The Puerto Rico Ports Authority (PRPA) has issued a proposed regulation that would require all inbound cargo containers, regardless of whether the container was shipped from a company located in the United States or from a company located in a foreign country, to be scanned for contraband. This requirement would be in addition to any security checks that may be performed by Customs and Border Protection (CBP), and would apply to companies that are considered by CBP to be low-security risks, such as CTPAT certified companies. If implemented, the regulation would result in (1) a significant new expense for U.S. companies shipping to Puerto Rico, and (2) likely significant supply chain delays. In addition, it opens up the possibility that other states may adopt similar regulations that burden interstate commerce to raise revenue for the state. In current form, the proposed PRPA regulation would require the following:
- 100 percent scanning of inbound cargo containers, which likely will result in significant delays along the entire supply chain; and
- A scanning fee ranging from $58 to $70 per container (depending on the size of the container).
The PRPA asserts that the proposed 100 percent scanning requirement is necessary to protect the health and safety of its citizens. Although protecting the safety of its citizens is a laudable goal of all governments, the PRPA’s purported safety rationale for scanning 100 percent of all inbound containers – even from other states and regardless of the security profile of the shipper -- is suspect because it requires the third party scanning company to pay the PRPA $10 per each container scanned, which could result in millions of dollars of additional revenue for Puerto Rico.
The PRPA also claims that various customs and security laws authorize it to scan 100 percent of inbound containers, regardless of whether a particular container is shipped from a state within the United States or from a foreign country. Although those laws may authorize the scanning of inbound containers from a foreign country, nothing in any of those laws authorizes the scanning of cargo containers originating in individual states or territories. In fact, it is likely that the proposed PRPA scanning regulation violates the dormant commerce clause of the U.S. Constitution because Puerto Rico is enacting a regulation that excessively burdens interstate commerce -- something that it is not imposing on Puerto Rican entities that export goods from Puerto Rico.
If the PRPA scanning regulation were to become the norm, under the guise of health and safety claims, states could scan -- and charge fees -- for cargo containers originating in any other state. For example, what would happen if -- under the guise of protecting the health and safety of New York -- the state of New York imposed a requirement that 100 percent of trucks carrying cargo originating in states outside of New York be scanned for contraband and charged a fee for each truck that was scanned? The likely result would be that many states would adopt similar revenue raising schemes and interstate commerce would grind to a standstill.
Moreover, the PRPA scanning regulation would require 100 percent scanning of inbound cargo containers, regardless of the security profile of the entity shipping the merchandise. For example, the proposed PRPA regulation does not exempt entities that have been C-TPAT certified by CBP. Thus, even though CBP considers a C-TPAT certified entity to be a low-security risk, the proposed PRPA regulation would require that 100 percent of that entity’s inbound cargo containers be scanned for contraband.