CBP Lays out Scope of New Project to Amend Regs, "Evolve" Brokers

CBP Merging Review of Role of Broker, Reg Modernization into “Broker Revision Project”

As part of its 2010 examination of possible trade process improvements, CBP states that it became obvious that the role of the broker needed to be addressed.

During the same time period, CBP was engaging with the National Customs Brokers and Forwarders Association of America (NCBFAA) on a couple of broker regulation rulemakings and came to the conclusion that 19 CFR Part 111 as a whole should be examined in order to identify opportunities for modernization. CBP has noted that the broker regulations are 30 years old and during that time there has been a significant evolution of the role of the broker.

At the end of 2010, CBP decided to merge those two efforts into its broker revision (or review) project. It began this consolidated effort with a January 2011 meeting at which it began to define the scope of the project.

CBP states that it expects to address the following issues in its review:

Will Consider Requiring CHBs to “Know Their Customers,” More Vetting Before POAs

As part of its look at the responsibilities of customs brokers, CBP will be considering:

• Requiring greater broker connectivity to clients (i.e., know who they’re doing business with)
• Strengthening of proof of identity (i.e., require better vetting of clients prior to executing a power of attorney)
• Examining the broker/freight forwarder relationship (especially in light of the evolving global logistics network)
• Using brokers as a “force multiplier” (especially as a tool for small and medium-sized importers who would not normally have access to CBP resources like the Importer Self-Assessment program)

Wants to Update Broker Regs, Streamline Triennial Report, Consider Offshoring

When it looks at modernizing the broker regulations in 19 CFR Part 111, CBP expects to consider:

Updating regulations to account for modern business practices. In 2010, CBP proposed modernizing the customs regulations on recordkeeping by issuing two proposed rules -- a March 2010 proposed rule to amend 19 CFR Parts 111 and 163 regarding customs broker recordkeeping requirements as they pertain to the location and method of record retention, and an October 2010 proposed rule to amend 19 CFR 111.24 to allow customs brokers to disclose certain information regarding client (importer) records under certain conditions. CBP now expects to review 19 CFR Part 111 for other opportunities to modernize the regulations.

(See ITT’s Online Archives or 03/24/10 news, 10032420 for BP summary of proposed rule on location and method of retention of broker records. See ITT’s Online Archives or 10/26/10 and 10/27/10 news, 10102608, and 10102714, for BP summaries of the proposed rule on importer record sharing by customs brokers.)

Triennial report. CBP states that it would like to streamline and/or automate the triennial status report process. This could include doing away with the triennial status report as it is now known in favor of another way of brokers letting CBP know their status, employees, etc.

Offshore customs business operations. CBP states that it needs feedback/education from the trade on whether this should be an issue of concern for CBP.

Examine Frequency and Content of Broker Exam

CBP says that it will revisit the Customs brokers licensing exam, including the requirements for sitting for the exam, the criteria for obtaining a license, and the concept of continuing education to maintain a license.

CBP expects to look at the frequency of the exam and the issues related to possibly offering the exam on demand. CBP will also look at the various elements addressed in the exam to determine whether the right mix of regulatory knowledge versus real life knowledge of the brokerage industry is being achieved.

Review Use of Penalties, Filer Code Misuse

As part of its review of the penalty regime for brokers and CBP disciplinary actions, CBP expects to review:

19 USC 1641 penalty provisions. CBP wants to examine the current 19 USC 1641 penalty provisions and whether it is employing this provision appropriately in the field. CBP wants to look at whether the statute needs to be revised, or whether it needs to be executed differently.

Filer code misuse. CBP notes that although the regulations require certain action in cases of filer code misuse, CBP does not really provide guidance on what constitutes filer code misuse.

Examine C-TPAT-Broker Partnership

CBP expects to examine what it means for a broker to be a C-TPAT participant in light of possibly increasing the broker’s role in the supply chain. CBP does not yet know if the C-TPAT partnership is the right place for CBP to address expanding the role of the broker.

Trade Questions Broker as Entry Filer vs. Consultant, Etc.

During the question and answer portion of the session, comments centered on the evolving role of the broker and its relationship with both importer clients and CBP. Issues related to the role of the broker as an entry filer versus the role of a broker as a consultant were also discussed and one commenter noted that the problems related to privacy and confidentiality were important issues for CBP to address.

CBP Wants NCBFAA to Partner in Review, NCBFAA Expects to Accept Comments

CBP Commissioner Bersin has stated that he wants NCBFAA to partner with it in its review of the role of the customs broker.

NCBFAA sources have told Broker Power that they plan to post information on their website so that members of the trade can submit comments on the review.

(See ITT’s Online Archives or 04/14/11 news, 11041414, for BP overview of the April 12, 2011 COAC meeting during which CBP’s examination of the role of the broker was discussed.

See ITT’s Online Archives or 04/12/11 news, 11041221, for BP summary of CBP Commission Bersin’s remarks on the broker revision project at the recent National Customs Brokers and Forwarders Association of America (NCBFAA) Annual Conference.)

Presentation from symposium is available here.