Customs Broker Recordkeeping Requirements Regarding Location and Method of Record Retention, 33964-33967 [2012-13907]
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Federal Register / Vol. 77, No. 111 / Friday, June 8, 2012 / Rules and Regulations
systems and have remote facilitates to limit
the impact of disruptive events.
Applicable Laws, Regulations, and Policies
12. A regulated entity should comply with
all applicable laws, regulations, and
supervisory guidance (e.g., advisory
bulletins) governing the management of risk.
Standard 9—Management of Credit and
Counterparty Risk
Responsibilities of the Board of Directors and
Senior Management
1. Regarding the management of credit and
counterparty risk, the board of directors and
senior management are responsible for
ensuring that the regulated entity has
appropriate policies, procedures, and
systems that cover all aspects of credit
administration, including credit pricing,
underwriting, credit limits, collateral
standards, and collateral valuation
procedures. This should also include
derivatives and the use of clearing houses.
They are also responsible for ensuring
personnel are appropriately trained,
competent, and equipped with the necessary
tools, procedures and systems to assess risk.
2. Senior management should provide the
board of directors with regular briefings and
reports on credit exposures.
Policies, Procedures, Controls, and Systems
3. A regulated entity should have policies
that limit concentrations of credit risk and
systems to identify concentrations of credit
risk.
4. A regulated entity should establish
prudential limits to restrict exposures to a
single counterparty that are appropriate to its
business model.
5. A regulated entity should establish
prudential limits to restrict exposures to
groups of related counterparties that are
appropriate to its business model.
6. A regulated entity should have policies,
procedures, and systems for evaluating credit
risk that will enable it to make informed
credit decisions.
7. A regulated entity should have policies,
procedures, and systems for evaluating credit
risk that will enable it to ensure that claims
are legally enforceable.
8. A regulated entity should have policies
and procedures for addressing problem
credits.
9. A regulated entity should have an
ongoing credit review program that includes
stress testing and scenario analysis.
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Applicable Laws, Regulations, and Policies
10. A regulated entity should manage
credit and counterparty risk in a way that
complies with applicable laws, regulations,
and supervisory guidance (e.g., advisory
bulletins).
Standard 10—Maintenance of Adequate
Records
1. A regulated entity should maintain
financial records in compliance with
Generally Accepted Accounting Principles
(GAAP), FHFA guidelines, and applicable
laws and regulations.
2. A regulated entity should ensure that
assets are safeguarded and financial and
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operational information is timely and
reliable.
3. A regulated entity should have a records
retention program consistent with laws and
corporate policies, including accounting
policies, as well as personnel that are
appropriately trained and competent to
oversee and implement the records
management plan.
4. A regulated entity, with oversight from
the board of directors, should conduct a
review and approval of the records retention
program and records retention schedule for
all types of records at least once every two
years.
5. A regulated entity should ensure that
reporting errors are detected and corrected in
a timely manner.
6. A regulated entity should comply with
all applicable laws, regulations, and
supervisory guidance (e.g., advisory
bulletins) governing the maintenance of
adequate records.
Dated: May 31, 2012.
Edward J. DeMarco,
Acting Director, Federal Housing Finance
Agency.
[FR Doc. 2012–13997 Filed 6–7–12; 8:45 am]
BILLING CODE 8070–01–P
DEPARTMENT OF HOMELAND
SECURITY
U.S. Customs and Border Protection
DEPARTMENT OF THE TREASURY
19 CFR Parts 111 and 163
[CBP Dec. 12–12; USCBP–2009–0019]
RIN 1515–AD66 (Formerly RIN 1505–AC12)
Customs Broker Recordkeeping
Requirements Regarding Location and
Method of Record Retention
U.S. Customs and Border
Protection, Department of Homeland
Security; Department of the Treasury.
ACTION: Final rule.
AGENCIES:
This document adopts as a
final rule, with an additional technical
correction, proposed amendments to the
Customs and Border Protection (CBP)
regulations regarding customs broker
recordkeeping requirements as they
pertain to the location and method of
record retention. The amendments
permit a licensed customs broker, under
prescribed conditions, to store records
relating to his or her customs
transactions at any location within the
customs territory of the United States.
The amendments also remove the
requirement, as it currently applies to
brokers who maintain separate
electronic records, that certain entry
records must be retained in their
original format for the 120-day period
SUMMARY:
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after the release or conditional release of
imported merchandise. These changes
maximize the use of available
technologies and serve to conform CBP’s
recordkeeping requirements to reflect
modern business practices without
compromising the agency’s ability to
monitor and enforce recordkeeping
compliance.
DATES:
Effective July 9, 2012.
FOR FURTHER INFORMATION CONTACT:
Anita Harris, Broker Compliance
Branch, Trade Policy and Programs,
Office of International Trade, Customs
and Border Protection, 202–863–6069.
SUPPLEMENTARY INFORMATION:
Background
On March 23, 2010, U.S. Customs and
Border Protection (CBP) published in
the Federal Register (75 FR 13699) a
proposal to amend title 19 of the Code
of Federal Regulations (19 CFR)
regarding customs broker recordkeeping
requirements as they pertain to the
location and method of record retention.
