Elimination of Customs Broker District Permit Fee, 34549-34554 [2020-04708]

Download as PDF Federal Register / Vol. 85, No. 109 / Friday, June 5, 2020 / Proposed Rules lotter on DSK9F5VC42PROD with PROPOSALS other federal, state, or local laws or regulations? If so, how? Provide any evidence that supports your position. With reference to the asserted conflicts, should the Rule be modified? If so, why, and how? If not, why not? IX. Comment Submissions You can file a comment online or on paper. For the FTC to consider your comment, we must receive it on or before September 3, 2020. Write ‘‘Energy Market Manipulation Rule, 16 CFR part 317, Project No. P082900)’’ on your comment. Because of the public health emergency in response to the COVID–19 outbreak and the agency’s heightened security screening, postal mail addressed to the Commission will be subject to delay. We strongly encourage you to submit your comment online through the https:// www.regulations.gov website. To ensure the Commission considers your online comment, please follow the instructions on the web-based form provided by regulations.gov. Your comment, including your name and your state, will be placed on the public record of this proceeding, including the https:// www.regulations.gov website. If you file your comment on paper, write ‘‘Energy Market Manipulation Rule, 16 CFR part 317, Project No. P082900’’ on your comment and on the envelope, and mail it to the following address: Federal Trade Commission, Office of the Secretary, 600 Pennsylvania Avenue NW, Suite CC– 5610 (Annex J), Washington, DC 20580, or deliver your comment to the following address: Federal Trade Commission, Office of the Secretary, Constitution Center, 400 7th Street SW, 5th Floor, Suite 5610 (Annex J), Washington, DC 20024. If possible, please submit your paper comment to the Commission by courier or overnight service. Because your comment will be placed on the publicly accessible website at www.regulations.gov, you are solely responsible for making sure that your comment does not include any sensitive or confidential information. In particular, your comment should not include any sensitive personal information, such as your or anyone else’s Social Security number; date of birth; driver’s license number or other state identification number, or foreign country equivalent; passport number; financial account number; or credit or debit card number. You are also solely responsible for making sure that your comment does not include any sensitive health information, such as medical records or other individually identifiable health information. In VerDate Sep<11>2014 17:12 Jun 04, 2020 Jkt 250001 addition, your comment should not include any ‘‘trade secret or any commercial or financial information which . . . is privileged or confidential’’—as provided by Section 6(f) of the FTC Act, 15 U.S.C. 46(f), and FTC Rule 4.10(a)(2), 16 CFR 4.10(a)(2)— including in particular competitively sensitive information such as costs, sales statistics, inventories, formulas, patterns, devices, manufacturing processes, or customer names. Comments containing material for which confidential treatment is requested must be filed in paper form, must be clearly labeled ‘‘Confidential,’’ and must comply with FTC Rule 4.9(c). In particular, the written request for confidential treatment that accompanies the comment must include the factual and legal basis for the request, and must identify the specific portions of the comment to be withheld from the public record. See FTC Rule 4.9(c). Your comment will be kept confidential only if the General Counsel grants your request in accordance with the law and the public interest. Once your comment has been posted publicly at https:// www.regulations.gov—as legally required by FTC Rule 4.9(b)—we cannot redact or remove your comment unless you submit a confidentiality request that meets the requirements for such treatment under FTC Rule 4.9(c), and the General Counsel grants that request. Visit the FTC website to read this request for comment and the news release describing it. The FTC Act and other laws that the Commission administers permit the collection of public comments to consider and use in this proceeding as appropriate. The Commission will consider all timely and responsive public comments that it receives on or before September 3, 2020. For information on the Commission’s privacy policy, including routine uses permitted by the Privacy Act, see https://www.ftc.gov/site-information/ privacy-policy. By direction of the Commission. April J. Tabor, Acting Secretary. [FR Doc. 2020–10988 Filed 6–4–20; 8:45 am] BILLING CODE 6750–01–P PO 00000 Frm 00013 Fmt 4702 Sfmt 4702 34549 DEPARTMENT OF HOMELAND SECURITY U.S. Customs and Border Protection 19 CFR Parts 24 and 111 [Docket No. USCBP–2020–0010] RIN 1515–AE43 Elimination of Customs Broker District Permit Fee U.S. Customs and Border Protection, DHS; Department of the Treasury. ACTION: Notice of proposed rulemaking. AGENCY: This document proposes to amend the U.S. Customs and Border Protection (CBP) regulations to eliminate customs broker district permit fees. Concurrently with this document, CBP is publishing a notice of proposed rulemaking to, among other things, eliminate customs broker districts (see ‘‘Modernization of the Customs Brokers Regulations’’ RIN 1651–AB16). Specifically, CBP proposes to transition all brokers to national permits and to expand the scope of the national permit authority to allow national permit holders to conduct any type of customs business throughout the customs territory of the United States. By transitioning to a national permit, CBP also proposes to eliminate the requirements for brokers to maintain district permits. As a result, CBP proposes the conforming amendments discussed in this document to eliminate customs broker district permit fees. DATES: Comments must be received on or before August 4, 2020. ADDRESSES: You may submit comments, identified by docket number, by one of the following methods: • Federal eRulemaking Portal at http://www.regulations.gov. Follow the instructions for submitting comments via Docket No. USCBP–2020–0010. • Mail: Trade and Commercial Regulations Branch, Regulations and Rulings, Office of Trade, U.S. Customs and Border Protection, 90 K Street NE, 10th Floor, Washington, DC 20229– 1177. Instructions: All submissions received must include the agency name and docket number for this rulemaking. All comments received will be posted without change to http:// www.regulations.gov, including any personal information provided. For detailed instructions on submitting comments and additional information on the rulemaking process, see the ‘‘Public Participation’’ heading of the SUMMARY: E:\FR\FM\05JNP1.SGM 05JNP1 34550 Federal Register / Vol. 85, No. 109 / Friday, June 5, 2020 / Proposed Rules SUPPLEMENTARY INFORMATION section of this document. Docket: For access to the docket to read background documents or comments received, go to http:// www.regulations.gov. Submitted comments may be inspected during regular business days between the hours of 9 a.m. and 4:30 p.m. at the Trade and Commercial Regulations Branch, Regulations and Rulings, Office of Trade, U.S. Customs and Border Protection, 90 K Street NE, 10th Floor, Washington, DC. Arrangements to inspect submitted comments should be made in advance by calling Ms. Cammy Canedo at (202) 325–0439. FOR FURTHER INFORMATION CONTACT: Melba Hubbard, Chief, Broker Management Branch, (202) 863–6986, melba.hubbard@cbp.dhs.gov. SUPPLEMENTARY INFORMATION: Public Participation Interested persons are invited to participate in this rulemaking by submitting written data, views, or arguments on all aspects of this proposed rule. U.S. Customs and Border Protection (CBP) also invites comments that relate to the economic, environmental, or federalism effects that might result from this regulatory change. Comments that will provide the most assistance to CBP will reference a specific portion of the rule, explain the reason for any recommended change, and include data, information or authority that support such recommended change. lotter on DSK9F5VC42PROD with PROPOSALS Background Section 641 of the Tariff Act of 1930, as amended (19 U.S.C. 1641), provides that individuals and business entities must hold a valid customs broker’s license and permit to transact customs business on behalf of others. The statute also sets forth standards for the issuance of broker licenses and permits; provides for disciplinary action against brokers in the form of suspension or revocation of such licenses and permits or assessment of monetary penalties; and provides for the assessment of monetary penalties against other persons for conducting customs business without the required broker’s license. Section 641 authorizes the Secretary of the Treasury to prescribe rules and regulations relating to the customs business of brokers as may be necessary to protect the public and the revenue of the United States and to carry out the provisions of section 641. The regulations issued under the authority of section 641 are set forth in Part 111 of title 19 of the Code of VerDate Sep<11>2014 17:12 Jun 04, 2020 Jkt 250001 