New Year, New Civil Monetary Penalties for the Trade Industry

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By Nikki Godfrey, J.D.

On January 3rd, 2020, the U.S. Department of Commerce published inflation adjustments for civil monetary penalties (CMPs) under its jurisdiction, including civil penalties that the Bureau of Industry and Security (BIS) and the International Trade Administration (ITA) are responsible for carrying out.[1]  This means that failure to comply with various U.S. trade regulations will result in heftier fines for 2020.

The Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 (Inflation Adjustment Act) allows authorized federal agencies to annually adjust CMPs that they have jurisdiction to administer.  Under this act, agencies are required to adjust their CMPs no later than January 15th of each year and publish those adjustments in the Federal Register.

The Inflation Adjustment Act requires the maximum CMP or the minimum and maximum CMP (as applicable) to be increased by the cost-of-living adjustment.  The cost-of-living adjustment changes each year since it is determined based on the Consumer Price Index (CPI) from previous years.   The CPI is a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services.[2]  The cost-of-living adjustment for 2020 is the percentage for each CMP that the October 2019 CPI exceeded the October 2018 CPI.

The adjusted CMPs become effective on January 15th, 2020.  Overall, the CMPs administered by the BIS and ITA are increasing.  With CMPs increasing, it is important for businesses to implement various processes and procedures to make sure violations of U.S. trade regulations do not occur.  This can be done through the implementation of compliance and risk management programs.

Adjustments for Civil Penalties Administered by the BIS:

  • 15 U.S.C. 5408(b)(1), Fastener Quality Act (1990), violation, maximum from $47,357 to $48,192.
  • 22 U.S.C. 6761(a)(1)(A), Chemical Weapons Convention Implementation Act (1998), violation, maximum from $38,549 to $39,229.
  • 22 U.S.C. 6761(a)(l)(B), Chemical Weapons Convention Implementation Act (1998), violation, maximum from $7,710 to $7,846.
  • 50 U.S.C. 1705(b), International Emergency Economic Powers Act (2007), violation, maximum from $302,584 to $307,922.
  • 22 U.S.C. 8142(a), United States Additional Protocol Implementation Act (2006), violation, maximum from $31,328 to $31,881.
  • 50 U.S.C. 4819, Export Control Reform Act of 2018 (2018), violation, maximum from $300,000 to $305,292.

Adjustments for Civil Penalties Administered by the ITA:

  • 19 U.S.C. 81s, Foreign Trade Zone (1934), violation, maximum from $2,924 to $2,976.
  • 19 U.S.C. 1677f(f)(4), U.S. – Canada Free Trade Agreement Protective Order (1988), violation, maximum from $210,386 to $214,097.

[1] Complete Federal Register publication of Civil Monetary Penalty Adjustments for Inflation can be found here.

[2] U.S. Bureau of Labor Statistics, Consumer Price Index, https://www.bls.gov/cpi/.