BRO-4-01-CO:R:C:E 225000 JRS
Mr. Leroy F. Berven, CHB
Global Transportation Services Inc.
1930 Sixth Avenue South, Second Floor
Seattle, WA 98134
RE: Power of attorney; Sufficiency of a sample Limited Power of
Attorney to obligate the Activity 2 Customs bond of a
bonded carrier on an in-bond shipment document (CF 7512);
19 CFR 141.31(a); delegation of limited signature
authority for in-bond documents; 19 CFR 111.3(d)
Dear Sir:
This is in response to your letter dated October 8, 1993,
requesting our opinion on the acceptability of your proposed
language for a limited power of attorney to be executed by another
bonded carrier with whom you do business.
FACTS:
No facts presented. However, the following background
circumstances are set forth: Your company, in its corporate
capacities as a U.S. Customs Broker, international freight
forwarder, Customs bonded carrier, Customs bonded cartman, etc.,
frequently moves (or causes to be moved) imported merchandise which
remains under U.S. Customs bond at time of movement. Your
company's bond is used for movements via its own vehicles, and/or
under circumstances in which the company retains sufficient control
of the in-bond merchandise at origin, destination, and points
between.
In other cases, where such in-bond merchandise is to move via
other carriers, and your company does not exercise sufficient
direct control at origin and/or destination to be comfortable about
obligating its bond for such movements, your company arranges for
that merchandise to move via another bonded carrier, so that
carrier's Activity 2 Customs bond may be obligated for that
movement. In such a case, when that carrier's Activity 2 bond is
obligated by execution of a CF 7512 or other appropriate in-bond
document, showing that second carrier as in-bond carrier of record,
the individual signing the in-bond document on behalf of the
carrier must be duly authorized to do so, which entails an
authorized carrier representative to come to your office for the
sole purpose of signing the in-bond document on behalf of the
second bonded carrier, or for you to take those documents to the
other carrier's office for signature.
You have proposed an alternative to the above described
approach by use of a limited power of attorney (POA) by which your
company could obligate the other carrier's Activity 2 Customs bond
to reduce your company's exposure to what you feel are acceptable
risk levels. You state most carriers with whom you do business
have indicated a willingness to execute a POA, when it explicitly
restricts the signature authority of your company and your
authorized employees, for in-bond documents only.
The drafted limited POA, in either letter form on the issuing
company's letterhead or in a document form, reads as follows:
"[Legal name of company], a corporation doing business
under the laws of the State of _______, and having an
office and place of business at [address of headquarters
office], hereby constitutes and appoints Global
Transportation Services, Inc., and its licensed officers,
and individuals specifically authorized to act for said
corporation by power of attorney, as agents and attorneys
in all Customs Districts, authorized to sign Customs Form
7512 on behalf of [legal name of company]. This
authorization is expressly limited to Customs Form 7512,
and does not include authority to sign any other
documents or forms on behalf of [legal name of company]."
If it is necessary to further restrict such a POA before a
carrier will grant it, additional language may include:
"This authorization is further limited to shipments
tendered to [legal name of company] for transportation
services," and/or "this authorization is effective until
________ __, 19__."
[Signature]
[Name and title of signer]
ISSUE:
Whether the drafted language in the sample limited power of
attorney, as set forth above in the FACTS section, effectively
obligates the Activity 2 Customs bond of the other carrier.
LAW AND ANALYSIS:
Bonded carriers are legal monopolies. 19 U.S.C. 1551 and
1553. The general tenet is that by submitting a transportation
entry, the initial bonded carrier obligates itself, under its bond,
for the merchandise received by it for carriage even when the
bonded carrier voluntarily turns the merchandise over to other
carriers, whether bonded or non-bonded. 19 CFR 18.8(a); T.D. 40631
(1925); C.S.D. 79-13. The initial bonded carrier remains liable
for any and all irregularities that occur (shortages, nondelivery,
misdelivery) no matter who is commercially responsible, until all
Customs requirements are met. See 19 CFR 18.8(b).
To avoid the above-stated responsibility when your company
will not be effectuating any part of the transportation movement
itself, you arrange at the outset for that merchandise to move via
another bonded carrier so that your bond will not be obligated.
Your company then has the other carrier's Activity 2 bond obligated
by its execution of a CF 7512 or other appropriate in-bond document
by that carrier. Handling the transaction in this manner, your
company will be relieved from subsequent liability on a
transportation movement provided solely by the other bonded
carrier. Under your proposed plan, if your company had the power
of attorney to sign the in-bond transportation documents on behalf
of the bonded carrier you selected for the transaction, you would
eliminate the need to have an authorized representative of the
carrier sign the prepared transportation document at either its
office or your office.
It is our opinion that the drafted limited power of attorney
effectively delegates to your company the necessary signature
authority needed for the execution of the transportation in bond
document (CF 7512) on behalf of the selected bonded carrier. By
Global having a POA to sign the CF 7512 as the other carrier's
attorney-in-fact, it can legally obligate the Activity 2 Customs
bond. The limited POA, as drafted, accomplishes your company's
objective of commercial convenience and its intended purpose to
effectively transfer bond liability to the actual carrier doing the
transportation movement and complies with the Customs Regulations
on the execution of POAs. See 19 CFR Part 141, subpart C; CF 5291.
As you are probably know, a POA, except a power of attorney
issued by a partnership, may be granted for an unlimited period of
time until revoked in writing or may be granted only for a specific
time period. See 19 CFR 141.34. Thus, the limited POA, with
regard to duration, may be as broad or as narrowly drawn as the
principal wishes it to be.
We agree with your assessment that the signatory of a limited
POA, on behalf of a corporation, be a corporate officer, or
otherwise duly authorized to sign documents on behalf of the
corporation, in the same manner as required under the Customs
Regulations for the signatory of a Customs POA on CF 5291. See
footnote 1, supra.
The preparation and signing of a transportation entry, the CF
7512, has traditionally been exempted from the category of an
"entry" included in the definition of "Customs business" (19 CFR
111.1(c)), which requires a customhouse broker's license pursuant
to 19 U.S.C. 1641 (see 19 CFR 111.3(d); Ruling 729570 JL, dated May
29, 1986; Ruling 729937 JL, dated May 6, 1987; Ruling 722221 MKT,
dated February 22, 1984)(copies enclosed); it appears that this
remains so even with the amendment of 19 U.S.C. 1641(a)(2) by
section 648 of the NAFTA Implementation Act (Title VI, Customs
Modernization), Pub. L. No. 103-182, 107 Stat. 2057, 2207 (December
8, 1993). Therefore, a limited POA may be granted for a specified
limited range of in-bond transportation entry documents so long as
the Customs documents are not "entries" within the meaning of 19
U.S.C. 1484 (consumption entry).
HOLDING:
Through the use of a limited POA, a Customs bonded carrier may
delegate, to another party such as a broker or freight forwarder,
the authority for that other party and its authorized employees to
sign, on its behalf, an in-bond Customs transportation document (CF
7512), thereby obligating the bonded carrier's Activity 2 Customs
bond for the merchandise described in the CF 7512.
Sincerely,
John Durant, Director Commercial Rulings Division
Enclosures