Changes to Part 111 Still Distant, But Agreement on Continuing Education Close, Says CBP's Ryan

The planned changes to the 19 CFR Part 111 regulations that govern customs brokers are still several stages away from implementation, said Elena Ryan, acting director of Trade Facilitation and Administration at CBP, who is overseeing the process for the agency. Ryan declined to put a time frame on the expected changes, but said the rulemaking process can sometimes be a multi-year process. While some of the discussed changes are more contentious than others, the update will be part of a single rulemaking, rather than piece by piece changes, she said in an interview.

Continuing education remains as one of the more contentious issues, and CBP recently reconvened the working group on the issue, said Ryan. The group includes members and non-members of the National Customs Brokers and Forwarders Association of America (NCBFAA), she said. The role of NCBFAA as the administrator of a continuing education program has been one of the sources of disagreement throughout the discussions (See 12100512 and 12091233). Some other concerns include applying the requirements to long-time brokers or newly licensed brokers, while others say CBP should leave it to the market to push the incompetent brokers out of the business, said Ryan.

The working group has developed a framework addressing three main parts of a continuing education (CE) program, Ryan said. The components are: ensuring quality and meaningful education, how to report completion of CE to CBP, and what the consequences are for non-completion, she said. Ryan is planning a Webinar in the next month or two to discuss the results of the working group, but some further approvals from the group are necessary before it’s scheduled. CBP is planning to publicize the planned CE changes well before the regulatory rules are official because it will affect all brokers licensed under Part 111 and will be altogether new requirements, unlike other parts of the update, she said.

Many Changes Still Possible

While other parts of the regulatory update face less disagreement, the entirety of Part 111 update remains in flux, Ryan said. “Until our Secretary signs it and send it to the [Office of Management and Budget], you really don’t have a sense of what makes it in, what doesn’t,” she said. “There are changes all the way to publication.”

Potential changes to geographic areas are also still of some concern, Ryan said. While CBP did away with a local permit waiver pilot program (see 12091233), the agency may still reduce the number of districts, from the current seven to four areas, she said. The agency is also looking at extending length of waivers given to importers that are unable to find a broker licensed in a certain district, she said. Those one year-long waivers aren’t “really long enough to make business decisions,” such as office leasing or hiring, she said. Three to five-year waivers may work better, though no specific length has been decided on, she said.

Some new validation requirements are also likely, Ryan said. “There’s some basic things that we think we can ask for,” she said. “Some identity documents, some articles of incorporation.” It’s also important that the importer will be required to give the information to the broker or CBP upon request, said Ryan. “We can’t make this all about the broker having to collect the information,” she said. An importer that doesn’t want to provide the verification shouldn’t be able to seek out another broker that’s willing to go without such information, she said.

The new validation requirement “dovetails” with plans to require some new information as part of an update to CBP Form 5106, Ryan said (see 12062524). The changes to Form 5106, the importer ID input record, are on a separate track from the Part 111 rewrite because it’s a form change, rather than a regulatory change, she said. The form change will come before the regulatory changes, simply because a form change is an easier process, though there will still be two opportunities to comment on the proposed changes, she said.

Also being reviewed are the factors CBP considers when looking at a broker’s “supervision and control” (see 12092105). Those factors, now contained in the regulations, are “best left out of the regulations,” though the agency will put out a more “robust guidance” on the issue, said Ryan. This relates to the geographic and district permit issue, she said. “If you have brokers scattered all over the country, that’s technically fine with me from policy perspective, as long as you exercise responsible supervision and control,” Ryan said. It’s not much different from what happens when filing under a national permit, she said.

Working Under Current Statute

CBP’s proposed changes to Part 111 are all being developed under the assumption that there won’t be any statutory changes, Ryan said. “We have a certain way that we are planning on doing things assuming the statute stays the way it is now,” said Ryan. “If the statute were to magically change in the middle of it all, we would have to regroup anyway.” That’s because it’s too unknown if any statutory changes will come to fruition, she said.

Still, CBP may consider pushing for statutory changes up through the White House on things such as changes to the triennial report requirement, possibly making it a biennial report or getting rid of it altogether, and the geographical areas requirements, Ryan said. Many of statutory geographical requirements were done away with long ago and those requirements in 19 USC Section 1641 is the last place that the regional requirements are defined, she said. The speed at which CBP could get those changes through will likely be much different than if industry pressed Congress to make the changes, said Ryan.

The use of trusted trader programs, C-TPAT and Importer Self Assessment, as a way to satisfy bona fides requirements is also still “on the table,” she said. Because those programs aren’t regulatory, it won’t be something written into the regulations, but may be something they can offer as a benefit for participation, said Ryan. CBP has said involving the trusted trader programs could help streamline the verification process (see 12100512).

Correction: Elena Ryan is the Director of Trade Facilitation and Administration at CBP.