Carriers: Transport goods from a foreign port to a U.S. port. Four of these 10 data elements are identical to  elements submitted later for customs entry purposes. ATS Targeting

The collection of these additional 10+2 data elements is intended to  improve high-risk targeting efforts. CBP’s Regulatory Assessment Generally Adheres to OMB Guidance, but Could Have Been Improved by Additional Information

CBP’s regulatory assessment generally adheres to OMB guidance by  including required elements—such as a statement of the need for the  proposed action, an examination of alternative approaches, and evaluation  of the benefits and costs. Additionally, a more complete analysis of the uncertainty involved in  estimating key variables used to evaluate costs and benefits, and  additional information regarding some costs to foreign entities, could also  have improved CBP’s regulatory assessment. Greater transparency regarding the selection of alternatives could have  improved the assessment by justifying the limited scope of the alternatives  analyzed in the regulatory assessment and providing insight into CBP’s  decision making. OMB guidance  states that regulatory analyses should be transparent, and in particular  that such analyses should clearly explain the assumptions used in the  analysis. However,  the regulatory assessment does not describe or analyze how or why CBP  made this judgment. CBP officials acknowledged that, to the  extent data are available on these costs, this information could be added  to the regulatory assessment. CBP Has Collected, Assessed, and Shared Information with the Trade Industry to Monitor and Help Improve Compliance with and Implementation of the 10+2 Rule

CBP has collected and assessed a variety of information, such as daily  compliance reports, and has shared information with the trade industry,  through importer progress reports and outreach events, to help improve  compliance with and implementation of the 10+2 rule. CBP is also using  information it has collected to monitor and help improve implementation  of the rule, for example, by posting a “Frequently Asked Questions”  document on its Web site that addresses some common problems. CBP Is Using Information It Has Collected to Monitor and Help Improve Implementation of the 10+2 Rule

CBP officials said that CBP is generally satisfied with the status of ISF  implementation, based on CBP data that indicate that approximately 80  percent of shipments in July 2010 were compliant with the ISF  requirement. CBP Has Not Yet Finalized Its Targeting Criteria to Identify Risk Factors in 10+2 Data, and CBP’s Use of the Data Has Not Impacted Trade Flow

Data generated by the 10+2 rule are available for use in targeting efforts,  such as identification of unmanifested containers, but CBP has not yet  finalized the ATS national security weighted rule set—CBP’s primary  targeting criteria within ATS for identifying high-risk cargo containers—to  identify risk factors present in the ISF data set. Additionally, CBP officials stated that access to vessel stow plans—one of  the two data elements provided by carriers—has enhanced CBP’s ability to  identify potentially dangerous unmanifested containers—containers and  their associated contents not listed on a ship’s manifest that pose a  security risk in that no information is known about their origin or  contents. According to best practices in project  management, the establishment of project milestones and time frames can  help ensure timely project completion. However,  establishing milestones and time frames for having the finalized weighted  rule set in place could help guide CBP in such testing and provide CBP  with goals for completing interim steps and finishing this project, thus  better positioning it for targeting high-risk cargo, thereby fulfilling the  statutory purpose of the requirement to collect the additional data  elements. If CBP publishes an update to its regulatory assessment,  as CBP officials said that CBP may do, further transparency could help  clarify CBP’s decision making in formulating the 10+2 rule. In addition, a  more complete analysis—with further analysis of uncertainty for both  costs and benefits, as well as certain costs to foreign entities—could help  to provide better information about the circumstances under which  benefits justify costs. To accomplish the statutory purpose of collecting the 10+2 data, which is  to enhance CBP’s ability to target high-risk cargo containers, CBP plans to  update the ATS national security weighted rule set to identify risk factors  in 10+2 data. Recommendations for Executive Action

