CBP Considering Refunds of Liquidated Damages Caused by Wrong ACE Release Dates

NEW ORLEANS -- CBP has nearly fixed a series of issues surrounding release date updates in ACE that were causing CBP to mistakenly issue liquidated damages for late filing against compliant filers, said Jim Swanson, CBP director-cargo security and controls, at the National Customs Brokers & Forwarders Association of America annual conference on April 4. The agency is cancelling in full mistaken assessments of liquidated damages caused by the issues, and is currently deciding how to handle mistaken claims that have already been paid, Swanson said.

The errant release dates had been causing CBP officers to think filers were submitting late entry summaries and payments on statements (see 1702140032). Aware of some issues, CBP headquarters had in March 2016 directed CBP officers to “use common sense and do due diligence” before issuing late filing liquidated damages. But as CBP officers became more comfortable with ACE, they again began generating reports showing late filers – many late only because ACE had the wrong release date -- and assessing liquidated damages to filers on the list. There was suddenly a “big upsurge” in liquidated damages, partly because they hadn’t been running the reports for a while, Swanson said.

Agency headquarters clamped down in early February, instructing field staff that, because it was impossible to separate actual late filers from filers deemed late because of the glitch, to use “extreme care” when issuing liquidated damages, including by reaching out to the filer to ask if they indeed were late, Swanson said. It told field staff to “go back to the beginning of ACE” and cancel more than 200 liquidated damages claims in full. More cancelations are in the pipeline, he said. Still under discussion is refunding mistaken liquidated damages claims that have already been paid, which is fraught with “significant legal hurdles,” Swanson said.

CBP is working to fix the underlying system issues, in an effort Swanson characterized as “peeling an onion.” Fixes were deployed at the beginning of March, and another is being deployed April 5, he said. Another fix is coming on April 27. “It’s a big issue” and CBP is “going to keep doing this until we get it right,” Swanson said. The issue is “not a get-out-of-jail free card,” allowing late filing “whenever you want,” but CBP is “going to take a go-slow approach” and will only issue liquidated damages “when they’re correct,” Swanson said.

The release date issue headlined a list of about 30 ACE priorities recently taken to Capitol Hill by Cindy Allen of FedEx and NCBFAA lobbyist Jon Kent. Though the congressional committees with jurisdiction over CBP funding have been “very receptive,” they were recently under the mistaken impression that ACE was done, Allen said during the panel discussion. “We said, ‘well, not so fast,’” and compiled the simplified, high-level list for staffers to take “and explain it to the people who are going to make the decisions about CBP funding,” Allen said.

That funding will determine whether CBP will be able to implement many of the capabilities long sought by the trade community and included on the list. CBP is “dedicated” to extending house bill release to all modes, with the Office of Field Operations signing off on the policy, Swanson said. Right now, the agency is “looking for the window” so it can do the primary programming, but there’s “no way to tell when the window is going to be open,” he said. It’s “all going to depend on funding.” The same goes for Section 321 release in the Automated Broker Interface, which won’t need a “massive funding package” but “there will be funding requirements,” Swanson said.

Also requiring additional funding is implementation of changes to drawback from the Trade Facilitation and Trade Enforcement Act of 2015. Though they take effect in February 2018, “right now the TFTEA requirements are all considered post-core,” Swanson said. “As far as funding is concerned, we’re not funded for any of that yet. At all. We have no money for any of that post-core work, including TFTEA stuff,” he said.

The TFTEA changes to drawback are now sure to take effect less than a year after CBP deploys drawback in ACE. Following the delay of its Jan. 14 deadline (see 1701110039), the agency is still conducting “rigorous testing” of the post-release capabilities, including drawback, reconciliation, duty deferral collections and liquidation. “Management doesn’t want to provide a new date” until CBP has completed and is satisfied with testing, which has been complicated by how much the post-release capabilities are interrelated. “Customs has been collecting money for how many years," said Monica Crockett, director-entry summary, accounts and revenue, at CBP. “We don’t want to deploy the new system and screw it up.” The trade community will have 30 days’ notice of the new deployment date once CBP issues the required Federal Register notice, she said.

CBP is working on addressing another trade community priority: the lack of a national downtime policy for ACE, Swanson said. Last month CBP issued a “comprehensive downtime guidance” that expands “the use of Northern border broker downtime procedures to all ports and modes,” Swanson said. The procedure allows brokers to file cargo release on paper so CBP officers can input the information into ACE manually (see 1702060015). The guidance “doesn’t rise to the level of a directive yet,” but “we’re working on that,” he said. A core principle is flexibility for ports, he said. While some less busy ports have more time to spend on each shipment and conveyance, larger ports will need “slightly different downtime procedures” to accommodate higher volumes, he said.

Email ITTNews@warren-news.com for a copy of the slides from the presentation, including NCBFAA ACE priorities.