U.S. Customs and Border Protection (CBP) has issued updated guidelines regarding liquidated damages claims and penalties for wood packing material (WPM) violations. Until 2017, CBP would not issue a penalty until five documented violations had occurred. Effective November 1, 2017, Customs changed its position and started issuing penalties for the first violation in order to motivate better compliance.
When a violation is found, Animal and Plant Health Inspection Service (APHIS) will issue an Emergency Action Notification (EAN). Failure to comply with the EAN will result in the imposition of liquidated damages up to the amount of the importer’s bond. Customs can also impose a penalty assessed at the domestic value of the goods. The guidelines state that Customs may offer mitigation of liquidated damages if action was taken under the EAN, but after the deadline. Mitigation could also be granted if the petitioner was unable to take the required EAN action due to circumstances beyond its control.
Penalties can be issued for unmarked WPM, inappropriately marked WPM, or infested WPM. For a first time violation, CBP may mitigate the penalty to 1-10% of the value of the penalty. A second violation may be mitigated to 10-25% of the value of the penalty. Third or subsequent violations may be mitigated to an amount not lower than 25% of the assessed penalty. Customs will take into account mitigating factors such as clear documentary evidence of immediate remedial action taken to prevent further WPM violations, and exceptional cooperation with CBP and APHIS. Aggravating factors include a lack of cooperation with CBP or APHIS, and falsely marked WPM.