on on 12

that process, but it's going to be a critical step in 13

seeing

-- in making sure that the President's order on 14

this really succeeds. And, obviously, a Trusted Trader 15

program that provides some meaningful benefits is going 16

to be an important part of that. 17

So, thanks very much. 18

(Applause.) 19

IV. QUESTIONS & ANSWERS FOR MORNING SESSION 20

MS. ADAIR: Okay, I want to thank all our 21

presenters this morning for some really excellent 22110

information, presentations, and it undoubtedly has 1

raised a lot of questions in people's minds. 2

I also want to remind everybody tha t we need 3

to ask questions from the mic. If there are folks in 4

the room who have questions, they need to queue up at 5

the microphone, which is here, where John is standing. 6

If you're at the table and you're going to ask a 7

question, you need to turn on you r mic for the 8

question. You need to identify yourself and your 9

affiliation. 10

And so, I think we can get started with 11

questions. And I believe we have some questions from 12

CPSC staff. So I recognize Carol Cave. 13

MS. CAVE: Great. Thanks, Patty. So I d o 14

have a couple of follow

- up questions, based on some of 15

the comments we've heard today. And, first of all, I 16

do thank you all for your input, because it is very 17

informative. And, you know, we don't know all the 18

rules of the land, so

-- but we do have so me clarifying 19

questions, I guess, that I would like to ask. 20

Many of you have talked about this issue of 21

burden and the data entry piece on your side of the 22111

house. So, I guess what I was looking to have a better 1

understanding of is when today a shipment from any of 2

your members is stopped, A, if you could quickly talk 3

through that process of how that is provided to CBP or 4

CPSC when that commodity is stopped at entry; and, if 5

you could, also talk about both time delay and money 6

delay or cost to your indust ries as a result of that 7

delay when having to ask. 8

MR. GOLD: I guess I'll start, Jonathan Gold, 9

National Retail Federation. 10

I guess it really depends on why the product 11

is stopped, who is stopping it, is there resources at 12

the port where the shipment has been stopped. If you 13

have an agency who is stopping a product that isn't at 14

the port, it takes time for them to get there and do 15

the inspection. If it's an FDA product

-- and Mike can 16

talk about the FDA stops that the air cargo industry is 17

seeing. 18

But any time a product is stopped and causes 19

delay, you've got the expense of not getting the 20

product to where it needs to be on time, you've got the 21

storage costs it's going to cost to hold that product. 22112

You've got the inspection cost to do the inspectio n on 1

the product. So, all of that adds up at the end of the 2

day. 3

I think the importers want to get the 4

information as quickly as possible to the agency who 5

has stopped the import, whether it's for trade 6

compliance or something else. So they'll work wit h 7

their broker to make sure that, as quickly as they can, 8

they'll get the data, whatever the data that's 9

required, to the agency that needs to do the 10

inspection. 11

So, I know, with the, you know, certificates, 12

it's, you know, upon demand. I think it's wit hin 24 13

hours they have to get the certificate, if there is an 14

issue. 15

And I would turn it back, you know, to CPSC, 16

is that, you know, part of the issues that we haven't 17

heard that there have been any issues with CPSC being 18

able to get the certificates. S o I guess one of the 19

questions I think we all have is are there issues that 20

CPSC has seen with obtaining the certificates. If 21

there are, are there other ways we can look at helping 22113

the agency get those certificates quicker than they're 1

currently receiving them? 2

MR. KAUFMAN: And if I could comment on that 3

as well, I think, you know, certainly providing a 4

certificate or a group

-- a small group of certificates 5

on demand is not creating a huge burden. On the other 6

hand, having to preemptively or proactive ly submit 7

hundreds, potentially, of these same documents per day 8

would create a huge administrative burden. 9

As far as the costs go, certainly a lot of our 10

members sell to retailers, and retailers, in order to 11

try to maintain something approximating just in time, 12

and to try to minimize the amount of time that they're 13

holding inventory, have very tight ship windows on when 14

that product can be delivered. So it's very common for 15

retailers to say, "You must deliver this product to our 16

warehouse between this d ate and this date," and that 17

window can be as short as two weeks. 18

So, even a few days delay at the port can 19

result in either a monetary penalty from the retailer, 20

or, if you miss that ship window, the retailer has the 21

option of canceling the order. And the importer is 22114

stuck with goods that they can't sell, which can be 1

very significant, in terms of cost, particularly for a 2

small or medium enterprise. 3

MS. ADAIR: Just a general reminder

-- this is 4

Patty Adair

-- please identify yourself and your 5

affilia tion. And it just helps with the transcript and 6

people who are watching over the web. 7

MR. KAUFMAN: Sorry, Al Kaufman, Toy Industry 8

Association. 9

MS. MCGUIGAN: This is Kathleen McGuigan with 10

the Retail Industry Association. Additional costs 11

could als o be that, you know, depending on how long the 12

delay is to meet that ship window, rather than going 13

through normal supply chain processes, the importer 14

then will have to then do express shipment, or do some 15

kind of enhance, because it needs to be in the st ores, 16

because the retailer has already advertised it, it's in 17

their big Friday flyer, or it's

-- you know, heaven 18

forbid, it's for Black Friday, and it needs to be 19

there. So, all of those costs would have to be 20

considered as part of the total cost. 21

MR. LAHAR: I would just like to echo a 22115

comment that John made about resources at the ports. 1

There are not CPSC officers at every port in the world. 2

I live in Champlain, New York, we don't have a CPSC 3

officer; the closest officer is in Buffalo. 4

And along t he Canadian border we operate 24 5

hours a day, 7 days a week. In fact, the bulk of the 6

merchandise that we deal with comes through in the 7

evening, and into the early hours of the morning. And 8

if we don't have access to officers, or we don't have a 9

system that can automatically provide a release along 10

the lines of what FDA has, it could be a huge burden 11

and slow down trade coming through the border, and that 12

could result in shipments being held up and additional 13

costs in storage and transportation. 14

MS. AD AIR: Thank you, Mike Lahar, with the 15

National Customs Brokers. 16

(Laughter.) 17

MS. ADAIR: And Forwarders Association. I 18

know it feels awkward, but it just is helpful. Thank 19

you. 20

MR. KAUFMAN: Hi. Al Kaufman with the Toy 21

Industry Association. Just t o add on to what Michael 22116

said, that issue is not limited to minor ports where 1

CPSC doesn't have, necessarily, personnel assigned. We 2

found that even at major ports like Chicago and the 3

Port of New York, some of our members have reported 4

having product hel d for five days and then released 5

because the inspector couldn't get to it. 6

So, clearly, staffing levels are the limiting 7

factor here. 8

MR. MURRAY: Sean Murray with the National 9

Association of Foreign Trade Zones. And something that 10

comes to mind for me is the importance of understanding 11

the need for some flexibility in the process. 12

With customs, most of the things they are 13

doing

-- they are going to grant a release, and then 14

there is going to be follow

- up with import specialists 15

or others asking que stions, because the primary 16

concerns are, typically, "Are they getting the revenues 17

and accurate declarations they need?" But things will 18

be released. 19

With certain other agencies, there is the 20

release issue. And so you will have

-- I will use the 21

FDA a s an example

-- you will have shipments held, and 22117

it is very

-- it's unclear what needs to be done to 1

bring the shipment into compliance to get the release. 2

And when there is manual ; people in the 3

process, that raises other issues, because then it 4

become s contact issues: How do you actually get a hold 5

of the person? There is person ne l training issues; 6

they don't really know what they're asking for, in some 7

cases. And sometimes you have things as simple as 8

vacation issues, where the person asking the qu estion 9

leaves, and no one feels comfortable issuing a release 10

until they come back two, three weeks from then. 11

And so, we'll see in manufacturing 12

environments you will have

-- customs will recognize, 13

hey, if a line is going down, we don't want to shut 14

yo ur factory down. If we are going to work with you, 15

we will clear things, we might have a prior disclosure 16

to fix this afterwards, but we don't want lines to go 17

down. That's not our job, to shut your business down. 18

You don't have that with some of the ot her agencies, 19

and that's a real difficulty. You just can't get your 20

product and you can't use it without creating more 21

problems for yourself. 22118

MS. CAVE: Thanks. I have another question, 1

actually, mainly for Mark. And you mentioned in your 2

presentation this issue of a blanket certificate. Can 3

you talk a little bit more about how that works in 4

another environment, and what exactly that means ? 5

MR. SHACKLETTE: I guess a good example would 6

be the NAFTA Certificates of Origin, which are valid 7

for a year, which we would rely on, you know, for our 8

frequent importers. And that's certainly a good 9

process. We don't have to go and collect data on a 10

shipment

- by

- shipment basis. So that obviously saves a 11

lot of time and cost for the broker and the importer, 12

as well. So that would be a much more efficient 13

process. 14

MR. JOHOLSKE: This is Jim Joholske from CPSC. 15

A follow

- up for the express carrier folks. 16

So, there are a number of different government 17

agencies that have certification licensing 18

requirements. I n situations when you serve as the 19

importer of record, how are you involved in satisfying 20

those requirements, or transmitting those documents? 21

MR. SHACKLETTE: When we serve as the IOR, I 22119

mean, really, our process with customs is exactly the 1

same as when the importer is the importer of record. 2

It does put some burdens back on us, there are some 3

things that

-- where we could be held responsible for, 4

compared to a shipment where we were not the importer 5

of record. But in no way are we, you know, subject t o 6

the type of penalties, I guess, for lack of a better 7

word, that we would be subject to under this proposal 8

from CPSC, where, you know, we're held legally 9

responsible, we have to certify, and if it wasn't done 10

right, we would be held liable as though we w ere the 11

actual purchaser

- owner. So the other ones do not go to 12

that extent. 13

And certainly customs understands that when we 14

serve as the importer of record, there is this other 15

party out there who is the ultimate consignee who is 16

the party, who is the ac tual purchaser, sold

- to party, 17

who shares a responsibility in that shipment, as well. 18

And they will also, you know, pursue them, and then 19

there certainly would be a lot of times where they 20

would leave us out of the equation, because they 21

understand it was done for the purposes

-- just for 22120

streamlining trade, and

-- as a convenience matter. 1

MS. CAMPBELL: Jacqueline Campbell, CPSC. One 2

of the rules we discussed earlier was the component 3

part rule, 1109. And for the brokers, you know, were 4

you familiar w ith this rule? And do you think that it 5

would give you a way to take a component part 6

certificate for a finished product, and then issue the 7

certificate? 8

Oh, I'm sorry. Jacqueline Campbell. Can 9

everyone hear me now? Okay, terrific. Thank you. 10

This is a question mostly for the brokers. 11

And I was asking about 16CFR Part 1109, which is the 12

component part rule, and

-- whereby someone could issue 13

a finished

-- or a component part certificate for a 14

finished product, essentially. Could you

-- as 15

brokers , do you see that as a means of issuing a 16

certificate? 17

And if

-- were you familiar with the rule? 18

That's another question that we had. And we'd like to 19

hear your comments on that. 20

MR. LAHAR: I did read about. There

-- in our 21

industry there is alway s -- I'm sorry, Mike Lahar with 22121

the NCBFAA. 1

(Laughter.) 2

MS. ADAIR: Sorry. 3

MR. LAHAR: There is always somebody in our 4

industry that is willing to take on those roles. So 5

I'll bet there is somebody out there right now who 6

probably is putting togethe r a plan on how they could 7

probably capitalize on that. 8

But understand that our core business is not 9

certifying products for CPSC. And for the vast 10

majority of the industry, I would say that we would 11

probably be interested in acting as a transmitter of 12

data, but not as a submitter of data. And actually 13

doing the certification, in my opinion, would be a 14

submitter. And then we get back to the liability that 15

would be incurred by the party that is submitting the 16

information to CPSC, and making that certifi cation. 17

Who is going to back it up? That is my big 18

concern. 19

MR. KAUFMAN: Jacqueline

-- Al Kaufman with 20

the Toy Industry Association

-- just to add a little 21

bit to that, you know, certainly it's reasonable for 22122

certifiers to rely on the certifications of others in 1

order to make that certification. I think, in response 2

to your question, I think the stumbling block would 3

probably be for a broker who doesn't have intimate 4

knowledge of the product, how would they know that they 5

were receiving all of the ne cessary component 6

certificates in order to issue a finished product 7

certificate, because they would be receiving a batch of 8

certificates, but without that product knowledge they 9

don't know whether they have a complete picture or not. 10

MR. SHACKLETTE: Mar k Shacklette, UPS. And 11

just to add on to those guys, yeah, I mean, it 12

wouldn't

-- it would be very risky for us to do that, 13

and I don't see us taking on that risk, and I don't see 14

why we would want to take on that risk. Because I 15

think the risk is certai nly much greater than the 16

reward. 17

MR. MULLEN: One thing on this, too

-- I'm 18

Mike Mullen from the Express Association of 19

America

-- a lot of other federal agencies that require 20

someone to submit some type of certificate or 21

verification, that requirement is a part of a 22123

registration that that importer or that manufacturer 1

has to actually come in and register themselves with 2

that agency. And you know, the certificates that are 3

required sort of result out of that process. 4

So, it's a case where you're deali ng with 5

companies that have huge compliance staffs that ensure 6

that those kind of

-- that kind of documentation 7

of

-- goes along with all their shipments coming in, 8

and it's

-- they don't

-- in fact, they would 9

vehemently object to trying to impose those k ind of 10

requirements on a carrier. 11

MS. CAMPBELL: Thank you. 12

MS. CAVE: Carol Cave, CPSC. Another 13

question

-- and mainly for anybody

-- but do you all 14

know if there are any other federal agencies out there 15

that you are aware of that have defined "impor ter" any 16

differently than, say, us, FDA, or CBP in the terms 17

that you're

-- you had described earlier, in terms of 18

changes? 19

[ No response from panelists

. ] 20

MR. JOHOLSKE: This is Jim Joholske from CPSC 21

again. 22124

Nancy, quick question for you. You were kind 1

enough to kind of delve into your process of generating 2

certificates. On your website, when you generate a 3

certificate, are you able to associate that to a 4

specific entry that comes into the U.S.? 5

MS. MACPHERSON: No, you're associating that 6

to an item number, a SKU number, the free text of that 7

item. Yeah, the

-- 8

MR. JOHOLSKE: Okay. 9

MS. MACPHERSON: Because of it

-- from what I 10

showed, simply the number of transactions and the way 11

the process flows, you know, all combined trailers in, 12

all combine d trailers out, it is directly linked to the 13

item

-- 14

MR. JOHOLSKE: Okay. 15

MS. MACPHERSON:

-- and not a shipment. 16

MR. JOHOLSKE: Thank you. And I guess just a 17

general question for anybody that would like to jump 18

in. 19

Generally speaking, when you're working with 20

your customs broker, or working with a customs broker 21

to file entry, the information that they use to then 22125

file the entry through ABI with CBP, how is that 1

information generally provided? Is it by phone, fax, 2

email, some sort of data element s, a variation of all 3

of them? Just trying to get a little background on how 4

that information goes from the importer to the broker. 5

MR. GOLD: Jon Gold, National Retail 6

Federation. I guess I can start, but would love the 7

brokers to chime in, as well. 8

I think it really depends on the company, the 9

level of sophistication within the company, large 10

importer versus small importer. I think, for the 11

larger importers, who have very complex systems, it 12

will be through an IT means that will get there, 13

whether it's email or direct, you know, linkage of 14

information. For others, smaller guys, you're going to 15

see probably faxes that are coming in. 16

So, it really depends on the company, their 17

level of expertise, as far as how they're getting their 18

information. Bu t there is no common kind of universal 19

system for how that information is transmitted to the 20

brokers. A lot of it is, you know, depending on the 21

brokers, their relationship with the importer, the 22126

systems they have in place, and they're all worked out, 1

but it really depends on that level of expertise and 2

resources within those companies. 3

And for the smaller guys, this could be more 4

and more of a paper trail than it will be on the 5

electronic side. So it's going to be even more complex 6

for those guys to ge t that data forward. 7

MS. MCGUIGAN: Kathleen McGuigan with RILA. 8

So, as Jon mentioned, large importers have close 9

working relationships with their brokers, partners, and 10

so they have developed systems where they can transmit, 11

essentially, data fields. It's a field that they 12

transmit to their brokers, who, in turn, can transmit 13

that as part of their customs entry. 14

But again, that's IT resource

- intensive, and 15

it requires very close and continuing partnership with 16

particular brokers on an ongoing basis. 17

MR. LAHAR: Mike Lahar with the NCBFAA. I 18

think we have to keep in mind it's not just the 19

exporters and the importers who are providing the 20

information to the broker. In many cases, it depends 21

on the broker themselves. Our membership has brokers 22127

that run the gamut, from a few people in an office, in 1

an airport, or a seaport, to fairly substantial 2

companies that have offices across the United States 3

and would have an IT department that would be available 4

to develop the type of software that would allow that 5

type of integration. 6

And then, we have the express carriers, who 7

are very large. But even those, I would dare say, have 8

a limited amount of IT people to work on these types of 9

issues. 10

MR. SHACKLETTE: And Mark Shacklette at UPS. 11

Yeah, even in

-- at UPS, we run the full gamut. So we 12

have the very large importers who we're totally 13

integrated with, and then we go to the other end of the 14

spectrum through, like, our small package service, 15

where it's a first

- time importer who is asking, "Why do 16

you ne ed my tax number?" "What do I have to do?" "I 17

don't have"

