5.2 Continuous vs. Single Transaction Bonds and Activity Codes

5.2 Continuous vs. Single Transaction Bonds and Activity Codes

Quick Answer / Core Regulatory Metrics: Continuous Bond (National / Revenue Division) vs STB (Port of Entry) | Activity Code 1 (19 CFR 113.62: Importer/Broker) | Activity Code 2 (19 CFR 113.63: Custodian) | Activity Code 3 (19 CFR 113.64: Carrier) | Activity Code 4 (19 CFR 113.73: FTZ Operator) | Centralized filing via ACE.

Continuous vs. Single Transaction Bonds (STBs)

Customs bonds are structurally classified into two operational categories: Single Transaction Bonds (STBs) and Continuous Bonds. The legal parameters governing their filing, jurisdiction, and operational scope are codified in 19 CFR Part 113, Subpart B.

Single Transaction Bonds (STBs)

A Single Transaction Bond covers strictly one customs transaction, entry, or commercial movement. Key characteristics include:

• Transaction-Specific Scope: An STB is executed for a single entry summary (e.g., a one-time entry of specialized machinery), a single temporary importation under bond (TIB), or an isolated in-bond transit movement.
• Local Port Jurisdiction: STBs are tendered directly to the Port Director at the specific CBP Port of Entry where the merchandise is arriving and being declared. The port director exercises discretion regarding bond acceptance and valuation sufficiency.
• Non-Revolving Coverage: Once the specific entry or transaction is completed, liquidated, or cancelled, the bond's utility is fully exhausted. It cannot be applied to subsequent importations.

Continuous Bonds

A Continuous Bond provides umbrella financial coverage for recurring customs transactions spanning multiple ports over an extended, indefinite duration:

• Nationwide Operational Scope: A single continuous bond covers import transactions conducted at any and all CBP ports of entry throughout the United States, Puerto Rico, and the U.S. Virgin Islands.
• Centralized Electronic Administration: Continuous bonds are filed electronically and approved centrally by the CBP Revenue Division (Office of Finance, Indianapolis). They are registered directly in the Automated Commercial Environment (ACE).
• Open-Ended Duration: Unlike an annual commercial insurance policy that expires on a fixed date, a continuous customs bond remains active from year to year without annual re-execution, continuing until affirmatively terminated by the surety or principal under 19 CFR 113.27.

Commercial Decision Criteria: Continuous vs. STB

When advising commercial clients, a licensed customs broker evaluates three primary operational criteria:

1. Importation Frequency and Premium Economics: STB premiums are typically charged on a per-shipment basis, ranging from $3.00 to $10.00 per $1,000 of bond face value, usually subject to a minimum charge of $50 to $100 per entry. In contrast, an entry-level $50,000 Continuous Activity Code 1 Bond commands an annual premium typically between $400 and $600. Consequently, an importer executing more than 3 or 4 formal entries per year achieves direct monetary savings by securing a continuous bond.
2. Cargo Clearance Velocity and ACE Processing: Continuous bonds are validated instantaneously and automatically by ACE at the moment the customs broker transmits the electronic entry data (CBP Form 3461 equivalent). This allows immediate "paperless" release upon vessel arrival. Conversely, an STB frequently requires manual processing, physical or electronic document submission, and port officer review, introducing administrative delays of 24 to 72 hours at the port.
3. Administrative Overhead and Collateral: Securing individual STBs requires repeated credit vetting, individual bond applications, and frequent demands by corporate sureties for 100% cash collateral from infrequent or foreign importers. A continuous bond establishes a single underwriting line of credit.

---

The Bond Activity Code System (19 CFR Part 113, Subpart G)

CBP Form 301 is a standardized, modular legal document designed to cover vastly diverse trade operations. Rather than creating separate bond forms for every industry, CBP utilizes a system of Activity Codes. Each activity code incorporates by reference an explicit set of statutory conditions codified in 19 CFR Part 113, Subpart G.

A single CBP Form 301 may be executed for a single activity code, or it may combine multiple activity codes under a consolidated continuous bond (e.g., combining Activity Code 1 and Activity Code 2 for an importer operating its own bonded warehouse).

Two related sections round out Subpart G: 19 CFR 113.74 (indemnity of a complainant under Section 337 of the Tariff Act) and 19 CFR 113.75 (deferral of duty on large yachts imported for sale at U.S. boat shows).

CITATION TRAPS IN THIS TABLE: Three pairings are routinely swapped in distractors and are worth over-learning. Activity Code 4, the FTZ operator bond, is 19 CFR 113.73, not 113.65. 19 CFR 113.65 is the drawback bond — the conditions a claimant must carry to receive accelerated payment of drawback (Activity Code 1a). And the airport customs security area bond conditions live in Appendix A to Part 113, not in a numbered section.

