Background on Customs Broker Regulation Changes
The Customs broker regulations in part 111 of title 19 of the Code of Federal Regulations (19 CFR 111) have been subject to review by the broker community, CBP, and Commercial Customs Operations Advisory Council (COAC) for several years. During this time, CBP solicited feedback from the trade community through webinars, port meetings and trade association meetings, aiming to promote transparency and collaboration while modernizing regulations to reflect the role of the broker in today’s business environment.
In the April 2016 COAC public meeting, the COAC Broker Regulations Working Group (BRWG) made 37 recommendations to modernize 19 CFR 111. The COAC BRWG included participants from the trade community and CBP representatives. BRWG Recommendations focused on the following areas: the evolving role of the broker; confidentiality, cybersecurity, and record retention; responsible supervision and control and employee reporting; and licensing and permits. Included in those recommendations were a proposed single, national permit for brokers, as well as electronic process changes.
The Notice of Proposed Rule making (NPRM), published June 5, 2020, reflected many of these recommendations and proposed changes to align the broker regulations with contemporary business practices in the electronic environment. Updating 19 CFR 111 would provide resource optimization for both industry and CBP and would update compliance requirements to protect revenue and strengthen CBP's knowledge of importers.
Key proposed changes in the NPRM include:
- Transitioning to a national permit framework
- Increasing license application fees and expanding forms of payment
- Codifying that U.S. customs business is conducted within the U.S. customs territory
- Revising regulations regarding the broker/client relationship
- Updating the responsible supervision and control oversight framework
- Strengthening cyber security and records requirements
- Modernizing broker reporting and the electronic data interface (ACE) capabilities through the broker account portal
Modernization of the Customs Broker Regulations 19 CFR 111 Status
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.
Modernization of the Customs Broker Regulations (19 CFR 111) Proposed Changes
Some of the proposed changes are listed below:
Establish One National Permit for each Broker
- Eliminate the district permit and transition to a single permit framework (national permit) that operates at the national level within the customs territory of the United States
- Eliminate the need for brokers to request permit waivers and maintain district offices
Broker Fee Changes and Electronic Payment
- Increase the license application fee for individual and organization license applications to better align application fees to CBP's processing expenses
- Expand payment options for brokers to include electronic fee payment
Broker Reporting and Electronic Data Interface (ACE)
- Enhance the ACE broker portal and streamline broker reporting
Customs Business within the U.S. Customs Territory and Knowledgeable Point of Contact
- Require that customs business be conducted within the customs territory of the United States
- Require that brokers designate a knowledgeable point of contact to be available to CBP during and outside of normal operating hours to respond to customs business issues
- Require brokers to obtain a customs power of attorney directly from the importer of record/drawback claimant, not via a freight forwarder
- Report to CBP when brokers terminate representation of a client as a result of determining that the client is attempting to defraud or otherwise commit any criminal act against the U.S. Government
- Require brokers to advise the client on the proper corrective actions required and retain a record of broker communication with the client in cases of noncompliance, error or omission
Responsible Supervision and Control Requirements
- Require brokers to submit a supervision plan with a national permit application to detail how the entity intends to exercise Responsible Supervision and Control
- Update and add factors related to Responsible Supervision and Control to reflect the transition to a national permit framework
- Require brokers to employ a sufficient number of licensed brokers to ensure Responsible Supervision and Control over their customs business
Cyber Security and Records Requirements
- Require brokers to maintain records, including electronic records, within U.S. customs territory
- Require brokers to notify CBP when there has been a breach of electronic or physical broker records and provide the compromised importer of record numbers
National Permit Transition Information
In the Notice of Proposed Rulemaking modernizing customs broker regulations, CBP proposed to eliminate district permits and allow all customs brokers to operate under a single national permit. Once the final rule is published, CBP will transition all customs brokers currently operating solely under a district permit to a national permit as follows.
- CBP will transition this pool of brokers to a national permit between the publication date and effective date of the final rule
- Current district permits will remain active until the final rule effective date and ACE National Permit programming is in place
- CBP will use a broker’s current district permit information for the creation of the national permit
- Each broker transitioned will be notified when their pending national permit has been created and given an opportunity to provide CBP with amended address and permit qualifier information
Webinar (June 17, 2022 at 2:00 p.m. ET)
CBP will host a webinar June 17, 2022 at 2:00 p.m., ET. This educational webinar will cover Notice of Proposed Rule Making (NPRM) recommendations to the broker regulations in 19 CFR 111, to include national broker permits. Registration for the webinar can be found at: Broker Regulations Webinar Registration link. The information to access the webinar will be sent to the email address you provide on the day of the webinar.
CSMS Message is one of CBP's methods for communicating to our trade partners news and updates on our automated systems - namely the Automated Commercial Environment (ACE).
CSMS# 52145776 - Modernization of Broker Regulations 111 Webinar