-- you know, they don't have a clue. 18

So, we're having to provide, you know, a lot 19

of hand

- holding to them, and it's all completely 20

manual. It's phone, it's fax, it's emails, it's all of 21

those, all of the above. 22128

MR. KAUFMAN: Al Kaufman with the TIA, and 1

that's certainly true for our membership. There

-- it 2

runs the gamut from very large, very sophisticated 3

companies that have an electronic data interchange with 4

their broker, or may even have in

- house brokers, all 5

the way to very small enterprises that rely very 6

heavily on an outside broker, and simply just say, "I 7

don't know anything about this, I'm depending on my 8

broker to make sure that I'm compliant, in terms of the 9

entry, and I'll

-- you know, I'll send it to you by, 10

you know, fax, or phone, or carrier pigeon," or however 11

it happens to work. So

-- 12

MR. MURRAY: Sean Murray with NAFTZ. I'm 13

sorry I'm going to jump backwards to a question that 14

Carol had asked, but it threw me when you firs t asked 15

it. You asked about the definition of importer, and 16

whether other agencies might define it differently. 17

I can't think of any on the import side, but 18

on the export side the Census Bureau and Department of 19

Commerce redefined exporter in the late 1 990s to really 20

address the same problem I think you guys might be 21

considering, and they redefined it to the principal 22129

party and interest, which was a broader concept, 1

because they realized the problems with really defining 2

that specific exporter was not ne cessarily the party 3

that had the interest in the merchandise. So that 4

might be a place to look. 5

MS. CAVE: So, many of you know that CPSC 6

staff have been working very closely with CBP and, you 7

know, through the BIEC, and everything else, and we 8

actually put in the notice for this meeting the fact 9

that staff have been discussing the possibility of a 10

pilot system that we would do with CBP. Many of you 11

mentioned it today and recommended that, as well, to 12

the Commission. 13

I guess I'd just like to see, from my 14

counterparts at other agencies, when they enter into a 15

pilot situation there is somewhat of a lack of a 16

response to engage and make it work and be successful. 17

If I could just kind of see, from those who are here 18

at the table, what kind of level of com mitment you 19

would be willing to do, should the staff engage in that 20

kind of an effort. 21

MR. LAHAR: Mike Lahar with the NCBFAA. I 22130

serve as a co - chair of the RAC Committee within the 1

NCBFAA. Our focus is on participating government 2

agencies, such as the FDA and the CPSC. We just had 3

our national meeting earlier this week, and I had 4

people lined up to get on the committee because of 5

ITDS. It is very much in the foresight of the 6

organization, and my committee in particular, and I bet 7

I can gather up a bun ch of people who would want to 8

participate in that. Just say the word. 9

MR. GOLD: Jon Gold with the National Retail 10

Federation. While I, you know, can't commit that 11

members will participate, we will obviously work very 12

closely with them, and encourage them to participate. 13

You know, the retailers have been some of the ones who 14

have stepped out further on some of these projects. We 15

look at C

- TPAT, ISF, and those kinds of initiatives, 16

you know our members have really kind of been front of 17

line to try and participate and work with the 18

government agencies. They know how important this is, 19

and they want to make sure it's done right. 20

So, from that aspect, I think we would have 21

several members who would be interested in working with 22131

the agency, looking at t he

-- you know, the parameters 1

of the pilot and how that would work, but I think they 2

would be very interested to work with you, showing from 3

small, medium, and large, how this works, what it would 4

take to move forward on kind of a data element

- type 5

submis sion. 6

MS. MCGUIGAN: I'm Kathleen McGuigan with 7

RILA, and I would echo what Jon says. I mean our 8

members have been lead partners with CBP on C

- TPAT, 9

product safety. Our members were some of the first 10

members of that partnership program. 11

So, again, th ey look forward to participating. 12

This will significantly impact their business. So 13

getting it done, and getting it done right is critical. 14

We've had multiple

-- numerous phone call conversations 15

about best ways to educate and provide information to 16

the CPSC about supply chains. So I have no doubt that 17

our members will also be eagerly anticipating. 18

MR. KAUFMAN: Al Kaufman with TIA, and I would 19

echo that, as well. You know, certainly we can't make 20

a commitment on behalf of our individual members, but I 21

know there is great interest in this, this subject, 22132

among our members. We would certainly encourage them 1

to participate. And, frankly, I would be very 2

surprised if you didn't have more candidates than you 3

could take. So

-- 4

MS. JONES: Erika Jones fo r the Bicycle 5

Product Suppliers. Again, I can't commit the members; 6

we would definitely raise it to them. But one issue 7

they will have is what exactly the pilot would be. If 8

it's a pilot of uploading pdf's, I can tell you now I 9

don't think anybody is go ing to want to do that. But 10

if it's a pilot of the data elements or a pilot to try 11

to take it to that generation, they may well be 12

interested in helping with that. 13

MR. MURRAY: Sean Murray with the NAFTZ. Two 14

comments. First of all, many of the compan ies that 15

will jump into a pilot will be the companies that are 16

already highly skilled, have good compliance programs, 17

highly automated. So, if you are contemplating issues 18

with the small or medium

- sized importers who face the 19

issues, they are less likely, I think, to be in pilots, 20

because, frankly, they don't know about it, they don't 21

have the resources. 22133

The second thing would be even participants in 1

pilots, sometimes they do it because they want to do 2

it, because they think it's a good idea just to do i t, 3

to play ball. But I've been working with some 4

companies and other agencies, supply chain pilot 5

program right now, and the results are it's slowing 6

things down, it's taking longer, it's more data 7

elements, it's not actually helping. 8

And so, you want t o convey that there will be 9

some benefits to participating in the pilot to 10

encourage people to be in the pilot. 11

Ms. MCGUIGAN: So this is Kathleen McGuigan 12

again with RILA. So I would encourage you, as you're 13

considering putting together your pilot prog ram, lots 14

of pilot programs sort of run in tandem with the 15

existing customs entry process. So that way, just as 16

Sean mentioned, that the entry actually goes through, 17

but the pilot program is sort of an additional layer, 18

but the entry can continue to clear in a timely 19

fashion, that you can get your information that you 20

need, and you can understand the timelines for doing 21

that, and you can work back and forth, but the cargo is 22134

not going to be stopped at the ports. 1

MR. LAHAR: Mike Lahar with the NCBFAA. M ike 2

Mullen had been so kind earlier to mention COAC. I 3

think the forum that you're having today, if you 4

consider

-- continue to have these open meetings, and 5

consider participating in COAC, that you're going to 6

get a lot more participation in your pilot. 7

MR. GOLD: Jon Gold, with National Retail 8

Federation, just to echo Michael as well, as you're 9

looking to develop the pilot, I would do it under the 10

construct of the COAC, and work with industry on 11

developing the pilot itself, as opposed to the agency 12

jus t kind of putting its own thoughts together on a 13

pilot. I think working with industry to develop the 14

pilot and determine what the objectives and the goals 15

are I think will get you a lot further than just the 16

agency putting it together on its own. 17

MR. JO HOLSKE: Jim Joholske from CPSC. A 18

couple of you have touched on modes of transportation 19

and some of the challenges that come up. Those are 20

issues we deal with in our world, in targeting, as 21

well. 22135

I was just wondering if anyone would like to 1

expand on that a little bit, I guess a chance to give 2

us a little more background on what you see the 3

challenges may be in filing certificates 4

electronically, as proposed under the rule, in the 5

various modes of transportation. 6

MR. LAHAR: Mike Lahar with the NCBFA A. Sorry 7

to be a mic hog. 8

One of the things to consider

-- there are a 9

lot of different modes of transportation, you're right. 10

And there are different types of ports: air , vessel, 11

northern border, southern border. And they're all 12

different animals. In my world, I work and live 45 13

minutes due south of Montreal. But we have exporters 14

in Montreal who are putting things on their truck at 15

4:00 in the afternoon, and they're down at U.S. Customs 16

in queue to clear by suppertime. 17

The 24

- hour rule is a real onerous requirement 18

for us. We already work with one hour for CBP, two 19

hours for FDA, but 24 hours for northern

- border brokers 20

who have immediate proximity to exporters. And I 21

daresay as well, for the express carriers, who have to 22136

have that very small t ime frame to get the goods in, 1

that's a real problem for us. It's going to be a real 2

challenge, it's going to require a different way about 3

thinking for those shipments that are subject to CPSC, 4

and could delay the entry of the goods into the United 5

State s. 6

MR. JOHOLSKE: Let me just follow up on that 7

point. So the proposed rule, it talked about the 8

requirement being at entry or entr y summary , if filed 9

simultaneously. 10

So, how does that factor in? If we're not 11

looking at 24 hours in advance, but at th e time of 12

entry, what type of issues, say at a border crossing, 13

northern border, would you envision and having to 14

provide certificate data, along with all the other data 15

that would be needed at entry? 16

MR. LAHAR: Along the northern border we 17

consider ent ry to be the time when the merchandise gets 18

to U.S. Customs and is cleared, for most shipments. 19

And then, we have 10 business days within which to file 20

the perfected entry summary with U.S. Customs. 21

So, if you were to accept data at entry 22137

summary, the g oods will be long gone from the border, 1

be in a warehouse, and could even be at your local 2

big

- box store. So there is a big difference between 3

entry and entry summary along the northern border. 4

That may not be quite so true for vessel ports, because 5

they operate under a different set of constraints. 6

MR. KAUFMAN: Al Kaufman with TIA, and I would 7

say that that

-- what Michael has outlined for the 8

northern border certainly would apply at the southern 9

border, as well. We have a number of members who 10

manuf acture, say, within 20 minutes of the border in 11

Mexico. And when a truck is full, it heads for the 12

border, 20 minutes later it's being entered. 13

So, the requirement to submit certificate data 14

electronically just adds another layer of 15

administrative burde n to trying to get that 16

documentation together, and get it submitted in that 17

short period of time. 18

MS. MACPHERSON: This is Nancy MacPherson from 19

Lego. If I can just build on that, I think the thing 20

that we see is that, as I mentioned, you would be 21

subm itting the documents for those items and then, 22138

literally, you would be repeating it over and over, 1

because those items just continue to flow. It's not 2

like we ship all of one item, you know, even in a week. 3

Over 52 weeks you would be shipping any combina tion of 4

the same items, and just, literally, repeating the same 5

certificate data elements. 6

MR. SHACKLETTE: Yeah, and

-- Mark Shacklette, 7

UPS

-- I'm just thinking of, like, our

-- the volume we 8

handle from

-- express volume from Canada and Mexico. 9

They might pick something up in Vancouver, for example, 10

4:00 p.m. their time, which might

-- is 7:00 p.m. my 11

time. It's going to come into Louisville that night, 12

it's going to clear customs that night. If I had 13

to

-- if the information for this is missing, th e 14

shipment is then held. 15

So, something that would have gotten delivered 16

that next morning, you know, and the money that people 17

pay for that expedited service is now, you know, going 18

to be lost. 19

MR. GOLD: Jon Gold with the National Retail 20

Federation. Just to

-- you know, Michael referenced 21

the 24

- hour rule. Just as kind of an example of when 22139

customs looked at doing the 24

- hour rule, where it was 1

getting the advanced information to do their targeting, 2

they recognized that not every mode was the same, a nd 3

you couldn't do 24 hours because of that. 4

So, what we did is we broke out into different 5

subgroups with each mode represented, to talk about how 6

they do it, their difficulties, and the challenges. So 7

we ended up with different time frames for when

-- for 8

each mode when that 24

- hour rule was to take effect. 9

So, I would encourage, as you're looking at 10

this, talk to the different modes specifically, look at 11

their timing and their supply chains, because they're 12

all very different. Even within the modes , there is 13

some difference there. So I would encourage you to 14

take a look at that, as well. 15

PARTICIPANT: We're going to take a question 16

from the audience here. 17

(Laughter.) 18

MR. Kaye : Hi, Elliott Kaye with CPSC. First 19

of all, thank you very much. We really are listening. 20

We want you to know we're listening, and we're going 21

to continue to listen. We do want to get this right; 22140

it's very important for us to get this right. 1

There obviously is an executive order that is 2

in effect that is supposed to come online by December 3

of 2016. We think that this is a big part of it. But 4

part of us understanding it is understanding the 5

aspects of the executive order that might be separate 6

from 1110 and its impact, and so I direct this to Mr. 7

Gold, Ms. McGuigan, Mr. Kaufman, and anyone else who 8

wants to jump in, but probably them, in particular. 9

Can you tell us, if we were to do nothing on 10

1110 and it were to stay as it is, what would your 11

members have to do procedurally, IT

- wise, cost

- wise, to 12

comply with the executive order, so that we can get a 13

better understanding of how much you're going to have 14

to do, if anything, that's different that might not be 15

related to 1110? 16

MR. GOLD: Jon Gold, National Retail 17

Federation. I think part of this is we're still tryi ng 18

to figure out what that cost is going to be, especially 19

with all the other agencies coming online and moving 20

towards the electronic environment. 21

So, our hope is, through the executive order 22141

and through the BIEC, as we identify what those 1

challenges ar e, one of the issues that we know the BIEC 2

is looking at is looking at all the different 3

regulations from the agencies that will be

-- could be 4

impacted, and how industry could be impacted. 5

You know, our hope at the end of the day is it 6

streamlines costs , if you only have to file data once, 7

as opposed to with 47 different agencies, where that's 8

a cost. So we have long supported ACE and ITDS as 9

always being that kind of front

- end system to collect 10

data one time and one time only, where the other 11

agencies could then pull it and then use it for what 12

they need. 13

So, at the end of the day, it could be a cost 14

savings, if done correctly. But I think we have to 15

make sure we get there, and it's done the right way. 16

Through that, also, is this external engagement that we 17

have discussed. I think, from industry's perspective, 18

we need to hear more from the BIEC itself and the other 19

agencies what the process is moving forwards, how those 20

changes are going to be made, what we need to provide 21

to the agencies to help pu sh that forward, as well, I 22142

think is critical. 1

MS. MCGUIGAN: It's Kathleen McGuigan with 2

RILA, and I would echo what Jon says. I think our 3

members are working very closely with COAC and within 4

the existing working groups to ensure that 5

whatever

-- with

-- what other agencies need is as 6

streamlined as possible, so whatever data fields they 7

have to file will be as limited. 8

And that's the same kind of relationship that 9

we'd like to have with the CPSC is, right now, the 10

proposal asks for the entire certif icate. There is 11

clearly repetitive information, there is clearly 12

information on there such as who has

-- you know, who 13

has the records for the testing that is really not 14

needed for your import risk targeting purposes. 15

And so, what do you need for your i mport risk 16

targeting purposes? How can we streamline it as much 17

as possible? What are you already getting? How could 18

we marry that together to ensure that whatever is 19

ultimately decided on, that they're the minimal number 20

of data fields, going forward? 21

So, yes, our members, everybody, will incur a 22143

cost. But whatever cost that would be would be 1

minimal, compared to the large number of data fields 2

that would be required for the entire certificate of 3

conformity. 4

MR. SHACKLETTE: And

-- Mark Shacklette at 5

UPS

-- just to add on to what you guys said, as far as 6

ITDS goes, we've seen with some of the agencies that 7

we've started to sit down and talk with, it has become 8

a Christmas wish list of data that they would like to 9

see, and us and the import community are certainly 10

pushing back on that, because the costs could be 11

substantial to us if they were able to make us require 12

all this data. 13

So that's something to take a very careful 14

look at, and we would appreciate that. 15

MR. KAUFMAN: Al Kaufman with TIA, a nd I would 16

certainly echo those comments. If done correctly, it 17

has the

