HQ 225000 - 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) - United States International Trade Commision Rulings

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HQ 225000

June 27, 1994

BRO-4-01-CO:R:C:E 225000 JRS

CATEGORY: POWER OF ATTORNEY

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

[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

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