Federal Regulations (CFR) (19 CFR part 111) and provide for, among other things, fee payment requirements applicable to brokers under section 641 and 19 U.S.C. 58c(a)(7). The current customs brokers regulations are based on a district system in which ports within a district handle entry, entry summary, and postsummary activity and for which a broker district permit is required. Discussion of Proposed Amendments In a concurrent notice of proposed rulemaking, published elsewhere in this issue of the Federal Register (see ‘‘Modernization of the Customs Brokers Regulations’’ RIN 1651–AB16), CBP proposes to amend the CBP regulations by modernizing the customs brokers regulations to coincide with the development of CBP trade initiatives including the Automated Commercial Environment (ACE) and the Centers of Excellence and Expertise (Centers). Specifically, CBP is proposing to transition all brokers to national permits and to expand the scope of the national permit authority to allow national permit holders to conduct any type of customs business throughout the customs territory of the United States. To accomplish this, CBP proposes to eliminate broker districts and district permits, which also eliminates the need for district permit waivers and for brokers to maintain district offices. This document proposes conforming amendments to Parts 24 and 111 to eliminate customs broker district permit fees. Part 24 Part 24 of title 19 of the CFR (19 CFR part 24) sets forth the regulations regarding customs financial and accounting procedures. Section 24.22 describes the customs Consolidated Omnibus Budget Reconciliation Act (COBRA) user fees and limitations for certain services. Specifically, paragraph (h) of section 24.22 describes the customs broker permit user fee. CBP proposes conforming amendments to sections 24.22(h) and (i)(9) to eliminate the customs broker district permit fee. Part 111 Elimination of District Permits Section 111.19 provides the procedures for obtaining broker permits, responsible supervision and control requirements for permits, and review procedures for the denial of a permit. As further described in the concurrent notice of proposed rulemaking, published elsewhere in this issue of the Federal Register, CBP is proposing to PO 00000 Frm 00014 Fmt 4702 Sfmt 4702 eliminate district permits and move to a national permit-only system (see ‘‘Modernization of the Customs Brokers Regulations’’ RIN 1651–AB16). Section 111.19(c) describes permit fees. As CBP is proposing to eliminate district permits in a concurrent notice of proposed rulemaking, this document proposes conforming amendments to this section by eliminating fees for district permits. In addition, CBP proposes removing the specific permit application and permit user fee amounts and replacing the numerical figures with a reference to the relevant fee provision in sections 111.96(b) and (c). The proposed changes to section 111.96(b) can be found in the concurrent notice of proposed rulemaking. Elimination of District Permit Fees Section 111.96 describes fees required throughout part 111. Paragraph (c) of section 111.96 describes the permit user fee. To reflect the proposed elimination of district permits, CBP proposes to eliminate the customs broker district permit fee. CBP also proposes to specify that the user fee is for national permits issued under section 111.19(a). As discussed in the concurrent proposal ‘‘Modernization of the Customs Brokers Regulations’’ RIN 1651–AB16, CBP published an interim final rule that transferred certain trade functions from the port director to the Center director. Similarly, certain broker management functions previously performed by the port director will be transferred to the Centers as part of this proposed rule. CBP proposes to revise the last sentence of paragraph (c) by splitting it into two sentences, with the second sentence providing that the director of the designated Center will notify the broker in writing of the failure to pay and the revocation of the permit. Other Conforming Amendments The authority for part 111 currently provides a specific authority citation for section 111.3. When the text of section 111.3 was transferred to section 111.2 in a final rule published in the Federal Register (65 FR 13880) on March 15, 2000, CBP inadvertently did not revise the specific authority citation for either section. CBP proposes to correct this by revising the specific authority citation for section 111.2 by adding that this section is also issued under 19 U.S.C. 1484 and 4798, and by removing the specific authority citation for section 111.3. An identical amendment is proposed in the concurrent document, ‘‘Modernization of the Customs Brokers Regulations’’ RIN 1651–AB16. E:\FR\FM\05JNP1.SGM 05JNP1 34551 Federal Register / Vol. 85, No. 109 / Friday, June 5, 2020 / Proposed Rules Executive Orders 13563, 12866, and 13771 Executive Orders 13563 and 12866 direct agencies to assess the costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). Executive Order 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. Executive Order 13771 (‘‘Reducing Regulation and Controlling Regulatory Costs’’) directs agencies to reduce regulation and control regulatory costs and provides that ‘‘for every one new regulation issued, at least two prior regulations be identified for elimination, and that the cost of planned regulations be prudently managed and controlled through a budgeting process.’’ This rule is not a ‘‘significant regulatory action,’’ under section 3(f) of Executive Order 12866. Accordingly, OMB has not reviewed this regulation. As this rule is not a significant regulatory action, this rule is exempt from the requirements of Executive Order 13771. See OMB’s Memorandum titled ‘‘Guidance Implementing Executive Order 13771, Titled ‘Reducing Regulation and Controlling Regulatory Costs’’’ (April 5, 2017). However, this rule is considered a deregulatory action under Executive Order 13771 and the estimated annualized savings to the public are $481,089. CBP has prepared the following analysis to help inform stakeholders of the impacts of this proposed rule. 1. Need and Purpose of Rule The current customs brokers regulations are based on the district system in which entry, entry summary, and post-summary activity are all handled by the ports within a permit district. In the rule published concurrently (RIN 1651–AB16) with this proposed rule, CBP proposes to modernize the regulations governing customs brokers to better reflect the current work environment and streamline the customs broker permitting process to save money. 2. Background The customs territory of the United States is divided into seven customs regions. Within each region, the customs territory of the United States is further divided into districts; there are currently 40 customs districts.1 Currently, a district permit is required for each district in which a customs broker intends to conduct customs business. Each district permit requires a one-time permit fee of $100 and an annual user fee of $141.70. A customs broker has the option of receiving his/ her first district permit concurrently with the receipt of the customs broker license in which case the $100 permit fee is waived. In an effort to modernize the permitting process for customs brokers, the proposed rule published concurrently in the FR (RIN 1651– AB16) will eliminate the district permitting process and automatically grant each district permit holder a national permit. 3. Proposed Rule Amendments: Costs and Benefits Concurrently with this document, CBP is publishing a notice of proposed rulemaking that eliminates customs broker districts (see ‘‘Modernization of the Customs Brokers Regulations’’ RIN 1651–AB16). CBP proposes to transition all brokers to national permits and to expand the scope of the national permit authority to allow national permit holders to conduct any type of customs business throughout the customs territory of the United States. By transitioning to a national permit, CBP proposes to eliminate the requirements for brokers to maintain district permits and pay the annual user fee. Consequently CBP proposes to eliminate customs broker district permit annual user fees. CBP has prepared the following analysis to help inform stakeholders of the impacts of this proposed rule. 3.1 Permit User Fee Currently, the payment of an annual permit user fee of $141.70 is required for each permit that is granted to an individual, partnership, association, or corporate broker. The permit user fee is payable for each district and/or national permit a customs broker has, including when a district permit is issued concurrently with the broker’s license. As a result of the concurrent CBP rule, district permits will be eliminated and customs brokers will only need to pay an annual user fee on a single national permit.2 According to data from CBP’s Broker Management Branch, as of January 2017 there were 2,093 3 brokers holding one or more district permits 4 that have 3,067 active district permits. This is an average of approximately 1.5 district permits per customs broker permit holder. Using this figure we can now project how many district permits brokers who currently hold at least one permit, would have had over the period of the analysis, from 2017 through 2021 under the baseline condition (i.e., if this rule is not promulgated). This is shown in Exhibit 1 below. EXHIBIT 1—PROJECTION OF NEW INDIVIDUAL AND CORPORATE PERMITS Year lotter on DSK9F5VC42PROD with PROPOSALS 2017 2018 2019 2020 2021 New individual licenses issued New individual permits New corporate licenses issues New corporate permits 762 839 922 1,015 1,116 1,143 1,258 1,384 1,522 1,674 97 106 115 126 137 146 159 173 188 205 ................................................................................................................. ................................................................................................................. ................................................................................................................. ................................................................................................................. ................................................................................................................. 