In that document, CBP proposed
amendments to the CBP regulations to
permit a licensed customs broker to
store records relating to his or her
customs transactions at any location
within the customs territory of the
United States, so long as the broker’s
designated recordkeeping contact,
identified in the broker’s permit
application, makes all records available
to CBP within a reasonable period of
time from request at the broker district
that covers the CBP port to which the
records relate. The document also
proposed to remove the requirement, as
it applied to brokers who maintain
separate electronic records, that certain
entry records must be retained in their
original format for the 120-day period
after the release or conditional release of
imported merchandise.
CBP solicited comments on the
proposed rulemaking.
Discussion of Comments
Eleven commenters responded to the
solicitation of public comment in the
proposed rule. Eight commenters
expressed support for the proposed
rulemaking, noting in particular that the
proposed amendments serve to
maximize the use of available
technologies, increase efficiency and
reduce the cost of storing records.
Several of these eight commenters
included additional suggestions.
A description of the comments
received, together with CBP’s analyses,
is set forth below.
Comment: One commenter requested
that CBP issue guidance to the ports as
to what constitutes a ‘‘reasonable time
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period’’ within which a broker must
produce requested documentation. The
commenter also suggested that CBP
allow brokers to submit requested entry
documents to any port in an electronic
format.
CBP Response: In an effort to maintain
uniform standards at its ports, CBP is
amending 19 CFR 111.23(a) in this final
rule by replacing the term ‘‘reasonable
time period’’ with ‘‘30 calendar days, or
such longer time as specified by CBP.’’
Regarding the submission of requested
entry-related documentation in an
electronic format, CBP intends, through
the Automated Commercial
Environment (ACE) and related
technology, to allow for the submission
of entry-related documentation through
electronic imaging.
Comment: One commenter inquired
whether the ability to reproduce entry
data that is generated by an applicationbased software program, as opposed to
data stored in an electronic Portable
Document Format (PDF) or Tagged
Image File (TIF) format, satisfies CBP’s
electronic recordkeeping requirements.
CBP Response: Yes, but unless
otherwise excepted, documents must be
maintained in their original format for
120 days.
Comment: One commenter inquired
whether a broker’s electronic (imaged
file) documentation can be maintained
on a server physically located outside
the customs territory of the United
States.
CBP Response: For purposes of
complying with CBP’s broker
recordkeeping requirements, a broker’s
electronic documentation must be
maintained on a server physically
located within the customs territory of
the United States wherein CBP has
jurisdiction to issue a summons under
19 U.S.C. 1509(a)(2).
Comment: Two commenters
recommended that CBP further amend
19 CFR 163.5(b)(2)(iii) by removing the
requirement for express consignment
brokers who are also serving as
importers of record to maintain records
in their original format for 120 days
following the end of release or
conditional release. The commenters
stated that many brokers are the
importer of record for numerous
shipments and the 120-day
recordkeeping requirement is
burdensome. Additionally, removing
this requirement would allow these
brokers to manage their recordkeeping
responsibilities in a systemic manner
which parallels their day-to-day
business practices.
CBP Response: CBP will not remove
the requirement for brokers who are also
serving as importers of record to
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maintain records in their original format
for the prescribed 120-day period. The
intent of the proposed amendments is to
eliminate duplicative record retention
requirements, and not to alter the
importer of record’s ultimate
responsibility.
Comment: Two commenters noted
that most large customs brokers operate
nationally (in 42 districts) and are not
limited to the specific district in which
they are physically located. Unless a
broker is able to obtain a waiver from
CBP, he or she is faced with the burden
of procuring 42 permit qualifiers. The
commenters also stated that the recent
promulgation of the Remote Location
Filing regulations is indicative of the
fact that modern business practices
allow a customs broker to operate
nationally regardless of their actual
locations. In light of the above, the
commenters suggested that CBP should
revise the current regulations that
require an individual licensed broker to
be designated as a permit qualifier in
each customs district. The commenters
are of the view that having one national
permit without local district permit
qualifiers will have no impact on broker
responsibilities or liability, as CBP can
easily obtain required information and
records without the need to have a
person available to contact locally in
each district.
CBP Response: The recommendation
to revise the current regulations that
require an individual licensed broker to
be designated as a permit qualifier in
each district is beyond the scope of this
proposed rulemaking. CBP is, however,
engaged in a comprehensive review of
the role of brokers, and will consider the
proposal in that context.
Comment: One commenter noted that
there does not appear to be any reason
to distinguish ‘‘packing lists’’ from the
other types of records associated with
an import transaction and, therefore,
CBP should remove the existing
exception in 19 CFR 163.5(b)(2)(iii)
which excludes ‘‘packing lists’’ from the
types of records that a broker must
maintain for the requisite 120-day
period. The commenter recommended
that the final rule provide that the
obligation for maintaining original
records, including packing lists, rests
with the importer of record in
accordance with 19 U.S.C. 1509. At a
minimum, the commenter suggested
that the final rule clarify that the
obligation to maintain packing lists in
original form does not extend to brokers.
CBP Response: CBP notes that
§ 163.4(b)(2) requires, in pertinent part,
that packing lists must be retained for a
shorter 60-day, rather than a 120-day,
period. It is further noted that the intent
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of the proposed rulemaking is not to
alter the scope of a broker’s
recordkeeping requirements; therefore,
the obligation to maintain packing lists
will continue to apply.
Comment: One commenter suggested
the following technical amendments to
the final rule:
• The word ‘‘broker’’ should be
removed from 19 CFR 111.23(a) in that
there is no such thing as a ‘‘broker
district.’’