-- you know, there certainly is going to be 18

some up - front costs. We're still trying to figure out 19

what that's going to look like. But, clearly, there is 20

a potential benefit, you kno w, in the long run. 21

And you know, I would say that certainly part 22144

of that is making sure that the requests for data are 1

tightly constrained and have a very direct impact on 2

what it is that you're trying to accomplish, whether 3

it's better targeting or, yo u know, evaluation of 4

compliance. 5

I think also, you know, we

-- the elephant in 6

the room is I think there is significant skepticism in 7

the business community that that 2016 date is going to 8

hold. So

-- 9

MR. Kaye : And thank you for that. If I can 10

just ask a quick follow

- up -- again, Elliott Kaye with 11

CPSC. And so, let's say the PGA message set does not 12

change. It's the current PGA message set. It's data 13

elements. 14

Can any of you talk at least to what you 15

anticipate as the burden on your industries, just to 16

comply with the EO itself? 17

MS. MCGUIGAN: I hate to be wishy

- washy, but 18

I'm going to be a little bit equivocal, because the 19

executive order talks about what other agencies are 20

going to require. So, until you know what other 21

agencies are requiri ng, and what data fields are going 22145

to be required, it's hard for us to give you a cost 1

estimate. 2

I mean certainly our members, both

-- and any 3

importer

-- already has some administrative burdens. 4

Anyone who files electronically has administrative 5

burden s that they've already invested in the process, 6

and continue to invest to maintain those processes and 7

systems. 8

So, again, I think it depends on what agencies 9

are asking for. Individual agencies are coming on 10

board. If they're asking for a Christmas li st, that's 11

why there is significant pushback as to

-- because 12

every data field or data set that you do is an 13

additional IT cost, not only for the broker, someone 14

who is a self

- filer, the importer, and also for your 15

overseas suppliers, as well. 16

MR. MURRAY : This is Sean Murray with the 17

NAFTZ, and I think everybody wants to go on record on 18

behalf of their company or association as saying they 19

support ACE and ITDS development, and we do, too. 20

One of the concerns

-- and pointing towards 21

the additional costs that are out there that we've 22146

seen -- the FDA implemented its Predict system of 1

screening roughly two to four years ago, they've rolled 2

it out across the country. And one of the issues that 3

we've seen there is, while it's great from

-- it's 4

automating a process that was otherwise manual within 5

the agency

-- what you're seeing is that when things 6

have been automated, and data elements are there, and 7

it matches or it doesn't match, you find out that 8

people, over the years, have been fudging things. You 9

kn ow, they understand that this company

-- they might 10

have submitted this code, but we all know they mean 11

this code, and so they were letting things go. 12

And so, when we saw Predict being rolled out 13

to the various ports or FDA districts around the 14

country, you saw delays that people couldn't explain. 15

And it was a real cost, a real concern, and we still 16

see those things rippling through with the various 17

companies. 18

MR. MULLEN: This is Mike Mullen from the 19

Express Agency, and I want to follow up on what Sea n 20

said there. 21

ACE, and the implementation of ITDS, really, 22147

if you stand back and look at it, is the automation of 1

a process, much of which is automated now, but much of 2

which is not, much of which is still on paper. 3

So, theoretically, there shouldn't b e more 4

data elements; it's just a question of getting them 5

into a different process. But, of course, it's not 6

that simple. And when

-- as has been indicated a few 7

times

-- when people stand back and start looking at 8

this, they start picking out others th ey'd like to 9

have. 10

The PGA message data set, you know, was worked 11

out very carefully over several years now, 12

so -- supposed to include that whole universe. So, the 13

example Sean used of what happened with Predict is a 14

good example of what happened. 15

Peo ple were submitting a lot of this on paper. 16

And you can say they were fudging, but people could 17

look at that piece of paper who had a lot of experience 18

with it, and say, "I know what he means," you know? 19

And, "This is okay." Well, an automated system ca n't 20

do that as well. So that's where the growing pains are 21

going to be. 22148

But, essentially, again, from the trades' 1

point of view, this is

-- this system is going to be 2

one place to submit the data that is being submitted in 3

several different ways now. A nd once we get the whole 4

thing set up and working, it should be better. 5

The major changes have to be on the government 6

side. This

-- for a lot of government agencies, this 7

is going to be a radically different way than the way 8

they've received informatio n in the past. And I think, 9

in terms of both the IT programming and the staff 10

resources and other things, that the major costs are 11

going to be on the government side. 12

MS. JONES: Erika Jones from the Bicycle 13

Suppliers, and I will commit to talking to ou r members 14

to see if we can get you some answer to that question 15

in our written comments. But I echo what my colleagues 16

have said, that the EO is not the actual driver of 17

compliance costs, it's the implementation of it by the 18

affected agencies. And so we are not going to know, 19

really, what the executive order compliance costs are 20

until those data elements are refined. It's somewhat 21

of a chicken and an egg, but we will strive to get you 22149

some -- an answer in our written submission in the end 1

of the month. 2

MR. Kaye : Great. Thank you, everybody, and I 3

do want to reiterate something that Carol said about 4

the pilot. Should we go ahead and do the pilot, which 5

I anticipate we might very well do , w e are hopeful that 6

we will get a good spectrum of participants, because 7

that's going to be very important. Thank you. 8

MS. ADAIR: Recognize another member of the 9

audience with a question. 10

MR. SMITH: Chris Smith with IKEA. I just 11

wanted to make a comment around the question around 12

electronic submission of the ce rtificates. Even in the 13

current development of ACE, and with the ability to 14

upload electronic documents, you would have to have an 15

entry in place already. So being able to file that or 16

match that to an entry 24 hours ahead of time is pretty 17

much physical ly impossible. 18

Then you add to it a company of IKEA's size, 19

where during peak we're doing 200 entries a day, 20

ranging in size from 5 entry lines to 200, of which, 21

according to some of the statistics shown this morning, 22150

75 percent would have certificates o f 1, 2, who knows 1

how many, associated with those line items, to be able 2

to match that and manually upload those 24 hours ahead 3

of time is almost impossible to do. 4

MR. KAUFMAN: Al Kaufman with the Toy Industry 5

Association. I actually have a question fo r the CPSC 6

staff, and it's kind of occurred to me as we're sitting 7

here. 8

Given the fact that some of these data 9

elements are arguably, you know, maybe not directly 10

related to the goal of the changes to the

-- proposed 11

changes to the 1110 rule, it seems t hat this might be 12

considered a technical barrier to trade. Is there an 13

intention to report this to the WTO when we get a final 14

rule? 15

MS. CAVE: I think we have to take it under 16

advisement when and if that ever happens, but

-- 17

MR. KAUFMAN: Okay. 18

MS. CAVE: But I'm assuming we would

-- 19

MR. KAUFMAN: Thank you. 20

MR. SHACKLETTE: And

-- Mark Shacklette, UPS 21

-- just to add on to your question, and when we 22151

submitted our comments last July, we did bring up 1

several WTO concerns in that document. So you could 2

refer to that that we worked with our legal counsel on. 3

MS. ADAIR: We have another question from the 4

audience? 5

MR. SANDERS: Yeah. My name is Walt Sanders, 6

I'm with Van Fleet Associates, and I have a number of 7

companies I represent, but I'm as king this question on 8

behalf of Zippo Manufacturing Company. 9

As a lot of folks in the audience know, as the 10

source of products, the manufacturing source of 11

products, is a trade secret for a number of reasons. A 12

manufacturer, third party manufacturer, fo r Zippo 13

Lighter in China might be totally different than the 14

manufacturer of Joe's Tobacco Shop and the cheaper 15

alternative. 16

Well, my question is for Carol or the CPSC 17

staff. Is

-- what measures will the CPSC staff do to 18

protect that proprietary informa tion from foreign or 19

domestic competitors? 20

MS. CAVE: It's no different than how it's 21

handled today. It's filed with customs. 22152

MR. SANDERS: Yeah. 1

MS. CAVE: Right? Or given to CBP at time of 2

entry. 3

MR. SANDERS: There is a lot more information 4

th at

-- 5

MS. CAVE:

-- would be filed today. 6

MR. SANDERS: There is a lot more information 7

that's going to be uploaded and available. And I would 8

recommend that the CPSC use extraordinary measures to 9

protect that information. And I just wanted to get th e 10

assurance that you would do that. Great. Thank you. 11

MR. MULLEN: This is Mike Mullen from the 12

Express Agency. And if we're

-- if we've shifted over 13

to the mode where we're asking you questions now

-- 14

(Laughter.) 15

MR. MULLEN: I guess you've exhau sted all 16

your -- 17

MS. CAVE: See, that's the beauty of an open 18

rulemaking. It's only one way today. 19

(Laughter.) 20

MR. MULLEN: But you've heard the 21

recommendations several times today, that the existing 22153

system seems to be working okay, providing the 1

ce rtificate on demand. Is

-- do you guys have a 2

fundamentally different view from that, or do you

-- or 3

not? 4

MR. JOHOLSKE: I mean I would say this, that 5

there is a lot of unknowns. A lot of the 6

non - compliance that we are finding in import now, the 7

shipm ents that are being stopped are not certified. 8

So, you can extend that to what are we not looking at, 9

and how much of that is not certified. 10

I mean we are seeing that products that are 11

stopped at import, that are failing for a lead issue, a 12

phthal at es i ssue, small parts issue, are not certified. 13

So, I mean, I guess that's about the most that I could 14

say to it at this point. 15

MR. MULLEN: That is really the basis of 16

where, if we can get this small group together with the 17

right experts around the table, that's the kind of 18

discussion that I think would really be useful to have, 19

you know. What are the unknowns you're dealing with, 20

and what is it you're really trying to achieve, in 21

terms of your ability to target that sort of thing 22154

better? 1

You know, I thi nk that would be a very 2

fruitful area for an ongoing discussion. 3

MR. KAUFMAN: Al Kaufman with the Toy Industry 4

Association. Yeah, just as you said, Jim, it kind of 5

occurred to me. If you go back and look at the port 6

reports, despite the fact that CPSC is targeting and 7

holding only, presumably, the riskiest products, and so 8

you've got a sort of a preselected population that 9

you're looking at, your hit rate, in terms of 10

non - compliance, is only about seven percent. 11

So, I guess my question would be, does it make 12

sense to impose these huge administrative burdens, you 13

know, on the other 93 percent of the population that 14

presumably is compliant, you know, is testing, is 15

certifying, does have compliant product, in order to 16

try and capture this small part of t he population? 17

MS. CAVE: I mean that's a very good point, 18

and that's exactly why we want to hear from you on 19

these issues about possible solutions and things that 20

may be recommended to the Commission on, you know, what 21

is the right approach to handling some of these things. 22155

MS. ADAIR: We have a question from the 1

audience. 2

MR. SAYLOR: Yeah, I just really have a 3

comment, I mean, really, kind of following on Al and 4

Mike's comments. 5

MS. ADAIR: Your name and affiliation, please? 6

MR. SAYLOR: Oh, I' m Tim Saylor with Baby 7

Jogger Company. Albeit we're talking about children's 8

product certificates, and general certificates of 9

conformity, they're essentially self

- declarations based 10

on certified testing. That is mandated by CPSC rules. 11

So, if it isn't currently identifying 12

manufacturers who aren't self

-- or certifying their 13

products before import, then I don't understand if it 14

would, with this new proposed rule change, 15

identify

-- further identify manufacturers that aren't 16

certifying the products that are, you know, mandated to 17

be certified prior to import. 18

Is it

-- would it be an improvement to 19

identify those manufacturers? Because I would imagine, 20

if they were asked to provide a document at this point, 21

perhaps they would provide one and not have c ertifying 22156

documents to support those. 1

MS. ADAIR: We are going to get to some of 2

that in the afternoon, as well, so we

-- maybe a more 3

fulsome response in the afternoon. 4

We have other questions? We are getting close 5

to our lunch, but not quite. 6

MR. JOHOLSKE: Jim Joholske from CPSC. One 7

final question I had. 8

Kathleen, I believe you made a 9

statement

-- you can correct me if I'm wrong

-- that 10

the majority of the certificates from your members are 11

basically in paper, paper form. Was that not correct ? 12

MS. MCGUIGAN: No. If I made that 13

misstatement, that is incorrect. 14

MR. JOHOLSKE: Okay. 15

MS. MCGUIGAN: So, essentially, our 16

members

-- what I said was a few of our members 17

maintain them in paper form. So we have

-- the 18

majority are kept on IT sys tems. Whether or not 19

they're internal or external IT systems, they're going 20

to be in pdf format. 21

And my point was that they're

-- none of them, 22157

you know, regardless of where they're held, either in 1

paper form in a file folder, or in an internal

- external 2

IT system, none of them are in data fields right now 3

that in any way can be transmitted electronically. And 4

most of them, as we talked about in my presentation, 5

the systems for maintaining those records are separate 6

and distinct from the systems that com panies currently 7

use to

-- for their customs entry information. 8

And often those two systems don’t talk to one 9

another, at least currently. So, there would have to 10

be some way to actually get them to talk to

-- first of 11

all, put it into data fields, get them to talk to one 12

another, align it, and then transmit it. 13

MR. JOHOLSKE: Okay, great, thanks. 14

MS. ADAIR: Additional questions? 15

MS. JONES: Could I just

-- Erika Jones for 16

Bicycle Products

-- follow up on Kathleen's comment? I 17

think that, again, goes to perhaps a vocabulary 18

difference between "paper" versus "electronic" versus 19

"data fields." 20

I think most companies now have an electronic 21

way of keeping what might be an Excel spreadsheet, it 22158

might be

-- but the data itself is in pdf form. It's 1

no t manipulatible data entry that can just be uploaded 2

with the push of a button. So it's electronic, rather 3

than paper in many cases, but it isn't the kind of data 4

storage that lends itself to the data entry that 5

you're

-- that we're contemplating. 6

So, a gain, I think we want to make sure that 7

we are using the vocabulary consistently. It may be 8

electronic and still not manipulatible into a data 9

entry format. 10

MS. CAMPBELL: This is Jacqueline Campbell, 11

CPSC. 12

Along those lines, in terms of how the data 13

can be accessed, so a pdf is generated. How is that 14

pdf generated? Where did the data come from? 15

And maybe Lego has a system there where you 16

could

-- is it fed from a database and then

-- ? 17

MS. MACPHERSON: Actually, our whole system is 18

integrated int o our SAP system, and our Enterprise 19

Warehouse system, and we've actually gone in and had 20

data fields through SAP created. 21

When I talk about the types of processes that 22159

you have to put in place, that's the complexity of it, 1

because we wanted it to not be complex, so we wanted to 2

make sure that this just became integrated into our 3

traditional supply chain. So we worked it into all of 4

the systems that we use for our traditional supply 5

chain. 6

MS. CAMPBELL: So, just to follow up, if pdf's 7

are being create d, is it possible to export another 8

file type? 9

MS. MACPHERSON: This is Nancy, again, from 10

Lego. 11

You know, when I hear about the data elements 12

and what's on the certificate, I'll be quite honest. 13

Nobody, to be honest, really cares what's on our 14

certif icates. They care what's in our test reports. 15

And that's why that's where the meat of it is. The 16

certificate is a piece of paper that states that these 17

are the things that we comply with. 18

And I know we're not talking about other 19

things in the proposed rule, but things like the 20

attestation and

-- and it was brought up here earlier 21

that the majority, the vast majority, of people are 22160

doing this. And if you change this rule, the vast 1

majority of people are going to figure out a way to do 2

that, but does th at address you finding the violative 3

products and the folks that are at most risk? 4

So I think that's the fundamental question. 5

You know, I kind of used a little, you know, facetious 6

comment there on my thing about the executive order, 7

but I am concerned that you just make the haystack 8

bigger, you put more data into the system, but it only 9

confuses it, because now there is more for you to 10

process and CBP to process, and it's

-- the data is in 11

the system from the players who are playing the game 12

correctly. 13

So, fundamentally, there may just be another 14

way -- and I don't have the answer today

-- to say, 15

"Okay, what are you"

