U.S. Customs and Border Protection announced the publication of the Notices of Proposed Rulemaking (NPRMs) for the long-awaited update to 19 CFR 111.
The NPRM for the Modernization of the Customs Broker Regulations (85 FR 34836) and the NPRM for the Elimination of the Customs Broker District Permit Fee (85 FR 34549) were published on June 5, 2020.
The comment period for both NPRMs ended on August 4, 2020.
The effective date for both Final Rules is December 19, 2022.These rules modernize the customs broker regulations and provide resource optimization for both industry and CBP and will update compliance requirements to protect revenue and strengthen CBP’s knowledge of importers.
Key Changes Highlights
New Term and Definition of “Processing Center”
- The Processing Center means the broker management operations of a CBP Center of Excellence and Expertise (Center) that process applications for a broker’s license, applications for a national permit for an individual, partnership, association, or corporation, as well as submissions required in Part 111 for an already-licensed broker.
- Center personnel (Broker Management Officers) at any of the 41 port locations will continue to process applications and submissions, based on the location through which the broker received/will receive their license and national permit.
Transitioning to a National Permit Framework
- CBP eliminated broker districts and district permits.
- Current district permit holders without a national permit will be automatically transitioned to a national permit before the final rule effective date on 12/19/22.
- The national permit allows the broker to conduct customs business on a national scope.
- The national permit eliminates permit waivers and simplifies permit management.
Broker Fee Changes and Electronic Payment
- CBP has increased the license application fee from $200 per application to $300 for individual license applications and $500 for organization license applications to recover some of the costs associated with the processing of applications and to better align the processing expenses between the application types.
- CBP allows for electronic submission of broker applications and fees. Payment and submission of the broker exam fee and application and the triennial fee and report have been deployed in the eCBP portal. Additional applications and fees are planned for future eCBP development.
Customs Business within the U.S. Customs Territory and Knowledgeable Point of Contact
- CBP’s practice of requiring customs business to be conducted within the customs territory of the United States is now codified in the regulation.
- Brokers must designate a knowledgeable point of contact to be available to CBP during and outside of normal operating hours to respond to customs business issues (24/7 POC).
- Brokers must execute a customs power of attorney directly with the importer of record or drawback claimant, and not via a freight forwarder or other (unlicensed) third party, to transact customs business for that importer of record or drawback claimant.
- Brokers must advise the client on the proper corrective actions required in the case of noncompliance or an error or an omission on the client’s part, and retain a record of their communication with the client.
Responsible Supervision and Control Requirements
- CBP has added three Responsible Supervision and Control factors in regulation, increasing the factors from ten to thirteen.
- CBP may consider the listed Responsible Supervision and Control factors to the extent any are relevant to a specific broker when determining what is necessary to perform and maintain responsible supervision and control.
- A sole proprietorship, partnership, association or corporation must employ a sufficient number of licensed brokers, the number of which may depend on multiple factors, such as the size of the broker entity, the skills and abilities of the employees and supervising employees, and the complexity and similarity of tasks.
- At the time of permit application, brokers must provide a supervision plan for exercising responsible supervision and control over their customs business, which will be unique to each broker and depend, among other things, on the size of a brokerage, the complexity of the customs business, and the types of transactions handled.
Cyber Security and Records Requirements
- Brokers must maintain original records, including electronic records, within the U.S. customs territory.
- Brokers must notify CBP when there has been a breach of electronic or physical broker records and provide the compromised importer of record numbers.
- Regulatory revisions to records confidentiality allows brokers to share client information with third parties when authorized in writing by the client.
Broker Reporting and the Electronic Data Interface (ACE)
- CBP modernized the regulations to allow brokers to transmit the following information via the ACE portal account:
- Information on new and terminated employees
- Office of record and recordkeeping address information
- Recordkeeping point of contact information
- Knowledgeable 24/7 point of contact information
- If the ACE portal is not available, the information must be submitted to the processing Center.
- CBP eliminated the requirement to report an employee’s prior employer(s) and prior home address(s).
Broker Exams and License Changes
- CBP may provide exam results to examinees electronically.
- CBP may accept exam appeals and issue appeal decisions electronically.
- CBP may provide alternatives to on-site testing such as remote proctor testing.
- An applicant who has been denied a license must address how deficiencies which resulted in the denial have been remedied when submitting a new application.
- Brokers must not give, solicit or procure the giving of any information or testimony that the broker knew or should have known was false or misleading in any matter pending before DHS or to any representative of DHS.
- Brokers must document and report to CBP when brokers separate from or cancel representation of a client as a result of determining that the client is intentionally attempting to use brokers to defraud the U.S. Government or commit a criminal act against the U.S. Government.