Deadline: July 9, 2013 – CBP Begins Liquidated Damages Phase of ISF Enforcement – Are You Ready?

The US Customs and Border Protection (CBP) announced that it will begin the liquidated damages phase of the Importer Security Filing (ISF) on July 9, 2013.

These ISF enforcement phases are designed to help CBP make more informed targeting decisions regarding high-risk US-bound cargo.

Starting on July 9, 2013, liquidated damages of $5,000 per violation will be issued for inaccurate, incomplete, or untimely filings. CBP may also withhold the release or transfer of cargo for which an ISF has not been filed. Noncompliant cargo will also be subject to further inspections.

The ISF requires importers and carriers to electronically submit additional cargo information at least 24 hours before ocean freight is loaded onto a vessel bound for the US. It was designed to increase the amount of shipment information available to the CBP in order to better identify potential terrorist threats.

While many shippers have slacked off with ISF compliance, that will all change with the implementation of liquidated damages. According to Albert Saphir, president of ABS Consulting, “responsible importers that spent a lot of time and effort (money) on creating a good and compliant ISF program will receive the benefit they deserve when those importers not compliant will finally need to ‘get with the program’ or face significant monetary penalties.”

A cargo security trade mandate has been long overdue

“For many [shippers], it may be a rude awakening as I have seen many ‘slack off’ with ISF compliance, including brokers and forwarders who became less and less ‘accurate’ with managing the ISF process as CBP was really not enforcing it yet,” said Saphir. “But finally those ‘responsible’ importers that spent a lot of time and effort (money) on creating a good and compliant ISF program will receive the benefit they deserve when those importers not compliant will finally need to ‘get with the program’ or face significant monetary penalties.  Fair is fair.”

Saphir said he is convinced CBP will take a careful and measured approach to penalties, and he does not expect an avalanche of penalties but a steady flow of well “qualified” and “deserving” penalties on importers that simply fail to play by the rules.

Earlier this year, the National Industrial Transportation League (NITL) cited customs and international trade law firm Sandler/Travis’s reporting in its Daily Report that “CBP is expected to issue by the end of May a proposed rule that would make various changes to increase the accuracy and reliability of the advance information submitted under the importer security filing, or ‘10 + 2 rule.”

It added that while fines for non-compliance were set at $5,000 per incident, Sandler/Travis said that CBP has not strongly required full compliance and that the proposed rule could set forth the agency’s intention to do so and establish standards under which full compliance could take place.

ISF went live in January 2010, following a January 2009 interim final rule, which included a delayed enforcement date (of January 26, 2010) 12 months after the interim final rule took effect. During this one-year period, CBP said it would “show restraint in enforcing the rule…and take into account difficulties that importers may face in complying with the rule as long as importers are making a good faith effort and satisfactory progress toward compliance.”