1 In addition to the 40 geographically defined customs districts, there are three special districts that are responsible for specific types of imported merchandise. These special districts include districts 60, 70 and 80. District 60 refers to entries made by vessels under their own power. District 70 refers to shipments with a value under $800. District 80 refers to mail shipments. These three special districts do not require the use of a licensed VerDate Sep<11>2014 17:12 Jun 04, 2020 Jkt 250001 broker with a specific district permit and as a result are not affected by this proposal. 2 The reduction of the fee revenue will result in less funds available for CBP operations, but this is offset by the reduction in costs to process the permits. Thus, there is no net effect to CBP in reducing this revenue. 3 This figure represents all current licensed brokers that are permit holders, regardless of what PO 00000 Frm 00015 Fmt 4702 Sfmt 4702 year they received their license and is inclusive of the 1,258 brokers that hold at least one district permit concurrently with a national permit. 4 Note that 11,531 brokers (13,624 active broker licenses ¥2,093 customs broker permit holders) do not have any permits at all, and as a result, will not be affected by the permitting changes of this rule. E:\FR\FM\05JNP1.SGM 05JNP1 34552 Federal Register / Vol. 85, No. 109 / Friday, June 5, 2020 / Proposed Rules EXHIBIT 1—PROJECTION OF NEW INDIVIDUAL AND CORPORATE PERMITS—Continued Year New individual licenses issued New individual permits New corporate licenses issues New corporate permits 4,654 6,981 581 871 Total .......................................................................................................... Note: Values may not sum to total due to rounding. Absent this rule, there would be 4,654 new individual licenses and 581 new corporate licenses issued for a total of 5,235 licenses (see Exhibit 1). Using the aforementioned ratio of district permits to customs broker permit holders of 1.5 district permits to 1 customs broker permit holder, these 5,235 broker licenses would result in 7,853 district permits. According to CBP’s Broker Management Branch, in addition to the 7,853 district permits that would be granted over the period of analysis, approximately 150 national permits are issued annually. This means that over the period of analysis from 2017 through 2021, 750 national permits will be granted to customs brokers in addition to the 7,853 district permits for a total of 8,603 permits. Absent this rule, these 8,603 permits would result in permit user fee charges of $1,219,045 (8,603 total permits * $141.70 annual permit user fee) over the period of the analysis. With this rule in place, the 5,235 total brokers would only receive a single national permit each for a total of 5,235 permits. This would result in permit user fee charges over the period of analysis of $741,800 (5,235 national permits * $141.70 annual permit user fee). This represents total savings to new customs brokers of $477,245 ($1,219,045 ¥ $741,800) over the period of analysis. Please see Exhibit 2, below, for the estimated annual cost savings. EXHIBIT 2—COST SAVINGS FROM THE PERMIT USER FEE FOR NEW LICENSES [$2016] New licenses issued Year 2017 2018 2019 2020 2021 New district permits New national permits Total permits Savings as a result of this proposed rule ..................................................................................... ..................................................................................... ..................................................................................... ..................................................................................... ..................................................................................... 859 945 1,037 1,141 1,253 1,289 1,418 1,556 1,712 1,880 150 150 150 150 150 1,439 1,568 1,706 1,862 2,030 $82,186 88,279 94,797 102,166 110,101 Total .............................................................................. 5,235 7,853 750 8,603 477,245 Note: Values may not sum to total due to rounding. Current brokers that have more than one permit will also benefit from this rule. According to CBP’s Broker Management Branch, as of January 2017 there were 1,319 brokers that either have more than one district permit or a combination of at least one district permit and a national permit. These 1,319 brokers currently hold a total of 3,613 permits which results in a ratio of 2.73 permits per broker (some of the existing brokers hold significantly more than the average of 1.5 permits per customs broker permit holder). Absent this rule, these permits would result in an annual permit user fee charge in 2017 of $511,962 (3,613 permits * $141.70 annual permit user fee) or $2,559,810 over the period of analysis from 2017 through 2021. As a result of this rule, the 1,319 brokers would only need to hold a single national permit for a total of 1,319 permits. This would result in an annual permit user fee charge in 2017 of $186,902 (1,319 national permits * $141.70 annual permit user fee) or $934,510 over the period of analysis. This represents an annual savings in 2017 of $325,060 ($511,962¥$186,902) or $1,956,192 over the period of analysis to customs brokers who currently hold more than one permit. This also represents a decrease in the transfer payment from customs brokers to the government of $1,956,192 over the period of analysis from 2017 through 2021. Please see Exhibit 3, below, for the estimated annual cost savings for existing license holders. EXHIBIT 3—COST SAVINGS FROM THE PERMIT USER FEE FOR EXISTING LICENSES OVER PERIOD OF ANALYSIS [$2016] Existing licenses 5 lotter on DSK9F5VC42PROD with PROPOSALS Year 2017 ......................................................... 2018 ......................................................... 2019 ......................................................... 1,319 1,444 1,582 5 A growth rate of 9.5 percent was used to project the number of existing licenses over the period of analysis. The 9.5 percent figure is the average of the VerDate Sep<11>2014 17:12 Jun 04, 2020 Jkt 250001 Number of permits absent rule Number of permits with rule 3,613 3,943 4,318 1,319 1,444 1,582 ten (10) percent calculated average growth rate for individual licenses and the nine (9) percent PO 00000 Frm 00016 Fmt 4702 Sfmt 4702 Cost absent rule ($) 511,962 558,716 611,794 Cost with rule ($) 186,902 204,658 224,101 Annual cost savings over period of analysis ($) 325,060 354,058 387,694 calculated average growth rate for corporate licenses that was used in the analysis. E:\FR\FM\05JNP1.SGM 05JNP1 34553 Federal Register / Vol. 85, No. 109 / Friday, June 5, 2020 / Proposed Rules EXHIBIT 3—COST SAVINGS FROM THE PERMIT USER FEE FOR EXISTING LICENSES OVER PERIOD OF ANALYSIS— Continued [$2016] Existing licenses 5 Year Number of permits absent rule Number of permits with rule Cost absent rule ($) Cost with rule ($) Annual cost savings over period of analysis ($) 2020 ......................................................... 2021 ......................................................... 1,732 1,896 4,728 5,177 1,732 1,896 669,915 733,557 245,390 268,702 424,525 464,855 Total .................................................. ........................ ........................ ........................ 3,085,945 1,129,753 1,956,192 Note: Values may not sum to total due to rounding. 3.2 Total Costs The elimination of the annual user fee for district permits does not result in any costs to brokers, but as noted above the rule yields the aforementioned cost savings. 3.3 Total Benefits The total annual monetized cost savings for customs brokers are the result of monetary savings from switching from a district permitting system to a national permitting system. Specifically, the cost savings are the result of the payment of the annual permit user fee for only a single national permit instead of for each of the potentially several district permits a broker holds. As shown in Exhibit 4 below, total savings over the period of analysis are approximately $2.4 million dollars. EXHIBIT 4—TOTAL ANNUAL UNDISCOUNTED SAVINGS FOR BROKERS ($2016), 2017–2021 Year 2017 2018 2019 2020 2021 Total savings ...................................... ...................................... ...................................... ...................................... ...................................... $407,246 442,337 482,491 526,691 574,956 Total .................................. 