Either your company, or someone you have spoken with lately, has likely been the recipient of a wood packing notice violation. This is because, especially in the last two years, Customs and Border Protection (CBP) has started strictly enforcing the requirements and regulations related to wood packing material (WPM). CBP has made it clear that it has a zero-tolerance policy for WPM violations. CBP has recently updated its WPM enforcement guidelines to reflect the strict enforcement stance. See, Guidelines for Liquidated Damages and Penalties for Non-Compliant Wood Packing Material (WPM) (July 2017, revised July 2018). Importers will now be assessed liquidated damages including first-time WPM violators. However, liquidated damages can usually be mitigated, although it is likely that some amount of liquidated damages will still be owed by the importer.
WPM is hardwood and softwood packaging, not comprised wholly of wood-based products. This includes: (1) plywood, particle boards, oriented strand boards, veneer, wood wool, etc., (2) used in transporting or protecting a commodity. WPM that does not undergo sufficient processing or treatment to remove or kill pests can lend to the creation and spread of said pests which is detrimental to domestic agriculture and forest resources. Examples of WPM include crates, pallets, and other types of packaging. The WPM regulations were enacted pursuant to the International Plant Protection Convention (IPPC) guidelines, which were a result of proliferation of pest infestations into many countries due to packaging which was not properly treated.
The specific WPM regulations can be found at 7 C.F.R. 319.40.3 (B)(2). There are two different aspects of wood packing violations: 1) Whether the packaging itself has been infested, and 2) Whether the packaging is properly marked to demonstrate the WPM has been treated prior to importation. The regulations require that the WPM marking be visible, (preferably on at least two opposite sides of the packaging), with a legible, permanent mark. Additionally, the WPM must include a unique graphic symbol, the ISO two-letter country code for the country that produced the WPM, as well as a unique number assigned by the national plant protection agency of that country to the producer of the WPM. Lastly, an abbreviation disclosing the type of treatment must be included on the WPM.
There are three types of WPM violations: (1) unmarked WPM, (2) inappropriate markings, and (3) pest infestation. Pest infestation is the most serious WPM violation and will usually receive higher liquidated damages. For all three WPM violations, an Emergency Action Notification (EAN) is issued which orders the immediate export of the violating shipment, including the cargo, at the owner’s expense. The U.S. Department of Agriculture’s (USDA) division of Animal and Plant Health Inspection Service (APHIS) is responsible for policy development and interpretation with respect to WPM while CBP is responsible for the inspection and enforcement at the time the WPM is imported. WPM violations are assessed liquidated damages under 19 U.S.C.§1592. However, if there are continual WPM violations, especially if it involves pest infestations, penalties could also be issued under 19 U.S.C § 1595a(b).
CBP has a specific structure when determining appropriate liquidated damages for failing to comply with an EAN. If liquidated damages are assessed, importers can submit a petition for mitigation which should include: (1) whether the merchandise was exported or destroyed, (2) whether you, in a timely manner, addressed the WPM issue, and (3) what steps have you taken to avoid this claim in the future. Additionally, if the liquidated damages amount is $100,000 or more, the petition will automatically go to CBP Headquarters for final review and mitigation decision. It is important to note that when a WPM violation occurs, CBP will not allow separation of the violative WPM from the actual cargo and allow the cargo to stay. Meaning, both the cargo and WPM must be exported.
For any additional inquiries, or if you would like to discuss WPM compliance measures in more detail, please contact Jennifer Horvath at firstname.lastname@example.org.