On July 17, 2009, CBP issued guidelines on the assessment and cancellation of claims for liquidated damages for importer security filing (“ISF”) violations (i.e., violations of the “10+2” interim final rule) by importers and vessel carriers. The rule requires importers to submit 10 data points and ocean carriers to submit two pieces of data on US-bound container cargo to CBP. CBP’s guidelines, effective July 17, state that it is a violation to fail to submit an ISF, submit an inaccurate ISF, submit a late ISF, or fail to submit an accurate update or withdraw an ISF when required. CBP indicated that liquidated damages may not be assessed for failure to file an ISF if no bond is in place. Port directors may assess a claim for liquidated damages in an amount of US$5,000 for a late ISF, inaccurate ISFs, inaccurate ISF updates, or failure to withdraw an ISF when required. Additional statutory penalties may be assessed with CBP Headquarters’ approval for “serious or repetitive violations.” Claims for liquidated damages involving late ISFs, inaccurate ISFs or ISF updates may be cancelled if CBP determines that law enforcement goals were not compromised by the violation, upon payment of an amount between US$1,000 and US$2,000 (depending on the presence of mitigating or aggravating factors) for the first violation, and payment of not less than US$2,500 for subsequent violations. However, CBP will not grant relief, even where mitigating factors are present, if CBP “determines that law enforcement goals were compromised by the violation.”
CBP provides the following non-exhaustive list of mitigating factors: (1) Evidence of progress in implementing the ISF requirement during the flexible enforcement period of January 26, 2009 through January 26, 2010; (2) Small number of violations compared to the number of shipments for which ISFs were required; (3) An ISF importer, which is certified as a Tier 2 or Tier 3 member of the Customs-Trade Partnership Against Terrorism (“C-TPAT”), may receive additional mitigation of up to 50 percent of the normal mitigation amount, depending on the tier of C-TPAT participation; (4) Demonstrated remedial action to prevent future violations; (5) Vessel diversion due to factors outside the ISF importer’s control lead to the ISF being filed late and (6) For inaccurate filings, if the ISF filer acquired information from another party in accordance with ordinary commercial practices and can demonstrate that it reasonably believed the information to be true and it was not reasonably able to verify the information, this will be considered an “extraordinary mitigating factor” that may warrant cancellation of a claim without payment. Aggravating factors include: (1) Lack of cooperation with CBP or impeding CBP activity with regard to the case; (2) Evidence of smuggling or attempt to introduce or introduction of merchandise contrary to law, which may be considered an “extraordinary aggravating factor;” (3) Multiple errors on the ISF and (4) Rising error rate on the ISF indicative of deteriorating performance.
The guidelines also address liquidated damages for failure to comply with vessel stow plan and container status message requirements.
In addition to liquidated damages that may be assessed, the guidelines provide that the failure of an arriving carrier or ISF importer to provide the required advance electronic cargo information in the time period and manner prescribed by the regulations may result in the issuance of a do not load (“DNL”) hold, the delay or denial of a vessel carrier’s preliminary entry-permit/special license to unlade and/or the assessment of any other applicable penalty. CBP may also withhold the release or transfer of the cargo until CBP receives the required information, and has had the opportunity to review the documentation and conduct any necessary examination.