• Section 163.5(b)(3) has been
modified to provide that changes to
alternative storage procedures must be
approved by Regulatory Audit in
Charlotte, North Carolina. However,
§§ 111.23(b)(2), 163.5(b)(1), 163.12(b)(2)
and 163.12(c)(1) still require that
approval be sought from Regulatory
Audit in Miami. These locations should
be harmonized.
• Several references to ‘‘Customs’’
throughout the cited sections should be
changed to ‘‘CBP.’’
CBP Response: CBP does not agree
that the word ‘‘broker’’ should be
deleted from 19 CFR 111.23(a). CBP still
recognizes broker districts in the
administration of broker permits even
though districts and regions were
eliminated in the agency reorganization
of 1995.
The regulatory provisions cited by the
commenter, in fact, currently reflect the
Regulatory Audit office located in
Charlotte, N.C., and do not need to be
amended. See CBP Dec. 07–82 of
October 19, 2007 (72 FR 59174).
When CBP proposes to amend a
regulatory provision, it endeavors to
change all outdated references in the
section to ‘‘Customs’’ and replace it
with either ‘‘CBP’’ or ‘‘customs,’’ as
appropriate. The proposed rulemaking
omitted one such reference in
§ 163.5(b)(2)(i), and this document
corrects such omission.
Conclusion
After analysis of the comments and
further review of the matter, CBP has
determined to adopt as final, with the
technical change noted above in
§ 163.5(b)(2)(i), and a clarification, the
proposed rule published in the Federal
Register (75 FR 13699) on March 23,
2010. The change to 19 CFR 111.23(a)
clarifies that ‘‘the reasonable time
period’’ within which a designated
recordkeeping contact must make all
records available to CBP is ‘‘30 calendar
days, or such longer time as specified by
CBP.’’
The Regulatory Flexibility Act and
Executive Order 12866
Because these amendments liberalize
broker recordkeeping requirements and
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place no new regulatory requirements
on small entities to change their
business practices, pursuant to the
provisions of the Regulatory Flexibility
Act, 5 U.S.C. 601 et seq., it is certified
that the amendments will not have a
significant economic impact on a
substantial number of small entities.
Further, these amendments do not meet
the criteria for a ‘‘significant regulatory
action’’ as specified in E.O. 12866.
Paperwork Reduction Act
The information collections contained
in this rule have been previously
submitted and approved by the Office of
Management and Budget (OMB) and
assigned OMB control numbers 1651–
0076 and 1651–0034. An agency may
not conduct or sponsor, and a person is
not required to respond to, a collection
of information unless it displays a valid
control number assigned by OMB.
Signing Authority
This document is being issued in
accordance with 19 CFR 0.1(a)(1) of the
CBP regulations (19 CFR 0.1(a)(1))
pertaining to the authority of the
Secretary of the Treasury (or his or her
delegate) to approve regulations related
to certain customs revenue functions.
territory of the United States in
accordance with the provisions of this
part and part 163 of this chapter. Upon
request by CBP to examine records, the
designated recordkeeping contact
identified in the broker’s applicable
permit application, in accordance with
§ 111.19(b)(6) of this chapter, must make
all records available to CBP within 30
calendar days, or such longer time as
specified by CBP, at the broker district
that covers the CBP port to which the
records relate.
(b) Period of retention. The records
described in this section, other than
powers of attorney, must be retained for
at least 5 years after the date of entry.
Powers of attorney must be retained
until revoked, and revoked powers of
attorney and letters of revocation must
be retained for 5 years after the date of
revocation or for 5 years after the date
the client ceases to be an ‘‘active client’’
as defined in § 111.29(b)(2)(ii),
whichever period is later. When
merchandise is withdrawn from a
bonded warehouse, records relating to
the withdrawal must be retained for 5
years from the date of withdrawal of the
last merchandise withdrawn under the
entry.
List of Subjects
PART 163—RECORDKEEPING
19 CFR Part 111
Administrative practice and
procedure, Brokers, Customs duties and
inspection, Licensing, Penalties,
Reporting and recordkeeping
requirements.
■
19 CFR Part 163
Administrative practice and
procedure, Customs duties and
inspection, Penalties, Reporting and
recordkeeping requirements.
Amendments to the Regulations
For the reasons stated in the
preamble, parts 111 and 163 of title 19
of the CFR (19 CFR parts 111 and 163)
are amended as set forth below.
PART 111—CUSTOMS BROKERS
1. The authority citation for part 111
continues to read in part as follows:
■
Authority: 19 U.S.C. 66, 1202 (General
Note 3(i), Harmonized Tariff Schedule of the
United States), 1624, 1641.
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*
*
*
*
2. Section 111.23 is revised to read as
follows:
■
§ 111.23
Retention of records.
(a) Place of retention. A licensed
customs broker may retain records
relating to its customs transactions at
any location within the customs
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3. The authority citation for part 163
continues to read in part as follows:
Authority: 5 U.S.C. 301; 19 U.S.C. 66,
1484, 1508, 1509, 1510, 1624.