-- because I think everyone has 16

said today, "We haven't heard of any problems." I have 17

never been talked to once in six years about, " Hey, 18

somebody couldn't access your certificate." 19

Went online, saw, as I said earlier, thousands 20

of people have looked at it. You know, maybe my

-- you 21

know my brother is, I don't know. 22161

(Laughter.) 1

MS. MACPHERSON: But

-- I told him to look 2

2,000 tim es so it would look really good

-- but the 3

real problem is that the people who don't play the game 4

right, we don't have a good way to find them yet. And, 5

I mean, this sounds like a cop show, but that's the 6

problem. 7

And I think, sitting here as a manufac turer 8

and an importer who tries to do the right thing, it is 9

a frustration level when a new proposal comes out, and 10

you look at it, and you say, "Oh, come on," you know, 11

because we know that you are trying to get to a problem 12

that you absolutely have, but we just are really 13

challenged by the means. And I think the real 14

challenge here today is, "Is there a better way to do 15

it?" 16

So, that's where we are. Thank you. 17

MR. KAUFMAN: Yeah, Al Kaufman with the TIA, 18

and I would certainly echo what Nancy said. I think 19

that

-- you know, and I said at the outset

-- recognize 20

that there is a legitimate concern, that there is a 21

legitimate goal that the staff is trying to achieve. 22162

It's

-- I think where we get lost is the significant 1

burden and the, I guess, collater al damage that goes 2

along with what's been proposed. 3

MS. ADAIR: We have a question from the 4

audience. 5

MS. MANN: I kind of have a comment to 6

Jacqueline's question. This is Hailey Mann from 7

American Plastic Toys. 8

As far as information provided to us in a pdf 9

format, we're completely on the opposite side of the 10

spectrum from Lego. So I send our product out to a 11

third party lab. That information is sent to me via 12

email, the test report and the children's product 13

certificate, in a pdf format. So it w ould take 14

somebody on our team

-- which would be me

-- to type, 15

then, all that information into whatever type of fields 16

that would have to be translated by some means into a 17

database. 18

PARTICIPANT: However

-- 19

MS. MACPHERSON: This is Nancy. Again, if I 20

can just add to that

-- and, Hailey, despite all of our 21

great integration, we would have to do the same thing. 22163

MS. MANN: Okay. 1

MS. MACPHERSON: A pdf is a pdf. 2

MS. MANN: Right. 3

MS. MACPHERSON: That's when we end up with. 4

It goes through the s ystem in kind of neat ways, but at 5

the end of the day we have a pdf file, and we would 6

still have to do data entry. 7

MR. KAUFMAN: Yeah, and I would add that 8

that's

-- what Hailey has described is extremely common 9

in our industry. What happens, both for, let's say, 10

retailer importers and also for manufacturers, because 11

they have to do third party testing at a CPSC

- listed 12

laboratory, what they will often do is, when they get a 13

pdf of the test report, they simply have the lab 14

generate the certificate on the ir behalf. 15

They're still the certifier, they're still 16

listed on the certificate as the certifying party, but 17

the lab just

-- they sort of outsource the generation 18

of that pdf file to the lab. 19

MS. ADAIR: Jacqueline, I'm going to give you 20

the last word. 21

MS. CAMPBELL: Okay. Last word. 22164

MS. ADAIR: For right now. 1

MS. CAMPBELL: So, just along those lines, 2

then, the lab is generating a pdf. It's entirely 3

possible they could generate a different file type, 4

correct? 5

MS. MANN: No, they generate a pd f so it's not 6

modifiable. I mean it

-- Rick, why don't you come up 7

here? 8

MS. ADAIR: Okay, we're at time. And we will 9

have another question session later in the afternoon. 10

Before everybody gets up and goes to lunch, I 11

just want to say thank you to th e presenters this 12

morning, and for all the really valuable information 13

you gave, and your willingness to talk and exchange 14

information, and to everyone who asked questions. 15

And also, remind everyone, when you leave for 16

lunch, if you leave you have to com e back through 17

security. So just allow time for that. 18

And we'll see everybody back here at 1:30. 19

Thank you. 20

(A lunch break was taken.) 21

22165

1

2

3166

A F T E R N O O N S E S S I O N 1

V. OVERVIEW OF CPSC'S RISK ASSESSMENT METHODOLOGY 2

MR. BLACHERE: Hello an d good afternoon. I'd 3

like to get the afternoon session started off on time, 4

or a couple minutes late. Give a moment for people to 5

find some seats, and for me to find my presentation. 6

No

-- one thing I'm good at. 7

All right. Hello. My name is John Bl achere, 8

and I work for the Commission as an international trade 9

specialist here at the Consumer Product Safety 10

Commission. This staff presentation has not been 11

reviewed or approved by the Commission, and may not 12

reflect its views. 13

I, as well as several others in my office, 14

collaborate continually with the U.S. Customs and 15

Border Protection to develop a functional and 16

continually improving risk assessment methodology at 17

the border for consumer products. As an agency, and as 18

a participant in the one U.S. Government strategy at 19

the border, I can safely say that the Commission has 20

made great strides since the CPSIA was passed six years 21

ago. 22167

I'd like to provide a high

- level review of the 1

RAM, and present how the electronic filing component of 2

1110 will be a benefit to us all. 3

A few acronyms to get us started. You will 4

see these in my presentation, as well as in 5

presentations this afternoon, so I thought I would just 6

put them out there. 7

The Harmonized Tariff Schedule of the United 8

States, or HTSUS, is th e coding scheme specific to the 9

United States that CBP uses to classify product coming 10

into the country, used to identify the tariff needed at 11

the time of entry. 12

The ITDS, or the International Trade Data 13

System, is actually not a system. It is an adviso ry 14

board of federal agencies that are involved in the 15

import or export process. 16

This advisory board provides guidance to CBP, 17

as they continue to modernize their Automated Customs 18

Environment, or ACE, system. 19

And then CBP is U.S. Customs and Border 20

Pro tection. 21

While Jacqueline reviewed the specific 22168

requirements for certificates this morning, I wanted to 1

highlight that CPSC's import

- related statutes under 2

Section 17 also speaks to the requirement to refuse 3

admission for regulated products not accompani ed by a 4

certificate. 5

Also mentioned this morning, the existing 1110 6

rule on certificates allows for both paper and 7

electronic certificates. Typically, compliant 8

importers are placing a certificate in the shipping 9

container, or providing a URL for their certificate in 10

a prominent location, such as on the shipping 11

container, on the product, or on the invoice. The 12

current 1110 rule requires certificates to be created 13

before importation and be available to CPSC and CBP as 14

soon as the shipment is available f or inspection. 15

Currently in practice, certificates are not 16

always in the box or available electronically. But we 17

have been allowing importers to recondition this by 18

providing the certificate when we request it, instead 19

of refusing admission. This is a cumbersome and 20

time

- consuming process for our port staff, who must 21

take additional steps to try and locate the 22169

certificates, and it adds time and cost for the 1

importer, as well. 2

Also, this is an ineffective method for 3

evaluating compliance with certifica tes, as we can 4

neither review certificate compliance for all incoming 5

products, nor can we systematically analyze any of the 6

information provided. 7

We have the statutory authority under Section 8

14(g) ( 4 ) to require electronic filing of certificates 9

with CB P. The proposed amendments to the 1110 rule 10

would require that, to meet the accompan yment 11

requirement, certificates for imported products be 12

filed electronically with CBP at the time of filing of 13

the entry. 14

The U.S. Government is moving to a paperless, 15

electronic

- based trade environment, as emphasized by 16

Executive Order 13659. These efforts will have 17

efficiencies and benefits to government and industry 18

over time. Entering the data elements electronically 19

allows the system to review and provide the info rmation 20

to port inspectors in a very short time frame. This 21

will redirect exams to higher

- risk shipments, 22170

facilitate the release of complying shipments into 1

commerce, and allow the Commission to measure 2

certificate filing requirements systematically. 3

Se ction 17 of the CPSA describes how the 4

Commission is to address imported products. Section 5

17(h) ( 1 ) requires the CPSC to establish and maintain a 6

permanent product surveillance program, in cooperation 7

with other federal agencies to carry out the 8

Commissio n's responsibilities, and to prevent the entry 9

of unsafe consumer products into the commerce of the 10

United States. 11

Additionally, a provision of the Improvement 12

Act of 2008 requires CPSC to develop a Risk Assessment 13

Methodology, or RAM, to support this fu nction. In 14

developing the methodology, the Commission was tasked 15

with using CBP's portion of their trade modernization 16

effort that supported other agency work at the border, 17

and participate in the ITDS. The CPSC is also 18

modernizing legacy information sys tems, so we were to 19

include this as part of our information technology 20

modernization plan. 21

To best understand how to implement this, we 22171

continually work with CBP and other federal health and 1

safety agencies of

-- a few of which you're going to 2

hear from this afternoon, to evaluate the best 3

applicable processes for the Commission. 4

Holistically, the ultimate goal of this effort 5

is a type of total risk management at import under this 6

program to identify, isolate, and control risks 7

whenever possible. Many CPSC

- regulated product areas 8

are almost exclusively imported, such as toys, 9

fireworks, and ATVs. 10

By maintaining a continuous monitoring process 11

over imports for product areas considered to be a 12

potential risk of non

- compliance because of a mandatory 13

stan dard or defect determination, the Commission can 14

feel confident that risk is being managed at our 15

country's borders. Monitoring imports by product type, 16

entity, and region, and matching known sources of risk 17

at the same level, CPSC can understand the brea dth and 18

depth of factors involving importation of the product 19

areas. 20

The addition of certificate data provided 21

electronically can vastly improve the shipment 22172

information available to us. I use two product groups 1

to demonstrate the extremes of this risk approach. 2

ATVs are a small product volume area entering 3

into the country using two product codes, or HTSUS 4

codes, at entry. They are being brought in and are 5

manufactured by a very limited number of companies. 6

Monitoring the compliance of a short list of companies 7

allows the Commission to have a higher level of 8

assurance that safety laws are being followed. 9

On the other hand, there is a huge volume of 10

toys entering our country, primarily through five 11

Harmonized Tariff Schedule Codes. There may be oth er 12

codes that contain what we would term "toys" as well, 13

but the HTSUS requires they be coded with other 14

classically non

- toy products, such as games or 15

miscellaneous product plastic items. 16

Toys are being brought in and manufactured by 17

a wide array of com panies. Monitoring is more limited, 18

with the goal being to interdict dangerous products 19

where possible, without significantly impacting trade 20

flows. The data provided on certificates would make 21

this effort much more precise. 22173

The following major compone nts have been 1

developed in the Office of Import Surveillance to 2

support existing functions the Commission has been 3

performing prior to the Improvement Act. 4

Intergovernment MOU and agreements are a set 5

of rules of the road, and forms cooperation with othe r 6

agencies. Collocating staff at ports of entry and 7

aligning processes to perform screenings and 8

examinations of targeted shipments is critical to 9

enforcement and effectiveness at the border. 10

Aligning information technology to optimize 11

the selection of shipments and coordination of 12

government agencies at the border facilitates the 13

movement of legitimate cargo, and improves overall 14

processing times. 15

And supporting all of this is the need to 16

continually improve Commission processes through 17

project work. One example is our effort to better 18

identify products at import, to monitor active risks as 19

identified within the agency. The proper 20

classification of products to more precisely intercede 21

on shipments of risky products, and differentiate from 22174

other safer products, will add additional efficiencies 1

to CPSC's work at the border. 2

The Commission has several MOUs with CBP that 3

we use to share data and cooperate in enforcement 4

activities. One of our agreements allows CPSC staff to 5

be collocated with CBP at th e ports and at CBP 6

headquarters. 7

Staff target and screen shipments and examine 8

product at ports of entry. This work consists of many 9

possible activities, depending on the product being 10

evaluated. Investigators perform chemical and physical 11

analysis, as well as documentary verification of 12

products within shipments. Some shipments may have a 13

large number of different product models to evaluate. 14

These tests and checks take time to perform, and 15

shipments are held by CBP until they are complete. At 16

the en d of the examination, CPSC consults with CBP to 17

either release the shipment, or to detain under our 18

authority. 19

As presented earlier as part of the 20

Improvement Act, the Commission was tasked with trying 21

to figure out how best to coordinate with CBP and ot her 22175

federal agencies at the border. A large part of this 1

is the efficient and effective exchange of information 2

to support agency missions. 3

CPSC staff sought to effectively integrate as 4

much data as possible to model and support our 5

enforcement strategy involving product hazards at 6

importation into a pilot targeting and workflow 7

tracking system. It is effectively

-- it is 8

affectionately known as the ITDS RAM to those of us who 9

have taken part since the beginning. 10

Potential data sources supporting this effort 11

are grouped into five basic areas. 12

Shipment

- specific detail provided by CBP 13

through their modernization effort. CPSC was the first 14

agency to test and implement the integrated web 15

service. Since that time the Commission has been 16

receiving entry and entry summary data necessary to 17

test the usefulness of the ITDS RAM pilot. 18

Case history, enforcement history being done 19

by CPSC, and possibly other agencies, also provide good 20

risk information. 21

Examination history. These are exams that 22176

provide us the early indication of non

- compliance or 1

presence of product risk that's available to us. 2

Injury and death data informs the RAM of the 3

priority or product groups as the Commission becomes 4

aware of changes to U.S. injury and death trends. 5

And commercia l information. We are hopeful 6

that third party trade data may be able to provide 7

additional details that may be useful to 8

differentiating risk. 9

There are several major functions that are 10

being performed by the ITDS RAM pilot system to date, 11

and we have

-- I'm focusing here on four of them. 12

Statistical modeling of data coming from the 13

pilot system is being used to understand factors that 14

may indicate a higher probability of a violation or 15

defect in a shipment. This analysis has resulted in 16

changes to s ome of our targeting and risk

- scoring 17

rules. 18

Product level standard reporting, provides 19

experts with information to develop novel approaches to 20

compliance monitoring. 21

Pushing the shipment details to our collocated 22177

Commission staff at ports of entry thr ough a graphical 1

user interface allows for much better local 2

coordination. 3

And the system scoring of risks of 4

non - compliance for each shipment as it posts to CPSC 5

systems allows staff an additional indicator with which 6

they can differentiate shipments av ailable for 7

examination at the port. 8

The diagrams that I am going to show 9

here

-- well, this main diagram, I'm sorry

-- provides 10

a simplified schematic of the entry process with the 11

ITDS RAM running. After the broker enters the data, 12

it's reviewed by CB P systems, and it's shared with CPSC 13

where appropriate. Any additional data elements or 14

requirements for electronic filing could be implemented 15

here under CBP's well

- defined framework. 16

CPSC, CBP, and other federal agencies would 17

process the information. Risk

- scored shipments are 18

then pushed out to the port staff to use in selecting 19

shipments to screen and examine. CBP port staff 20

receives similar information specific to their needs in 21

their systems. 22178

CPSC collocated staff coordinates any 1

screening and examination activities on the shipment 2

with information and risk scores in hand. 3

The Commission only stops what can be 4

examined. This process remains constrained by 5

resources. 6

As the Commission analyzes the best way to 7

act, in coordination with CBP at the border, other 8

efforts are necessary to effectively differentiate 9

non - compliant shipments from compliant, and streamline 10

our interaction with importers at the border. 11

One such effort is the Harmonized Tariff 12

Schedule Code breakouts that we have reque sted to date. 13

Often times, the HTSUS lumps products of interest to 14

the Commission at import with others that are of little 15

risk or are not within CPSC jurisdiction. In these 16

instances, we have tried to identify them and propose 17

code changes to the U.S. I nternational Trade Commission 18

to cleanly segment products of interest. The added 19

precision limits the number of stops within a focus 20

area that are not considered a risk to the public by 21

the Commission. 22179

In 2011, the CPSC proposed and successfully 1

altered the codes for toys, ATVs, many children's 2

durable products, and drywall. We have a second set of 3

proposed changes currently in front of the U.S. ITC. 4

In summary, we believe that moving certificate 5

data collection to electronic filing of data elements 6

w ill reduce the number of shipments reviewed that are 7

compliant or out of scope; reduce the time spent per 8

shipment to verify compliance with our laws; improve 9

the rate of discovery of hazardous or violative 10

products per staff month; provide a single reliab le 11

store of certificate data. 12

This ends my presentation on how electronic 13

filing of data elements are a major component to 14

improving the RAM and the work being done at the U.S. 15

border. 16

(Applause.) 17

Now, I would like to introduce Bonnie Novak, a 18

new me mber to the CPSC team. She is D irector of H uman 19

F actors , and she will be moderating the rest of today's 20

activities. 21

MS. NOVAK: Good afternoon. Thank you all for 22180

your attendance, and welcome to the afternoon session. 1

We are presenting here this aftern oon with our federal 2

agencies on the workshop on electronic filing of 3

certificates. 4

Want to give a reminder to everyone that the 5

workshop is being recorded and webcast, and part of the 6

public record. We encourage all interested parties to 7

submit relevan t comments through regulations.gov. 8

Written comments must be received by Friday, October 9

31, 2014. 10

We will be taking questions from folks on the 11

webinar, and asking those, as time permits, at the end 12

of the session. The email address for those question s 13

and those attending online is efiling@cpsc.gov. 14

The transcript for today's workshop will be 15

added to the docket at www.regulations.gov, docket 16

number CPSC 2013

- 0017. You'll see that on the bottom of 17

your agenda, and hear it many times today. 18

The Powe r Point presentations will also be 19

uploaded and available at www.slideshare.net/uscpsc. 20

So, thank you again. Thank you, John, for 21

your overview of the CPSC's risk assessment 22181

methodology, and thank you to all the stakeholders who 1

presented this morning, and for everyone in attendance 2

today. 3

This afternoon's session we will be hearing 4

from our federal partner agencies. We have five folks 5

presenting in this afternoon's session, so we can allow 6

for about 15 minutes apiece for presentations. As 7

Patty did this morning, I'll give you the two

- minute 8

peace sign, just to give you a heads up when it's time 9

to start transitioning. 10

Question and answers will be held at the end 11

of the session. 12

And please speak clearly

-- just a reminder to 13

please speak clearly i nto the microphone and don't 14

stray from the podium too much, if you can help it. 15

VI. AUTOMATED COMMERCIAL ENVIRONMENT (ACE) 16

FILING REQUIREMENTS AND AGENCY PILOTS PANEL 17

MS. NOVAK: All right. So, our first 18

presenter this afternoon is Ms. Brenda Smith, the 19

E xecutive D irector of the ACE business office from 20

Customs and Border Protection. So I'll pull up your 21

presentation for you. 22182

MS. SMITH: Good afternoon, everyone, and I 1

want to thank my colleagues from CPSC for including 2

Customs and Border Protecti on in this discussion. It's 3

one that we are both very involved in, but also very 4

interested in, as a major player at the border, and one 5

who

-- which has been charged with both protecting the 6

United States and its citizens, but also driving 7

economic prosp erity through facilitating trade. 8

So, I think John did a terrific job of 9

outlining, really, the operational approach to how CPSC 10

does their work. And for those of you that are 11

familiar with most of us operating at the border, this 12

is not so different. The models are very similar, and 13

I think that is a function of not only the fact that we 14

have similar missions and similar tools, but also that 15

we work very closely together, and have really shared 16

our best practices and our lessons learned. 17

What I'd lik e to do this afternoon is to give 18

a more technical overview of the automated tools that 19

we have available to us. Many of you are familiar with 20

the single

- window concept. John referred to it as the 21

International Trade Data System. But I'd like 22183

to

-- for those of you that are not familiar, I'd like 1

to walk you through exactly what the system is, what 2

our vision is, and how we, as one U.S. Government, will 3

use the capabilities provided by the single window to 4

help facilitate trade and enforce the law. 5

The slide

-- the opening slide, a little 6

difficult to read unless you have your distance glasses 7

on. What this basically says is this

-- we envision, 8

from a government perspective, that the single window 9

will really be the hub, the main tool through which we 10

assess risk and process cargo. 11

There are 47 different government agencies 12

with equities at the border that are interested in 13

either gathering information about shipments coming in 14

to or going out of the United States, or are just 15

interested in analyzing , either for commercial reasons 16

or for an assessment of risk. 17

In 2006, the Safe Port Act required that CBP, 18

as it was modernizing its own commercial system, also 19

build the single window, and that when the ACE, or the 20

Automated Commercial Environment , was complete, that 21

the single window would be complete at exactly the same 22184

time. 1

And so, as we've proceeded with our 2

modernization effort, we have worked very closely 3

through the ITDS B oard of D irectors , and with our 4

partners at the 47 government agencies, to

-- not only 5

to build a system, identify requirements and build a 6

system, but also to try to get a better understanding 7

of how we really can, together, and working with the 8

private sector, can really make sure that we are not 9

just paving the cow path, th at in fact we are taking 10

advantage of the opportunities to become more 11

efficient, more effective, and do our job better. 12

So, John did mention that we have a great deal 13

of support in the Administration. Many of you know 14

that, in February, President Obama signed an executive 15

order which mandated that the Department of Homeland 16

Security, the Department of Treasury, and our partners 17

in most of the other departments that make up the 18

Federal Government, work together to streamline export 19

and import processes. 20

There really are two pieces to that executive 21

order. The first one is a mandate and a schedule to 22185

finish ACE in the single window by 2016. That's really 1

important. It's really important, not only because it 2

lights a bit of a fire under us to work toge ther to get 3

the automation correct and get it out the door, but it 4

also requires us to work together to really take 5

advantage of that opportunity to work on our business 6

processes. And it also directs us not only to work 7

internally on our business process es, but to work 8

together to try to adhere to international standards so 9

that we start to achieve some global harmonization. 10

But it also

-- and this is really 11

critical

-- it requires us to engage with the private 12

sector to try to understand, again, what o pportunities 13

are available to us, and what the best approach is, 14

from a business perspective, to accomplishing our 15

mission. 16

We have a lot of governance. We have the ITDS 17

B oard of D irectors , chaired by Timothy Skud, at the 18

Department of Treasury, who giv es the executive 19

leadership, really, on tactical issues. This is 20

really, for us, in trying to build a system, is where 21

the rubber meets the road. 22186

We also internally have a great deal of 1

governance from the Department of Homeland Security, 2

Treasury, as w ell as within CBP. The ACE executive 3

steering committee, chaired by our D eputy C ommissioner, 4

Kevin McAleenan, meets once a month to make sure that 5