2,433,721 Exhibit 5 shows the total and annualized savings over the period of analysis (2017–2021) at a three (3) and seven (7) percent discount rate, per guidance provided in OMB Circular A– 4. Total benefits range from approximately $2.1 to $2.3 million over the period of analysis. Annualized benefits are approximately $480,000. Note: Values may not sum to total due to rounding. EXHIBIT 5—TOTAL PRESENT VALUE AND ANNUALIZED BENEFITS, FROM 2017–2021 [$2016] Total present value benefits Annualized benefits 3% 7% 3% 7% $2,284,331 $2,110,639 $484,266 $481,089 3.4 Net Benefits Exhibit 6 summarizes the monetized costs and benefits of this rule to individual and business entity customs brokers. As shown, the total monetized present value net benefit of this rule over a 5-year period of analysis from 2017–2021 ranges from approximately $2.3 to $2.4 million and the annualized net benefit is approximately $500,000. In 2017, we estimate that 859 brokers will receive their broker licenses (762 individual licenses plus 97 corporate licenses). The adoption of this rule will result in an average annual net benefit per broker in 2017 of $560 ($481,089 annualized net benefit/859 total new brokers for 2017). EXHIBIT 6—PRESENT VALUE AND ANNUALIZED NET BENEFIT OF RULE ($2016), 2017–2021 3% Discount rate lotter on DSK9F5VC42PROD with PROPOSALS Present value Total Cost ........................................................................................................ Total Benefit .................................................................................................... Total Net Benefit ............................................................................................. 4. Regulatory Flexibility Act The Regulatory Flexibility Act (5 U.S.C. 601 et seq.), as amended by the Small Business Regulatory Enforcement VerDate Sep<11>2014 17:12 Jun 04, 2020 Jkt 250001 $0 2,284,331 2,284,331 and Fairness Act of 1996, requires agencies to assess the impact of regulations on small entities. A small entity may be a small business (defined as any independently owned and PO 00000 Frm 00017 Fmt 4702 Sfmt 4702 7% Discount rate Annualized $0 484,266 484,266 Present value $0 2,110,639 2,110,639 Annualized $0 481,089 481,089 operated business not dominant in its field that qualifies as a small business per the Small Business Act); a small notfor-profit organization; or a small E:\FR\FM\05JNP1.SGM 05JNP1 34554 Federal Register / Vol. 85, No. 109 / Friday, June 5, 2020 / Proposed Rules governmental jurisdiction (locality with fewer than 50,000 people). The proposed rule will apply to all customs brokers, regardless of size. Accordingly, the proposed rule will affect a substantial number of small entities. However, as stated above in the Executive Orders 13563, 12866, and 13771 section, the proposed rule will result in an average savings per customs broker of a discounted present value of $560. Since brokers, on average, will benefit as a result of this rule, and the savings are relatively small on a per broker basis, it will not have a significant impact on customs brokers. Accordingly, CBP certifies that this rule does not have a significant impact on a substantial number of small entities. 5. Paperwork Reduction Act In accordance with the Paperwork Reduction Act of 1995 (Pub. L. 104–13, 44 U.S.C. 3507) an agency may not conduct, and a person is not required to respond to, a collection of information unless the collection of information displays a valid control number assigned by OMB. The collections of information contained in these regulations are provided for by OMB control number 1651–0034 (CBP Regulations Pertaining to Customs Brokers) and by OMB control number 1651–0076 (Recordkeeping Requirements). This rule does not change the burden under these information collections. Signing Authority This regulation is being issued in accordance with 19 CFR 0.1(a)(1) pertaining to the Secretary of the Treasury’s authority (or that of his delegate) to approve regulations related to certain customs revenue functions. List of Subjects 19 CFR Part 24 Accounting, Claims, Customs duties and inspection, Harbors, Reporting and recordkeeping requirements, Taxes. 19 CFR Part 111 lotter on DSK9F5VC42PROD with PROPOSALS Proposed Amendments to the CBP Regulations For the reasons set forth in the preamble, parts 24 and 111 of title 19 of the Code of Federal Regulations (19 CFR parts 24 and 111) are proposed to be amended as set forth below. 17:12 Jun 04, 2020 1. The general authority citation for part 24 continues to read as follows: ■ Authority: 5 U.S.C. 301; 19 U.S.C. 58a– 58c, 66, 1202 (General Note 3(i), Harmonized Tariff Schedule of the United States), 1505, 1520, 1624; 26 U.S.C. 4461, 4462; 31 U.S.C. 3717, 9701; Pub. L. 107–296, 116 Stat. 2135 (6 U.S.C. 1 et seq.). * * § 24.22 * * * [Amended] 2. In § 24.22: a. Paragraph (h) is amended by: i. Removing the phrase ‘‘each district permit and for’’ in the first sentence; ■ ii. Removing the second sentence; and ■ iii. Removing the word ‘‘port’’ from the third sentence and adding in its place the words ‘‘designated Center’’; and ■ b. Paragraph (i)(9) is amended by removing the phrase ‘‘: for district permits, class code 497;’’ from the first sentence. ■ ■ ■ PART 111—CUSTOMS BROKERS 3. The authority citation for part 111 is revised to read as follows: ■ Authority: 19 U.S.C. 66, 1202 (General Note 3(i), Harmonized Tariff Schedule of the United States), 1624; 1641. Section 111.2 also issued under 19 U.S.C. 1484, 1498; Section 111.96 also issued under 19 U.S.C. 58c, 31 U.S.C. 9701. Jkt 250001 the designated Center referred to in § 111.19(b). The permit user fee must be paid by the due date as published annually in the Federal Register, and must be remitted in accordance with the procedures set forth in § 24.22(i) of this chapter. When a broker submits an application for a national permit under § 111.19(b), the full permit user fee must be remitted with the application, regardless of the point during the calendar year at which the application is submitted. If a broker fails to pay the annual permit user fee by the published due date, the permit is revoked by operation of law. The director of the designated Center will notify the broker in writing of the failure to pay and the revocation of the permit. * * * * * Approved: March 3, 2020. Timothy E. Skud, Deputy Assistant Secretary, Department of the Treasury. Mark A. Morgan, Acting Commissioner, U.S. Customs and Border Protection. [FR Doc. 2020–04708 Filed 6–4–20; 8:45 am] BILLING CODE 9111–14–P DEPARTMENT OF EDUCATION 34 CFR Chapter III [Docket ID ED–2020–OSERS–0015] 4. In § 111.19, revise the section heading and paragraph (c) to read as follows: Proposed Requirements—The Individuals With Disabilities Education Act (IDEA) Paperwork Reduction Waivers § 111.19 AGENCY: ■ National permit. * * * * * (c) Fees. A national permit issued under paragraph (a) of this section is subject to the permit application fee specified in § 111.96(b) and to the customs user permit fee specified in § 111.96 (c). The fees must be paid at the designated Center (see § 111.1) or online with the submission of the permit application. * * * * * 5. In § 111.96, paragraph (c) is revised to read as follows: ■ Administrative practice and procedure, Brokers, Customs duties and inspection, Penalties, Reporting and recordkeeping requirements. VerDate Sep<11>2014 PART 24—CUSTOMS FINANCIAL AND ACCOUNTING PROCEDURE § 111.96 Fees. * * * * * (c) Permit user fee. Payment of an annual permit user fee defined in § 24.22(h) of this chapter is required for a national permit granted to an individual, partnership, association, or corporate broker. The permit user fee is payable with the filing of an application for a national permit under § 111.19(b), and for each subsequent calendar year at PO 00000 Frm 00018 Fmt 4702 Sfmt 4702 Office of Special Education and Rehabilitative Services, Department of Education. ACTION: Proposed requirements and definition. The Department of Education (Department) proposes requirements and a definition for waivers under section 609 of the Individuals with Disabilities Education Act (IDEA). The Department may select as many as 15 States to receive waivers of statutory requirements of, or regulatory requirements relating to, IDEA Part B, for a period of time not to exceed 4 years, to reduce excessive paperwork and noninstructional time burdens that do not assist in improving educational and functional results for children with disabilities. The purpose of these waivers is to increase the time and resources available for instruction and other activities aimed at improving educational and functional results for children with disabilities. Statutory requirements of, or regulatory SUMMARY: E:\FR\FM\05JNP1.SGM 05JNP1