4. In § 163.5:
a. Paragraph (a) is amended in the first
sentence by removing the word ‘‘shall’’
and adding in its place the word
‘‘must’’, and in the second sentence by
removing the word ‘‘Customs’’ and
adding in its place the term ‘‘CBP’’;
■ b. Paragraph (b)(2) introductory text is
amended in the second sentence by
removing the word ‘‘Customs’’ and
adding in its place the term ‘‘CBP’’;
■ c. Paragraph (b)(2)(i) is amended by
removing the word ‘‘Customs’’ and
adding in its place the term ‘‘CBP’’;
■ d. Paragraph (b)(2)(iii) is revised;
■ e. Paragraph (b)(2)(v) is amended by
removing the word ‘‘Customs’’ and
adding in its place the term ‘‘CBP’’;
■ f. Paragraph (b)(2)(vi) is amended by
removing the word ‘‘shall’’ and adding
in its place the word ‘‘must’’;
■ g. Paragraph (b)(3) is amended by
removing the words ‘‘the Miami
regulatory audit field office’’ and adding
in their place the language, ‘‘Regulatory
Audit, Office of International Trade,
Customs and Border Protection, 2001
Cross Beam Drive, Charlotte, North
Carolina 28217’’;
■ h. Paragraph (b)(4) is amended by
removing the words ‘‘shall be’’ and
■
■
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adding in their place the word ‘‘are’’;
and
■ i. Paragraph (b)(5) is revised.
The revisions read as follows:
§ 163.5
Methods for storage of records.
*
*
*
*
*
(b) * * *
(2) * * *
(iii) Except in the case of packing lists
(see § 163.4(b)(2)), entry records must be
maintained by the importer in their
original formats for a period of 120
calendar days from the end of the
release or conditional release period,
whichever is later, or, if a demand for
return to CBP custody has been issued,
for a period of 120 calendar days either
from the date the goods are redelivered
or from the date specified in the
demand as the latest redelivery date if
redelivery has not taken place. Customs
brokers who are not serving as the
importer of record and who maintain
separate electronic records are
exempted from this requirement. This
exemption does not apply to any
document that is required by law to be
maintained as a paper record.
*
*
*
*
*
(5) Failure to comply with alternative
storage requirements. If a person listed
in § 163.2 uses an alternative storage
method for records that is not in
compliance with the conditions and
requirements of this section, CBP may
issue a written notice informing the
person of the facts giving rise to the
notice and directing that the alternative
storage method must be discontinued in
30 calendar days unless the person
provides written notice to the issuing
CBP office within that time period that
explains, to CBP’s satisfaction, how
compliance has been achieved. Failure
to timely respond to CBP will result in
CBP requiring discontinuance of the
alternative storage method until a
written statement explaining how
compliance has been achieved has been
received and accepted by CBP.
§ 163.12
[Amended]
5. In § 163.12:
a. Paragraph (a) is amended by
removing the word ‘‘Customs’’ wherever
it appears and adding in its place the
term ‘‘CBP’’;
■ b. Paragraph (b)(2) is amended: by
removing the word ‘‘shall’’ wherever it
appears and adding in its place the
word ‘‘must’’, and; in the second
sentence, by removing the words
‘‘Customs Recordkeeping’’ and adding
in their place the words ‘‘CBP
Recordkeeping’’ and removing the
language ‘‘the Customs Electronic
Bulletin Board (703–921–6155)’’ and
adding in its place the language, ‘‘CBP’s
■
■
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Regulatory Audit Web site located at
https://www.cbp.gov/xp/cgov/import/
regulatory_audit_program/archive/
compliance_assessment/’’;
■ c. Paragraph (b)(3) introductory text is
amended: In the first, third and fourth
sentences, by removing the word
‘‘Customs’’ wherever it appears and
adding in its place the term ‘‘CBP’’, and;
in the second sentence, by removing the
word ‘‘Customs’’ and adding in its place
the words ‘‘all applicable’’;
■ d. Paragraphs (b)(3)(iii), (iv), (v), and
(vi) are amended by removing the word
‘‘Customs’’ wherever it appears and
adding in its place the term ‘‘CBP’’;
■ e. Paragraph (c)(1) is amended by
removing the word ‘‘shall’’ wherever it
appears and adding in its place the
word ‘‘will’’;
■ f. Paragraph (c)(2) is amended: By
removing the word ‘‘Customs’’ and
adding in its place the term ‘‘CBP’’; by
removing the word ‘‘Miami’’ and adding
in its place the word ‘‘Charlotte’’, and;
by removing the word ‘‘shall’’ and
adding in its place the word ‘‘will’’;
■ g. Paragraph (d)(1) is amended: In the
first sentence, by removing the words
‘‘Customs shall’’ and adding in their
place the words ‘‘CBP will’’, and; in the
second sentence, by removing the word
‘‘Customs’’ and adding in its place the
word ‘‘CBP’’;
■ h. The introductory text to paragraph
(d)(2) is amended by removing the word
‘‘shall’’ and adding in its place the word
‘‘must’’; and
■ i. Paragraph (d)(3) is amended: By
removing the word ‘‘shall’’ and adding
in its place the word ‘‘must’’; and, by
removing the word ‘‘Customs’’ and
adding in its place the term ‘‘CBP’’.
ACTION:
Final rule.
Coast Guard
The Coast Guard is
establishing temporary special local
regulations on the navigable waters of
Niantic Bay, Long Island Sound, the
Thames River and New London Harbor,
New London, Connecticut for OPSAIL
2012 Connecticut (CT) activities. This
action is necessary to provide for the
safety of life on navigable waters during
OPSAIL 2012 CT. This action will
restrict vessel traffic in portions of
Niantic Bay, Long Island Sound, the
Thames River, and New London Harbor
unless authorized by the Captain of the
Port (COTP) Sector Long Island Sound
(SLIS).
