CBP Planning Broker Management, Recordkeeping Changes, Says Industry Lawyer

PALM SPRINGS, Calif. -- CBP is planning a number of major changes to its approach to broker management, moving such work away from individual ports and to the Centers of Excellence and Expertise, said Richard Wortman, a lawyer with Grunfeld Desiderio who spoke at the Western Cargo Conference Oct. 17. Headquarters will continue to have overall control, but the legwork will be handled at the CEEs across the country, he said. Wortman discussed broker management changes and a number of other expected updates being contemplated as part of revisions to customs broker regulations.

Under the plan, each broker will receive an "assigned center," where all the licensing requirements and triennial reports would be filed, instead of the port of entry, said Wortman. As part of a CEE, the broker will be required to provide a "broker office of record" that the CEE would contact when necessary, he said. The assigned CEE "may have nothing to do with the type of merchandise you do," he said. While planning has started, much is still to be decided and the actual changes are probably "years away from fruition," he said.

Many of the broker regulatory changes are related to CBP's plans to do away with geographic permitting to allow for a single national permit (see 1509290021) and to maintain a standard of responsible supervision and control. The agency has come up with "a laundry list of factors" it will take into consideration for broker compliance issues, including some that should be of concern to the industry, said Wortman. While CBP shot down a proposal to require a certain ratio of licensed brokers (see 1510090021), the agency may consider whether a broker employs an "adequate number of licensees," he said. Another factor of consideration is whether there's "timely accessibility" to licensed brokers and to the licensed officer "who's license is supporting the corporation," he said. CBP didn't immediately comment.

Another possible factor will be the level of responsiveness to CBP, the volume and frequency of entry filings and "the extent of which the qualifying broker is actually involved in broker operations," he said. One troubling factor in discussion is the consideration of the physical proximity to a licensed officer, he said. That seems to not make sense considering CBP's effort to move away from geographic boundaries, said Wortman. A CBP official recently said CBP hoped the agency could request public comment on the broker regulation changes by the end of the year (see 1510050015).

CBP would also like to move to a fully electronic exam, Wortman said. That would allow the agency to process exam results far quicker than it does now, but may also result in the cost of the exam to increase to around $300-$400, he said. The agency may also increase the fees for licensing, he said. CBP is also considering the addition of a cybertheft provision that would require brokers to provide written notification to CBP of any breach of records within 72 hours and give an "impact assessment" within 30 days of the breach, said Wortman.

The agency is also considering changes to record retention requirements by specifically allowing for cloud storage as long as the cloud is maintained in the U.S, he said. Another troubling aspect that may be proposed is a requirement for broker records retention related to advice to clients in the event a client is thought to be doing something wrong, he said. "You will have an affirmative obligation to keep in writing that they were advised so that during your broker audit, every time you gave that advice, it may be reviewed," he said. "I think this is really pushing it," he said.

A final version of the Importer ID Input Record (Form 5106) is still going through governmental review, said Wortman. He expects that the final form will largely resemble the proposed version issued earlier this year (see 1507240009), but it still may be another year or so before it final version is published.