---

In-Depth Analysis of Core Activity Codes

1. Activity Code 1: Importer or Broker (19 CFR 113.62)

Activity Code 1 is the most heavily utilized bond on the CBLE. It secures the basic importation of merchandise into the customs territory of the United States. Under 19 CFR 113.62, the principal and surety agree to six mandatory covenants:

• Agreement to Pay Duties, Taxes, and Charges (113.62(a)): The principal agrees to pay all lawful duties, taxes, and fees found due upon entry, liquidation, or reliquidation, including antidumping/countervailing duties, merchandise processing fees, harbor maintenance fees, and billing interest.
• Agreement to Make Timely Entry Summary (113.62(b)): The principal guarantees that a complete entry summary (CBP Form 7501 or ACE electronic summary) and estimated duty deposit will be filed within 10 working days from the physical release of the merchandise under CBP Form 3461.
• Agreement to Produce Documents and Evidence (113.62(c)): The principal agrees to furnish any commercial invoices, packing lists, export certificates, declarations of origin, or partner government agency documents demanded by CBP within the statutory timeframe (typically 120 days from entry summary or specified demand date).
• Agreement to Redeliver Merchandise (113.62(d)): The principal agrees that if merchandise is found to be non-compliant, misbranded, prohibited, restricted, or subject to PGA conditional release refusal, it will promptly redeliver the goods to CBP custody within 30 calendar days of the date of a formal Notice to Redeliver (CBP Form 4647), or within the designated conditional release period.
• Agreement to Rectify Non-Compliance (113.62(e)): If merchandise is released under conditional authority, the principal agrees to mark, label, clean, fumigate, or destroy the goods in strict compliance with federal laws under CBP supervision.
• Agreement to Exonerate the United States (113.62(g)): The principal agrees to indemnify and hold harmless the United States and CBP officers against any legal liability, costs, or damages arising from the entry, detention, or examination of the merchandise.

2. Activity Code 2: Custodian of Bonded Merchandise (19 CFR 113.63)

Activity Code 2 secures parties authorized to hold, transport, or manipulate merchandise that has arrived in the United States but has not yet been formally entered for consumption or duty-paid. Entities requiring this bond include:

• Proprietors of customs bonded warehouses (the eleven classes are established by 19 CFR 19.1; warehouse entries and withdrawals are governed by 19 CFR Part 144).
• Operators of Container Freight Stations (CFS) and Centralized Examination Stations (CES).
• Bonded Cartmen and Lightermen licensed under 19 CFR Part 112 to transport bonded freight locally between terminals and examination facilities.
• Bonded Common Carriers holding merchandise moving in-bond under 19 CFR Part 18.

Core Bond Conditions (19 CFR 113.63):

• Safe receipt, physical security, and absolute inventory tracking of all bonded cargo.
• Uncompromising rule: Delivery or release of bonded merchandise ONLY pursuant to an authorized CBP permit or electronic release authorization.
• Immediate notification to CBP of any physical discrepancies, shortages, overages, or structural damage.
• Unrestricted right of CBP officers to enter and inspect the premises, security logs, and inventory at any time.

3. Activity Code 3: International Carrier (19 CFR 113.64)

Activity Code 3 governs operators of international commercial conveyances—commercial ocean vessels, international cargo and passenger aircraft, cross-border motor carriers, and interstate pipelines. Conditions include:

• Timely Manifest Transmission: Accurate advance transmission of cargo and passenger manifests via Automated Manifest System (AMS) and Advance Passenger Information System (APIS).
• Prohibition Against Unpermitted Lading or Unlading: Conveyance operators covenant that no merchandise, baggage, or passengers will be unladed or discharged without a specific CBP permit or approved preliminary entry.
• Carrier Control and Custody: Agreement to maintain control over all imported goods until released by CBP, and to transport cargo safely to declared ports of destination.
• Payment of User Fees and Overtime: Payment of all statutory conveyance arrival fees, passenger inspection fees, and reimbursable CBP agricultural/customs overtime charges.

4. Activity Code 4: Foreign Trade Zone Operator (19 CFR 113.73)

Activity Code 4 binds operators of Foreign Trade Zones established under the Foreign Trade Zones Act (19 U.S.C. §§ 81a–81u) and 19 CFR Part 146. A bond of a foreign trade zone operator must contain the conditions of 19 CFR 113.73 and must be a continuous bond; there is no single-transaction FTZ operator bond. Conditions include:

• Compliance with all FTZ Board operating mandates and CBP zone directives.
• Strict maintenance of the Foreign Trade Zone Inventory Control and Recordkeeping System (ICRS), accurately reflecting the admission, manipulation, manufacturing, destruction, and physical transfer of all merchandise.
• Proper accounting for the statutory zone status of goods: Privileged Foreign (PF), Non-Privileged Foreign (NPF), Domestic (D), or Zone-Restricted (ZR).
• Guarantee that no merchandise will be removed from zone boundaries into the U.S. customs territory without a formal entry for consumption (Entry Type 06) and payment of all applicable duties, taxes, and fees.

5. Specialized Activity Codes: 5 and 11

• Activity Code 5: Commercial Gauger and Commercial Laboratory (19 CFR 113.67): Binds commercial laboratories and commercial gaugers accredited under 19 CFR Part 151 to accurately measure, sample, and assay bulk commodities (such as crude petroleum, petrochemicals, and liquid agricultural products). Guarantees adherence to ASTM standards and honest reporting of volume, temperature, and specific gravity.
• Activity Code 11: Airport Customs Security Area (Appendix A to 19 CFR Part 113): Binds commercial entities (airlines, ground handlers, caterers, fueling companies) operating within the secured Federal Inspection Services (FIS) areas of international airports. Guarantees that employees will display valid CBP security identification badges, observe access controls, and prevent unauthorized personnel or uninspected contraband from exiting the international transit zone.

---

Comparative Matrix: Customs Bond Activity Codes & Compliance Defaults