CBP Part 111 Regulatory Updates Include 'Customs Business' Changes, Broker Employment Ratio

ORLANDO, FLA. -- CBP included a revision to the definition of "customs business" and a proposed broker employment ratio within a set of changes to the agency's regulations in 19 CFR Part 111, said Troy Riley, executive director of CBP's Office of Commercial Targeting and Enforcement. Riley, who spoke at the National Customs Brokers & Forwarders Association of America conference on April 22, discussed a number of the proposed regulatory updates, though he was unable to go into great detail because the changes are now undergoing a further review at the agency. The Part 111 update does not include continuing education requirements, he said.

The updates address several issues that the NCBFAA pushed for, he said. The definition of "customs business" is one such area, though Riley said the changes are not as "extensive" as the NCBFAA would have liked. The question will be whether CBP seeks to expand the scope of what is covered by the term "customs business" or if it will seek to narrow the activities it covers, said Alan Klestadt, a lawyer with Grunfeld Desiderio and customs counsel for the association. CBP will also seek revisions to national permitting regulations, which will include the broker to employee ratio suggested by the NCBFAA, said Riley. The NCBFAA told CBP that national permit holders should employ at least one licensed customs broker for every 12 employees (see 14072222). CBP is still considering the economic impacts of such a requirement, he said.

There will also be some updates to recordkeeping requirements and an update of broker visit guidelines, said Riley. The intent is that CBP be able to see where the business and recordkeeping is actually performed, he said. There's some ongoing discussion at the agency as to how to handle the recordkeeping requirements in consideration of the growing use of cloud storage, he said. Particularly difficult is how CBP would treat cloud storage if parts of the service is domestic and other parts are foreign, he said. CBP has not "cracked that nut," he said. CBP also plans to add clarity to the employee reporting regulations, he said.

The regulatory changes do not include the addition of continuing education requirements, Riley said. Several brokers voiced surprise and disappointment at the lack of such requirements, which have been an area of discussion for years. The agency is still reviewing the regulations to see whether it has the authority to require continuing education or whether a statutory change would be necessary, he said. The agency's authority to accredit or select creditors was among the issues that held up the continuing education requirements, he said. From the policy side, the education requirements seem like a good idea, but the issue has been with CBP's lawyers for some time now so there may be some concerns on the subject, Riley said. CBP should pursue a statutory change to allow for continuing education if the agency determines that is necessary, said Kuehne + Nagel Import Compliance Officer Ken Bargteil, who has long been involved in the NCBFAA customs committee.