CBP Guidelines on Penalties/Liquidated Damages for Failure to Comply with Advance Electronic Cargo Information Requirements (Part II - NVOCCs, ABI Filers, Etc.)

Guidelines for the Assessment and Mitigation of Penalties Against Arriving Vessel, Air and Rail Carriers for Failure to Comply with the Advance Electronic Cargo Information Requirements; Guidelines for the Assessment and Cancellation of Claims for Liquidated Damages Against NVOCCs, Slot Charterers and Other Parties Electing to Transmit the Advance Electronic Cargo Information for Failure to Comply with the Advance Electronic Cargo Information Requirements

This is Part II of a multi-part series of summaries on these guidelines and focuses on the guidelines as they relate to authorized electronic transmitters that elect to transmit advance cargo information ("authorized electronic transmitters"), such as non-vessel operating common carriers (NVOCCs), etc. for vessel cargo, and Automated Broker Interface (ABI) filers, Express Consignment Carrier Facilities, etc. for air cargo. (Note that there are no such authorized electronic transmitters for rail cargo.)

(See future issues of ITT for additional summaries. See ITT's Online Archives or 07/13/05 news, 05071305, for Part I.)

Highlights of Guidelines' Provisions Affecting NVOCCs, ABI Filers, CFS', etc.

The following are highlights of these guidelines as they relate to NVOCCs, slot charterers, and other authorized electronic transmitters of vessel advance cargo information, and to ABI filers, Express Consignment Carrier Facilities, and Container Freight Stations (CFS)/deconsolidators, etc. as authorized electronic transmitters for air advance cargo information:

General.Additional consequences. In addition to the enforcement actions, penalties and liquidated damages that may be assessed as provided in the guidelines, the failure of an arriving carrier (vessel, air or rail) or of any authorized electronic transmitter to provide the required advance electronic cargo information in the time period and manner prescribed by the CBP Regulations may result in the delay or denial of a vessel carrier's preliminary entry-permit/special license to unlade, an air carrier's landing rights, a train carrier's permission to proceed, and/or the assessment of any other applicable statutory penalty.

CBP may also withhold the release or transfer of the cargo until it receives the cargo declaration information and has had the opportunity to review the documentation and conduct any necessary examination.

Information received from 'another party.' When the party electronically presenting to CBP the cargo information required in 4.7a(c), 122.48a(d) and 123.91(d) receives any of this information from another party, CBP will take into consideration how, in accordance with ordinary commercial practices, the presenting party acquired such information, and whether and how the presenting party is able to verify this information. Where the presenting party is not reasonably able to verify such information, CBP will permit the party to electronically present such information on the basis of what the party reasonably believes to be true.

Denial of unlading/landing rights/permission to proceed. vessel cargo. The failure to timely transmit the cargo information or the failure to transmit accurate or valid electronic cargo information by the arriving vessel carrier, slot charterers or NVOCCs may result in the delay or the denial of the permit to unlade. In any case, CBP states that it will not issue the permit to unlade before it has received the cargo declaration information pursuant to the regulations. Also a term permit or special license already issued will not be applicable to any inbound vessel carrier for which CBP has not received the advance electronic cargo information in the time period and manner required.

air cargo. The failure to timely transmit the cargo information or the failure to transmit accurate or valid electronic cargo information may result in the delay or the denial of the carrier's permit/special license to unlade or in the denial of its landing rights. In any case, CBP states that the failure of the arriving air carrier or another authorized party (e.g. authorized ABI filers, Express Consignment Carrier Facilities, etc.) to electronically transmit the cargo information will result in the denial of the carrier's permit/special license to unlade, and a term permit or special license already issued will not be applicable to any inbound flight. Also a term permit or special license already issued will not be applicable to any inbound flight for which CBP has not received the advance electronic cargo information in the time period and manner required.

Assessment of liquidated damages claims against NVOCCs, ABI filers, etc. for untimely transmission or inaccurate/invalid information. When a vessel carrier or an air carrier arrives at a port of entry where the advance electronic cargo information is required, Port Directors may assess, in addition to any other applicable statutory penalty, a claim for liquidated damages in the amount of $5,000 under 19 CFR 113.64(c) or 19 CFR 113.62(j)(2), for violation of 19 USC 4.7, 4.7a, or 122.48a against any NVOCC, slot charterer, ABI filer, or other authorized electronic transmitter who elects to transmit cargo information but who transmits advance electronic cargo information to the CBP-approved electronic data interchange system untimely or containing inaccurate or invalid electronic cargo information.