DATES: This rule is effective from 6 a.m.
on July 6, 2012 to 5 p.m. on July 7, 2012.
This rule will be enforced during the
following dates and times:
(1) Area 1, from 6 a.m. July 6, until
5 p.m. on July 7, 2012.
(2) Areas 3 and 4, from 7:30 a.m. until
5 p.m. on July 7, 2012.
(3) Areas 2 and 5, from 10 a.m. until
5 p.m. on July 7, 2012.
ADDRESSES: Documents mentioned in
this preamble are part of docket [USCG–
2012–0066]. To view documents
mentioned in this preamble as being
available in the docket, go to https://
www.regulations.gov, type the docket
number in the ‘‘SEARCH’’ box and click
‘‘SEARCH.’’ Click on Open Docket
Folder on the line associated with this
rulemaking. You may also visit the
Docket Management Facility in Room
W12–140 on the ground floor of the
Department of Transportation West
Building, 1200 New Jersey Avenue SE.,
Washington, DC 20590, between 9 a.m.
and 5 p.m., Monday through Friday,
except Federal holidays.
FOR FURTHER INFORMATION CONTACT: If
you have questions on this rule, call or
email Petty Officer Joseph Graun,
Prevention Department, U.S. Coast
Guard Sector Long Island Sound, (203)
468–4544, Joseph.L.Graun@uscg.mil. If
you have questions on viewing or
submitting material to the docket, call
Renee V. Wright, Program Manager,
Docket Operations, telephone (202)
366–9826.
SUPPLEMENTARY INFORMATION:
33 CFR Part 100
Table of Acronyms
[Docket Number USCG–2012–0066]
COTP Captain of the Port
CT Connecticut
DHS Department of Homeland Security
FR Federal Register
SLIS Sector Long Island Sound
David V. Aguilar,
Acting Commissioner, U.S. Customs and
Border Protection.
Approved: June 4, 2012.
Timothy E. Skud,
Deputy Assistant Secretary of the Treasury.
[FR Doc. 2012–13907 Filed 6–7–12; 8:45 am]
BILLING CODE 9111–14–P
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DEPARTMENT OF HOMELAND
SECURITY
RIN 1625–AA08
Special Local Regulations; OPSAIL
2012 Connecticut, Niantic Bay, Long
Island Sound, Thames River and New
London Harbor, New London, CT
AGENCY:
Coast Guard, DHS.
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SUMMARY:
A. Regulatory History and Information
On March 19, 2012 the Coast Guard
published a notice of proposed
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33967
rulemaking (NPRM) entitled ‘‘Special
Local Regulations; OPSAIL 2012
Connecticut, Niantic Bay, Long Island
Sound, Thames River and New London
Harbor, New London, CT’’ in the
Federal Register (77 FR 15981). We
received no comments on the proposed
rule. No public meeting was requested
and none was held.
Under 5 U.S.C. 553(d)(3), the Coast
Guard finds that good cause exists for
making this rule effective less than 30
days after publication in the Federal
Register. The Coast Guard published
and NPRM for this rule in March, but
there was not sufficient time to publish
this Final Rule more than thirty days
prior to the effective date of the rule.
B. Basis and Purpose
The legal basis for this rule is 33
U.S.C. 1233, which authorizes the Coast
Guard to define special local
regulations.
This temporary special local
regulation is necessary to ensure the
safety of vessels and spectators from
hazards associated with OPSAIL 2012
CT.
C. Discussion of Comments, Changes
and the Final Rule
No comments were received and this
final rule is unchanged from the rule
published in the NPRM.
D. Regulatory Analyses
We developed this rule after
considering numerous statutes and
executive orders related to rulemaking.
Below we summarize our analyses
based on several of these statutes or
executive orders.
1. Regulatory Planning and Review
This rule is not a significant
regulatory action under section 3(f) of
Executive Order 12866, Regulatory
Planning and Review, as supplemented
by Executive Order 13563, Improving
Regulation and Regulatory Review, and
does not require an assessment of
potential costs and benefits under
section 6(a)(3) of Executive Order 12866
or under section 1 of Executive Order
13563. The Office of Management and
Budget has not reviewed it under those
Orders.
Although this regulation prevents
traffic from transiting a portion of Long
Island Sound, the Thames River and
New London Harbor during OPSAIL
2012 CT, the effect of this regulation
will not be significant for the following
reasons: During the limited time that the
regulated areas will be in effect,
mariners will be able to transit around
some areas, and persons and vessels
will still be able to enter, transit
E:\FR\FM\08JNR1.SGM
08JNR1
]]>Agencies
[Federal Register Volume 77, Number 111 (Friday, June 8, 2012)]
[Rules and Regulations]
[Pages 33964-33967]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-13907]
=======================================================================
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DEPARTMENT OF HOMELAND SECURITY
U.S. Customs and Border Protection
DEPARTMENT OF THE TREASURY
19 CFR Parts 111 and 163
[CBP Dec. 12-12; USCBP-2009-0019]
RIN 1515-AD66 (Formerly RIN 1505-AC12)
Customs Broker Recordkeeping Requirements Regarding Location and
Method of Record Retention
AGENCIES: U.S. Customs and Border Protection, Department of Homeland
Security; Department of the Treasury.
ACTION: Final rule.
