CBP Issues Guidelines for Liquidated Damages and Penalties on WPM (Effective March 9, 2007)

CBP states that the statutory requirements of 7 CFR 319.40-3 mandate that regulated WPM - such as, crates, boxes, and pieces of wood used to support or brace cargo - being imported into the U.S. shall be heat treated or fumigated with methyl bromide in accordance with Environmental Protection Agency (EPA) label instructions and include a mark that certifies the wood completed the required treatment under the "Guidelines for Regulating Wood Packing Material in International Trade," ISPM 15 of the International Standards of Phytosanitary Measures (ISPM) and any associated amendments, revisions or exemptions identified by the U.S. Department of Agriculture (USDA), Animal and Plant Health Inspection Service (APHIS).

(CBP has previously noted that the WPM regulations have been in full enforcement since July 5, 2006 and were implemented in a three-phase approach to ensure that the trade was fully informed.)

WPM Must Display a Visible, Legible, and Permanent Mark Certifying Treatment

According to CBP, 7 CFR 319.40-3 requires that WPM display a visible, legible, and permanent mark certifying treatment. The mark must be a legible and permanent mark that indicates that the article has been subjected to the approved measure and include the following elements:

The International Plant Protection Convention (IPPC) logo;

The ISO two-letter country code for the country that produced the WPM followed by a unique number code;

The unique number code is assigned by the country's National Plant Protection Organization (NPPO) to the producer of the WPM, who is responsible for ensuring appropriate wood is used and properly marked. Therefore, this code allows a trace back to the facility that treated and stamped the WPM; and

An abbreviation that discloses the type of treatment (HT for heat treatment or MB for methyl bromide fumigation; Guatemala is approved to use TT in place of HT or BM in place of MB).

(See CBP's notice for an example of an acceptable WPM mark.)

Exceptions and Exemptions to the WPM Regulation

CBP explains that this regulation applies to WPM made from softwood or hardwood. However, certain articles are exempt or excepted from the treatment and marking requirements. The exceptions are outlined in 7 CFR 319.40-3, and Appendix B of the CBP document entitled "Operating Procedures for Implementation of the Wood Packaging Materials (WPM) Regulation," as amended, which provides exceptions and exemptions further added by the USDA.

(See ITT's Online Archives or 06/30/06 and 07/14/06 news, 06063000 and 06071410, for BP summary of the "Operating Procedures" document and its update.)

WPM that Does Not Contain the Required Mark Will be Immediately Exported, Etc.

CBP states that regulated WPM must be properly marked to indicate that it has been either heat treated or treated with methyl bromide. There are three categories under WPM under this enforcement:

Unmarked. WPM that is encountered by CBP during the course of inspection and found not bearing the required treatment and markings required under 7 CFR 319.40-3(b)(1) and 19 CFR 319.40-3(b)(2);

Inappropriately marked. WPM that is encountered by CBP during the course of inspection and found to be inappropriately marked or illegibly marked is assumed to be untreated by either of the approved methods identified under 7 CFR 319.40-3(b)(1); and

Infested. WPM that is infested with a named pest confirms that the WPM has not been treated in accordance with 7 CFR 319.40-3(b)(1). (Named pests are live wood boring pests of the families Cerambycidae, Buprestidae, Siricidae, Cossidae, Curculionidae, Platypodidae, Sesiidae, or Scolytidae.)

1. CFR 319.40-3(b)(3) provides for immediate export of WPM that does not contain the required mark. Marked WPM containing pests in the above mentioned families is considered WPM that has not been treated and marked in accordance with 19 CFR 319.40-3, and shall be immediately exported pursuant to 19 CFR 319.40-3(b)(3).

CBP notes that the importer of record, carrier, or bonded custodian is responsible for any costs or charges associated with export.

CBP explains that when assessing liquidated damages and/or penalties, the value of the merchandise is the value of the WPM plus the value of the commodity or commodities identified for importation on the entry documentation.

Assessing Liquidated Damages for Failure to Comply with an EAN

CBP states that if the party whose bond is obligated at the time of the discovery of the violation has received an Emergency Action Notification (EAN) requiring export of the violative WPM but fails to do so, CBP may issue a liquidated damages claim against that party.

According to CBP, the following procedures shall be utilized in liquidated damage cases where there is a failure to comply with the EAN:

Entry made, goods conditionally released. If a consumption entry is made and the goods were conditionally released, CBP will issue the claim against the importer under 19 CFR 113.62(e). The liquidated damages claim shall be issued at three times (3x) the entered value of the merchandise but not greater than the bond amount.

Entry made, no conditional release. If a consumption entry is made, but the goods were not conditionally released, and the importer failed to comply with the EAN, CBP will issue the claim against the importer under 19 CFR 113.62(g).

The amount of the liquidated damages claim shall be the cost of export or remediation but no greater than the bond amount. In an effort to ensure compliance with the EAN, the goods shall not be released and the port should follow procedures outlined in 19 CFR 151.16 (Detention of Merchandise) until the WPM violation is addressed. Once it is determined that the requirements of the EAN will not be met and CBP has to take remedial measures, the claim for liquidated damages shall be issued against the importer.

Entry not made, carrier failed to comply. If an entry is not made and the carrier failed to comply with the EAN, CBP will issue the claim against the carrier under 19 CFR 113.64(b). The liquidated damages claim shall be issued at the entered value of the merchandise, but no greater than the bond amount.

Party other than carrier or importer failed to comply with EAN. If a party other than the carrier or importer failed to comply with the EAN, and that party is responsible for the merchandise under its custodial bond, CBP will issue the claim against that party under 19 CFR 113.63(a)(1). The liquidated damages claim shall be issued at three times (3x) the entered value of the merchandise, but no greater than the bond amount.

Penalties May be Assessed Even Though There is Compliance with All EANs, Etc.

CBP states that penalties may be assessed in addition to claims for liquidated damages, and may be assessed even though there is compliance with all EANs in cases wherein:

Attempt to conceal a WPM violation. The importer, carrier, or bonded custodian attempts to conceal a violation of WPM, CBP personnel shall issue a penalty either under 19 USC 1592, or 1595a(b).

Continuous WPM documented violations over a fiscal year. The importer, carrier, or bonded custodian has continuous documented violations (more than 5) over one fiscal year period nationally, CBP personnel may issue a penalty under 19 USC 1592, or 1595a(b) may also be assessed.

CBP adds that WPM violations (all categories) shall be documented in the EAN database, and WPM violations under categories 1 and 2 shall be documented in CBP databases with the WPM violation code "wp:nc."

¹ According to a set of frequently asked questions (FAQs) posted to CBP's Web site, these guidelines will only be applied to shipments that arrive on or after the effective date of March 9, 2007. Shipments that arrived before March 8, 2007 will not be subject to the new guidelines.

(See ITT's Online Archives or 03/12/07 news, 07031207, for BP summary of CBP's previous announcement that effective March 9, 2007, it may issue claims for liquidated damages and/or penalties against importers, carriers or bonded custodians for importing WPM in violation of the regulations.)

CBP guidelines (posted 04/02/07) available at http://www.cbp.gov/linkhandler/cgov/import/commercial_enforcement/wpm/guidelines_wpm.ctt/guidelines_wpm.doc

CBP FAQ on these guidelines (posted 04/02/07) available at http://www.cbp.gov/linkhandler/cgov/import/commercial_enforcement/wpm/wpm_faq.ctt/wpm_faq.doc