Elimination of Customs Broker District Permit Fee, 63262-63267 [2022-22151]
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Federal Register / Vol. 87, No. 200 / Tuesday, October 18, 2022 / Rules and Regulations
DEPARTMENT OF HOMELAND
SECURITY
U.S. Customs and Border Protection
DEPARTMENT OF THE TREASURY
19 CFR Parts 24 and 111
[USCBP–2020–0010; CBP Dec. 22–22]
RIN 1515–AE43
Elimination of Customs Broker District
Permit Fee
U.S. Customs and Border
Protection, Department of Homeland
Security; Department of the Treasury.
ACTION: Final rule.
AGENCY:
This document amends the
U.S. Customs and Border Protection
(CBP) regulations to eliminate customs
broker district permit fees. Concurrently
with this final rule, CBP is publishing
a final rule to, among other things,
eliminate customs broker districts (see
‘‘Modernization of the Customs Broker
Regulations’’ RIN 1651–AB16).
Specifically, CBP is transitioning all
brokers to national permits and
expanding 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.
As a result of the elimination of customs
broker districts, CBP is amending in this
document the regulations to eliminate
customs broker district permit fees.
DATES: Effective December 19, 2022.
FOR FURTHER INFORMATION CONTACT:
Melba Hubbard, Chief, Broker
Management Branch, (202) 863–6986,
melba.hubbard@cbp.dhs.gov.
SUPPLEMENTARY INFORMATION:
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SUMMARY:
I. 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
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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 existing
customs broker 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.
On June 5, 2020, U.S. Customs and
Border Protection (CBP) published a
notice of proposed rulemaking (NPRM)
in the Federal Register (85 FR 34549),
proposing the elimination of customs
broker district permit fees in parts 24
and 111. The NPRM solicited public
comments on the proposed rulemaking,
with a 60-day comment period, which
closed on August 4, 2020. No comments
were received in response to this NPRM.
In a concurrent NPRM, published
elsewhere in the same issue of the
Federal Register (see ‘‘Modernization of
the Customs Broker Regulations’’ RIN
1651–AB16)(85 FR 34836)), CBP
proposed to amend its regulations by
modernizing the customs broker
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 proposed to transition
all brokers to national permits and
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 proposed to
eliminate broker districts and district
permits, which would also eliminate the
need for district permit waivers and the
requirement for brokers to maintain
district offices. CBP received 55 public
comments during the 60-day solicitation
period and addressed those comments
in a concurrent final rule document,
published elsewhere in this issue of the
Federal Register (see ‘‘Modernization of
the Customs Broker Regulations’’ RIN
1651–AB16)(hereinafter, referred to as
the ‘‘concurrent final rule document’’).
II. Discussion of Regulatory Changes to
Parts 24 and 111
Part 24
Part 24 of title 19 of the CFR (19 CFR
part 24) sets forth regulations
concerning customs financial and
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accounting procedures. Section 24.22
describes the customs Consolidated
Omnibus Budget Reconciliation Act
(COBRA) user fees and corresponding
limitations for certain services.
Specifically, paragraph (h) of § 24.22
deals with the annual customs broker
permit user fee. In this final rule, CBP
has eliminated in §§ 24.22(h) and (i)(9),
references to the customs broker district
permit user fee, conforming with
amendments in the concurrent final rule
document, which eliminates broker
districts and district permits.
In the concurrent NPRM, CBP had
proposed to add a new definition in
§ 111.1 for a ‘‘Designated Center’’,
which was defined as the Center
through which an individual,
partnership, association, or corporation
submits an application for a broker’s
license, or as otherwise designated by
CBP for already-licensed brokers. After
further consideration of how CBP will
be processing broker matters and taking
into account the public comments
received with regard to the proposed
definition, CBP has determined in the
concurrent final rule document to
modify the proposed definition to better
align with current and future processes
regarding brokers.