they understand not only what the schedule is, whether 6

we're on schedule and on budget, but also to try to 7

u nderstand what the risks and issues are, and to help 8

us address those risks and issues. 9

I probably don't have to tell you all too much 10

about why the single window is important. But on this 11

slide

-- and I hope you'll take a closer look at 12

it

-- it essent ially says that we have an opportunity, 13

a tremendous opportunity, to increase security and 14

address those issues associated with cargo crossing our 15

borders, but also to play a huge role and be a driver, 16

really, of U.S. economic competitiveness. 17

So let's t alk about what the single window 18

actually is. For those of you that have a more 19

technical bent, this will probably be familiar to you. 20

There are really three capabilities that the single 21

window is built on within ACE. 22187

The first one is th e participat ing government 1

agency message set. And all this is is a harmonized 2

set of data that we have agreed, as a government, 3

reflect our regulatory requirements, but don't repeat 4

if another agency is already collecting. 5

So, for those of you that work with the trad e 6

process, you know that CBP collects a huge amount of 7

data, things like, for example, an importer's name and 8

address. If you look at most of the forms that other 9

agencies require as part of the import process, you 10

will also see that they ask for the impo rter's name and 11

address. We don't need to collect that twice in an 12

automated environment. So that the PG

-- we call it 13

the PG message set

-- gives us that one data set with 14

all the data elements, import and export, that are 15

required to complete an import or export transaction. 16

Those data elements are sent from the A CE 17

system, from CBP, to our partner government agency 18

through an interoperability web service. And John 19

noted that CPSC was the first federal agency to start 20

receiving data from CBP through IWS. It is simply the 21

pipeline. And it's a pipeline not only for CBP to send 22188

data to other agencies, but it's also a pipeline for 1

those other agencies to send messaging back to CBP, so 2

that we can transmit it to the trade. 3

What are those messages about ? About the 4

disposition of your cargo. Are you missing 5

information? Are you missing a data element or a piece 6

of documentation, like an invoice, that we might want 7

to see, as a government? 8

It also says, "Your cargo can move on down the 9

road." So thos e messages are really critical. Every 10

time the status of cargo changes, that messaging goes 11

back through an EDI link to the private sector, to the 12

filer, to make sure that you know exactly where your 13

cargo is. 14

We are working within ACE, within the 15

moder nization, to make sure that messaging is as clear 16

as possible, and it gives as much information as 17

possible about the reason your cargo may be held up. 18

The final key capability that we have built as 19

part of the single window is the document image system. 20

This allows us to collect pictures of forms, pdf's, 21

things like that, where, because of either 22189

international requirements or statutory requirements, 1

we may have to actually look at a form, because there 2

may be a foreign government stamp that was collecte d at 3

the time of export on its way here to the United 4

States, or something along those lines. 5

We consider this a transitional step, and our 6

goal is to move from collecting paper forms, or an 7

electronic picture of a paper form, into actual data 8

elements. And the reason for that is really related to 9

the risk management that John talked about. You can't 10

target off a form. And we don't want to collect so 11

many metadata elements

-- so the umbrella data elements 12

that are associated with the forms

-- that we a re not 13

facilitating trade. 14

So much easier to target and assess risk off 15

data elements. But for a number of agencies, this is 16

the right way to go for the time being. 17

So, those are the three technical 18

capabilities. I wanted to give you a sense of where we 19

are with implementing those capabilities. 20

So we've talked about 47 government agencies. 21

The PG message set is really the core of this. We 22190

have completed or are in the process of completing 1

building that PG message set for six agencies. We have 2

11 to go. For those of you that are interested in a 3

precise schedule, if you go to CBP.gov to the trade and 4

then ACE page, the "Development and Deployment 5

Schedule" lay out all of not only the build and 6

roll

- out schedule for ACE, but also what the 7

capabiliti es are we will be building for each agency, 8

and when that will be available. 9

The document image system, we have 17 agencies 10

that we expect to use the capability; we have completed 11

9. And interoperability web service, which is the 12

pipeline for transmitti ng the data, we have 9 that are 13

already using it, 10 in process, and 9 more to go. In 14

some cases, the agency is not asking for additional 15

data through the interoperability web service

-- I'm 16

sorry, through the PG message set. All they want is 17

what CBP co llects. So that's a pretty easy thing to 18

do. So, lots of benefits around the PG message set. 19

And I'd actually like to talk a little bit 20

more about the data that we collect. CBP has been 21

collecting automated trade data since the mid

- 1980s. 22191

For those o f you that have been around that long, you 1

know that our commissioner at the time talked about 2

"automate or perish." He believed that U.S. business 3

needed to, in order to remain competitive, have an 4

electronic trade process, and you needed to invest in 5

co mputers, you needed to invest in systems that would 6

give us electronic data, and allow us all to manage it 7

in a more facilitated fashion. 8

That gave us great power. But with that great 9

power comes great responsibility. We have had many 10

discussions about what data to ask for, when. It would 11

be very easy to ask for the world. Frankly, we'd 12

probably choke on it if we got a tremendous amount of 13

data. 14

And so, when we ask for new data elements, we 15

are very careful to make sure that the data that we are 16

col lecting, that particular data element, not only will 17

help us make a good risk

- based decision, but also that 18

we're asking for the right data at the right time from 19

the right party. That is absolutely critical, to get 20

those three elements in place. If we d on't, we have 21

the ability to add significant costs into the 22192

management of the supply chain. 1

The model that we really use is focusing on 2

advanced data, getting it as early as possible in the 3

process, in order to make admissibility decisions. 4

Admissibilit y decisions are very much focused on 5

security, as well as public health and safety. 6

Generally, if we have a straight compliance 7

decision, or a decision that results in the collection 8

of revenue, that data we are able to collect after the 9

goods have been released from the government's either 10

physical custody, or on behalf of the government. So, 11

what we collect in advance we want as early as 12

possible, so we can make a decision as early as 13

possible. But what isn't used in making an 14

admissibility decision c an wait. 15

We also have used a number of different ways 16

of asking for that data. We talked a lot a few minutes 17

ago about collecting data electronically. But we have 18

also used a number of different options for the how and 19

the when and the who. 20

We have u sed things like blanket certificates. 21

So, instead of asking for data on every single 22193

transaction, we have asked for information that covers 1

a range of shipments, whether it's a year, or perhaps 2

it's for a particular commodity, and it's good until 3

you chan ge the combination of 4

commodity

- importer

- shipper. Blanket certificates seem 5

to save a lot of cost on the part of the trade, but 6

also give us the information that we need. 7

We also, instead of collecting an actual 8

certificate, will often just ask for a nu mber, knowing 9

that that gives us the traceability that, when we need 10

to go back and ask for

-- so, first, it allows us to 11

check that, in fact, a certificate exists. But, 12

second, it allows us that traceability to go back and 13

ask for information about a spe cific shipment. 14

We also have tried a pre

- vetting approach, 15

where we will go in and, through, in most cases, our 16

partnership programs, will check the compliance systems 17

that normally would be used to provide the information 18

to us. And if we go in, and th rough, generally, an 19

audit capability, are able to satisfy ourselves that a 20

broker

-- usually an importer or an exporter with a 21

broker acting on their behalf

-- is able to provide 22194

consistently compliant, reliable data, we may say, "We 1

don't need to see tha t data every single time," so that 2

pre - vetting partnership aspect is another opportunity. 3

The final opportunity that we have used in the 4

advanced data space is really to ask for that data only 5

when we need it. So it's an upon

- request approach. 6

That has worked for CBP. There is some risk with it 7

if, in fact, the data is not kept transaction by 8

transaction. 9

But in many cases, we have made the decision 10

that we put that information on what we call

-- and 11

it's just because of our regulatory structure

-- t he 12

A1A list. And so, it's a long list of documents that 13

importers/exporters are required to have, and that they 14

must make available if asked. But it

-- frankly, it 15

saves the paper, the transmission, the logistics costs 16

by only asking for that information when we absolutely 17

require it. 18

So, I think that what we're

-- I really want 19

to stress is that that idea of asking for the right 20

data at the right time, and being very careful to match 21

when you ask for that data

-- is it far in advance, is 22195

it just before release, is it post

- release? What data 1

are you asking for? Do you absolutely need a 2

particular data element? 3

And then, finally, who are you asking for this 4

data? We have a situation that we've been able to 5

address over the last couple of years where we were 6

asking for transportation data from the carrier and 7

from the broker. We spent an inordinate amount of time 8

reconciling that same data that we received from two 9

different parties. There was no value that we saw to 10

that reconciliation activity, but it took us a 11

tremendous amount of personnel resources to do that 12

reconciliation. 13

The other thing that it did was to keep a 14

broker from filing their entry until the last minute, 15

because they didn't have the data available. 16

The other concept that we've been able to work 17

through the last couple of years is we are asking now 18

for best

- available data. We are not requiring 19

perfection; we recognize that there is a risk around 20

that. But the best

- available data gets us data in as 21

early as possible, let's us ma ke a preliminary release 22196

or risk decision, and then we are able to look at the 1

final data as the cargo actually arrives. And we do 2

targeting at each point that new data is submitted. 3

How much time do I have? We're close? I have 4

a half

- an - hour, apparen tly, so I'll keep talking. 5

(Laughter.) 6

MS. SMITH: Great, okay. That's good, that's 7

good. 8

So, anyway, we are very careful about asking 9

for new data. Many of you are veterans of the 10+2, or 10

importer security filing process that we went through a 11

nu mber of years ago. We spent three or four years 12

talking about the right data elements, and we ended up 13

with a couple of new data elements that were of 14

significant value to CBP and the government, and were 15

able to, with some investment on the part of the 16

p rivate sector, could be provided to us and added to 17

the facilitation of the supply chain. 18

Using those types of data elements in the PG 19

message set, and having those conversations, which we 20

do, both through COAC

-- and I know that Mary Ann will 21

talk about that

-- and through the trade support 22197

network which CBP finds of great value, in terms of 1

supporting the collaboration between the private sector 2

and the government, is really critical in helping us 3

understand what the impact of the government's 4

requireme nts are. 5

So far, we've done, I think, a pretty good job 6

of making sure that the data that we really need we can 7

collect, and, in fact, can put in the participating 8

government agency message set. Lots of benefits around 9

the PG message set

-- I'm actually not going to go 10

through those

-- near real

- time decision

- making, 11

available to agencies more quickly to allow them to 12

make decisions fairly quickly, and I think 13

easier

-- makes it easier, instead of filing 5 forms, 14

10 forms with a particular transaction, y ou send 1 15

message in, and the data is parsed out. 16

One of the other COAC members has talked about 17

"submit once, use many times," and that really is the 18

goal that we're looking for with the participating 19

agency message set. 20

Just a little bit of detail ab out how we do 21

work with the other agencies to come on board. It is 22198

not simply turning a switch. And I know that Bob and 1

Roy will talk a little bit more about this this 2

afternoon, so let me just kind of give you the basics, 3

and lay out some of the critica l points that we are 4

looking at. 5

From a process perspective, the first thing we 6

do is make sure that we all understand how and why 7

we're going to protect the data. The business 8

confidential data that's provided to us, protected 9

both

-- either by the Pri vacy Act or the Trade Secrets 10

Act, carries a lot of responsibility. We want to make 11

sure that, as 47 agencies have access to that data, 12

that we all understand what our responsibilities are. 13

We identify what the requirements are, how 14

we're going to share data, whether it's going to be 15

through the IWS pipeline, or where agencies will come 16

in through the ACE portal and actually do their work in 17

the ACE system. 18

After we identify how it's going to go back 19

and forth, we also take the opportunity to sit down 20

with the policy and the operational folks to make sure 21

we all understand what the needs are, and also ask the 22199

question, "Is there a way that we can do this better?" 1

And I will tell you we've been having a lot of 2

conversations around the, "Is this the righ t way to do 3

business," or, "Is there a way that we can make it more 4

efficient?" A lot of those conversations also have 5

been held through the COAC and through the trade 6

support network. 7

We also, at the time that we are defining 8

requirements built on a mo dern business vision, are 9

also working on the legal side of things: the Federal 10

Register notices, perhaps the regulatory change, the 11

operational guidance, so that our folks in the field 12

understand what it is we're looking to do, and what 13

their authorities are. 14

Then we build. Building is actually the easy 15

part. We roll along, we are using an agile development 16

process, which I hope is good news to all of you, 17

because it really means that those of you that actually 18

use the system are at the table when the system gets 19

developed. 20

We then

-- after it's finished developing, we 21

do a tremendous amount of testing. We do testing in 22200

the

-- in a certification environment, so before it 1

goes live we do testing. I will make a pitch for those 2

of you that are actual filers, that you get in with us 3

early and test this capability. It's absolutely 4

critical that we get it right. 5

I think the advantage of being an early 6

adopter is that you get to tell us what's wrong, and 7

you have our commitment to fix it fast. And, as you 8

know, what doesn't work for you may be working for 9

somebody else. So don't rely on other people to test 10

the system for you. We need early adopters, we want to 11

make sure we get this right. So please come in and 12

test with us, either in the certificati on environment, 13

or when we roll this out for production use, actual use 14

of the new capability. We need people to use it in a 15

live environment, and we do this in a very controlled 16

fashion, so we don't crash everything. We do this in a 17

live environment, bu t we need people to work with us to 18

do that. 19

And I do want to call out my colleagues, Mike 20

and Mary Ann, at the table. We've had a lot of very 21

supportive members of the private sector. And so, for 22201

those of you that haven't been able to test with us 1

yet , please, I would encourage you to talk to our 2

representatives from Deringer and UPS about how they 3

work with CBP and the other agencies to get this right. 4

Where is CPSC now? As John mentioned, first 5

one in line on IWS, they are currently receiving 6

prod uction data from CBP, so entry and entry summary 7

data, which is

-- feeds right into their risk 8

assessment model. We have done a couple of upgrades, 9

and we are working on how to capture CPSC's 10

requirements in the document image system. 11

We should have all of those capabilities 12

available in the

-- on the ACE platform no later than 13

July of 2015. We have been putting out quarterly 14

releases and, in some cases, we are earlier than we 15

expected. So please keep an eye on that development 16

and deployment schedule. 17

One of the things that you'd need to be aware 18

of: If you think this is going to go away, it's not. 19

We do have mandatory transition into the ACE 20

environment. Right now we are using two systems: the 21

Automated Commercial System and the Automated 22202

Commer cial Environment . We have heard a great deal 1

about how expensive it is to maintain two systems. But 2

I will tell you we've got a lot of great new capability 3

in ACE. And the time to move to ACE is now, because we 4

are requiring that if you file electronic manifest data 5

on import or export transactions, that must be done in 6

ACE in May

-- not very far away. 7

If you file entry data, that must be done in 8

ACE by November. Again, just less than 14 months away. 9

That is going to be a pretty heavy lift. So, if y ou 10

are an importer, if you are a broker, if you are a 11

software vendor

-- probably not too many of those 12

here

-- you need to have a plan if you're not already 13

filing in ACE. 14

So, I'm happy to answer questions on this, but 15

the key date here is we will be re quiring the use of 16

ACE by November 1, 2015. 17

Questions? Questions at the end. Okay. 18

Thank you very much for the opportunity. 19

(Applause.) 20

MS. NOVAK: Thank you so much, Brenda, for 21

your very informative presentation. 22203

Next up today in our session w e have Bob 1

Berczik, who is going to talk to us today about F ood 2

S afety and I nspection S ervices

. 3

PRESENTER: BOB BERCZIK 4

MR. BERCZIK: Is everybody awake? How many 5

folks had a nice, I don't know, chicken, turkey

-- 6

can't wander away from the podium, s orry -- ham 7

sandwich, cheeseburger, maybe. Show of hands? Yeah. 8

Okay. 9

How many folks know that the Food Safety and 10

Inspection Service is the agency that regulates meat, 11

poultry, and processed egg products? Oh, I'm so 12

impressed. You are the best audi ence I've ever had. 13

Okay. 14

I could stand up here and talk for a long 15

time. I would especially give a lot of credit to my 16

CBP colleagues and the amount of work that goes into 17

attempting to create and utilize this single window. 18

I've been involved in AC E ITDS now for about 19

10 years. And for many, many years, a lot of my 20

audiences got tired of hearing me say, "Well, when we 21

get there with ACE, when we get there with ITDS, when 22204

we get all these things developed that we can process 1

this data electronically , and stop shoving pieces of 2

paper around." 3

FSIS is one of the agencies that is piloting 4

the PGA message set. It's here. You can see it, it's 5

alive. And so we have a lot of work to do? Yes, we 6

do. Will we have a lot of growing pains, as we move 7

alon g? Yes, we will. But the benefits, I think, at 8

the end product will so far outweigh the archaic 9

processes that we have in place now. 10

So, for a quick instance, FSIS requires a 11

form. It's called FSIS Form 9540

- 1. It's an import 12

application. That piece of paper is filled out by 13

hand. It's a mix of entry data that CBP currently 14

collects and has collected for many years. It's also a 15

portion of inspection certificate data which FSIS 16

requires for every shipment of meat, poultry, and 17

processed egg products from the foreign government, and 18

some data that the trade provides to us as far as when 19

is this shipment going to arrive, and where is it going 20

to be reinspected at. 21

So, let me just go through with my slides a 22205

little bit. 1

(Slide presentation.) 2

MR. B ERCZIK: Okay. I talked to you about 3

FSIS already. Our authority comes from the Federal 4

Meat Inspection Act, the Agriculture Marketing Act, 5

Poultry Productions Inspection Act, Humane Methods of 6

Slaughter Act, and the Egg Products Inspection Act. 7

Public Health Information System is the 8

interface that FSIS utilizes. When we first started 9

developing the PHIS, we took into account the 10

functionalities of ACE, at least from the import 11

perspective and the export perspective, and we built 12

those functionalities into our development process. 13

Our main goal, at the end of the process, was 14

to try to figure out a way to streamline the customs 15

process, and transition away from that paper

- based 16

application that I talked about. 17

When we launched the import portion of PHIS in 18

May of 2012, we were connected with ACE, as well, 19

through the interoperability web services. But that 20

initial connection only gave us a very small piece of 21

the data elements that we required for our import 22206

application. 1

Why we still utilize that small subset of 2

data, it was still a burden on the trade to continue to 3

fill out the piece of paper, send it in to the FSIS 4

inspector, at which point the FSIS inspector would sit 5

at the PHIS system and key in this data, which, I'm 6

sure you can see, is pro bably not a good use of 7

resources. 8

All the data elements that we're using, and 9

the tables that we use, and even so much as far as the 10

certificate data, we're very conscious of international 11

standards. The schemas are UN/CEFACT

- compliant, as 12

well as Worl d Customs Organization

- compliant. 13

To your right is just a little picture of what 14

that 9540

- 1 piece of paper looks like. I talked about 15

that importers are required to apply for inspection 16

prior to the cargo coming in to the U.S. An entry or 17

entry summar y certified for cargo release in ACE, 18

combined with that message set, eliminates the need for 19

that piece of paper. And, obviously, I think it goes 20

without saying that you can see the benefits and the 21

expedition

-- if I can use that word

-- of the process, 22207

if all this data is collected electronically. 1

Shot to the right shows an importer applicant 2

tab that actually exists in the PHIS system right now. 3

Just to pick up on the point that Brenda made earlier 4

about agencies utilizing data that's already collec ted 5

by customs, and not asking for the same data over and 6

over again, for FSIS, when it comes to broker 7

information, importer information, and consignee 8

information, we take the organization, the addresses, 9

city, state, province codes or postal codes. We take 10

that information from the header level entry, meaning 11

when the broker uses their filer code, ACE sees that, 12

and ACE populates those data fields for us 13

automatically. 14

Now, for FSIS purposes, and what we asked for 15

in the message set was, well, that's great. I know how 16

to get to A.N. Deringer's corporate headquarters. But 17

at the end of the day, I've got a shipment here. I've 18

either got a data problem, I've got a refused entry 19

problem, whatever my issue is, and I need to know 20

directly who I can get to that knows about this entry 21

that we can resolve these issues. 22208

So, FSIS and the message set asked for an 1

individual's first and last name, a phone number, and 2

an email address. 3

PHIS is also designed to where, if a refused 4

entry, failures to present, th ose types of issues come 5

about, the import inspector

-- it's a button in PHIS 6

which generates an automatic email to the email address 7

that's been provided to FSIS in that application. So 8

the benefits of having that quick connection and that 9

ability to not have to go hunt somebody down, if you 10

will, is a huge improvement. 11

Okay. For IT folks, these are the good old 12

dot matrix schemes

-- I believe that's the proper term. 13

And when you get into the

-- it's going to tell you, 14

"Okay, I need this specific data element on this 15

specific line, and this many characters over," and it 16

accommodates this many characters. It looks scary. 17

The first time I started digging in to all that stuff, 18

I was so overwhelmed, I was like, "Wow, I've really got 19

this project on my pl ate? How did I go from a meat 20

inspector to a database guy?" Okay? 21

But, actually, once you take the plunge, and 22209

you really start to work through it, it's not quite as 1

complex as

-- well, it's complicated, but it will sink 2

in. If I can get it, everybody can get it. Trust me. 3

Okay, FSIS had a few specific

-- I will call 4

them issues. So, in working with the software 5

developers that we have currently involved in our 6

pilot, and with our colleagues in the trade that we 7

currently have in the pilot

-- and I keep pointing over 8

to Mr. Lahar there, because Deringer is one of our 9

pilot participants in our message set

-- a couple 10

things came to light. 11

We had many inspection certificates that could 12

come in within an entry, and then we have many lots 13

that can be associated with a certificate. So, we took 14

steps, and we worked with our CBP colleagues to say, 15

"How are we going to get around this?" 16

So, working very closely together, we came up 17

with a grouping methodology that now exists in this 18