Agencies

[Federal Register Volume 85, Number 109 (Friday, June 5, 2020)]
[Proposed Rules]
[Pages 34549-34554]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-04708]


=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF HOMELAND SECURITY

U.S. Customs and Border Protection

19 CFR Parts 24 and 111

[Docket No. USCBP-2020-0010]
RIN 1515-AE43


Elimination of Customs Broker District Permit Fee

AGENCY: U.S. Customs and Border Protection, DHS; Department of the 
Treasury.

ACTION: Notice of proposed rulemaking.

-----------------------------------------------------------------------

SUMMARY: This document proposes to amend the U.S. Customs and Border 
Protection (CBP) regulations to eliminate customs broker district 
permit fees. Concurrently with this document, CBP is publishing a 
notice of proposed rulemaking to, among other things, eliminate customs 
broker districts (see ``Modernization of the Customs Brokers 
Regulations'' RIN 1651-AB16). Specifically, CBP proposes to transition 
all brokers to national permits and to expand the scope of the national 
permit authority to allow national permit holders to conduct any type 
of customs business throughout the customs territory of the United 
States. By transitioning to a national permit, CBP also proposes to 
eliminate the requirements for brokers to maintain district permits. As 
a result, CBP proposes the conforming amendments discussed in this 
document to eliminate customs broker district permit fees.

DATES: Comments must be received on or before August 4, 2020.

ADDRESSES: You may submit comments, identified by docket number, by one 
of the following methods:
     Federal eRulemaking Portal at http://www.regulations.gov. 
Follow the instructions for submitting comments via Docket No. USCBP-
2020-0010.
     Mail: Trade and Commercial Regulations Branch, Regulations 
and Rulings, Office of Trade, U.S. Customs and Border Protection, 90 K 
Street NE, 10th Floor, Washington, DC 20229-1177.
    Instructions: All submissions received must include the agency name 
and docket number for this rulemaking. All comments received will be 
posted without change to http://www.regulations.gov, including any 
personal information provided. For detailed instructions on submitting 
comments and additional information on the rulemaking process, see the 
``Public Participation'' heading of the

[[Page 34550]]

SUPPLEMENTARY INFORMATION section of this document.
    Docket: For access to the docket to read background documents or 
comments received, go to http://www.regulations.gov. Submitted comments 
may be inspected during regular business days between the hours of 9 
a.m. and 4:30 p.m. at the Trade and Commercial Regulations Branch, 
Regulations and Rulings, Office of Trade, U.S. Customs and Border 
Protection, 90 K Street NE, 10th Floor, Washington, DC. Arrangements to 
inspect submitted comments should be made in advance by calling Ms. 
Cammy Canedo at (202) 325-0439.

FOR FURTHER INFORMATION CONTACT: Melba Hubbard, Chief, Broker 
Management Branch, (202) 863-6986, [email protected].

SUPPLEMENTARY INFORMATION: 

Public Participation

    Interested persons are invited to participate in this rulemaking by 
submitting written data, views, or arguments on all aspects of this 
proposed rule. U.S. Customs and Border Protection (CBP) also invites 
comments that relate to the economic, environmental, or federalism 
effects that might result from this regulatory change. Comments that 
will provide the most assistance to CBP will reference a specific 
portion of the rule, explain the reason for any recommended change, and 
include data, information or authority that support such recommended 
change.

Background

    Section 641 of the Tariff Act of 1930, as amended (19 U.S.C. 1641), 
provides that individuals and business entities must hold a valid 
customs broker's license and permit to transact customs business on 
behalf of others. The statute also sets forth standards for the 
issuance of broker licenses and permits; provides for disciplinary 
action against brokers in the form of suspension or revocation of such 
licenses and permits or assessment of monetary penalties; and provides 
for the assessment of monetary penalties against other persons for 
conducting customs business without the required broker's license. 
Section 641 authorizes the Secretary of the Treasury to prescribe rules 
and regulations relating to the customs business of brokers as may be 
necessary to protect the public and the revenue of the United States 
and to carry out the provisions of section 641.
    The regulations issued under the authority of section 641 are set 
forth in Part 111 of title 19 of the Code of Federal Regulations (CFR) 
(19 CFR part 111) and provide for, among other things, fee payment 
requirements applicable to brokers under section 641 and 19 U.S.C. 
58c(a)(7).
    The current customs brokers regulations are based on a district 
system in which ports within a district handle entry, entry summary, 
and post-summary activity and for which a broker district permit is 
required.

Discussion of Proposed Amendments

    In a concurrent notice of proposed rulemaking, published elsewhere 
in this issue of the Federal Register (see ``Modernization of the 
Customs Brokers Regulations'' RIN 1651-AB16), CBP proposes to amend the 
CBP regulations by modernizing the customs brokers regulations to 
coincide with the development of CBP trade initiatives including the 
Automated Commercial Environment (ACE) and the Centers of Excellence 
and Expertise (Centers). Specifically, CBP is proposing to transition 
all brokers to national permits and to expand the scope of the national 
permit authority to allow national permit holders to conduct any type 
of customs business throughout the customs territory of the United 
States. To accomplish this, CBP proposes to eliminate broker districts 
and district permits, which also eliminates the need for district 
permit waivers and for brokers to maintain district offices. This 
document proposes conforming amendments to Parts 24 and 111 to 
eliminate customs broker district permit fees.

