CBP Proposes Updates to Customs Broker Regulations

CBP released its long-awaited proposal to update customs broker regulations. Among other changes, CBP proposes to “update the responsible supervision and control oversight framework, ensure that customs business is conducted within the United States, and require that the customs broker have direct communication with the importer.” The regulatory changes were under government review for years (see 1804110024) following lengthy discussions about the updates (see 1510210017).

CBP also proposed eliminating customs broker districts and expanding “national permit authority to allow national permit holders to conduct any type of customs business throughout.” As part of that, CBP issued another proposal to eliminate customs broker district permitting fees.

The agency also proposes some language around requirements for employing a sufficient number of customs brokers. Specifically, CBP proposes adding to the regulations that “a sole proprietorship, partnership, association, or corporation must employ a sufficient number of licensed brokers relative to the job complexity, similarity of subordinate tasks, physical proximity of subordinates, abilities and skills of employees, and abilities and skills of the managers,” it said. CBP also said that under the national permitting plan, “it will be crucial that licensed brokers are readily available to employees, both in person or virtually,” it said.

CBP also proposes new requirements when a broker discovers illegal activity by a client. While a broker is currently required to end business with a client when illegal activity is found, “the proposed new requirement puts an affirmative duty on the broker to document and report to CBP when the broker terminates representation of a client as a result of determining that the client is attempting to defraud or otherwise commit any criminal act against the U.S. Government,” it said. “This requirement covers situations where a broker advises the client of a noncompliance, error, or omission, the client directs the broker to continue such noncompliance, error, or omission, and in response the broker terminates its relationship with the client.”

Five new components are proposed for CBP's standard for responsible supervision and control, it said. The new pieces that would be considered are: “(1) the timeliness of processing entries and payment of duty, tax, or other debt or obligation owing to the Government for which the broker is responsible, or for which the broker has received payment from a client; (2) communications between CBP and the broker; (3) the broker’s responsiveness and action to communications, direction, and notices from CBP; (4) communications between the broker and its officer(s); and, (5) the broker’s responsiveness and action to communications and direction from its officer(s).”

Those factors are “being proposed due to their importance in the modern brokerage environment and their importance in evidencing the proper transaction of customs business,” the agency said. Broker license application fees would also be increased under the proposal.

CBP also proposes new requirements for notifying CBP of data breaches and designating a recordkeeping point of contact “who will serve as the party responsible for broker-wide financial and recordkeeping requirements.” Another proposal would require “that a broker must not rely on a customs power of attorney granted by a freight forwarder, but rather that the broker must obtain a customs power of attorney directly from the importer of record or drawback claimant,” it said.

(Federal Register 06/05/20)