CBP's Enforced Compliance Procedures and Penalties/Mitigation Guidelines for Prior Notice of Imported Food

This is Part II, the final part of a two-part series of summaries on CBP's memorandum and guidelines, and highlights CBP's guidelines on penalty assessment and mitigation.

CBP explains that these penalty/mitigation guidelines have been issued in furtherance of the FDA's December 2003 Compliance Policy Guide, and because the current phase (Phase 3) of the Bioterrorism Act enforcement plan for PN may result in the assessment of monetary penalties.

Guidelines for Penalty Assessment

CBP states that in general, it has the discretion to refrain from taking any enforcement action if it does not believe it to be in the best interest of the Government. In addition, before any of the following penalty assessments are made, consideration may be given to the level of cooperation received regarding cargo security from the party to be charged. (The guidelines note that the penalty notice should cite 19 USC 1595a(b) (Penalty for aiding unlawful importation) as the statute violated.)

CBP's guidelines cover penalty assessments for the following violations:

Failure to provide PN. The port director, after consultation with FDA, may issue a civil monetary penalty equal to the domestic value of the cargo for which PN is not given. CBP states that the penalty should be assessed against the party having the information necessary to submit PN, but who fails to submit that PN (which could be the owner, importer, or consignee). The penalty may be assessed against multiple parties for the same failure if those parties aided or facilitated the violation.

Untimely presentation of PN. CBP states that the port director, after consultation with the FDA, may issue a civil monetary penalty equal to the domestic value of the cargo when PN is untimely. CBP states that the penalty should be assessed against the party who submits or transmits PN in an untimely manner.

(Exception: If PN is not given in accordance with PN time frames but FDA conducts its review, has determined its response to the PN and has advised CBP of that response prior to the arrival of the merchandise, penalty assessment would not be appropriate.)

Inaccurate PN information. The port director, after consultation with FDA, may issue a civil monetary penalty equal to the domestic value of the cargo for which inaccurate PN is given. CBP states that the penalty should be assessed against the party who submits the inaccurate PN.

Guidelines for Penalty Mitigation

CBP has also provided guidelines for the mitigation of penalties associated with failure to submit PN, untimely submission of PN and inaccurate PN information. CBP's guidelines provide specific information for each of these types of violations.

CBP states that when considering any petition for relief, the fines, penalties and forfeitures officer (FPFO) may consider whether the party is a participant in Customs-Trade Partnership Against Terrorism (C-TPAT) and may weight the level of cooperation received regarding cargo security as a mitigating factor in any case. The FPFO may also exercise the discretion to mitigate a second or subsequent violation as a first violation in the case of a penalty assessed against a cooperating party.

CBP's guidelines for the mitigation of penalties include:

First violation:

Option 1 - pre-set mitigation amount. CBP sources state that for a first violation where CBP is aware of the facts surrounding the violation, CBP may offer a form of mitigation in the penalty notice (modified CF-5955A) called Option 1. Under Option 1 the violator is offered the opportunity to cancel the claim by paying a pre-set mitigated amount within 60 days.

By electing Option 1 in lieu of filing a petition for relief, the charged party waives the right to file a petition for relief. However, the charged party may file a supplemental petition if s/he does so in accordance with CBP regulations and has some new fact or information which merits consideration in accordance with these guidelines.

The Option 1 pre-set amounts are as follows: for failure to submit PN, $750; for untimely presentation of PN, $250; and for inaccurate PN information, $500. CBP adds that the Option 1 amount cannot exceed the assessed penalty amount.

Option 2 - Option 1 offered, but petition for relief filed instead. CBP states that the charged party is not required to accept the Option 1 amount, but may instead petition for relief pursuant to 19 CFR Part 171. However, if the violator fails to show that the violation did not occur, or that it occurred solely because of Government error, the violator will have to pay an amount that is higher than Option 1 in order to settle the case.

Specifically, if the penalty stems from failure to submit PN or inaccurate PN information, and the petition fails to demonstrate that the violation did not occur, or that it occurred solely because of Government error, the penalty will be mitigated to an amount equal to no less than $500 more than the Option 1 amount. For such instances involving penalties stemming from untimely submission of PN, this amount will be equal to no less than $250 more than the Option 1 amount .

(CBP sources add that a first-time violation that does not receive an Option 1 offer will also have the opportunity to file a petition for relief.)

Second or subsequent violations:

Second or subsequent violations - only petitions for relief available. CBP sources state that parties charged with a second or subsequent PN violation will not be offered an Option 1 pre-set amount. In such cases, CBP will simply issue a notice containing the assessed penalty. The recipient will then have the option of filing a petition for relief from that amount.

CBP adds that less favorable mitigation terms or denial of mitigation may occur for second and subsequent violations.

CBP's guidelines provide that second or subsequent violations may be mitigated upon payment of an amount between the following ranges: for failure to submit PN, $1,000 - $5,000; for untimely submission of PN, $500 - $2,000; and for inaccurate PN information, $750 - $3,000. CBP states that the mitigated amount cannot exceed the penalty amount.

CBP also states that if the violating party is a participant in C-TPAT and has cooperated with CBP on transport and supply chain security issues, this may be considered a mitigating factor and the claim may be mitigated on the lower end of the above-listed mitigation ranges.

(See ITT's Online Archives or 05/14/04 news, 04051410, for most recent BP summary of FDA's Compliance Policy Guide, with links to earlier summaries.

See ITT's Online Archives or 06/22/04 news, 04062210, for Part I of this BP summary.)

Memorandum on "Procedures for Implementation of Enforced Compliance and Penalties for the Bioterrorism Act," with "Penalty Assessment and Mitigation Guidelines for Prior Notice under the Bioterrorism Act" Attachment (posted 06/21/04) available at http://www.cbp.gov/ImageCache/cgov/content/import/commericial_5fenforcement/bioterrorism/external_5fbt_5faprocedures_2edoc/v1/external_5fbt_5faprocedures.doc