CBP adds that a claim for liquidated damages in the amount of $5,000 may be assessed for any subsequent violation.

Single liquidated damages claim for multiple violations by NVOCC, ABI filer, etc. Untimely filing. For each departure to the U.S. where multiple violations for untimely filing of advance cargo information consistent with the paragraph above occur, a single penalty may be assessed against the master, pilot, or person in charge of the train under 19 USC 1436, or a single claim for liquidated damages may be assessed under 19 CFR 113.64(c) or 19 CFR 113.62(j)(2) against each NVOCC, slot charterer, ABI filer, or other authorized electronic transmitter responsible for the violations.

Inaccurate/invalid transmissions. In cases where inaccurate or invalid electronic cargo information is transmitted for multiple shipments on the same arrival, a single penalty may be assessed against the master, pilot, or person in charge of the train under 19 USC 1436, or a single claim for liquidated damages may be assessed under 19 CFR 113.64(c) or 19 CFR 113.62(j)(2) against each NVOCC, slot charterer, ABI filer, or other authorized electronic transmitter responsible for the violations.

Cancellation of liquidated damages claims, etc.First violation. If an NVOCC, slot charterer, ABI filer, or other authorized electronic transmitter incurs a liquidated damages claim for untimely filing cargo information or for filing inaccurate or invalid electronic cargo information, the liquidated damages claim may be cancelled upon payment of an amount between $1,000 and $3,500, if CBP determines that law enforcement goals were not compromised by the violation.

An authorized electronic transmitter¹ that is a certified Customs-Trade Partnership Against Terrorism (C-TPAT) member may receive mitigation of at least 50% of the normal mitigation amount. For example, if a liquidated damages claim is normally mitigated to $1,000 (the lowest mitigation amount for first violations by non-C-TPAT members), a liquidated damages claim against a certified C-TPAT member should be mitigated to an amount of no more than $500.

Subsequent violations.Any subsequent claim for liquidated damages against an NVOCC, slot charterer, ABI filer or other authorized electronic transmitter for untimely filing electronic cargo information or for filing inaccurate or invalid cargo information may be cancelled upon payment of an amount not less than $3,500.

Information to transmitter from another party. Where the party electronically presenting to CBP the cargo information required by CBP Regulations receives any of this information from another party, CBP will take into consideration how, in accordance with ordinary commercial practices, the presenting party acquired such information, and whether and how the presenting party is able to verify this information. Where the presenting party is not reasonably able to verify such information, CBP states that it will permit the party to electronically present such information on the basis of what the party reasonably believes to be true.

Mitigating and aggravating factors. Mitigating factors. The following are considered mitigating factors: (1) inexperience in transmitting advance electronic cargo information, (2) a general good performance and low error rate in the handling of cargo, (3) a carrier or authorized electronic transmitter² that is a certified C-TPAT member may receive mitigation of at least 50% of the normal mitigation amount; and (4) demonstrated remedial action has been taken to prevent future violations.

Aggravating factors. The following are listed as aggravating factors: (1) lack of cooperation with CBP or CBP activity is impeded with regard to the case, (2) evidence of smuggling or attempt to introduce or introduction of merchandise contrary to law. This may be considered an extraordinary aggravating factor, and (3) there is a rising error rate that is indicative of deteriorating performance in the transmission of cargo information.

¹CBP sources state that the guidelines incorrectly use the term 'carrier'

²CBP sources state that 'authorized electronic transmitters' are also included

(See ITT's Online Archives or 02/19/04 news, 04021905, for BP summary of CBP's FAQ which contains a matrix of the required transmission times. See ITT's Online Archives or 01/20/04 news, 04012035, for the final part (Part XXII) of BP's summary of the final rule, which sets out the various compliance dates.)

CBP contact - Herminio Castro (202) 572-8700

CBP notice (CBP Dec. 05-23) available in July 6, 2005 CBP Bulletin (Vol. 39, No. 28) at http://www.cbp.gov/xp/cgov/toolbox/legal/bulletins_decisions/bulletins_2005/vol39_07062005_no28/