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SUMMARY: This document adopts as a final rule, with an additional
technical correction, proposed amendments to the Customs and Border
Protection (CBP) regulations regarding customs broker recordkeeping
requirements as they pertain to the location and method of record
retention. The amendments permit a licensed customs broker, under
prescribed conditions, to store records relating to his or her customs
transactions at any location within the customs territory of the United
States. The amendments also remove the requirement, as it currently
applies to brokers who maintain separate electronic records, that
certain entry records must be retained in their original format for the
120-day period after the release or conditional release of imported
merchandise. These changes maximize the use of available technologies
and serve to conform CBP's recordkeeping requirements to reflect modern
business practices without compromising the agency's ability to monitor
and enforce recordkeeping compliance.
DATES: Effective July 9, 2012.
FOR FURTHER INFORMATION CONTACT: Anita Harris, Broker Compliance
Branch, Trade Policy and Programs, Office of International Trade,
Customs and Border Protection, 202-863-6069.
SUPPLEMENTARY INFORMATION:
Background
On March 23, 2010, U.S. Customs and Border Protection (CBP)
published in the Federal Register (75 FR 13699) a proposal to amend
title 19 of the Code of Federal Regulations (19 CFR) regarding customs
broker recordkeeping requirements as they pertain to the location and
method of record retention. In that document, CBP proposed amendments
to the CBP regulations to permit a licensed customs broker to store
records relating to his or her customs transactions at any location
within the customs territory of the United States, so long as the
broker's designated recordkeeping contact, identified in the broker's
permit application, makes all records available to CBP within a
reasonable period of time from request at the broker district that
covers the CBP port to which the records relate. The document also
proposed to remove the requirement, as it applied to brokers who
maintain separate electronic records, that certain entry records must
be retained in their original format for the 120-day period after the
release or conditional release of imported merchandise.
CBP solicited comments on the proposed rulemaking.
Discussion of Comments
Eleven commenters responded to the solicitation of public comment
in the proposed rule. Eight commenters expressed support for the
proposed rulemaking, noting in particular that the proposed amendments
serve to maximize the use of available technologies, increase
efficiency and reduce the cost of storing records. Several of these
eight commenters included additional suggestions.
A description of the comments received, together with CBP's
analyses, is set forth below.
Comment: One commenter requested that CBP issue guidance to the
ports as to what constitutes a ``reasonable time
[[Page 33965]]
period'' within which a broker must produce requested documentation.
The commenter also suggested that CBP allow brokers to submit requested
entry documents to any port in an electronic format.
CBP Response: In an effort to maintain uniform standards at its
ports, CBP is amending 19 CFR 111.23(a) in this final rule by replacing
the term ``reasonable time period'' with ``30 calendar days, or such
longer time as specified by CBP.'' Regarding the submission of
requested entry-related documentation in an electronic format, CBP
intends, through the Automated Commercial Environment (ACE) and related
technology, to allow for the submission of entry-related documentation
through electronic imaging.
Comment: One commenter inquired whether the ability to reproduce
entry data that is generated by an application-based software program,
as opposed to data stored in an electronic Portable Document Format
(PDF) or Tagged Image File (TIF) format, satisfies CBP's electronic
recordkeeping requirements.
CBP Response: Yes, but unless otherwise excepted, documents must be
maintained in their original format for 120 days.
Comment: One commenter inquired whether a broker's electronic
(imaged file) documentation can be maintained on a server physically
located outside the customs territory of the United States.
CBP Response: For purposes of complying with CBP's broker
recordkeeping requirements, a broker's electronic documentation must be
maintained on a server physically located within the customs territory
of the United States wherein CBP has jurisdiction to issue a summons
under 19 U.S.C. 1509(a)(2).
Comment: Two commenters recommended that CBP further amend 19 CFR
163.5(b)(2)(iii) by removing the requirement for express consignment
brokers who are also serving as importers of record to maintain records
in their original format for 120 days following the end of release or
conditional release. The commenters stated that many brokers are the
importer of record for numerous shipments and the 120-day recordkeeping
requirement is burdensome. Additionally, removing this requirement
would allow these brokers to manage their recordkeeping
responsibilities in a systemic manner which parallels their day-to-day
business practices.
CBP Response: CBP will not remove the requirement for brokers who
are also serving as importers of record to maintain records in their
original format for the prescribed 120-day period. The intent of the
proposed amendments is to eliminate duplicative record retention
requirements, and not to alter the importer of record's ultimate
responsibility.
Comment: Two commenters noted that most large customs brokers
operate nationally (in 42 districts) and are not limited to the
specific district in which they are physically located. Unless a broker
is able to obtain a waiver from CBP, he or she is faced with the burden
of procuring 42 permit qualifiers. The commenters also stated that the
recent promulgation of the Remote Location Filing regulations is
indicative of the fact that modern business practices allow a customs
broker to operate nationally regardless of their actual locations. In
light of the above, the commenters suggested that CBP should revise the
current regulations that require an individual licensed broker to be
designated as a permit qualifier in each customs district. The
commenters are of the view that having one national permit without
local district permit qualifiers will have no impact on broker
responsibilities or liability, as CBP can easily obtain required
information and records without the need to have a person available to
contact locally in each district.
CBP Response: The recommendation to revise the current regulations
that require an individual licensed broker to be designated as a permit
qualifier in each district is beyond the scope of this proposed
rulemaking. CBP is, however, engaged in a comprehensive review of the
role of brokers, and will consider the proposal in that context.