We recommend that the Commissioner of CBP take the following two  actions:  If CBP updates its Regulatory Assessment and Final Regulatory  Flexibility Analysis, provide greater transparency in the updated  assessment regarding the information which contributed to decisions  made in developing the 10+2 rule by including information, such as:  1.  a discussion of how the alternatives were selected for analysis,  including alternatives that were considered but not included in the  analysis, and what information CBP considered in addition to the  regulatory assessment to conclude that the alternative requiring the  Importer Security Filing, with an exemption for bulk cargo, and the  Additional Carrier Requirements was preferable over the other  alternatives analyzed;   2.  an uncertainty analysis for the costs to importers for a day of delay  and for the value of statistical life; and   3.  to the extent data are available, estimates for lost profits borne by  foreign entities. Homeland Security: Preliminary Observations on Efforts to Target  Security Inspections of Cargo Containers.
Why GAO Did This Study

Cargo containers present significant security concerns given the potential for using them to smuggle contraband, including weapons of mass destruction. In January 2009, U.S. Customs and Border Protection (CBP), within the Department of Homeland Security (DHS), implemented the Importer Security Filing (ISF) and Additional Carrier Requirements, collectively known as the 10+2 rule. Collection of cargo information (10 data elements for importers, such as country of origin, and 2 data elements for vessel carriers), in addition to that already collected under other CBP rules, is intended to enhance CBP's ability to identify high-risk shipments. As requested, GAO assessed, among other things, (1) the extent to which CBP conducted the 10+2 regulatory assessment in accordance with Office of Management and Budget (OMB) guidance, (2) how CBP used information it collected and assessed to inform its efforts to implement the 10+2 rule since January 2009, and (3) the extent to which CBP has used the additional 10+2 data to identify high-risk cargo. GAO analyzed relevant laws, OMB guidance, and CBP's 10+2 regulatory assessment, and interviewed CBP officials.

What GAO Found

CBP's 10+2 regulatory assessment generally adheres to OMB guidance, although greater transparency regarding the selection of alternatives analyzed and a more complete analysis could have improved CBP's assessment. CBP's regulatory assessment addresses some elements of a good regulatory assessment, as required by OMB, such as the need for the proposed action and evaluation of the benefits and costs. However, the assessment lacks transparency in that it does not explain how the four alternatives considered for the rule--variations in what and how many data elements are to be collected--were selected or how the preferred alternative was chosen. OMB guidance states that regulatory analyses should clearly explain the assumptions used in the analysis. If, as CBP officials stated, an update might be published in the future, greater transparency could help justify the scope of alternatives analyzed in the regulatory assessment and provide insight into CBP's decision making. Further, a more complete analysis of the uncertainty involved in estimating key variables used to evaluate costs and benefits could have improved CBP's regulatory assessment by providing better information about the circumstances under which benefits justify costs. CBP officials said that to the extent that data are available, this information could be added to an updated regulatory assessment to improve its completeness. CBP is using information it has collected, assessed, and shared with the trade industry to monitor and help improve compliance with and implementation of the 10+2 rule. For example, CBP collects daily information on the ISF compliance of importers' shipments at each U.S. port to monitor the status of ISF implementation, as well as data on vessels arriving in U.S. ports for which carriers did not supply information such as the position of each cargo container (stow plans). CBP data indicate that in July 2010, approximately 80 percent of shipments were ISF compliant, and CBP officials said that most carriers had submitted stow plans. CBP publishes answers to frequently asked questions on its Web site and has conducted outreach sessions with the trade industry to discuss errors in ISF submissions and help improve compliance. The 10+2 rule data elements are available for identifying high-risk cargo, but CBP has not yet finalized its national security targeting criteria to include these additional data elements to support high-risk targeting. CBP has assessed the submitted 10+2 data elements for risk factors, and according to CBP officials, access to information on stow plans has enabled CBP to identify more than 1,000 unmanifested containers--containers that are inherently high risk because their contents are not listed on a ship's manifest. CBP has conducted a preliminary analysis that indicates that the collection of the additional 10+2 data elements could help determine risk earlier in the supply chain, but CBP has not yet finalized its national security targeting criteria for identifying high-risk cargo containers or established project time frames and milestones--best practices in project management--for doing so. Such efforts could help provide CBP with goals for finishing this project, thus better positioning it to improve its targeting of high-risk cargo.

What GAO Recommends

GAO recommends that CBP should, if it updates its regulatory assessment, include information to improve transparency and completeness, and set time frames and milestones for updating its national security targeting criteria. DHS concurred with these recommendations.