message set. So now you have the ability to group 19

particular pieces of data which have a relationship to 20

a hierarchy data element. 21

So, therefore, when the system reads it 22210

through the extendible markup language documents that 1

flow back and forth through the IWS, the system 2

automatically recognizes that I have three or four 3

certificate numbers here, they're all associated to 4

this particular certificate provider

-- foreign 5

country, in FSIS's case

-- and then maps those data 6

elements appropriately into the end interface, which is 7

the Public Health Information System. 8

Talked about the certificates already in the 9

first bullet. Talked about the import application, the 10

combination of the certificate information, the trade 11

information, the entry information. 12

Okay, so for FSIS, w e also have a 13

government

- to

- government data exchange, in addition to 14

the business

- to

- government exchange. 15

Government

- to

- government exchange is called eCert, 16

electronic certification. So, currently, FSIS is in a 17

live environment with Australia, New Zealan d, and The 18

Netherlands. 19

Hopefully, if you're working with any foreign 20

governments in this type of business scenario, you'll 21

already know that this is a huge incentive, there are 22211

many international groups, international standards. 1

The push to get electro nic certificate information has 2

gone leaps and bounds in just the last year or two. 3

So, at the end of the day, what happens is the 4

trade submits the message set. They only need to give 5

me a certificate number within that message set record. 6

Then the PH IS reads that certificate number through 7

the XML, goes out to the electronic systems that are 8

currently up and running with those three foreign 9

governments that I just talked about, and then pulls 10

all that certificate information into that application, 11

whi ch provides a complete application. 12

Filers for FSIS that are using the message set 13

do not have to provide the paper form. I think I 14

already stated that. In addition, if you're filing for 15

a country that also has the electronic certification, 16

we no longe r will require that paper certificate, 17

either, which would put FSIS, basically, in a paperless 18

environment. 19

We are obviously working very hard with all 20

the other foreign governments. Mexico is very 21

interested, we have met with them several times 22212

already . Canada is extremely interested in getting 1

their electronic interface up and running. APEC, there 2

is a lot of work going on within the APEC community to 3

get that off the ground there, as well. 4

So, just a quick read

- out on where we are with 5

our pilot t o this point. We started the pilot on April 6

the 27th, so we're roughly talking 4 months. We 7

started with A.N. Deringer, and we started with OHL. 8

We started with three pilot ports: Champlain, 9

Philadelphia, and Houston, Texas. To date

-- well, not 10

to da te; September 4th is the last time I pulled the 11

information

-- we've got 109 entries that have been 12

filed using the PGA message set, representing 4.5 13

million pounds of product under FSIS jurisdiction. 14

Our countries that we have so far are Canada, 15

Austral ia, and New Zealand. Eighty

- seven percent of 16

the entries that have come through so far have had no 17

issues, no identified issues, whatsoever. And I know, 18

because I've asked the pilot participants to email me 19

separately on the side whenever they process on e. I go 20

in and I look at it, I make sure that it's

-- data is 21

where it's supposed to be, formatted the way it's 22213

supposed to be. And so, again, 87 percent we have had 1

no issues, whatsoever. 2

On the 13 percent that we have had issues, 3

there have been noth ing come up to slow the 4

reinspection or the movement of the shipment. They've 5

all been conflicts with coding, or a data element 6

didn't map correctly, or what I will consider 7

insignificant incidents. 8

Trying to think if there is

-- well, and some 9

our vali dations

-- and I'm going to try, because I got 10

the peace sign

-- pick up on

-- I think Brenda made 11

this point just a minute ago, as well. Get into the 12

cert environment, get in with Customs and Border 13

Protection, start working with your agency. Because 14

th at testing that you do before it moves into a 15

production is extremely critical. I can't emphasize 16

that enough. 17

Validations have been the multiple inspection 18

certificates. That issue that I described earlier, 19

that's been identified, it works properly in 20

production. The automation of the PG

- 14 record, which 21

is the certificate number for the eCert, and our 22214

increased capabilities to monitor any shipments for 1

failures to present. 2

Just a couple of references on the websites. 3

We do have a compliance guidel ine that's posted on both 4

FSIS and CBP website, and there is a lot more 5

information on the PHIS import component that's 6

available on the FSIS website. And just some contact 7

numbers. 8

(Applause.) 9

MS. NOVAK: Thank you, Bob. We'll have one 10

more presenta tion from one of our agency partners, and 11

then we'll take a break at that point

-- hopefully 5 to 12

10 minutes

-- and then we'll hear from our pilot 13

participants. 14

So, next up is Roy, Roy Chaudet, from the 15

Environmental Protection Agency. 16

PRESENTER: ROY CHAUDET 17

MR. CHAUDET: Thank you. Thank you very much. 18

Thank you, CPSC

-- Carol, in particular

-- for 19

inviting me. 20

(Slide presentation.) 21

As you can see from the title, I'm going to 22215

talk about our pilot programs. But this is also a 1

shameless plug a nd request

-- I'm looking in the 2

audience

-- for volunteers. Importers, brokers, any 3

software developers, I want to talk to you if you 4

import or export any of the commodities we regulate. 5

The other thing I want to tell you is this is 6

not vaporware. We worked very hard with Customs in the 7

last several years, and we have built an operating 8

system that's operating at the ports, and we're 9

building on it even as we speak. We're adding even 10

more functionality. So it's a tremendous step forward 11

for our agenc y. We think it's a tremendous step 12

forward for the trade community, as well as working 13

with the port officers, as well. 14

Let me tell you just a little bit about EPA. 15

We're a small agency, but we regulate nasty stuff: 16

poisons, toxic chemicals, hazardous waste, not really 17

good things. So we need to make sure that those 18

commodities that are being imported or exported are in 19

compliance with our regulations. 20

We do have hold authority. We're one of the 21

handful of agencies that do have hold authority, so w e 22216

can stop those shipments from either coming in to the 1

country or leaving the country where we have authority. 2

We do not have port presence. We do, for some of our 3

programs, have a regional office that can be at a port 4

within a certain time period. But some of our programs 5

have enforcement staff that manage out of Washington, 6

D.C., and headquarters. So, that's a little bit about 7

EPA. 8

So, what do I want to talk about? What do we 9

regulate? What are we doing with ACE/ITDS? What trade 10

can expect, just touch on what pilots we're doing now, 11

which pilots we plan to kick off very soon, and then 12

get down to the main message of this talk, which is we 13

need your participation. And what's involved with 14

getting started. And then, just like Bob threw up 15

his

-- he called it his dot matrix chart

-- I'll throw 16

you up what one

-- what a filing might look like, and 17

then we'll wrap it up from there. 18

So, EPA regulat es six commodities: 19

ozone - depleting substances, refrigerants, vehicles and 20

engine

-- and that includes on - road vehicles, off

- road 21

vehicles, and engines and generators, and basically, 22217

anything that emits into the atmosphere. They have to 1

be certified before they get brought in to the country, 2

unless it's a prototype car that somebody is going to 3

show off s omewhere. But we still need to file that, as 4

well. We regulate fuels, as well, that need to meet 5

certain standards. Toxic chemicals

-- and that, by far 6

is a very big, big commodity that we regulate. And 7

then pesticides and hazardous waste. And hazardo us 8

waste, we only have authority to regulate exports. The 9

rest we regulate on import. 10

The boxes that are highlighted and

-- with a 11

dark border, those are the ones that we actually are 12

working on for pilots right now with the system. So 13

that's just a br ief introduction of what we regulate. 14

So, what are we doing? Well, we're taking 15

these paper forms and we're making them available to be 16

made

-- to file electronically, using the PGA message 17

set. And then, what we do is, when those forms are 18

filed, we'v e taken data out of our agency systems, 19

moved it using IWS, Interoperable Web Services, to 20

Customs, and then we actually check what you filed. Is 21

that the correct registration number? Is that the 22218

correct producer establishment number? 1

And if it doesn't match, then we're going to 2

send you an error message. And, in some cases, if you 3

didn't provide it, we're going to send you a reject up 4

front so you do provide it. But at least you know, 5

when you file, where you stand with EPA in meeting our 6

reporting r equirements. If you do file the correct 7

information, as far as EPA is concerned, initially 8

you've met our reporting requirements. And so, that is 9

huge for us. 10

And let me just give you an example of the 11

current paper process of our pesticides program. The 12

pesticides notice of arrival right now is a paper 13

form

-- they are 3540

- 1

-- that an importer fills out 14

or broker fills out, and sends it Federal Express to 15

our regional office where the port is that they're 16

going to bring it into the country. 17

So you 've got the time and the cost of sending 18

that to the regional office. They have, typically, 19

about 48 hours just to review it. If they find 20

something, you may have to provide additional 21

information or resend it to them. And once they sign 22219

off on it, they send it back to you via courier to 1

provide with the shipment. 2

That process alone can take anywhere from two 3

to three weeks for a paper process. This new 4

electronic process we're talking about is two to three 5

minutes. So it's a dramatic improvement. A nd so, 6

this, as I like to refer to it, is one of our poster 7

childs (sic). 8

So, that really takes the essence of what 9

we're doing, where we file electronically, we do these 10

automatic reviews, instead of manual reviews, and then 11

we give you a message back t hat says, "Hey, you've met 12

the requirements," or, "No, you haven't," but it gives 13

you a chance to update and correct it before you arrive 14

at the port. 15

So, I'm going to stretch a little bit here. 16

And at the bottom I have a goal, but it's really more 17

of a challenge. And I know, for the express industry, 18

that's probably less realistic than others, but you 19

know, the sooner something could be filed, the sooner 20

everyone is going to know if it's met our reporting 21

requirements. And we realize that for foreign trade 22220

zones, in particular, and others filing, you may not 1

know the exact quantity. But if you're reporting the 2

commodity you're sending with the appropriate 3

information, and an estimate of the quantity

-- a 4

maximum estimate

-- then that's going to be

-- we think 5

right now that that's going to be good to meet our 6

reporting requirements. 7

Now, on entry summary, if you bring in more 8

than that maximum that you estimated, you're going to 9

be on our bad list. But what we're trying to do is 10

facilitate advanced early filing, as early as possible. 11

And then, if you could stretch it even further, if you 12

could report early enough, we'll tell you before you 13

load it if you've met our reporting requirements. 14

So, that, to me

-- if it's possible, if trade 15

can actually file that early, that could be a big time 16

saver. So if rail cars

-- and we're mainly

-- we're 17

starting off slow, where there is lead time, on ocean 18

and the rail environment. But those two modes seem to 19

be ripe for improvement. 20

So, what does that mean? That means that you 21

can expect shortened review and processing time. This 22221

process we're applying nationwide not only with EPA, 1

but working with Customs, nationwide, at all the ports. 2

So, right now, I'll be honest. Depending on which 3

region you're filin g to, you're going to get 4

variability on how that's processed. So we expect this 5

to standardize things, nationwide. So that, I think, 6

is a big, big improvement. 7

We expect to eliminate duplicate reporting of 8

certain data elements to both EPA and CBP. W e're 9

leveraging Customs data elements. Bob talked about the 10

header information. We're pulling as much as we can 11

out of that header information, and not asking for that 12

in the PGA message set. Courier fees, gone. And 13

that's not a trivial cost. We've do ne a little bit of 14

estimating on that; that's a big, big deal. And then 15

you get these error responses, and your ability to 16

update and correct. 17

So, what are we doing? What pilots? Well, as 18

of April 30th, working with CBP we actually have two 19

pilots up and running: those on depleting substances 20

and vehicles and engines. And we started at the Ports 21

of Long Beach and Newark. And as we get more filings, 22222

we're going to look at rolling that out, nationwide. 1

This fall/winter

-- we're in the heat right 2

now of testing with Customs. We've already built it, 3

but we're testing with Customs the notice of arrival 4

for pesticides, the poster child I just mentioned, as 5

well as exports of hazardous wastes. And so, those are 6

coming up, as well. We've worked with OFO , the field 7

operations. We've defined the starting points. And, 8

again, we're looking at rail and ocean for these 9

commodities

-- well, actually, for the pesticides. And 10

we're looking at truck for haz waste exports. 11

So, those that participate, what do y ou need 12

to do? You need to create message sets, submit test 13

filings in the certification environment. Brenda 14

recommended that you get involved now. So the sooner 15

you can do that, the better. 16

And then, as you file, you'll start receiving 17

notifications and feedback. We work with you 18

one - on - one. We look at what you file. We say, "Yes, 19

you've done it right," or, "You've missed a couple data 20

elements," and it's really quick turnaround. We're 21

talking to you either same day or within a day of your 22223

filing, at the latest. 1

And then, once you're done in 2

certification

-- and, by the way, this certifies you to 3

file for our commodities when you test and cert

-- you 4

can then file in production. And our pilots are being 5

conducted under the National Customs Autom ation 6

Program, which waives the requirement for the paper 7

filing. So, when you test you get added benefit of 8

getting certified and doing it electronically in 9

production. 10

So what do you need to file? Let me just give 11

you a taste of sort of the big data elements. 12

Ozone

- depleting substances, we know who the importers 13

are that are approved to bring that in. So when you 14

bring

-- so when they file to bring that in using the 15

message set, and we use CBP's import of record 16

number

-- but we have a special quant ity that we ask 17

for that

-- we'll check. And if you're on the list, 18

we'll tell you you're good to go, you've met the 19

reporting requirement. If you're not, we're going to 20

tell you. 21

Vehicles and engines, they've got to be 22224

certified. We've got a certific ation number. If you 1

provide that right number, we're going to tell you. If 2

you don't, we're going to tell you. 3

Pesticides notice of arrival, registration, 4

producer establishment numbers, we have both of those 5

numbers that we've given to CBP, and they' re going to 6

check those for every one of those filings. 7

And then, for hazardous waste

-- I'll just 8

mention this real quick

-- Bob talked about country 9

to

-- government

- to

- government exchanges. We have an 10

exchange with Canada and Mexico, where our countr ies 11

actually have to give consent for shipments of 12

hazardous waste to go between our countries. And when 13

we do that, we get a consent between the countries, and 14

then we tell the exporter from the U.S., "Here is your 15

consent number," it comes in a letter. And instead of 16

providing that on paper, when you file your export you 17

provide that consent number. And we

-- again, we check 18

it. So it's very powerful. 19

We're using computers, what they're designed 20

to do, which is routine, manual review. But I did hea r 21

a concern earlier today about, in the paper process, 22225

people may look at it and if it's not a black or white 1

situation they can make a judgment call. What happens, 2

in working with Customs on this, if something fails, 3

one of these checks, not only do we l et you know that 4

it's not correct, we get eyes on that filing. So if 5

there is a judgment call, we tell you, as the message 6

that comes back to you, whether it's wrong and we're 7

letting it go, or it's wrong and we're not going to let 8

it go. 9

So, that's the key thing, is to know that 10

EPA's enforcement staff has eyes on every one of these 11

things that failed validations. 12

So, if you want to get started, are you an ACE 13

filer? Are you filing the

-- those commodities at 14

these ports? If you're interested, conta ct me. There 15

will be a Federal Register notice, one that's already 16

gone out for the first two pilots, there is one for 17

pesticides that's coming out this fall. And I would 18

say work with your software developers. 19

Two minutes? Okay. So here is an eye ch art 20

strain, but this is not as bad as it looks. That's a 21

pesticide notice of arrival. That's our most 22226

complicated filing. It's really not that bad. 1

So, in summary, we're testing, we need you 2

guys to test with us. And we think there is a 3

tremendous be nefit. So, thanks. 4

(Applause.) 5

MS. NOVAK: Many thanks, Roy. And to the 6

other federal agency participants this afternoon. 7

Let's take a break. I think we've been good 8

on time, so let's take 10 minutes, and then we'll hear 9

from our pilot participant s for the second half of the 10

session, and then questions. So, please be back here 11

at 3:00, and we'll start at 3:00. 12

(A brief recess was taken.) 13

MS. NOVAK: Hi, all, thank you. We'll pick up 14

with the second half of our session here, if you can 15

grab yo ur seats. 16

We'll hear from two more presenters this 17

afternoon, two pilot participants who will give us a 18

briefing on their experiences. And then we'll open up 19

for questions and answers at that point. 20

A reminder to those on the webcast: you can 21

submit your questions at efiling@cpsc.gov. 22227

Okay, so I'd like to introduce Mike Lahar from 1

the FSIS, pilot trade volunteer from Deringer. 2

PRESENTER: MICHAEL LAHAR 3

MR. LAHAR: So, having heard about dot matrix, 4

I can't pass up this opportunity. Does anybod y know 5

who Dot Matrix is? 6

(No response.) 7

MR. LAHAR: She's Farmer Matrix's wife. 8

(Laughter.) 9

MR. LAHAR: I'd like to have a little fun with 10

you this afternoon and ask you to give me a little 11

latitude. I have children, a daughter who is 12 and 12

two boys, 5 and 2, so I am used to telling bedtime 13

stories. So, what I'd like to tell you about this 14

afternoon are the adventures of a small steak who goes 15

by the name of Sir Loin. 16

(Slide presentation.) 17

MR. LAHAR: Now, Mr. Loin resides in a factory 18

in Ca nada very close to the U.S. border. And your 19

local steak restaurant may have made a phone call to 20

Acme Meat Company saying, "We need some steaks." And 21

what happens at this point is Acme Meat Company will 22228

take the proper paperwork that's required to get M r. 1

Loin across the border, and call up the local trucking 2

company, and they swing by, pick up the steak and the 3

paperwork. 4

Now, the current process that we go through is 5

the trucking company will go back to their facility, 6

and either continue down to the border after they drop 7

the paperwork off at the dispatch, or they may drop the 8

trailer, and another driver pick it up and bring it 9

down. But they will send the paperwork to the broker, 10

and fax the meat paperwork

-- the 9540 and the health 11

certificates th at are required to get meat into the 12

United States

-- down to the inspection facility, the 13

I

- House, as we call them. 14

And currently, the broker will independently 15

key the data into our system and transmit it over to 16

U.S. Customs

-- excuse me, Customs and Border 17

Protection. I'm an old broker, I've been in the 18

business for 28 years; I can't stop, I can't help 19

myself. So pardon me, Brenda. And we will key in the 20

data and get it over there to get the customs release 21

when the goods get to the border. 22229

Now, the folks over at the inspection house 1

will take the paperwork that's faxed to them and bring 2

it over to the FSIS inspector, who has to manually key 3

that into the system. So it kind of slows trade down, 4

because for that guy to get out there and inspect th at 5

trailer, it's dependant upon him, before he goes out, 6

to key all the data in. 7

The new model that we're looking at, and that 8

we've been participating in the pilot, is all the 9

paperwork comes to the broker. And we key our normal 10

customs data in, and we also key the data necessary for 11

FSIS inspection in. So when that truck shows up at the 12

I

- House after it's been released by U.S. Customs, now 13

he can back into the door, and that inspector no longer 14

has the responsibility of just inspecting it, in 15

addition to keying the data. So when the trucks get to 16

our facility, it very much expedites the release of the 17

cargo, and speeds the inspection process up. 18

So, just a little background on how things 19

kind of happen

-- but I want to drive home one point. 20

And, Br enda, this is going to go along with what you've 21

been talking about with ACE and ITDS. And ACE equals 22230

-- or ITDS equals ACE. So, I'm hoping that the folks 1

in the room picked up on that. 2

We can't transmit ITDS information for all 3

these agencies unless we're transmitting ACE data to 4

Customs. So it's very important. The brokerage 5

community has been rallying recently. There has been a 6

lot more brokers transmitting ACE data to Customs. I 7

think the last statistic I heard this week was 47 8

percent

-- 45 pe rcent of all entry information being 9

transmitted to Customs currently is going through ACE. 10

The brokerage community, we have to do a 11

little bit better job, and we're getting there. I 12

think it's been increasing at the rate of about five 13

percent a month. So I pay attention at these meetings, 14

I really do. 15

So, the key is, if you're going to participate 16

in any of these ITDS pilots, the broker has to be on 17

ACE. Otherwise, it can't be done. 18

Now, from our perspective, we are in the 19

middle of a conversion c urrently to change our 20

software, to upgrade our software, so that worked

-- we 21

will be able to fully take advantage of all of the 22231

little bennies that ACE gives brokers and importers. 1

But in order to participate in the FSIS pilot, we 2

chose, as a company, t o put the brakes on things for 3

about three months. And the reason I mention that is 4

to give people an idea: This isn't something that 5

happens overnight, so you need to plan ahead. 6

We're really getting close to full 7

implementation of ACE, and then we ha ve about a year 8

afterwards for President Obama's deadline for ITDS. So 9

we've got to hurry up and start dealing with some of 10

this stuff. 11

The software development, as I said, took 12

three months. And, actually, it took quite a bit of 13

capital from the compa ny to get the programming done. 14

And the testing has gone fairly well. In preparation 15

for today's meeting, being in compliance, I don't key 16

entries on a daily basis. So I went out and decided I 17

was going to key an entry with FSIS data. 18

Now, my first st ab at it, it took me an hour 19

to key an entry. My second step, I got it down to 20

about a half an hour. I wasn't shuffling back and 21

forth through so much paperwork. I think, over time, 22232

our employees are going to get it down to probably 1

about 10 minutes an entry, which is interesting, 2

because if you read the NPRM, there are some statistics 3

buried in the back that CPSC went out and got from 4

another broker that said they thought it would take 5

about 10 minutes per line to key the CPSC data. 6

And they also felt that an average entry that 7

had CPSC requirements would have maybe three lines on 8

it, and the projected cost would be about $56 million. 9

So there is a cost to this. There is a cost 10

associated. And, of course, we're all being squeezed. 11

So, I guess my l essons learned, and what I 12

really want to drive home, is this isn't a static 13

process. I've heard multiple people talk about

-- here 14

and also in the NCBFAA meetings that we had in 15

Washington this week

-- about continuing to develop 16

better methods for doing this. 17

So, from my personal perspective, looking at 18

the way that the data we were inputting into the system 19

for FSIS, I'm definitely taking that home when these 20

meetings are over, and going back to the drawing board, 21

and telling our IT guys, "We got to f ind a better way 22233

to do it." The key is going to be

-- and I think, 1

Carol, you said there are six data elements that you're 2

really interested in. 3

MS. CAVE : Seven. 4

MR. LAHAR: Okay. The big thing is going to 5

be preventing data creep, and really focusi ng on those 6

particular items that you've got to have. Because if 7

we can contain the amount of data that we have to key 8

in that is particular to one agency, versus what we can 9

pull out of Customs' system, that is going to make our 10

job as brokers a lot easi er. 11

And I can live with six data elements. And, 12

actually, I say "data elements"

