CBP Guidelines on Penalties/Liquidated Damages for Failure to Comply with Advance Electronic Cargo Information Requirements (Part III - Carriers)

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 III, the final part of a multi-part series of summaries on these guidelines and focuses on the guidelines as they relate to carriers (vessel, air or rail). CBP notes that guidelines for truck carriers will be separately provided.

Highlights of Guidelines' Provisions Affecting Vessel, Air, and Rail Carriers

The following are highlights of these guidelines as they related to vessel, air, and rail carriers:

General.Additional consequences. In addition to the enforcement actions, penalties and liquidated damages that may be assessed as provided below, the failure of an arriving carrier (vessel, air or rail) to be automated in the Automated Manifest System (AMS) at all ports of entry in the U.S., or 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.' Where the party electronically presenting to CBP the cargo information required in 19 CFR 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 of the arriving vessel carrier to be automated in the Vessel AMS will result in the denial of the carrier's preliminary entry permit/special license to unlade and a term permit or special license already issued will not be applicable to any inbound vessel carrier.

The failure to timely transmit the cargo information or the failure to transmit accurate or valid electronic cargo information by the arriving vessel carrier 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. For any cargo that arrives in the U.S. by air at a port where the advance electronic cargo information is required, CBP must receive the required advance electronic cargo information as provided for in section 122.48a of the CBP Regulations (19 CFR 122.48a).

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, the failure of the arriving air carrier or another authorized party 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.

Rail cargo. For any cargo that arrives in the U.S. by rail or at a port where the advance electronic cargo information is required, CBP must receive the required advance electronic cargo information, as provided for in 19 CFR 123.91.

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 its permit to proceed.

In any case, the failure of the arriving rail carrier to electronically transmit the cargo information will result in the denial of the carrier's permit/special license to unlade and its permit to proceed, and a term permit or special license already issued will not be applicable to any inbound rail carrier. Also, a term permit or special license already issued will not be applicable to any inbound rail carrier for which CBP has not received the advance electronic cargo information in the time period and manner required.

Penalties. When a carrier (vessel, air, or rail) arrives at the port of entry where the advance electronic cargo information is required, port directors may assess a civil monetary penalty, under 19 USC 1436, for violations of 19 CFR 4.7, 4.7a, 122.48a, or 123.91, against the master, pilot, or person in charge of any arriving carrier (vessel, air, or rail) which is not automated in the AMS, who fails to electronically transmit the advance cargo information, who untimely files electronic cargo information, or who files inaccurate or invalid electronic cargo information

A penalty of $5,000 may be assessed against the master of the vessel, pilot of the airplane, or person in charge of the train in care of the carrier.

Subsequent violations. A $10,000 penalty (also under 19 USC 1436) may be assessed against the same master of the vessel, pilot of the airplane, or person in charge of the train in care of the carrier for any subsequent violation. In addition to a penalty pursuant to 19 USC 1436, CBP may deny the permit/special license to unlade, deny the term permit or special license to unlade, deny an air carrier's landing rights, deny a vessel's preliminary entry-permit/special license to unlade, deny a train's permission to proceed, and/or assess any other applicable statutory penalty.

Single penalty for multiple violations for each departure or for multiple shipments on same arrival. CBP states that for each departure to the U.S. where multiple violations for untimely filing of advance cargo information consistent with situations described above occur, a single penalty may be assessed against the master, pilot, or person in charge of the train under 19 USC 1436.

For 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.

Mitigation of penalties, etc. First violation. If an arriving carrier (vessel, air, or rail) incurs a penalty for failing to be automated in the AMS or to electronically transmit the required cargo information, or if the arriving carrier (vessel, air, or rail) incurs a penalty for untimely filing electronic cargo information or for filing inaccurate or invalid electronic cargo information, the penalty may be mitigated to an amount between $1,000 and $3,500, if CBP determines that law enforcement goals were not compromised by the violation.

A carrier which 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 penalty is normally mitigated to $1,000 (the lowest mitigation amount for first violations by non-C-TPAT members), a penalty assessed against a certified C-TPAT member should be mitigated to an amount of no more than $500.

Subsequent violations. If the arriving carrier (vessel, air, or rail) incurs a subsequent penalty for untimely filing electronic cargo information or for filing inaccurate or invalid electronic cargo information, the penalty may be mitigated to an amount between $3,500 and $5,000, if CBP determines that law enforcement goals were not compromised by the violation.

If a carrier which is a certified C-TPAT member untimely files electronic cargo information or files inaccurate or invalid cargo information, the certified C-TPAT member may receive mitigation of at least 50% of the normal mitigation amount. ¹

However, CBP will grant no mitigation for subsequent violations for failing to be automated in the AMS or for failing to electronically transmit the required cargo information, whether the violator is a certified C-TPAT member or not.

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 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.

¹ According to CBP sources, the C-TPAT mitigation example in the guidelines for subsequent violations mistakenly repeats the C-TPAT mitigation example given for a first violation; these sources are checking on whether a correction to these guidelines will be issued.

(See ITT's Online Archives or 07/13/05, 07/15/05, and 07/18/05 news, 05071305, 05071510, and 05071820, for Part I, II, and an addendum to Part II of BP's summary of these guidelines.

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/