A bond on file is automatically renewed for the year, at that amount, and no changes are permitted. Any change to the bond amount requires a new bond in that revised amount, which does not replace but is in addition to the bond on file with the incorrect amount.
As part of the original SGIP PAP25 to harmonize solar data with developers, financial markets, utilities and regulators members of the XBRL-CET working group seek areas where legacy systems, policies and procedures unnecessarily impose inefficiencies, add cost and undermine the bankability of solar projects.
The XBRL-CET working group can contribute where transitioning to digital and enabling data interoperability will immediately improve administration, reduce costs and make solar more bankable.
Administration of the US Customs duty, and the requirement of importers to provide financial security to guarantee payment of that duty, is an example where utilization of the XBRL data standard, combined with the solar data elements that are now part of the XBRL taxonomy because of the DOE SunShot funded Orange Button, can provide US Customs with the digital resources and tools to better identify, track and administer custom duty obligations.
Currently surety companies that provide importers bonds to cover their financial obligations to US Customs have the challenging situation where they are provided detailed monthly reports on each shipment, but the bonds themselves have no flexibility to adjust to the actual liability, and liability stacks year after year without the surety being advised of what the outstanding liability is, or when that liability will be terminated. This leaves the surety with ever increasing financial exposure as years pass and bonds stack up, and requires importers to finance future debt that doesn’t exist.
It is ironic that US Customs is one of the nation’s leading agencies for modernizing systems by implementing electronic bonding, which provides significant improvements in efficiency, failed to also modernize the administration for managing the surety bond exposure so legacy inefficiencies are inadvertently carried forward.
Our recommendation to US Customs is to implement XBRL and secure a return on the investment made by DOE under Orange Button by adopting the data terms and definitions in the expanded XBRL taxonomy to accurately track and administer financial obligations, including adjusting the surety requirement to only cover actual outstanding obligations, and for the current bond in place to cover all obligations thereby releasing old bonds when new bonds are issued.
Requiring surety markets to provide financial protection for unquantified exposures for an unknown time period makes the importer responsible to secure surety credit for obligations that do not exist, for which the surety is rightly due premium if the bond is outstanding.
Reducing the uncertainty by accurately quantitating the financial security required will reduce the cost of financial guarantees, without any loss of protection for US Customs.
Modernizing US Customs systems to utilize XBRL, along with better tracking of financial obligations will make solar more bankable and be a return on the investment made by DOE.
Funding for the effort could come from the MGT Act, or other financial resources dedicated to help agencies modernize their IT system, and our working group will volunteer where we can to assist.
XBRL-CET Working Group for Customs
K. Dixon Wright, Chief Cat Herder
Dixon has been very active in Orange Button and leads collaboration efforts to promote adoption of federally recognized machine readable data standards that can be used without constraint from license, trademarks or other fees. Dixon represents a number of solar importers, and provides surety bonds to cover US Customs duties.
From the US Customs Bond Form
This bond remains in force for one year beginning with the effective date and for each succeeding annual period, or until terminated.
From US Customs Website:
Unfortunately, the portion of ACS that tracks bond status was designed long ago, without anticipating the Reconciliation Prototype..
From the US Customs Bond Form
This bond constitutes a separate bond for each period in the amounts listed below for liabilities that accrue in each period.
Modernizing the US Customs Surety Bond Administration to Make Solar More Bankable
Leveraging the US DOT Orange Button and XBRL
Every year the liability compounds, but the liability is not defined and reconciliation and liquidation can take considerable time.
Requires financing debt that does not exist, and may never become due.