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CBP Improves Penalty Mitigation Guidelines for Wood Packaging Materials Violations

Tuesday, November 12, 2019
Sandler, Travis & Rosenberg Trade Report

U.S. Customs and Border Protection has revised its guidelines on mitigating penalties for violations of the wood packaging material regulations. These changes are retroactive to Nov. 1, 2017.

CBP’s enforcement of Department of Agriculture regulations on the treatment and marking of wood packaging materials frequently results in surprise penalty notices to importers in the amount of the total value of the shipment when violations are found. For example, a multi-million-dollar machine shipped on wood pallets that are found not to be properly marked or treated will result in a penalty on the full value of the machine. Upon notice of such violations, importers are required to reexport the shipment within 72 hours.

Until now, the only way to mitigate such claims was to file a petition applying the standard mitigation guidelines for all violations involving import admissibility, with the minimum amount usually granted being three percent of the initial claim. This was essentially a strict liability approach that left no room for penalty cancellation when pests were found, regardless of submission of proof of the required treatment and marking of the WPM or where reexportation occurred beyond the 72-hour period.

However, CBP has now revised its mitigation guidelines for these penalties to more rational levels. The updated guidelines take into account, for example, exportation beyond the 72-hour deadline, evidence of immediate remedial action to prevent further WPM violations, evidence of proper treatment although unmarked or incorrectly marked, if the number of WPM violations is small relative to the total number of import transactions, and whether the violations occurred close in temporal proximity.

For more information, please contact customs attorney Beth Ring at 212-549-0133.

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