-- six pieces of 13

information. It may encompass a few more data 14

elements, but I can live with six data elements, 15

myself. I'm speaking for my firm, Deringer, 16

versus -- I'm n ot representing the NCBFAA right now, 17

so -- but if that blows up, it's going to be 18

exponential, because it's not just CPSC. It's CPSC, 19

it's FDA, it's Lacey, it's all of these 47 agencies 20

that want some information. 21

So, if we can just focus on what is ab solutely 22234

necessary for you to do your job, it's going to make 1

our job a lot easier. 2

And I will call it there, so we can spend more 3

time with questions. 4

(Applause.) 5

MS. NOVAK: Thank you, Mike. Next up is Mary 6

Ann Comstock

-- I would like to invite y ou up -- and 7

she is from our COAC for CBP. 8

PRESENTER: MARY ANN COMSTOCK 9

MS. COMSTOCK: Thank you very much. I'm Mary Ann 10

Comstock. I actually do have a day job. I work for 11

UPS Supply Chain Solutions. I've been a customs broker 12

for over 35 years. An d I do want to mention that I am 13

a member of the advisory committee on commercial 14

operations of Customs and Border Protection, but 15

I'm

-- as a member of COAC, these are my personal 16

observations from my COAC work. And any reference to 17

COAC recommendations or the information that I make is 18

already out on CBP.gov and the website. So please keep 19

that in mind. 20

I do also want to say a special thank you to 21

Carol Cave, because she has been my

-- one of the 22235

government co

- chairs of the One U.S. Government at the 1

Border, and I really appreciate all the work she's 2

done. And, hopefully, we'll be able to provide some 3

good information for you. 4

(Slide presentation.) 5

MS. COMSTOCK: So, the 13th term of COAC is 6

the period of time that we're in. And we have been 7

work ing in the One U.S. Government at the Border 8

subcommittee, and doing a lot of different activities. 9

One of the activities that we went through was an EPA 10

working group. And I had the pleasure of working with 11

Roy Chaudet, and we managed to come to a mutua l 12

understanding, and have been collaborating ever since. 13

And now we are working with FDA, and there is also an 14

import mapping working group in progress. 15

So, one of the things that I want to point out 16

is there is an awful lot of recommendations that were 17

made in November of 2013, and I would encourage you to 18

go look at CBP's website under the COAC. At that 19

November meeting you will find a lot of 20

recommendations, and you're going to hear a lot of the 21

same buzz words you've probably heard here. 22236

One of th e things that we definitely encourage 1

is a unified filing of information. We want to be able 2

to have one large data set going in, and we want to 3

file it early. Up to 30 days early is what the 4

recommendation says. Now, it's not always going to be 5

availab le, but we're certainly going to try and give 6

Customs what the trade has available when it's 7

available. 8

We want the partner government agencies to 9

review the data for admissibility well in advance of 10

cargo arrival, allowing the partner government agencie s 11

to have much more time to perform their risk 12

assessments, review who the importer is, figure out 13

whether you know who they are, whether the product 14

complies

-- at least on paper or in data

-- and then 15

make admissibility decisions while effectively managi ng 16

resources. 17

We also want the partner government agency 18

message sets that are coming back through CBP to the 19

trade to be very clear and defined, and we want them to 20

be PGA by PGA, line by line. And I'm not really sure 21

that we've had this good discussio n with CBP yet about 22237

those message sets coming back, but I have a feeling 1

it's imminent. 2

We want to have sound risk assessment 3

occurring on data, not documents. So the data should 4

be the preferred method. And, occasionally, the 5

document imaging system is a useful tool. 6

One of the things that we talked about in our 7

recommendations from COAC is the Trusted Trader 8

program: expedited clearance for those known 9

importers; leveraging CBP and the trades' investment in 10

programs like CTPAT, ISA, and FS or FSMA , FDA volunteer 11

qualified volunteer program, also known as VQVP. Those 12

are important investments that the trade community is 13

willing to make to partner with the government agencies 14

so that you know them, and they will be able to provide 15

you with what you need as an agency. 16

One of the things I'd encourage is the use of 17

blanket declarations, if at all possible, particularly 18

for repetitive shipments. 19

There are single

- window efficiencies. Collect 20

only the data that's required. I'd also like to say 21

that i t should be collect only the commercial data 22238

that's required. Don't ask me for something very 1

obscure that there is no way I, as a Customs broker, or 2

the importer, or the exporter, could even give you. So 3

collect the data that's required. Hopefully it i s 4

commercially

- available data. 5

Utilize the data collected for various 6

purposes. As Mike said, collect the data once, use it 7

many times. Consider other alternative methods for 8

identifying importers, exporters, foreign food 9

facilities. Instead of me put ting in a complete name 10

and address, city, state, zip, email address, postal 11

code, whatever it is, use a DUNS number, if it's 12

applicable. A number is much easier to utilize in risk 13

assessment screening, instead of relying on that full 14

name and address, or even a MID number, which we

-- I 15

personally hope they go away, and they might. 16

Risk assessment methodology. I know that CPSC 17

has been working on RAM, and I trust the system is 18

robust. Recognizing compliant importers, stopping 19

high

- priority targets, th at's what they should do. 20

Now let's talk about some of the challenges. 21

The ability for us, as customs brokers, to timely find 22239

the data that we need to submit. Have the right data, 1

well in advance of cargo arrival, is going to be a 2

challenge. But I bel ieve that we can do it, 3

particularly with our repetitive customers. The 4

challenge really is when it's new players in the 5

international supply chain, and they occur daily. 6

I think I heard Customs say that they get 7

30,000 new IRS numbers for importers eve ry single 8

month. It's just a lot. 9

So, key entry errors. I know they happen. 10

They will occur. And so the more data that's required, 11

and the more free

- form data

-- not table

- driven

-- the 12

greater the chance for key entry errors. So, somehow, 13

if we can have the data to be clear and concise, that's 14

very, very helpful. 15

And, you know, I've certainly seen issues 16

where we transmit data for FDA, and we may be giving 17

them a MID number, which is an identifier for a name 18

and an address, but it matches to a dif ferent MID in 19

CBP's system. Therefore, FDA thinks I'm talking about 20

a completely different person. So, somehow, we have to 21

make sure that we have a clear way of understanding 22240

what the data is. 1

We want to implement this, in my opinion, in a 2

managed appr oach, similar to what maybe APHIS did with 3

the Lacey Act, so we don't have to have all the data 4

for all the potential HS numbers on day one. I'd like 5

to see a good roll

- out, if you will. Take the more 6

risk y items first, if at all possible. 7

And then, wh en data anomalies occur, that 8

feedback that you give to the filer is very critical. 9

And don't just tell me it's wrong. Tell me what's 10

wrong. I'm not a mind reader, and neither are my 11

peers. So we need to have good messages so we 12

understand what you don 't understand from the message 13

that we sent to you. 14

I do know that the management of all of that 15

data across all 47 government agencies is going to be a 16

challenge for both the importer and the entry filer. 17

And

-- to make sure that we're submitting the r ight 18

information on the right line, identifying the right 19

PGA. And we've said it before, I'll say it again. 20

Data creep is a real concern of the trade community. 21

So, let's talk about the business needs, and 22241

what I guess I would call some of the realitie s. The 1

global supply chain is evolving daily. Legitimate 2

trades should be managed as efficiently as possible. 3

We are seeing, more and more, non

- resident importers of 4

record becoming very common. Business consumer 5

shipments are increasing. 6

Trade moves 24/7; we need the PGAs to make 7

admissibility decisions well in advance of arrival, 8

just to keep the goods flowing across the border. I 9

would like to suggest high versus medium versus 10

low

- risk priorities. 11

Performing post

- entry audits is going to give 12

yo u, the partner government agency, good information. 13

I believe that if you're doing a post

- entry audit, and 14

you have an error, or you have an issue, holding the 15

customs broker as the potential importer of record 16

responsible doesn't make any sense, because the goods 17

have moved beyond their control. And it should be the 18

responsibility of the actual importer, the person that 19

has the financial interest in the goods, to respond to 20

any CPSC inquiries. 21

I've already mentioned the staged 22242

implementation. And I'd also like to mention that the 1

trade is very concerned about the cost to delay and 2

hold cargo. The added expense increases every 3

importer's cost, which is ultimately passed on to the 4

American consumer in some fashion. And while the trade 5

is not asking our partner government agencies to 6

release cargo that's unsafe, we have to somehow achieve 7

a balance. 8

I'd also like to mention that the COAC is 9

currently in the process of reviewing the 2014 trade 10

survey information. And I'm hopeful that the next COAC 11

publ ic meeting, which will be October the 7th, that 12

we'll see the results of that, and it will give you 13

more information about costs and holds. 14

So, keys to success

-- I said this a couple 15

days ago. The more you test, the more you learn about 16

the system, and the process, and the data requirements. 17

And so, the more efficient the trade will be in 18

managing the process. So we know that we need trade 19

participation on all of these PGA pilots. And we 20

really have to do a good job. 21

I know, personally, from my com pany, we are 22243

filing a significant number in ACE. We are not able to 1

participate yet in any of the partner government agency 2

tests. But hopefully, by early next year, mid

- next 3

year, we will. And so we'll probably feel some of the 4

same pain that Michael m ay have felt before. 5

We also wanted to mention that mutual 6

understanding of the data requirements

-- if you tell 7

me it's a widget, and I think it's a whatsamajig, we 8

have a little problem here. We've got to make sure 9

that we understand the data and the commercial 10

availability of the data. So the pilot is a very 11

important exercise to make sure that we can produce the 12

data efficiently, and the government agency has the 13

legislative mandate to require it. I'm not too worried 14

about that piece, because I'm

- - our friend at the ITDS 15

board, Mr. Timothy Skud, has been making very sure that 16

everybody knows who needs to perform

-- or to provide 17

what. 18

So, I will quote something that Ms. Smith's 19

colleague, Cynthia Wittenburg, said at a COAC meeting: 20

"We would lik e to have one U.S. efficient government 21

at the border as our goal." So, thank you. 22244

(Applause.) 1

MS. NOVAK: Thank you, Mary Ann. And thank 2

you, again, to all of our presenters, from both this 3

morning's session and this afternoon's session. We 4

appreci ate everybody being here and taking the time. 5

So, we will open the floor to some questions 6

at this point. A couple reminders for our folks on the 7

webcast: you can submit questions at this time to 8

efiling@cpsc.gov. 9

VII. QUESTIONS AND ANSWERS FOR AFTER NOON SESSION 10

MS. NOVAK: Carol? 11

MS. CAVE: Hi. Carol Cave, CPSC. This is 12

actually a question for Bob and for Brenda. 13

You mentioned that, currently, when you're 14

able to take a certificate number, and then that 15

number, I'm assuming, is actually mappe d or checked 16

against a reference file within FSIS

-- I would 17

assume -- and then it autopopulates that document. 18

My question really, Brenda, is for you, and 19

that is, is that data field, given that you've already 20

built it for FSIS, flexible enough to where other 21

agencies who may require a certificate could also use 22245

that mechanism to check and validate certificates? 1

MR. BERCZIK: So, just let me make sure that I 2

was very clear

-- and maybe, obviously, I was 3

not

-- the certificate data that FSIS receives co mes 4

from the foreign government. It does not come from the 5

trade community. Okay? So that is the connection 6

that's different, or in addition to, the connection 7

that we have with the trade data coming through for the 8

application. 9

MS. SMITH: However, t here are other agencies 10

that accept certificates. I would have to check 11

specifically to see if there is one that is flexible 12

enough. Usually, though, there is. And so, if that's 13

a CPSC requirement, we would be happy to work with you 14

on it. 15

MR. CHAUDET : So, if you look at the PGA 16

message sets, there is a LPCO number. That's where you 17

could put a certificate number, just like our 18

registration number for pesticides. 19

MR. BERCZIK: And that's where we utilize that 20

certificate number from the trade, is i n that record 21

group. 22246

MR. LAHAR: Bob, if I'm not mistaken, the 1

certificate data that you have is on your computer 2

system, not housed within Customs. 3

MR. BERCZIK: That's correct. 4

MS. CAVE: Okay. I have one clarification. 5

Brenda actually had on her slide earlier that, I guess, 6

the CPSC was actually working on DIS. And, just to 7

clarify, that is not happening, so don't anybody flip 8

out. 9

MR. JOHOLSKE: Yeah, I had a question for Bob. 10

You had gone over some stats on your pilot. I think 11

you had ment ioned processed 109 entries, 4.5 million 12

pounds, and for 87 percent of them there have been no 13

issues. 14

I was just wondering if you could talk to any 15

benefits that you have seen, from a trade facilitation 16

perspective, in running your pilot. In other word s, 17

have you seen those shipments been able to enter the 18

country quicker because you've had this electronic 19

exchange? 20

MR. BERCZIK: Well, if I may, I think I 21

would

-- I think Mike kind of discussed that, and the 22247

benefits, at least as far as from the FSIS reinspection 1

process. So

-- 2

MR. LAHAR: Yeah. I mean the current process 3

requires the inspector to input the data. And that's 4

only going to happen as quickly as the certificates and 5

the 9540s get over to the I

- House, and only as quickly 6

as the inspect or can put it in. 7

Now, we usually

-- in Champlain, anyways

-- we 8

usually start seeing trucks run about 3:00, 4:00 in the 9

afternoon. So the inspectors come in and, you know, 10

they start keying right away, but if they're out 11

inspecting a truck, they can't be back in the office, 12

inputting data into the system. 13

So, as far as gaining efficiencies for getting 14

trucks across the border quicker, eliminating the need 15

for the inspector to key that data is a big boom in the 16

I

- House. Now, from a broker's perspectiv e, of course, 17

that's shifting labor over onto our side, which we're 18

trying to address. 19

And one thing

-- and I really felt badly when 20

I sat down and I realized that I didn't mention

-- you 21

mentioned New Zealand, Australia, and The Netherlands 22248

as being cou ntries that currently participate in the 1

eCert program. I mean

-- Bob and I were talking 2

beforehand

-- and Canada is, you know, queuing up to be 3

the next one online. And when that information is able 4

to flow into the FSIS system, the data elements that 5

t he brokers would have to transmit are very much 6

minimized. 7

So, when we get to that point, our life is 8

going to get a lot easier. Obviously, the FSIS 9

inspectors that are getting these test shipments are 10

already reaping the benefits, and those particular 11

shipments are expedited through the system. So, yes, 12

when we get there, I do believe that there is going to 13

be great time savings. 14

MR. BERCZIK: So I would add, from a regulator 15

perspective, when that data comes through, and it's 16

pre - populating that app lication, so a lot of the 17

built

- in

-- and I'll use this term loosely

-- "risk 18

assessments" that are built into our system anyway are 19

activated, can be utilized. 20

In addition, there has also been some 21

development, programming development, that we have done 22249

with our interface that allows us to monitor for any 1

potential shipments that would skip the process. We 2

call those failures to present. So, you know, our 3

resources are much more focused. And with the message 4

set data, you know, the programming allows us to do a 5

better job of targeting, if you will. Again, I use 6

that word very loosely, but same thing. 7

MR. LAHAR: One thing to clarify, as well, is 8

FSIS does not have hold authority at the border. So, 9

by the time the trucks

-- you do

-- okay. By the t ime 10

we see the trucks, they've already been cleared by U.S. 11

Customs. And a lot of energy is spent by FSIS trying 12

to track these trucks down that don't report to the 13

I

- House for inspection. 14

MS. CAVE: Sorry, another question, mainly for 15

Mary Ann and Mike

. 16

So, today, in the broker world, for any 17

government agency where they require specific 18

documentation, what is it that you see on your side 19

that signals to you that some kind of 20

information

-- and how is that signaled to you, about 21

additional information might be required for filing? 22250

MS. COMSTOCK: Okay, so this is Mary Ann. 1

Generally speaking, particularly with the current ACE 2

system, where we're transmitting PGA data for FDA, DOT, 3

FCC

-- and we actually have in our own system a flag 4

for TSCA, believe it or not

-- we're looking for a 5

Harmonized Tariff Schedule flag to indicate to us that 6

we have a partner government agency who is interested 7

in that product. 8

You know, the customs broker, as the trade 9

facilitator, really need to have that aid to make s ure 10

that we get it right. We're not mind readers. We 11

really would like to see PGA flags, in my personal 12

opinion. I'm trusting that my broker colleagues would 13

agree. 14

And then, generally speaking, for those that 15

we don't have any data that we transmit t oday

-- for 16

example, Fish and Wildlife

-- my staffer is supposed to 17

be able to identify, just from experience, that if I've 18

got a deer hide from a hunt in Canada, that it's going 19

to require reporting to Fish and Wildlife. Now, Fish 20

and Wildlife does happe n to be at some ports of entry. 21

Therefore, they're also involved in that clearance. 22251

But that's the challenge that we face, is 1

knowing when something comes in, especially if it's an 2

obscure government agency

-- my office in Sweet Grass, 3

Montana, actually does clear articles that are subject 4

to the U.S. Nuclear Regulatory Commission licensing 5

requirements. And so I have copies of licenses on file 6

for my customers in Sweet Grass. But that doesn't 7

happen everywhere. 8

So, it's really the broker's experienc e. I 9

really think that the PGA message set is going to 10

improve the government's work, because they will get 11

more data than they have ever seen. 12

MR. JOHOLSKE: Question for Brenda. This 13

morning a few people expressed concern about 14

limitations that CBP h as in being able, and for CPSC, 15

at least, being able to accept volume

-- large volumes 16

of certificate data, and processing it, and sending it 17

to us. 18

Your slides, I think, went through nicely kind 19

of the time frame for implementation of ACE. I guess, 20

jus t sort of for clarification purposes, could you 21

just, I guess, reiterate, I guess, the ability of CBP 22252

to accept that PG message set data on behalf of CPSC, 1