Comment: One commenter noted that there does not appear to be any
reason to distinguish ``packing lists'' from the other types of records
associated with an import transaction and, therefore, CBP should remove
the existing exception in 19 CFR 163.5(b)(2)(iii) which excludes
``packing lists'' from the types of records that a broker must maintain
for the requisite 120-day period. The commenter recommended that the
final rule provide that the obligation for maintaining original
records, including packing lists, rests with the importer of record in
accordance with 19 U.S.C. 1509. At a minimum, the commenter suggested
that the final rule clarify that the obligation to maintain packing
lists in original form does not extend to brokers.
CBP Response: CBP notes that Sec. 163.4(b)(2) requires, in
pertinent part, that packing lists must be retained for a shorter 60-
day, rather than a 120-day, period. It is further noted that the intent
of the proposed rulemaking is not to alter the scope of a broker's
recordkeeping requirements; therefore, the obligation to maintain
packing lists will continue to apply.
Comment: One commenter suggested the following technical amendments
to the final rule:
The word ``broker'' should be removed from 19 CFR
111.23(a) in that there is no such thing as a ``broker district.''
Section 163.5(b)(3) has been modified to provide that
changes to alternative storage procedures must be approved by
Regulatory Audit in Charlotte, North Carolina. However, Sec. Sec.
111.23(b)(2), 163.5(b)(1), 163.12(b)(2) and 163.12(c)(1) still require
that approval be sought from Regulatory Audit in Miami. These locations
should be harmonized.
Several references to ``Customs'' throughout the cited
sections should be changed to ``CBP.''
CBP Response: CBP does not agree that the word ``broker'' should be
deleted from 19 CFR 111.23(a). CBP still recognizes broker districts in
the administration of broker permits even though districts and regions
were eliminated in the agency reorganization of 1995.
The regulatory provisions cited by the commenter, in fact,
currently reflect the Regulatory Audit office located in Charlotte,
N.C., and do not need to be amended. See CBP Dec. 07-82 of October 19,
2007 (72 FR 59174).
When CBP proposes to amend a regulatory provision, it endeavors to
change all outdated references in the section to ``Customs'' and
replace it with either ``CBP'' or ``customs,'' as appropriate. The
proposed rulemaking omitted one such reference in Sec. 163.5(b)(2)(i),
and this document corrects such omission.
Conclusion
After analysis of the comments and further review of the matter,
CBP has determined to adopt as final, with the technical change noted
above in Sec. 163.5(b)(2)(i), and a clarification, the proposed rule
published in the Federal Register (75 FR 13699) on March 23, 2010. The
change to 19 CFR 111.23(a) clarifies that ``the reasonable time
period'' within which a designated recordkeeping contact must make all
records available to CBP is ``30 calendar days, or such longer time as
specified by CBP.''
The Regulatory Flexibility Act and Executive Order 12866
Because these amendments liberalize broker recordkeeping
requirements and
[[Page 33966]]
place no new regulatory requirements on small entities to change their
business practices, pursuant to the provisions of the Regulatory
Flexibility Act, 5 U.S.C. 601 et seq., it is certified that the
amendments will not have a significant economic impact on a substantial
number of small entities. Further, these amendments do not meet the
criteria for a ``significant regulatory action'' as specified in E.O.
12866.
Paperwork Reduction Act
The information collections contained in this rule have been
previously submitted and approved by the Office of Management and
Budget (OMB) and assigned OMB control numbers 1651-0076 and 1651-0034.
An agency may not conduct or sponsor, and a person is not required to
respond to, a collection of information unless it displays a valid
control number assigned by OMB.
Signing Authority
This document is being issued in accordance with 19 CFR 0.1(a)(1)
of the CBP regulations (19 CFR 0.1(a)(1)) pertaining to the authority
of the Secretary of the Treasury (or his or her delegate) to approve
regulations related to certain customs revenue functions.
List of Subjects
19 CFR Part 111
Administrative practice and procedure, Brokers, Customs duties and
inspection, Licensing, Penalties, Reporting and recordkeeping
requirements.
19 CFR Part 163
Administrative practice and procedure, Customs duties and
inspection, Penalties, Reporting and recordkeeping requirements.
Amendments to the Regulations
For the reasons stated in the preamble, parts 111 and 163 of title
19 of the CFR (19 CFR parts 111 and 163) are amended as set forth
below.
PART 111--CUSTOMS BROKERS
0
1. The authority citation for part 111 continues to read in part as
follows:
Authority: 19 U.S.C. 66, 1202 (General Note 3(i), Harmonized
Tariff Schedule of the United States), 1624, 1641.
* * * * *
0
2. Section 111.23 is revised to read as follows:
Sec. 111.23 Retention of records.
(a) Place of retention. A licensed customs broker may retain
records relating to its customs transactions at any location within the
customs territory of the United States in accordance with the
provisions of this part and part 163 of this chapter. Upon request by
CBP to examine records, the designated recordkeeping contact identified
in the broker's applicable permit application, in accordance with Sec.
111.19(b)(6) of this chapter, must make all records available to CBP
within 30 calendar days, or such longer time as specified by CBP, at
the broker district that covers the CBP port to which the records
relate.
(b) Period of retention. The records described in this section,
other than powers of attorney, must be retained for at least 5 years
after the date of entry. Powers of attorney must be retained until
revoked, and revoked powers of attorney and letters of revocation must
be retained for 5 years after the date of revocation or for 5 years
after the date the client ceases to be an ``active client'' as defined
in Sec. 111.29(b)(2)(ii), whichever period is later. When merchandise
is withdrawn from a bonded warehouse, records relating to the
withdrawal must be retained for 5 years from the date of withdrawal of
the last merchandise withdrawn under the entry.
