Differences in Port ISF Enforcement Among Concerns with Stricter Policy, Says Surety Company

In meetings with CBP, industry has said it is worried about the lack of communication between HQ and ports regarding enforcement, as well as the lack of uniformity among ports on placing of ISF holds and issuing liquidated damages, the surety company said. CBP has provided direction to ports and said that "port bulletins on ISF enforcement are, for the most part, consistent with such direction," but "have declined to discuss operational elements of such communications" said Roanoke.

Industry has told CBP is there is a need for consistency among ports on policy regarding holds on consolidated containers when there is ISF compliance by some house bill of lading holders, but not by all. Further, some CBP port personnel don’t seem to understand what some new ISF hold codes mean, Roanoke said. But despite outreach to ports on the new ISF hold codes, CBP has refused to impose uniformity because of “port-to-port variations with respect to operating concerns and resources,” Roanoke said. “We are very concerned by the fact that CBP HQ has stated that they will not … impose uniform operations policy upon various ports of entry,” said the surety.

Roanoke says it gleaned the information through its participation in CBP advisory committees and industry associations. CBP began full enforcement and assessment of liquidated damages on ISF violations in July (see 13060712). It made the decision to step up enforcement after completing implementation of Automated Commercial Environment e-Manifest (M1) and noticing an uptick in violations (see 13061315). CBP did not comment on Roanoke's report.

Liquidated Damages

Roanoke’s report also discussed liquidated damages claims. According to the surety, CBP has said that although liquidated damages claims for ISF violations are not yet automatic because HQ approval is required, the agency’s goal is for the claims to eventually become automatic. At current compliance rates that would result in an exponential 3,900% increase in liquidated damages, Roanoke said. Even conservative estimates of potential claims would result a fivefold increase, the report said.

Other information on ISF liquidated damages that Roanoke says it gleaned from discussions with CBP include:

• CBP has made a policy decision to put a $10,000 cap on liquidated damages for a single ISF, regardless of number of violations.
• HQ approval of liquidated damages claims before they can be sent out by the port will continue for at least one more year (until at least July 9, 2014, although Roanoke said one CBP official said HQ review would continue for only 6-12 months).
• Although CBP doesn’t plan to retroactively assess liquidated damages for ISF violations that occurred before July 9, it reserves the right to do so, especially in the case of “egregious” offenders (CBP has yet to define “egregious”).
• CBP is exploring whether or not vessel departure date can be added as a data field in response to a bill of lading or manifest query as a way to provide information on ISF filing timeliness.

Recordkeeping for Six Years a 'Best Practice'

Roanoke also reported that CBP has said there is no special recordkeeping requirement for ISFs. This was in response to industry concern that brokers are only required to keep records for five years, but the statute of limitations for ISF violations is six years. CBP did say, however, that keeping records for six years may be the best practice, the surety reported. Roanoke advised that brokers “should consult their legal advisors before formulating record retention policy. Roanoke also said it agreed with CBP that an ISF should be filed even when late, though "Roanoke Trade strongly cautions customs brokers against filing ISFs and/or entries against their own bond," it said.