and push that to us? 2

MS. SMITH: So one of the things that CBP does 3

very well is to intake and man age large amounts of 4

data. 5

If you think about the commercial travel and 6

trade that the U.S. experiences every year, inbound and 7

outbound, and you think about all of the information 8

that is collected on travelers and cargo that go in and 9

out of the countr y, and the messaging, the event 10

messaging that goes back and forth. It's a huge volume 11

of data. 12

CBP's infrastructure is set up to support the 13

fast turnarounds of the messaging back to the trade. 14

We do have redundancy built into the system. But we 15

also believe that the need to test is critical. And 16

so, our testing protocols involve not only the ability 17

to transmit data from a technical perspective, but can 18

we handle the increased volume? 19

So, while I am very confident in our ability 20

to handle millions of transactions a day, I think that 21

what we do want

-- the earlier we can test that 22253

capability, further test that capability, the happier 1

we'll be. 2

MS. CAMPBELL: Hi, this is Jacqueline Campbell 3

from the CPSC, and this question is for Bob and Roy. 4

Do you have any rulemaking activities 5

associated with eFiling going on? And, if so, are you 6

using your pilot to inform that rulemaking activity? 7

MR. CHAUDET: This is Roy from EPA. Yes. 8

(Laughter.) 9

MS. CAMPBELL: Is that yes and yes, or

-- 10

MR. CHAUD ET: Yes and yes. We have two 11

regulatory programs: our pesticide programs

-- the 12

acronym is FIFRA. The notice of arrival is actually 13

implemented through Customs regulation 19 CFR. And so, 14

we are in the process of getting together a regulatory 15

package t o hand over to Customs, hopefully, this 16

winter. And so, we've been working at it, actually, 17

for several years now, trying to scope this out. But 18

we are looking at the public comment period and the 19

pilot to help inform that rule as it's being developed 20

ov er the next few years. 21

We also have a TSCA rulemaking effort 22254

underway, as well, and it's probably a month or so 1

behind the FIFRA rulemaking. And TSCA stands

-- or 2

it's for toxic chemicals. And, again, that is also 3

implemented under 19 CFR, so we hope t o either have the 4

reg package about the same time, or shortly thereafter, 5

going to Customs. 6

That program right now is not looking to do a 7

pilot, that we know of. But I think it remains open. 8

I do have to probably get them to commit, one way or 9

the othe r, very soon. So that's where we are on both 10

of those fronts. 11

MR. BERCZIK: So FSIS amended 9 CFR 327, 381, 12

and 590, which are the meat, poultry, and processing 13

product regulations. That proposed rule has been out 14

in the proposed phase. We already did the comments. 15

Went back for clearance. 16

I could tell you the date that it's going to 17

come out, but I'll just say, for right now, that its 18

publication of the final rule is imminent. 19

MS. CAMPBELL: And do you feel like your pilot 20

has informed any of that rule

- making? 21

MR. BERCZIK: Yes, absolutely. 22255

MS. CAMPBELL: Thank you, both of you. 1

MS. NOVAK: Any questions from the audience? 2

We do have a microphone set up, as earlier, off to the 3

center left in the room. 4

From staff? Oh, great, a question fro m the 5

audience. Can you state your name and affiliation, 6

please? 7

MS. MILLARD: Hi, I'm Sheila Millard with 8

Keller and Heckman. I want to thank everybody for the 9

informative presentation. 10

I had a question for Roy and Bob about the 11

data that you requir e. So, for pesticides and for ODS 12

chemicals, I'm guessing you're gearing it to your 13

registered databases, your registered pesticide, your 14

ODS import allowances, consumption allowances. Is 15

there any

-- and at FSIS, it's the foreign government 16

testing, so you have independent tracking numbers that 17

you're looking to. Is there anything analogous to 18

third party testing that's incorporated in your data 19

sets, or your PGAs that you're looking at? 20

(No response.) 21

MS. MILLARD: So, for

-- what we heard this 22256

mor ning is that what CPSC requires in the 1110 rule is 1

third party testing using an accredited laboratory. 2

And certificates have to include information like the 3

name of the laboratory, where

-- the individual 4

regulations that the specific product must meet. 5

It seems to me that your programs are much 6

more narrow, and much more defined, to a very specific 7

regulatory program that applies to a category of 8

products than what CPSC is proposing. I'm just asking 9

the question, if that assumption is true, and if the re 10

is anything like third party testing that you are 11

tracking through the ACE system with your interaction 12

with CBP. 13

MR. BERCZIK: So I would think that the 14

laboratory

- type issues with CPSC might have some kind 15

of a relationship, or maybe you could paral lel to what 16

FSIS does with the electronic certifications that we 17

get from the foreign governments. I wouldn't think 18

that it's in the scope of what's going on with the data 19

transfer from CBP. 20

But I would like to be clear that the data 21

that we require fro m the trade is all based on that 22257

import inspection application. So that's where our 1

data elements come from, and that's what, you know, we 2

have the authority to collect, and that's what we've 3

asked to collect. 4

Then it becomes an exercise, at least in my 5

opinion, of, okay, so for FSIS purposes we can collect 6

a portion of that data that we require on that form 7

from our foreign government certifications. Then we 8

require the rest of that data to come in from the trade 9

through the message set. 10

I don't know if that answers your question or 11

not. Okay. 12

MR. CHAUDET: So this is Roy from EPA. The 13

answer is yes. 14

(Laughter.) 15

PARTICIPANT: It's always yes. 16

MR. CHAUDET: So, again, I'm an IT guy. But 17

our programs actually have a separate collection that 18

t hey have the authority to do that's directly between 19

the manufacturer to register their pesticide directly 20

with our agency that does not

-- and then, what we do 21

is we take that registration number that's already been 22258

assigned to that product, and we give i t to Customs to 1

check for that product when you file your import filing 2

for the NOA. 3

So, again, it's a separate licensing process 4

directly with our agency. It does not involve Customs 5

at all. Similar with our allowance holders for ODS, as 6

well. 7

MS. M ILLARD: But it's linked to a 8

government

- issued ID, right? 9

MR. CHAUDET: Correct. 10

MS. MILLARD: Yeah, thank you. 11

MR. MULLEN: I was going to make a comment, 12

which is

-- 13

MS. NOVAK: Please state your name and

-- 14

MR. MULLEN: Yes, Gib Mullan from C PSC. I was 15

going to make a comment which is related to, I think, 16

something that Carol was thinking about, and also this 17

morning's discussion. And Al, I see, is behind me in 18

line, so maybe he is interested in this, too. 19

If you have

-- probably the most valuable 20

single piece of information from a certificate, or 21

about a certificate is , is there a certificate. And I 22259

don't know if this is as obvious to everybody in the 1

audience as it is to us, inside CPSC, but you don't 2

really want to have to ask for a cer tificate in every 3

single entry to find out if there is a certificate. 4

So, the number one thing you want to know is , is there 5

-- do you have a certificate. 6

This morning, when you were talking about, 7

like, what are you going to use it for

-- so the most 8

simple and valuable use of the system would be to find 9

out do you have a certificate, not any information on 10

it. Everything else is secondary. 11

So, this morning I was thinking, well, you 12

could just have a box where you check, yes, we have a 13

certificate. And then it took me

-- about two seconds 14

later I realized, well, everybody will cheat on that, 15

you know? 16

(Laughter.) 17

MR. MULLEN: Everybody is going to check that 18

box. But if you have

-- now -- so now we start 19

talking

-- Brenda, you raised the idea o f a certificate 20

number, and the beauty of that slowly sunk in. 21

If you had a certificate number, and that 22260

populated on the PGA message set, now you can target, 1

just based on whether there is a certificate or there 2

isn't a certificate. Later on, there are 3

things

-- there are elements on the certificate, of 4

course, that we could target even better with, and 5

things like which plant made the

-- you know, where was 6

the plant that made the toy? If they're making bad 7

toys for these people, they might be making bad toys 8

for other people, et cetera. 9

And even

-- not to throw a chill into the 10

atmosphere for the test labs, but even

-- you know, you 11

could, over time, determine whether, like, are there 12

test labs that are much more often issuing certificates 13

that are not consistent with the actual compliance as 14

we test. So you could start to have a lot richer 15

information. 16

But those are much more subtle points than 17

just the simple thing of whether there is a certificate 18

or not. 19

One problem I see is I don't think ou r rules 20

currently require there to be a certificate number. My 21

guess is that the test labs, particularly third party 22261

testing, there always would be a certificate number. 1

So we could make this an option. But that, itself, 2

would be a huge advance, just to allow in the PGA 3

message set a space where a certificate number could be 4

required, if nothing else. 5

MR. LAHAR: If I may interject

-- this is Mike 6

with A.N. Deringer

-- have you investigated the Food 7

and Drug Administration's PNSI system? Because 8

it

-- while it's not a perfect analog, it does provide 9

importers the ability to submit information specific to 10

the FDA directly to their servers. And then they're 11

able to provide that number that they receive, a 12

confirmation number, back to the broker, who is then 13

able to transmit that, along with some other 14

information, to U.S. Customs, who feeds it back to FDA. 15

So it's just

-- it's something you might want to look 16

at. 17

MR. MULLEN: This is Gib Mullan again. Mike, 18

this is not responsive to what you're sayin g, although 19

that sounds like a great idea. 20

I forgot one point. Relating to what Nancy 21

MacPherson was saying, there are at least some 22262

manufacturers who have a system which that one number 1

would allow you to hook into also. So, like, we could 2

access your certificates, if you just put that one data 3

element into the system. We wouldn't have to ask you. 4

There may be

-- you know, that's probably more rare 5

than

-- it's more the exception than the rule, but in 6

some cases that would even allow us to go a lot f urther 7

and get more information. 8

MS. NOVAK: Thank you, Gib. Another question 9

from the audience? 10

MR. KAUFMAN: Yes, hi. This is Al Kaufman 11

with the Toy Industry Association. This question is 12

actually for Brenda. Just a follow

- up question to one 13

tha t you responded to from Jim a little earlier. 14

You'd expressed confidence that Customs could 15

handle very large amounts of data. I wanted to 16

clarify. I'm assuming that means that you would be 17

receiving it in the form of a data set. Do you feel 18

just as c onfident if you received that volume of pdf's 19

through the imaging system? 20

MS. SMITH: Slightly

-- 21

MS. NOVAK: Brenda, don't forget your mic. 22263

MS. SMITH: Thanks, thank you. Slightly 1

different issue. And if I was more technologically 2

inclined, I woul d be able to give a better explanation. 3

What I would say is the PG message set, and 4

the entry/entry summary data that we receive, is 5

essentially every transaction. The pdf's, much larger 6

in size, we do not anticipate receiving with every 7

transaction. I n fact, the

-- not only the 8

recommendation made by COAC, but as a government, we 9

are seeing the transmission of pdf files as not the 10

optimal way to communicate with the government. 11

So, it's a capability, but we are looking more 12

for the transmission of da ta elements. 13

MR. KAUFMAN: Understand. Yeah, and 14

obviously, that's the Holy Grail

-- 15

MS. SMITH: But the short answer

-- and sorry 16

to steal a line from Roy

-- is yes. 17

(Laughter.) 18

MR. KAUFMAN: Okay. Yeah. No, just in light 19

of the conversation th is morning, when we were talking 20

about each entry may be involving, you know, hundreds 21

of pdf's, I mean, that was

-- that seems like it would 22264

be a Herculean task. 1

MS. SMITH: We would certainly have to have 2

that discussion. 3

MR. KAUFMAN: Thank you. 4

M R. MILLS

- WINKLER: Fred Mills

- Winkler from 5

SGS Consumer Testing Labs. I am having blue sky 6

thoughts, and some of it relates to what Gib was 7

saying. And this is not really a question, it's just a 8

thought that popped into my head. 9

When I drive any one of my cars into a 10

Valvoline, Jiffy Lube Service, pit place at the 11

dealership, they scan the VIN number, and they pull up 12

all the details on that vehicle: the engine size, the 13

oil capacity, gas capacity. All manufacturers that I'm 14

aware of use UPC codes on their products. 15

I mean , it seems like if the UPC code is 16

already there, and it's a unique identifier, there 17

should be a simple way of adding additional data into 18

that UPC code, because it already tells the 19

manufacturer what the product is that

-- you kno w, the 20

product number, and various other pieces of information 21

possibly even linked to the bill of materials or 22265

anything else. I t would seem that there is a system 1

there that could be translated in simple terms to 2

simply scanning a UPC code and filling th e data fields 3

that way. 4

MR. BLACHERE: This is John Blachere with 5

CPSC. Within the PG message set, and within the 1110 6

elements, there is a place for the UPC or GTIN to be 7

provided, or a code to be provided with the set of 8

information. And it has been contemplated by the staff 9

to possibly utilize that type of a feed, where we could 10

actually work with the cloud and possibly get the 11

additional information. We've not explored all the 12

data elements that would be available through the cloud 13

through that typ e of an instance, but it is part of our 14

thought process. 15

MR. MILLS

- WINKLER: Okay, thanks. 16

MR. BLACHERE: Thank you. 17

MS. NOVAK: Another question? 18

MR. BERCZIK: I just want to add to

-- Bob 19

Berczik, FSIS. We too are exploring possibilities of 20

util izing the business

- to

- government connections, and 21

the data that's available through global trade 22266

identification numbers. 1

It's also a very big topic that's 2

conversational at ITDS, and so we are certainly all 3

looking at utilizing, you know

-- it's availabl e. 4

MR. CHAUDET: And this is Roy from EPA. I 5

just want to jump in as a third here. 6

Actually, the government agencies through ITDS 7

actually has a product code work group that's been 8

working for several years. They've actually gone to 9

the World Customs Organization to talk about sort of 10

use of standard product codes. And I'll be frank. 11

From the EPA perspective, we're very interested because 12

HTS codes do not define our commodities very well at 13

all. 14

And so, unfortunately, the ones that we've 15

seen for the chemical industry are not mature yet. But 16

for other products they are fairly well mature. And we 17

have Doug Bailey of USDA as a sort of

-- heading that 18

effort up. So this is something that

-- it's a long 19

haul to get there, but it is an active discuss ion 20

that's been going on for a couple of years. 21

MR. DODD: Quin Dodd, independent product 22267

safety attorney. And since this is the time of the 1

program when you're inviting simplistic solutions to 2

complex problems

-- 3

(Laughter.) 4

MR. DODD: But I think Gib actually, as is 5

typical for him, had the answer. 6

But here is an even simpler answer. How 7

about, for those

-- if the object, or if the key

-- if 8

the key object is to encourage people to, in fact, 9

produce certificates that they're legally required to 10

do, how about

-- and I know compliance isn't 11

necessarily here, but how about throwing the book at 12

those who willfully disregard that mandate, and then 13

leave the other 99.5 percent of companies alone? Food 14

for thought. Thank you. 15

MS. NOVAK: Thank you. We have about five 16

minutes left, if there is any final questions from the 17

audience or the staff. 18

Yes, sir? 19

MR. MURRAY: Hi. Sean Murray from the NAFTZ, 20

and I'm kind of bringing this back around, since I was 21

one of the original presenters this morning . But the 22268

comment earlier about finding a unique identification 1

number for certificates, I like the idea. But I also 2

want to point out one of the hazards. And maybe this 3

will be a comment for you, Brenda. 4

With foreign trade zone users and operators we 5

talked about earlier this morning, high volume entries, 6

many, many lines. And one of the things they're 7

excited about with ACE is currently there is a 999

- line 8

cut

- off. And it's going away, and they're very 9

excited, because they can make bigger entries. 10

If we have unique certificate numbers, we're 11

talking about potentially hundreds of them, or 12

thousands, per entry. If we can do something that's 13

more of, like, just a declaration you have a 14

certificate, that becomes a much smaller data 15

collection. It m ight be less useful to the Commission, 16

but it's certainly much easier. 17

And that's kind of the direction that Customs 18

has gone over the years, in terms of how do you declare 19

things for free trade agreement qualification. It's no 20

longer that you have to p resent the certificate with 21

the entry; you present a declaration that you're making 22269

the claim, and Customs accepts that as you have the 1

certificate. 2

MS. NOVAK: Thank you. We can take one final 3

question. 4

(No response.) 5

MS. NOVAK: Everyone is ready to go, I think. 6

Carol, I could invite you up at this time for 7

closing remarks. 8

Thanks again to all of our presenters today. 9

VIII. CLOSING REMARKS 10

MS. CAVE: Thanks, Bonnie. I just wanted to 11

wrap up today and say

-- I do want to say thank you 12

very much for all of you coming today and taking your 13

time out of your busy schedules. I know this is not an 14

easy task, and it's a huge accomplishment to move this 15

issue forward. And hopefully we've got a lot of good 16

feedback today, and a lot of interaction. 17

Just a reminder to everyone, we are very 18

serious about the open comment period. The deadline is 19

October 31st. I know you all spoke today; a lot of it 20

will be part of the public record. But if you really 21

just want to make sure that we got your word, pl ease do 22270

file those comments at the regulations site. 1

I also want to remind everyone we did say, in 2

the notice for this meeting, the issue

-- and you've 3

heard it throughout the day, both from our federal 4

partners, the need for pilots, and things of that 5

n ature. I would like you to all please be on the 6

lookout for any future developments that we do there, 7

because we do take this very seriously, and we do want 8

it to work very well. So please be on the lookout for 9

that. 10

And then, lastly, this day could no t be 11

possible without the staff who actually put this 12

together. And they're probably hiding behind that 13

closed door, but Celestine Kish has been amazing at 14

putting this all together. She's actually over here 15

from Bonnie's staff on rotation to me. And, 16

u nfortunately, she's going back. But she has put this 17

entire thing together with very little assistance from 18

my team, but a lot of help from the general counsel's 19

office, Mary House, and also Alison

-- Alison? Oh, my 20

God, I'm so sorry. Jacqueline Campbel l. 21

So, you know, I just say to you guys thank you 22271

very much for all the work that you guys have done, and 1

then we look forward to working with all of you in the 2

future. So thank you. 3

(The meeting was concluded at 3:58 p.m.) 4

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