COAC questions ISF statute of limitations

COAC questions ISF statute of limitations

Lobdell

   The length of time U.S. Customs and Border Protection has to file a claim against a business for an error on its Importer Security Filing should be shortened because a delay contradicts the rule's intent to enhance security of ocean freight, a trade consultant told agency officials Thursday.
   Karen A. Lobdell, who sits on the Commercial Operations Advisory Committee to the Department of Homeland Security, said at the group's quarterly meeting in Miami that CBP may want to keep its options open to prevent fraud and other criminal activity, but that the ISF's goal is to prevent high-risk cargo from entering the country.
   'Initiating liquidated damages six years after a shipment has already been entered into commerce and has been released doesn't really serve the initial purpose of the program,' she said.
   Lobdell, director of trade security and supply chain services at Chicago law firm of Drinker Biddle & Reath, said COAC will study the issue and come up with a recommendation for a shorter period to finalize the ISF.
      Worries that importers could get socked with hefty fines for failing to properly submit a security form about their ocean cargo years after the fact are overblown, the CBP official in charge of the program said in an interview last week.
   Violations of the ISF regulation, which went into effect more than a year ago and which CBP officially began enforcing Jan. 26, 2010, have a six-year statute of limitations. Under the rule, importers must electronically transmit 10 types of data about the shipment a full day before the container it's in gets loaded on a ship overseas. Importers could be on the hook for liquidated damages of up to $5,000 per filing for late, inaccurate or incomplete documentation — and up to $10,000 if an amended ISF is filed that has problems.
   CBP has said it will take a graduated approach to enforcement and won't start issuing fines until late in the year as the trade community struggles to adapt to the significant data collection requirements.
   Compliance professionals feel anxiety about the possibility that their companies might receive ISF damages for a shipment six years in the past.

DiNucci

   But Richard DiNucci, who heads ISF, told AmericanShipper.com the agency would not abuse its legal latitude.
   'Our commitment is to deal with those situations as quickly as possible. I understand that the trade doesn't want those liabilities hanging over them. It doesn't seem fair. So I wouldn't anticipate getting into those situations,' he said.
   Asked if the statute of limitations language is there primarily to build a case history against a bad actor with a track record of non-compliance or security violations instead of going after a company for specific error on an ISF transaction, DiNucci replied, 'That's a fair interpretation.'
   Equally unnerving for importers is that surety companies that provide customs bonds to guarantee compliance will want the liability collateralized. Small companies that buy several single transaction bonds per year might have to offer collateral worth tens of thousands of dollars. Rates for continuous bonds that can cover ISF bonds are also expected to increase.
   A customs broker, who is not authorized by his company to speak publicly, suggested limiting the potential liability to no more than one year and preferably as short as 90 days. CBP has the ability to make a determination on whether there is a security risk within that period, he said.
   The problem with taking months or longer to assess damages is that companies can continue making mistakes that can be easily corrected, resulting in penalties for numerous container shipments, said Albert Saphir, owner of ABS Consulting, in a short white paper about ISF.
   An extended statute of limitations also poses a huge recordkeeping dilemma for the international business, he wrote. ' Eric Kulisch