CBP Report to Congress on Broker Importer ID Standards Delayed by DHS Rejection

Work continues on a report due to Congress on how CBP can improve importer verifications through customs brokers after the Department of Homeland Security sent it back to CBP following a review, said Jerry Malmo, director of CBP's Commercial Enforcement Division. DHS sent the report back to CBP because it was "too specific on what our plans were," said Malmo, who spoke Sept. 12 at a National Customs Brokers & Forwarders Association of America conference. Still, the agency recently started briefing lawmakers on the report, which was due Aug. 22 as part of the customs reauthorization law's Section 116 (see 1608240026).

CBP rewrote the report and it's now again being reviewed by DHS, Malmo said. The report likely will be released publicly after DHS approves CBP's submission to the House Ways and Means and Senate Finance Committees, he said. Malmo was unable to discuss some of the specifics involved in the report. While industry continues to gauge the impacts of the coming regulations on importer ID in Section 116, it's important to also look at Sections 114 and 115 that also update CBP's importer-of-record numbering and bonds based on risk assessment, Malmo said. "As you're looking at TFTEA and the trade act, you need to kind of look at it within the context of compliance around the risk of new importer and non-resident importers and the risk that Congress feels they impose on our ability to collect revenue," he said.

There was some clear anxiety at the conference over CBP's plans. The notion of "reasonable procedures" for verifying an importer described in Section 116 is an area of concern and could be "one of those times we are caught between CBP and the client," said Mary Jo Muoio of Geodis, who is NCBFAA Customs Committee chair. "You want to know who your customer is" because there's a better chance of getting paid, but at the same time "we're not a law enforcement agency," she said. Considering that the regulatory changes "will impact us dramatically" and CBP's plans are still in draft form, "it's not too late to bring us into the room," said Alan Klestadt, a lawyer with Grunfeld Desiderio and the NCBFAA's customs counsel. While Klestadt said he is aware CBP accepted input from various industry groups on Section 116, he's also "equally aware of the stone cold silence that's come back from the agency."

While acknowledging Klestadt's concerns, Malmo said some of CBP's approach to this issue so far is partially due to the leeway allowed by the law and the prioritizing of resources. Whereas CBP was required to issue regulations for new antidumping and countervailing duty evasion enforcement processes (see 1608190014), for example, the agency isn't under a time constraint to issue regulations under Section 116, he said. Malmo is also still operating under a "mandate" to have the broader broker regulatory update (see 1604250011) out by January, though that mandate preceded the additional work created by the customs law.

CBP faces an ongoing challenge related to ACE because the account functionalities were built in the "legacy ACE platform," Malmo said. "So we know that we have to go back and revisit that because it's an old system and needs to be modernized into the new ACE system and, quite frankly, the functionality we did get when we got ACE accounts doesn't really work as well as we need it to work," he said. With ACE headed toward an operational and maintenance mode, "we have to get in line with everyone else in the agency that wants to change or add functionality to ACE."

The new data elements on the Form 5106 will allow CBP to fulfill elements of Section 114 that requires a CBP database for importers of record, Malmo said. That form continues to be under review within the government, but is expected to be approved soon, he said. Despite previous plans to release a mobile application for Form 5106 access on smart phones and tablets (see 1607130026), that idea may be scuttled, Malmo said. That 5106 app effort started some two years ago and with Section 116 becoming law, it may no longer be useful, he said.