Part 24

    Part 24 of title 19 of the CFR (19 CFR part 24) sets forth the 
regulations regarding customs financial and accounting procedures. 
Section 24.22 describes the customs Consolidated Omnibus Budget 
Reconciliation Act (COBRA) user fees and limitations for certain 
services. Specifically, paragraph (h) of section 24.22 describes the 
customs broker permit user fee. CBP proposes conforming amendments to 
sections 24.22(h) and (i)(9) to eliminate the customs broker district 
permit fee.

Part 111

Elimination of District Permits

    Section 111.19 provides the procedures for obtaining broker 
permits, responsible supervision and control requirements for permits, 
and review procedures for the denial of a permit. As further described 
in the concurrent notice of proposed rulemaking, published elsewhere in 
this issue of the Federal Register, CBP is proposing to eliminate 
district permits and move to a national permit-only system (see 
``Modernization of the Customs Brokers Regulations'' RIN 1651-AB16).
    Section 111.19(c) describes permit fees. As CBP is proposing to 
eliminate district permits in a concurrent notice of proposed 
rulemaking, this document proposes conforming amendments to this 
section by eliminating fees for district permits. In addition, CBP 
proposes removing the specific permit application and permit user fee 
amounts and replacing the numerical figures with a reference to the 
relevant fee provision in sections 111.96(b) and (c). The proposed 
changes to section 111.96(b) can be found in the concurrent notice of 
proposed rulemaking.

Elimination of District Permit Fees

    Section 111.96 describes fees required throughout part 111. 
Paragraph (c) of section 111.96 describes the permit user fee. To 
reflect the proposed elimination of district permits, CBP proposes to 
eliminate the customs broker district permit fee. CBP also proposes to 
specify that the user fee is for national permits issued under section 
111.19(a).
    As discussed in the concurrent proposal ``Modernization of the 
Customs Brokers Regulations'' RIN 1651-AB16, CBP published an interim 
final rule that transferred certain trade functions from the port 
director to the Center director. Similarly, certain broker management 
functions previously performed by the port director will be transferred 
to the Centers as part of this proposed rule. CBP proposes to revise 
the last sentence of paragraph (c) by splitting it into two sentences, 
with the second sentence providing that the director of the designated 
Center will notify the broker in writing of the failure to pay and the 
revocation of the permit.

Other Conforming Amendments

    The authority for part 111 currently provides a specific authority 
citation for section 111.3. When the text of section 111.3 was 
transferred to section 111.2 in a final rule published in the Federal 
Register (65 FR 13880) on March 15, 2000, CBP inadvertently did not 
revise the specific authority citation for either section. CBP proposes 
to correct this by revising the specific authority citation for section 
111.2 by adding that this section is also issued under 19 U.S.C. 1484 
and 4798, and by removing the specific authority citation for section 
111.3. An identical amendment is proposed in the concurrent document, 
``Modernization of the Customs Brokers Regulations'' RIN 1651-AB16.

[[Page 34551]]

Executive Orders 13563, 12866, and 13771

    Executive Orders 13563 and 12866 direct agencies to assess the 
costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). Executive 
Order 13563 emphasizes the importance of quantifying both costs and 
benefits, of reducing costs, of harmonizing rules, and of promoting 
flexibility. Executive Order 13771 (``Reducing Regulation and 
Controlling Regulatory Costs'') directs agencies to reduce regulation 
and control regulatory costs and provides that ``for every one new 
regulation issued, at least two prior regulations be identified for 
elimination, and that the cost of planned regulations be prudently 
managed and controlled through a budgeting process.''
    This rule is not a ``significant regulatory action,'' under section 
3(f) of Executive Order 12866. Accordingly, OMB has not reviewed this 
regulation. As this rule is not a significant regulatory action, this 
rule is exempt from the requirements of Executive Order 13771. See 
OMB's Memorandum titled ``Guidance Implementing Executive Order 13771, 
Titled `Reducing Regulation and Controlling Regulatory Costs''' (April 
5, 2017). However, this rule is considered a deregulatory action under 
Executive Order 13771 and the estimated annualized savings to the 
public are $481,089. CBP has prepared the following analysis to help 
inform stakeholders of the impacts of this proposed rule.

1. Need and Purpose of Rule

    The current customs brokers regulations are based on the district 
system in which entry, entry summary, and post-summary activity are all 
handled by the ports within a permit district. In the rule published 
concurrently (RIN 1651-AB16) with this proposed rule, CBP proposes to 
modernize the regulations governing customs brokers to better reflect 
the current work environment and streamline the customs broker 
permitting process to save money.

2. Background

    The customs territory of the United States is divided into seven 
customs regions. Within each region, the customs territory of the 
United States is further divided into districts; there are currently 40 
customs districts.\1\ Currently, a district permit is required for each 
district in which a customs broker intends to conduct customs business. 
Each district permit requires a one-time permit fee of $100 and an 
annual user fee of $141.70. A customs broker has the option of 
receiving his/her first district permit concurrently with the receipt 
of the customs broker license in which case the $100 permit fee is 
waived. In an effort to modernize the permitting process for customs 
brokers, the proposed rule published concurrently in the FR (RIN 1651-
AB16) will eliminate the district permitting process and automatically 
grant each district permit holder a national permit.
---------------------------------------------------------------------------

    \1\ In addition to the 40 geographically defined customs 
districts, there are three special districts that are responsible 
for specific types of imported merchandise. These special districts 
include districts 60, 70 and 80. District 60 refers to entries made 
by vessels under their own power. District 70 refers to shipments 
with a value under $800. District 80 refers to mail shipments. These 
three special districts do not require the use of a licensed broker 
with a specific district permit and as a result are not affected by 
this proposal.
---------------------------------------------------------------------------

3. Proposed Rule Amendments: Costs and Benefits

    Concurrently with this document, CBP is publishing a notice of 
proposed rulemaking that eliminates customs broker districts (see 
``Modernization of the Customs Brokers Regulations'' RIN 1651-AB16). 
CBP proposes to transition all brokers to national permits and to 
expand the scope of the national permit authority to allow national 
permit holders to conduct any type of customs business throughout the 
customs territory of the United States. By transitioning to a national 
permit, CBP proposes to eliminate the requirements for brokers to 
maintain district permits and pay the annual user fee. Consequently CBP 
proposes to eliminate customs broker district permit annual user fees. 
CBP has prepared the following analysis to help inform stakeholders of 
the impacts of this proposed rule.

3.1 Permit User Fee

    Currently, the payment of an annual permit user fee of $141.70 is 
required for each permit that is granted to an individual, partnership, 
association, or corporate broker. The permit user fee is payable for 
each district and/or national permit a customs broker has, including 
when a district permit is issued concurrently with the broker's 
license. As a result of the concurrent CBP rule, district permits will 
be eliminated and customs brokers will only need to pay an annual user 
fee on a single national permit.\2\
---------------------------------------------------------------------------

    \2\ The reduction of the fee revenue will result in less funds 
available for CBP operations, but this is offset by the reduction in 
costs to process the permits. Thus, there is no net effect to CBP in 
reducing this revenue.
---------------------------------------------------------------------------

    According to data from CBP's Broker Management Branch, as of 
January 2017 there were 2,093 \3\ brokers holding one or more district 
permits \4\ that have 3,067 active district permits. This is an average 
of approximately 1.5 district permits per customs broker permit holder. 
Using this figure we can now project how many district permits brokers 
who currently hold at least one permit, would have had over the period 
of the analysis, from 2017 through 2021 under the baseline condition 
(i.e., if this rule is not promulgated). This is shown in Exhibit 1 
below.
---------------------------------------------------------------------------

    \3\ This figure represents all current licensed brokers that are 
permit holders, regardless of what year they received their license 
and is inclusive of the 1,258 brokers that hold at least one 
district permit concurrently with a national permit.
    \4\ Note that 11,531 brokers (13,624 active broker licenses -
2,093 customs broker permit holders) do not have any permits at all, 
and as a result, will not be affected by the permitting changes of 
this rule.

