CBP HQ to Review ISF Liquidated Damages Claims for First Year, Says Agency Official
CBP headquarters will take a close look at each Importer Security Filing (ISF) liquidated damage claim submitted by the ports to decide whether to move forward on the enforcement action, said Craig Clark, who oversees the ISF program at CBP as vessel program manager. Beginning July 9 and for at least the next year, there will be a “pre-initiation review” at headquarters of all liquidated damages to make sure they “actually rise to the level of violation,” he said. Clark spoke during a National Industrial Transportation League Webinar on ISF filing June 25.
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Liquidated damages for problems with ISF, commonly referred to as 10+2, will not be retroactive from before the increased enforcement of the policy, set to begin July 9, said Clark. Still, past performance as an ISF filer will matter, whether as highly compliant or with a pattern of non-compliance, he said. The agency recently decided to begin the stricter enforcement after it saw an uptick in non-compliance and could avoid complicating the transition to Automated Commercial Environment: e-Manifest (M1) for vessels (see 13061315).
ISF-5 Enforcement to Come
The ISF liquidated damages for now only applies to ISF-10s, and to the carriers responsible for the vessel stow plan and container status messages, he said. Freight remaining on board (FROB) cargo, which typically requires an ISF-5, is something that will be addressed down the road, he said. “There are some legislative language complications that we are trying to iron out to better and more clearly define who is responsible for filing an ISF-5,” he said.
While full ISF compliance is the expectation, CBP knows “everyone is getting used to the process,” he said in response to a question as to how CBP might view an importer with an 89 percent compliance rate. The agency has always felt the regulations were about the data and not the damages, “and I wouldn’t anticipate that somebody with an 89 percent compliance rate would see piles of liquidated damages.” Still, as of July 9, late ISF filing will be considered non-compliant and subject possibly subject to liquidated damages no matter an importer’s compliance rate, he said.
It will be up to the port to decide the type of enforcement activity it wants to pursue and the ISF liquidated damages is now among the ports’ options, he said. Everything else the ports have been doing to drive compliance are still on the table, he said. CBP limits an ISF filer's exposure to $10,000, or two violations per filing, as liquidated damages have a maximum of $5,000 per ISF violation, said Clark. That’s why there’s a $10,000 single transaction bond required for a single filing.
Broker Exposure will Depend on Bond
Whether the damages will apply to the importer or the customs broker will depend on whose bond was obligated, said Clark. There is a petition process using CBP’s mitigation guidelines that can be used to push for lessened liquidated damages, said Clark. Since ISF filings do not actually close out, as entry filings do, there are no recordkeeping requirements, said Clark. But considering the statute for limitations on the liquidated damages is six years, recordkeeping for that period may be best practice, he said.
The filing requirements do not apply to bulk cargo and there’s some types of break-bulk cargo CBP considers to bulk -- therefore exempt -- for ISF purposes, he said. It’s mostly steel and timber products that are considered exempt break-bulk cargo, he said. The ISF rules requiring filing 24 hours before a vessel sails applies only to the vessel that is arriving in the U.S. and not an originating vessel with transshipped cargo, said Clark. For transshipped cargo, is the departure of the last vessel destined for the U.S. that determines timeliness for ISF, he said.