Regulatory Proposals on Brokers to Include Direct POA, Recordkeeping Requirements

NEW ORLEANS -- CBP plans to propose changes to powers of attorney and cybersecurity requirements as part of an update to customs broker regulations, said Cynthia Whittenburg, deputy executive assistant commissioner at CBP’s Office of International Trade, during the National Customs Brokers & Forwarders Association of America annual conference on April 4. The agency is the process of drafting the proposal, which will then face "extensive economic evaluation" by the Office of Management and Budget (OMB). The evaluation is a requirement of a recent Trump administration executive order that requires the repeal of two regulations for every "significant" new rulemaking (see 1702070048). Whittenburg didn't give a time frame for the proposal, but the agency recently said timing would be hard to predict (see 1703070009).

The agency will seek to "codify that the broker must obtain a customs power of attorney directly from the importer of record or drawback claimant, and not some intermediary, such as a freight forwarder," Whittenburg said. There shouldn't be anything to prevent direct communication between the broker and importer, she said. The agency will still allow for brokers to provide powers of attorney to other brokers on behalf of the client, she said. CBP will also propose a requirement that "brokers maintain records" within the U.S. "to ensure government accessibility via legal requests and for recording of cybersecurity breaches to CBP where the importer of record information has been stolen," she said. There's been some internal debate about the record retention requirements given the increased use of cloud storage (see 1504220017).

Some other "key features" of the proposal include the transition from district permitting to a single national permit, which "will allow brokers to conduct customs business on a national level, unlimited by what has evolved to be artificial district boundary restrictions," Whittenburg said. Brokers that have district permits "exclusively" will be "grandfathered into the national permit system," she said. CBP is also proposing that "customs business must be conducted within U.S. customs territory," she said. CBP included "most" of the recommendations in its regulatory package from the Commercial Customs Operations Advisory Committee (see 1604250011), she said.

There remains some uncertainty for how the "plus one minus two" executive order works exactly to calculate the regulatory reductions, she said. "Can we use these offsets to offset something else that has nothing to do with that regulation?" she asked. "Those are questions we have to ask," she said. That will affect regulatory proposals in the pipelines, including on drawback, which is "further along" than the changes to the broker regulations, she said.

CBP continues to believe the updated Form 5106 is a necessary first step toward creating an importer of record database as required by the Trade Facilitation and Trade Enforcement Act (see 1612020008). CBP still needs final approval from OMB for the revised Form 5106, and Whittenburg is "cautiously optimistic" that the new form will come out "relatively soon," she said. CBP will still need to "reassess" the updated form once OMB signs off because there's been a "sea change" since CBP submitted the form, she said. CBP processes between 20,000 and 25,000 new 5106 forms on a monthly basis and "approximately 95 percent of those updates" are processed through the Automated Broker Interface, she said. "We believe the current 5106 data does not provide information that is necessary to verify importer existence, affiliations ... nor does it evaluate accuracy," she said.