PART 163--RECORDKEEPING
0
3. The authority citation for part 163 continues to read in part as
follows:
Authority: 5 U.S.C. 301; 19 U.S.C. 66, 1484, 1508, 1509, 1510,
1624.
0
4. In Sec. 163.5:
0
a. Paragraph (a) is amended in the first sentence by removing the word
``shall'' and adding in its place the word ``must'', and in the second
sentence by removing the word ``Customs'' and adding in its place the
term ``CBP'';
0
b. Paragraph (b)(2) introductory text is amended in the second sentence
by removing the word ``Customs'' and adding in its place the term
``CBP'';
0
c. Paragraph (b)(2)(i) is amended by removing the word ``Customs'' and
adding in its place the term ``CBP'';
0
d. Paragraph (b)(2)(iii) is revised;
0
e. Paragraph (b)(2)(v) is amended by removing the word ``Customs'' and
adding in its place the term ``CBP'';
0
f. Paragraph (b)(2)(vi) is amended by removing the word ``shall'' and
adding in its place the word ``must'';
0
g. Paragraph (b)(3) is amended by removing the words ``the Miami
regulatory audit field office'' and adding in their place the language,
``Regulatory Audit, Office of International Trade, Customs and Border
Protection, 2001 Cross Beam Drive, Charlotte, North Carolina 28217'';
0
h. Paragraph (b)(4) is amended by removing the words ``shall be'' and
adding in their place the word ``are''; and
0
i. Paragraph (b)(5) is revised.
The revisions read as follows:
Sec. 163.5 Methods for storage of records.
* * * * *
(b) * * *
(2) * * *
(iii) Except in the case of packing lists (see Sec. 163.4(b)(2)),
entry records must be maintained by the importer in their original
formats for a period of 120 calendar days from the end of the release
or conditional release period, whichever is later, or, if a demand for
return to CBP custody has been issued, for a period of 120 calendar
days either from the date the goods are redelivered or from the date
specified in the demand as the latest redelivery date if redelivery has
not taken place. Customs brokers who are not serving as the importer of
record and who maintain separate electronic records are exempted from
this requirement. This exemption does not apply to any document that is
required by law to be maintained as a paper record.
* * * * *
(5) Failure to comply with alternative storage requirements. If a
person listed in Sec. 163.2 uses an alternative storage method for
records that is not in compliance with the conditions and requirements
of this section, CBP may issue a written notice informing the person of
the facts giving rise to the notice and directing that the alternative
storage method must be discontinued in 30 calendar days unless the
person provides written notice to the issuing CBP office within that
time period that explains, to CBP's satisfaction, how compliance has
been achieved. Failure to timely respond to CBP will result in CBP
requiring discontinuance of the alternative storage method until a
written statement explaining how compliance has been achieved has been
received and accepted by CBP.
Sec. 163.12 [Amended]
0
5. In Sec. 163.12:
0
a. Paragraph (a) is amended by removing the word ``Customs'' wherever
it appears and adding in its place the term ``CBP'';
0
b. Paragraph (b)(2) is amended: by removing the word ``shall'' wherever
it appears and adding in its place the word ``must'', and; in the
second sentence, by removing the words ``Customs Recordkeeping'' and
adding in their place the words ``CBP Recordkeeping'' and removing the
language ``the Customs Electronic Bulletin Board (703-921-6155)'' and
adding in its place the language, ``CBP's
[[Page 33967]]
Regulatory Audit Web site located at https://www.cbp.gov/xp/cgov/import/
regulatory--audit--program/archive/compliance--assessment/'';
0
c. Paragraph (b)(3) introductory text is amended: In the first, third
and fourth sentences, by removing the word ``Customs'' wherever it
appears and adding in its place the term ``CBP'', and; in the second
sentence, by removing the word ``Customs'' and adding in its place the
words ``all applicable'';
0
d. Paragraphs (b)(3)(iii), (iv), (v), and (vi) are amended by removing
the word ``Customs'' wherever it appears and adding in its place the
term ``CBP'';
0
e. Paragraph (c)(1) is amended by removing the word ``shall'' wherever
it appears and adding in its place the word ``will'';
0
f. Paragraph (c)(2) is amended: By removing the word ``Customs'' and
adding in its place the term ``CBP''; by removing the word ``Miami''
and adding in its place the word ``Charlotte'', and; by removing the
word ``shall'' and adding in its place the word ``will'';
0
g. Paragraph (d)(1) is amended: In the first sentence, by removing the
words ``Customs shall'' and adding in their place the words ``CBP
will'', and; in the second sentence, by removing the word ``Customs''
and adding in its place the word ``CBP'';
0
h. The introductory text to paragraph (d)(2) is amended by removing the
word ``shall'' and adding in its place the word ``must''; and
0
i. Paragraph (d)(3) is amended: By removing the word ``shall'' and
adding in its place the word ``must''; and, by removing the word
``Customs'' and adding in its place the term ``CBP''.
David V. Aguilar,
Acting Commissioner, U.S. Customs and Border Protection.
Approved: June 4, 2012.
Timothy E. Skud,
Deputy Assistant Secretary of the Treasury.
[FR Doc. 2012-13907 Filed 6-7-12; 8:45 am]
BILLING CODE 9111-14-P
