Recently updated guidelines from U.S. Customs and Border Protection will make it more expensive to secure a return of goods seized for violations of U.S. export laws or regulations. However, export compliance programs and other factors can help lower that cost.
For more information on export laws, regulations, and compliance, please contact export compliance attorney Kristine Pirnia at (202) 730-4964.
CBP may seize goods that are being exported, or have been exported, in violation of U.S. export control laws, including those of the Directorate of Defense Trade Controls, the Bureau of Industry and Security, the Office of Foreign Assets Control, and the Drug Enforcement Agency. CBP may also seize imported goods when the importation has a nexus to an exportation; e.g., goods temporarily imported or temporarily exported when the shipment does not have the required license, permit, or other authorization. CBP may also seize goods for failure to obtain a required Form 6 from the Bureau of Alcohol, Tobacco, Firearms, and Explosives for permanent importation of licensable goods.
When such seizures occur, parties with an interest in the goods can submit an administrative petition to request remission of the forfeiture and return of the goods. CBP reviews the facts and circumstances of each case and decides whether to grant relief and, if so, what type and under what conditions. CBP may reference these guidelines when making such decisions.
CBP states that previous versions of these guidelines distinguished between technical violations and substantive violations but that these terms are no longer being used because they were often confusing and misleading and are not used by licensing agencies. Instead, CBP is now distinguishing between license violations and non-license violations. License violations include exports of goods without the required license or other authorization, exports of goods in excess of the authorized amount, and failure to timely or properly file electronic export information for licensable goods. Non-license violations occur when the shipment has the required authorization (or none is required) but there is another violation; e.g., a violation of the Foreign Trade Regulations.
Under the revised guidelines, CBP will generally remit a forfeiture and release goods seized for export violations only if the following conditions are met: all costs of seizure (storage and appraisal) are paid, an executed hold harmless agreement is submitted, the goods are brought into compliance or exported under CBP supervision (if required), all export requirements are met if the goods are released for export, and a forfeiture remission amount is paid. The ranges below should serve as guidance when determining the remission amount.
First offense – if no aggravating factors are present, 10-30 percent of the export value of the seized goods but not less than $500; if aggravating factors are present, 30-50 percent of the export value but not less than $1,000
Second offense – if no aggravating factors are present, 30-50 percent of the export value but not less than $1,000; if aggravating factors are present, 50-80 percent of the export value but not less than $2,500
Third or subsequent offense – 50-80 percent of the export value but not less than $1,500
Remission amounts will generally be at the higher end of these ranges for license violations and at the lower end or middle for non-license violations, although egregious violations may justify deviation from this approach in either case.
The guidelines list a number of mitigating and aggravating factors that CBP may consider in determining a remission amount. Mitigating factors may include prior seizure history, inexperience, voluntary disclosures, third-party error, exceptional cooperation, remedial measures, and the existence of an active systematic export compliance program. Aggravating factors may include related criminal convictions, intentional violations, a pattern of violations showing disregard for U.S. laws and regulations, multiple violations in the same transaction, and the lack of an active systematic export compliance effort.