Cargo Systems Messaging Service

CSMS #49319147 - Clarifying Bond Requirements for Pipeline Operators

On August 31, 2021, the Acting Executive Director, CBP Office of Trade, Trade Policy and Programs, issued a memorandum to CBP personnel to clarify that a basic custodial bond with the conditions found at 19 C.F.R. § 113.63 (Activity Code 2) is required to be filed by the owner or operator of a pipeline to secure any movement of merchandise imported through the pipeline that is otherwise not secured by a basic importation and entry bond with the conditions found at 19 C.F.R. § 113.62 (Activity Code 1). In other words, the movement of imported merchandise through a pipeline must be secured by either a basic importation and entry bond or a basic custodial bond.

A basic custodial bond is still required to transport merchandise that is not yet entered and is intended to be entered later after transport to a different port or is intended for export (also known as “transportation in bond” or “in-bond movement”). See 19 C.F.R. §§ 18.1, 18.20, 113.63. This requirement is unchanged by the clarification provided above. The in-bond movement requirements were made clear in Treasury Decision 96-18, which (1) stated that “Customs Regulations pertaining to transportation in bond apply to transportation by pipeline”, (2) amended the definition of “common carrier” to include a “common carrier of merchandise owning or operating . . . a pipeline,” and (3) detailed some pipeline-specific in-bond procedures. See 19 C.F.R. §§ 18.0(b), 18.31; Warehouse Withdrawals; Aircraft Fuel Supplies; Pipeline Transportation in Bond of Merchandise, 61 Fed. Reg. 6,772 (Feb. 22, 1996). Moreover, in HQ ruling H256573 (May 1, 2015), CBP explained that merchandise imported by pipeline that is not entered for consumption and secured by a basic importation and entry bond must be secured by a basic custodial bond under the transportation in bond regulations.

At this time, pipeline operators are not required to obtain an international carrier bond with the conditions found at 19 C.F.R. § 113.64 (Activity Code 3) in addition to the basic custodial bond or basic importation and entry bond.

This clarification will be included in the next version (version 10.75) of the Automated Commercial Environment Entry Summary Business Process Document posted on CBP.gov.

Questions related to this clarification should be directed to Office of Trade, Trade Policy and Programs, Bond Policy at otbond@cbp.dhs.gov.