                          Exhibit 1--Projection of New Individual and Corporate Permits
----------------------------------------------------------------------------------------------------------------
                                                  New individual                   New corporate
                      Year                           licenses     New individual     licenses      New corporate
                                                      issued          permits         issues          permits
----------------------------------------------------------------------------------------------------------------
2017............................................             762           1,143              97             146
2018............................................             839           1,258             106             159
2019............................................             922           1,384             115             173
2020............................................           1,015           1,522             126             188
2021............................................           1,116           1,674             137             205
                                                 ---------------------------------------------------------------

[[Page 34552]]

 
    Total.......................................           4,654           6,981             581             871
----------------------------------------------------------------------------------------------------------------
Note: Values may not sum to total due to rounding.

    Absent this rule, there would be 4,654 new individual licenses and 
581 new corporate licenses issued for a total of 5,235 licenses (see 
Exhibit 1). Using the aforementioned ratio of district permits to 
customs broker permit holders of 1.5 district permits to 1 customs 
broker permit holder, these 5,235 broker licenses would result in 7,853 
district permits. According to CBP's Broker Management Branch, in 
addition to the 7,853 district permits that would be granted over the 
period of analysis, approximately 150 national permits are issued 
annually. This means that over the period of analysis from 2017 through 
2021, 750 national permits will be granted to customs brokers in 
addition to the 7,853 district permits for a total of 8,603 permits. 
Absent this rule, these 8,603 permits would result in permit user fee 
charges of $1,219,045 (8,603 total permits * $141.70 annual permit user 
fee) over the period of the analysis. With this rule in place, the 
5,235 total brokers would only receive a single national permit each 
for a total of 5,235 permits. This would result in permit user fee 
charges over the period of analysis of $741,800 (5,235 national permits 
* $141.70 annual permit user fee). This represents total savings to new 
customs brokers of $477,245 ($1,219,045 - $741,800) over the period of 
analysis. Please see Exhibit 2, below, for the estimated annual cost 
savings.

                        Exhibit 2--Cost Savings From the Permit User Fee for New Licenses
                                                     [$2016]
----------------------------------------------------------------------------------------------------------------
                                                                                                   Savings as a
              Year                 New licenses    New district    New national    Total permits  result of this
                                      issued          permits         permits                      proposed rule
----------------------------------------------------------------------------------------------------------------
2017............................             859           1,289             150           1,439         $82,186
2018............................             945           1,418             150           1,568          88,279
2019............................           1,037           1,556             150           1,706          94,797
2020............................           1,141           1,712             150           1,862         102,166
2021............................           1,253           1,880             150           2,030         110,101
                                 -------------------------------------------------------------------------------
    Total.......................           5,235           7,853             750           8,603         477,245
----------------------------------------------------------------------------------------------------------------
Note: Values may not sum to total due to rounding.

    Current brokers that have more than one permit will also benefit 
from this rule. According to CBP's Broker Management Branch, as of 
January 2017 there were 1,319 brokers that either have more than one 
district permit or a combination of at least one district permit and a 
national permit. These 1,319 brokers currently hold a total of 3,613 
permits which results in a ratio of 2.73 permits per broker (some of 
the existing brokers hold significantly more than the average of 1.5 
permits per customs broker permit holder). Absent this rule, these 
permits would result in an annual permit user fee charge in 2017 of 
$511,962 (3,613 permits * $141.70 annual permit user fee) or $2,559,810 
over the period of analysis from 2017 through 2021. As a result of this 
rule, the 1,319 brokers would only need to hold a single national 
permit for a total of 1,319 permits. This would result in an annual 
permit user fee charge in 2017 of $186,902 (1,319 national permits * 
$141.70 annual permit user fee) or $934,510 over the period of 
analysis. This represents an annual savings in 2017 of $325,060 
($511,962-$186,902) or $1,956,192 over the period of analysis to 
customs brokers who currently hold more than one permit. This also 
represents a decrease in the transfer payment from customs brokers to 
the government of $1,956,192 over the period of analysis from 2017 
through 2021. Please see Exhibit 3, below, for the estimated annual 
cost savings for existing license holders.
---------------------------------------------------------------------------

    \5\ A growth rate of 9.5 percent was used to project the number 
of existing licenses over the period of analysis. The 9.5 percent 
figure is the average of the ten (10) percent calculated average 
growth rate for individual licenses and the nine (9) percent 
calculated average growth rate for corporate licenses that was used 
in the analysis.

                             Exhibit 3--Cost Savings From the Permit User Fee for Existing Licenses Over Period of Analysis
                                                                         [$2016]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                            Annual cost
                                                             Existing        Number of       Number of      Cost absent   Cost with rule   savings over
                          Year                             licenses \5\   permits absent   permits with      rule  ($)          ($)          period of
                                                                               rule            rule                                        analysis  ($)
--------------------------------------------------------------------------------------------------------------------------------------------------------
2017....................................................           1,319           3,613           1,319         511,962         186,902         325,060
2018....................................................           1,444           3,943           1,444         558,716         204,658         354,058
2019....................................................           1,582           4,318           1,582         611,794         224,101         387,694

[[Page 34553]]

 
2020....................................................           1,732           4,728           1,732         669,915         245,390         424,525
2021....................................................           1,896           5,177           1,896         733,557         268,702         464,855
                                                         -----------------------------------------------------------------------------------------------
    Total...............................................  ..............  ..............  ..............       3,085,945       1,129,753       1,956,192
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: Values may not sum to total due to rounding.

3.2 Total Costs

    The elimination of the annual user fee for district permits does 
not result in any costs to brokers, but as noted above the rule yields 
the aforementioned cost savings.

3.3 Total Benefits

    The total annual monetized cost savings for customs brokers are the 
result of monetary savings from switching from a district permitting 
system to a national permitting system. Specifically, the cost savings 
are the result of the payment of the annual permit user fee for only a 
single national permit instead of for each of the potentially several 
district permits a broker holds. As shown in Exhibit 4 below, total 
savings over the period of analysis are approximately $2.4 million 
dollars.

 Exhibit 4--Total Annual Undiscounted Savings for Brokers ($2016), 2017-
                                  2021
------------------------------------------------------------------------
                          Year                             Total savings
------------------------------------------------------------------------
2017....................................................        $407,246
2018....................................................         442,337
2019....................................................         482,491
2020....................................................         526,691
2021....................................................         574,956
                                                         ---------------
  Total.................................................       2,433,721
------------------------------------------------------------------------
Note: Values may not sum to total due to rounding.

