GET READY: CBP to Begin ISF Full Enforcement Phase Imminently

Tweet

January 21, 2010

Earlier this week, U.S. Customs and Border Protection (CBP) officials provided details to the public concerning the enforcement approach it will take beginning January 26, 2010 when it commences “full enforcement” of the 10+2 interim final rule which amended the Customs Regulations (19 C.F.R.) to require Importer Security Filing (ISF) information from importers and additional information from carriers for vessel (maritime) cargo before it is brought into the United States.  For those not aware, the interim final rule took effect on January 26, 2009; however, CBP provided a one-year delayed enforcement period (until January 26, 2010) to allow the trade to work through various problems and to come into compliance with the requirements.  Additional detail on the ISF requirements is available here.

While CBP officials in recent weeks had previously expressed that the agency would take a “measured approach” to enforcing the 10+2 requirements, CBP now terms its enforcement approach as “graduated escalated”.  Sources have indicated that the initial phases of this enforcement approach will mirror an “informed compliance” approach, similar to the one used for enforcing the 24 hour rule.

CBP officials have stated that they will not use data collected during the delayed enforcement period against the trade.  The data that CBP collects beginning January 26, 2010; however, will be used as CBP moves towards stricter enforcement of the filing requirements.

CBP intends to roll out this “graduated” enforcement approach to the 10+2 filing requirements over the next four quarters of 2010:

·First quarter (January 26, 2010-April 2010) - CBP will concentrate its enforcement efforts on those importers who have not made an ISF since January 26, 2010.  If the importer does not file an ISF for shipments after the enforcement date, CBP will place those non-compliant importers on notice.  CBP may also communicate with importers who file late, incomplete filings or fail to withdraw a filing to advise them to take corrective action.  During Q1, CBP will not assess liquidated damages or issue Do Not Load (DNL) messages.  Due to the present security environment, however, CBP does reserve the right to take any necessary actions for national security purposes.  Shipments with no ISF filing may be subject to non-intrusive inspections (NII).  Warning notices issued by CBP will be communicated to the importer via its ISF filer.

·Second Quarter 2010 – CBP will likely begin issuing holds on cargo for noncompliance.  CBP may also consider other enforcement measures (e.g., increased exams).  CBP does not currently plan to assess liquidated damages or issue DNL messages in Q2.

·Third Quarter 2010 – CBP will begin to assess liquidated damages on ISFs with data or filing problems (this includes timeliness issues).  Currently, CBP is reporting that 80% of the filings are made on Fridays and would like to see how the filing distributions changes over the next few months as full enforcement begins.

·Fourth Quarter 2010 – CBP expects to be in full enforcement mode at this time.  Liquidated damages will be assessed on ISFs with data or filing problems (including timeliness).  CBP may issue DNL messages for specific high risk shipments.

With regard to liquidated damages, importers will have the right to petition for relief and to mitigate the assessment of liquidated damages.  CBP has indicated that all 10+2 penalty decisions will be cleared first by CBP Headquarters prior to issuance.  Penalty actions will be initiated by the ports, but they will be “centralized” and reviewed by CBP Headquarters.  Importers should coordinate with the appropriate port of entry if a claim for liquidated damages is issued.

Finally, CBP officials have noted that they will continue to conduct outreach and training seminars even after full enforcement mode begins on January 26, 2010.  CBP will hold 10+2 outreach events and anticipates issuing more regular updates to the 10+2 frequently asked questions (FAQs).

If you have any questions concerning the ISF requirements and CBP’s enforcement, please contact a Barnes/Richardson attorney.