US CBP often asks importers to sign a statute of limitations waiver (usually two years) in penalty and liquidated damages cases, or when the importer is filing a prior disclosure. CBP is trying to preserve its rights to sue the importer before the statute of limitations runs out. Once the deadline comes and goes, the Government will not able to sue unless there is some sort of equitable tolling.
Should importers sign these waivers?
CBP tends to make vague but alluring promises (which never seem to be get reduced to writing) about how signing a waiver will help convince the agency about the importer’s intention to cooperate. It is the “we’ll play nice if you play nice” strategy. CBP has a couple of regulatory tools to coerce importers into signing statute of limitations waivers, including speeding up its decision on the penalty. If there is less than one year left and the importer has not signed a waiver, CBP can reduce the deadline from thirty days down to seven days for an importer to respond to a pre-penalty notice, and the period can in reality be shorter if CBP sends the notice by mail, which it is allowed to do. CBP can also deny an importer’s ability to file a supplemental petition.
It seems that most consultants and customs attorneys (no one in our firm) go out of their way to appease CBP, including having customers/clients automatically sign waivers. Perhaps this is out of fear of litigation. While we do not hold an absolute view, our firm considers CBP’s waiver requests with suspicion and we do not automatically advise that our clients sign waivers.
It does not make sense that CBP takes more than five years or six to decide whether to sue or not. The statutes of limitations are generous under customs law when compared to most other areas of law. In addition, memories fade and evidence dissipates with time, making it harder to prosecute a penalty case and sometimes even to defend against one. By signing a statute of limitations waiver, the importer is drawing out the administrative proceedings and litigation, which, of course, can be very expensive in the long run and can prevent the importer from moving forward.
CBP’s promise to “play nice” if the importer signs a statute of limitations waiver often rings hollow. By definition, CBP stopped playing nice when it issued a penalty or liquidated damages notice, thus forcing the importer into a defensive posture. The only way that CBP can start playing nice again is if it drops its penalty case (the agency almost never admits error) or greatly mitigates the penalty/liquidated damages claim. Waivers should be irrelevant to mitigation. CBP’s Mitigation Guidelines do not, and probably could not, condition mitigation on the importer signing of a statute of limitations waiver. CBP cannot also refuse to consider any substantive arguments or claims the importer timely offers. CBP cannot say, “we won’t listen to you if you don’t sign this statute of limitations waiver.” See United States v. Jean Roberts of Cal., Inc., 30 C.I.T. 2027 (2006) (“The demand by Customs that defendant waive the applicable statute of limitations for a two-year period in return for any consideration of these two claims for relief was neither justified under the applicable statute and regulations nor consistent with principles of equity and fairness”).
Thus, whether to sign a statute of limitations waiver is a question that is more complicated than traditionally perceived. It is, as always, fact and context specific, an option to be weighed in the course of seeking to settle an administrative case or a lawsuit to the importer’s benefit. What are the risks, who holds the advantage, and who is likely to blink? These questions are always present as parties contemplate litigation. An importer may prefer not to sign a waiver to force CBP’s hand, perhaps thinking that the agency will accept a tender that is smaller than it desires. The importer may bet on the reluctance by the US Department of Justice, the agency that must sue in the Court of International Trade to collect the penalty or liquidated damages claim, to expend prosecutorial and political capital on a piddly customs penalty case when the world offers so many more sexy and prominent opportunities. Even if it is sued, the importer may be confident that it will win before the Court of International Trade, the dispassionate tribunal that must review all the facts and law anew.
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