U.S. Customs and Border Protection is proposing to modernize the custom broker regulations in 19 CFR 111 to professionalize the broker industry; formalize current practices, including those associated with the transfer of trade functions to CBP’s Centers of Excellence and Expertise; and adapt regulations to reflect technological advancements such as the creation and implementation of the Automated Commercial Environment. Major changes include switching from a district permit system to a national permit system and increasing the broker license application fee.

Comments on this proposed rule are due no later than Aug. 4. For more information, please contact Lenny Feldman at (305) 894-1011.

Among the changes in this proposed rule are the following.



Broker districts and district permits would be eliminated and all brokers would be automatically transitioned to national permits allowing them to conduct any type of customs business throughout the U.S. customs territory. Brokers would no longer be required to maintain district offices and could establish an office anywhere within the U.S. customs territory. However, they would have to designate an office of record as the primary location that oversees the administration of all activities conducted under a national permit. Each broker would also have a designated Center that would be its primary point of contact.



The broker license application fee would be increased from the current $200 to $300 for individuals and $500 for business entities. Other changes include (1) requiring license applications to be submitted to the Center designated by CBP after the applicant has passed the license examination rather than the port where the broker intends to do business, (2) eliminating the requirement for applications to be submitted under oath, (3) expanding the scope of the background investigation to include any association with any individuals or groups that may present a risk to national security or revenue collection, and (4) expanding the grounds sufficient to justify denial of a license to include failure to establish financial responsibility, the omission of pertinent facts in the application or interview, and detrimental commercial transactions.

Duties and Responsibilities


Brokers would be required to have direct communication with importers. Each broker would have to notify its designated Center within 72 hours of the discovery of any known breach of electronic or physical records relating to its customs business, along with a list of all compromised importer identification numbers. An exception to the restriction on brokers disclosing client information to third persons would be made for information properly in the public domain, which CBP states has been a point of confusion for some brokers.

Responsible Supervision and Control

Number of brokers. The rule would add a provision stating 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, and abilities and skills of employees and managers.

Factors evaluated. The current list of factors CBP considers when determining whether a broker is exercising responsible supervision and control would be amended to (1) place the obligation to provide employee training on the broker, (2) allow brokers to provide electronic (not just written) instructions and guidelines to employees, (3) provide that CBP will consider the broker’s reject rate relative to the overall volume of transactions it conducts, (4) clarify that ensuring access to current editions of relevant laws and regulations is more important than simply maintaining them, and (5) require licensed brokers to be readily available to employees, whether in person or virtually.

CBP is also proposing to add five new factors that may be considered: (1) 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 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).

In addition, CBP would be able to “consider the relevant factors from among those listed on a case-by-case basis.”

Importer error. The rule would newly place an affirmative duty on brokers to document and report to CBP when they separate or terminate their representation of a client they determine to be intentionally attempting to defraud or otherwise commit any criminal act against the U.S. government. CBP states that this 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.

When they know that a client has not complied with the law or has made an error in or omission from any required document, affidavit, or other paper, brokers must currently advise the client promptly of that problem. This rule would add requirements for brokers to (1) advise clients of, and explain, the proper corrective actions required and (2) retain records of such communications, which could be reviewed by CBP on a routine visit to the broker.

Freight forwarders. Drawback claimants would be added to the list of persons that a freight forwarder cannot forbid or prevent direct communications with by a broker in a compensation agreement. Brokers would not be allowed to rely on a customs power of attorney granted by a forwarder but would have to obtain one directly from the importer of record or drawback claimant.

Disciplinary Actions

This rule would give CBP discretion in pursuing civil or administrative investigation of disciplinary complaints against a broker rather than requiring such action.

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