    Exhibit 5 shows the total and annualized savings over the period of 
analysis (2017-2021) at a three (3) and seven (7) percent discount 
rate, per guidance provided in OMB Circular A-4. Total benefits range 
from approximately $2.1 to $2.3 million over the period of analysis. 
Annualized benefits are approximately $480,000.

 Exhibit 5--Total Present Value and Annualized Benefits, From 2017-2021
                                 [$2016]
------------------------------------------------------------------------
 Total present value benefits             Annualized benefits
------------------------------------------------------------------------
         3%              7%             3%                    7%
------------------------------------------------------------------------
       $2,284,331     $2,110,           $484,266             $481,089
                      639
------------------------------------------------------------------------

3.4 Net Benefits

    Exhibit 6 summarizes the monetized costs and benefits of this rule 
to individual and business entity customs brokers. As shown, the total 
monetized present value net benefit of this rule over a 5-year period 
of analysis from 2017-2021 ranges from approximately $2.3 to $2.4 
million and the annualized net benefit is approximately $500,000. In 
2017, we estimate that 859 brokers will receive their broker licenses 
(762 individual licenses plus 97 corporate licenses). The adoption of 
this rule will result in an average annual net benefit per broker in 
2017 of $560 ($481,089 annualized net benefit/859 total new brokers for 
2017).

                 Exhibit 6--Present Value and Annualized Net Benefit of Rule ($2016), 2017-2021
----------------------------------------------------------------------------------------------------------------
                                                         3% Discount rate                7% Discount rate
                                                ----------------------------------------------------------------
                                                  Present value     Annualized     Present value    Annualized
----------------------------------------------------------------------------------------------------------------
Total Cost.....................................              $0              $0               $0              $0
Total Benefit..................................       2,284,331         484,266        2,110,639         481,089
Total Net Benefit..............................       2,284,331         484,266        2,110,639         481,089
----------------------------------------------------------------------------------------------------------------

4. Regulatory Flexibility Act

    The Regulatory Flexibility Act (5 U.S.C. 601 et seq.), as amended 
by the Small Business Regulatory Enforcement and Fairness Act of 1996, 
requires agencies to assess the impact of regulations on small 
entities. A small entity may be a small business (defined as any 
independently owned and operated business not dominant in its field 
that qualifies as a small business per the Small Business Act); a small 
not-for-profit organization; or a small

[[Page 34554]]

governmental jurisdiction (locality with fewer than 50,000 people).
    The proposed rule will apply to all customs brokers, regardless of 
size. Accordingly, the proposed rule will affect a substantial number 
of small entities. However, as stated above in the Executive Orders 
13563, 12866, and 13771 section, the proposed rule will result in an 
average savings per customs broker of a discounted present value of 
$560. Since brokers, on average, will benefit as a result of this rule, 
and the savings are relatively small on a per broker basis, it will not 
have a significant impact on customs brokers. Accordingly, CBP 
certifies that this rule does not have a significant impact on a 
substantial number of small entities.

5. Paperwork Reduction Act

    In accordance with the Paperwork Reduction Act of 1995 (Pub. L. 
104-13, 44 U.S.C. 3507) an agency may not conduct, and a person is not 
required to respond to, a collection of information unless the 
collection of information displays a valid control number assigned by 
OMB. The collections of information contained in these regulations are 
provided for by OMB control number 1651-0034 (CBP Regulations 
Pertaining to Customs Brokers) and by OMB control number 1651-0076 
(Recordkeeping Requirements). This rule does not change the burden 
under these information collections.

Signing Authority

    This regulation is being issued in accordance with 19 CFR 0.1(a)(1) 
pertaining to the Secretary of the Treasury's authority (or that of his 
delegate) to approve regulations related to certain customs revenue 
functions.

List of Subjects

19 CFR Part 24

    Accounting, Claims, Customs duties and inspection, Harbors, 
Reporting and recordkeeping requirements, Taxes.

19 CFR Part 111

    Administrative practice and procedure, Brokers, Customs duties and 
inspection, Penalties, Reporting and recordkeeping requirements.

Proposed Amendments to the CBP Regulations

    For the reasons set forth in the preamble, parts 24 and 111 of 
title 19 of the Code of Federal Regulations (19 CFR parts 24 and 111) 
are proposed to be amended as set forth below.

PART 24--CUSTOMS FINANCIAL AND ACCOUNTING PROCEDURE

0
1. The general authority citation for part 24 continues to read as 
follows:

    Authority:  5 U.S.C. 301; 19 U.S.C. 58a-58c, 66, 1202 (General 
Note 3(i), Harmonized Tariff Schedule of the United States), 1505, 
1520, 1624; 26 U.S.C. 4461, 4462; 31 U.S.C. 3717, 9701; Pub. L. 107-
296, 116 Stat. 2135 (6 U.S.C. 1 et seq.).
* * * * *


Sec.  24.22  [Amended]

0
2. In Sec.  24.22:
0
a. Paragraph (h) is amended by:
0
i. Removing the phrase ``each district permit and for'' in the first 
sentence;
0
ii. Removing the second sentence; and
0
iii. Removing the word ``port'' from the third sentence and adding in 
its place the words ``designated Center''; and
0
b. Paragraph (i)(9) is amended by removing the phrase ``: for district 
permits, class code 497;'' from the first sentence.

PART 111--CUSTOMS BROKERS

0
3. The authority citation for part 111 is revised to read as follows:

    Authority:  19 U.S.C. 66, 1202 (General Note 3(i), Harmonized 
Tariff Schedule of the United States), 1624; 1641.
    Section 111.2 also issued under 19 U.S.C. 1484, 1498;
    Section 111.96 also issued under 19 U.S.C. 58c, 31 U.S.C. 9701.

0
4. In Sec.  111.19, revise the section heading and paragraph (c) to 
read as follows:


Sec.  111.19  National permit.

* * * * *
    (c) Fees. A national permit issued under paragraph (a) of this 
section is subject to the permit application fee specified in Sec.  
111.96(b) and to the customs user permit fee specified in


Sec.  111.96  (c). The fees must be paid at the designated Center (see 
Sec.  111.1) or online with the submission of the permit application.

* * * * *
0
5. In Sec.  111.96, paragraph (c) is revised to read as follows:


Sec.  111.96  Fees.

* * * * *
    (c) Permit user fee. Payment of an annual permit user fee defined 
in Sec.  24.22(h) of this chapter is required for a national permit 
granted to an individual, partnership, association, or corporate 
broker. The permit user fee is payable with the filing of an 
application for a national permit under Sec.  111.19(b), and for each 
subsequent calendar year at the designated Center referred to in Sec.  
111.19(b). The permit user fee must be paid by the due date as 
published annually in the Federal Register, and must be remitted in 
accordance with the procedures set forth in Sec.  24.22(i) of this 
chapter. When a broker submits an application for a national permit 
under Sec.  111.19(b), the full permit user fee must be remitted with 
the application, regardless of the point during the calendar year at 
which the application is submitted. If a broker fails to pay the annual 
permit user fee by the published due date, the permit is revoked by 
operation of law. The director of the designated Center will notify the 
broker in writing of the failure to pay and the revocation of the 
permit.
* * * * *

    Approved: March 3, 2020.
Timothy E. Skud,
Deputy Assistant Secretary, Department of the Treasury.
Mark A. Morgan,
Acting Commissioner, U.S. Customs and Border Protection.
[FR Doc. 2020-04708 Filed 6-4-20; 8:45 am]
BILLING CODE 9111-14-P