Customs Business Fairness Included in a House Appropriations Bill

The Customs Business Fairness Act, a change to bankruptcy law that protects customs brokers, was in effect in 2021, but only as a temporary measure. Its proponents failed to pass a permanent change in 2022. The National Customs Brokers & Forwarders Association of America has made a significant advance in the more than 20-year fight to make it so that the money that brokers' clients give them to send to CBP to pay tariffs is not subject to clawback after a bankruptcy filing. The clawback provisions are there so that company insiders don't strip a company of assets through bonuses or other special financial treatment to preferred vendors in the last three months before a filing.

The Customs Business Fairness Act, the proposal that would create a clawback carveout for these pass-through payments of tariffs, was attached to the Commerce, Justice and Science appropriations package in the House, in section 596.

Nicole Bivens Collinson, legislative counsel for NCBFAA, said lead sponsor Rep. Andrew Garbarino, R-N.Y., deserves the credit for getting the provision on a must-pass bill. He spoke to House Judiciary Chairman Jim Jordan, she said, and got approval from him to go to appropriators and see if they would allow it in their bill, even though it had not proceeded through the Judiciary Committee.

"It’s very exciting. We were so happy," Bivens Collinson said in a phone interview Sept. 6.

Although the appropriations bill is a must-pass bill, there are still several hurdles the provision must clear to become law in 2023. One is that there is no companion bill yet in the Senate. Bivens Collinson said there's interest from Sen. Raphael Warnock, D-Ga., and Sen. John Cornyn, R-Texas, "and we're hopeful they're going to come forward with something in the next couple of weeks."

She said she doesn't expect the Customs Business Fairness Act to get stripped from the CJS appropriations bill when it comes up for a vote on the House floor, but, if the same language isn't in the Senate appropriations package that covers the judiciary, it could get stripped out during conference negotiations.

Next week, NCBFAA is conducting a fly-in, and they will tell their delegations about the bill.

"We’re gonna unleash about 120 people on the Hill," she said, and they will ask their members of Congress to keep the language in the appropriations bill, but she said that ask is really to lay the groundwork for the conference, so that members advocate for the provision to be in the final package.

Once a Senate bill is introduced, Bivens Collinson said, NCBFAA will suggest that it, too, gets into that chamber's judiciary appropriations bill.

Congress won't be able to finish its work on appropriations before Oct. 1, when the new fiscal year begins, and there is a debate about how long the continuing resolution should be. They often go into the second or third week of December, but House Republicans don't want to let it go that long, for fear that members' desire to go home for Christmas will lead to concessions on the budget. There is some talk of a Nov. 1 end-date for a CR, but also a Dec. 1 date. Bivens Collinson said she doesn't think an earlier or a later date has any bearing on whether the Customs Business Fairness Act will make it into law -- but if continuing resolutions continue into 2024, it may be time to regroup.

She said: "If we’re in CR hell, CR groundhog day, then we might start thinking: 'What’s Plan B?'"