CBP has concluded that a definition
of ‘‘Processing Center’’ much better
reflects how CBP will manage broker
applications and broker submissions.1
As described in the concurrent final rule
document, the term ‘‘Processing Center’’
means the broker management
operations of a Center that processes
applications for licenses under
§ 111.12(a) and permits under
§ 111.19(b), as well as submissions by
already-licensed brokers required in
part 111. The applications and
submissions will be managed by Center
personnel, who are broker management
officers (BMOs) in 41 port locations
throughout the U.S. customs territory.2
Current brokers will continue to submit
any submissions to a location where the
broker license was issued, and any new
applicants for a license or permit should
choose a location where the applicant
intends to reside and or conduct
customs business. Thus, CBP changed
the proposed language in § 24.22(h)
from ‘‘designated Center’’ to ‘‘processing
1 In this document, CBP uses ‘‘Processing Center’’
in quotes to denote a replacement of the proposed
term ‘‘Designated Center’’; when the words
‘‘processing Center’’ without quotation marks are
used, CBP is referring to the Center of Excellence
and Expertise that is actually performing a
processing function.
2 A chart of all 41 BMO locations can be found
online on CBP’s website at https://www.cbp.gov/
trade/programs-administration/customs-brokers, by
clicking on the tab titled ‘‘Broker Management
Officer (BMO) Contact Information.’’
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Center (see § 111.1)’’, adding a reference
as to where the definition for processing
Center may be found.
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.
Specifically, paragraph (c) describes
permit fees. As CBP is eliminating
district permits in the concurrent final
rule document, this document makes
conforming amendments to § 111.19 by
eliminating fees for district permits. In
addition, CBP has removed the specific
permit application and permit user fee
amounts and replaced the numerical
figures with a reference to the relevant
fee provision in § 111.96(b) and (c). CBP
changed the proposed term ‘‘designated
Center’’ to ‘‘processing Center’’, as
explained above, in § 111.19(c), and
revised the second half of the second
sentence of paragraph (c) to replace the
reference to ‘‘online’’ submission of the
fee payment with a reference to the use
of a CBP-authorized EDI system. This
last change was made to conform
references to electronic submissions
throughout part 111. In addition, CBP
re-phrased the last part of the sentence
in paragraph (c), without changing the
meaning, to state that the fee needs to
be submitted at the time the permit
application is submitted. The changes to
§ 111.96(b) can be found in the
concurrent final rule document.
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Elimination of District Permit Fees
Section 111.96 describes fees required
throughout part 111. Paragraph (c) of
§ 111.96 describes the permit user fee.
To reflect the elimination of broker
districts and district permits, CBP has
eliminated the customs broker district
permit user fee, and specified that the
user fee is applicable for national
permits only, issued under § 111.19(a).
As discussed in the concurrent final
rule document, CBP published an
interim final rule that transferred certain
trade functions from the port director to
the Center director (see 81 FR 92978,
December 20, 2016). Similarly, certain
broker management functions
previously performed by the port
directors are transferred to the
processing Centers as part of this final
rule. CBP has revised the last sentence
of § 111.96(c) by splitting it into two
sentences, with the second sentence
providing that the processing Center
will notify the broker in writing of the
failure to pay and the revocation of the
permit. For the reasons explained above,
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CBP replaced the proposed term
‘‘designated Center’’ in § 111.96(c) with
the term ‘‘processing Center’’. CBP also
removed the reference to ‘‘director’’ to
clarify that submissions must be made
to the broker management operations of
a Center, meaning to one of the BMO
locations throughout the U.S. customs
territory. As not only Center directors
will be handling broker matters, but any
BMO, depending on where the broker
license was issued, CBP determined that
the removal of the reference to
‘‘director’’ was more appropriate.
III. Other Conforming Amendments
The authority for part 111 currently
provides a specific authority citation for
§ 111.3. When the text of § 111.3 was
transferred to § 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
has corrected this oversight in this final
rule document by adding a specific
authority citation for § 111.2, and by
removing the specific authority citation
for § 111.3. An identical amendment is
made in the concurrent final rule
document.
IV. Conclusion
Upon further consideration, CBP has
decided to adopt, with changes as
described above, as final the proposed
regulations published in the Federal
Register (85 FR 34549) on June 5, 2020.
V. Executive Orders 13563 and 12866
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.
As mentioned above, on June 5, 2020,
CBP published in the Federal Register
an NPRM titled, ‘‘Elimination of
Customs Broker District Permit Fee,’’
and received no comments from the
public. Therefore, CBP adopts the
regulatory amendments specified in the
NPRM, with the addition of a change to
the proposed term ‘‘Designated Center.’’
‘‘Designated Center’’ will be replaced
with ‘‘Processing Center,’’ in accordance
with the same change made in the
concurrent final rule document, as
explained above, as well as additional
minor changes for consistency purposes.
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63263
With the adoption of the proposed
regulatory amendments, CBP applies the
2020 proposed rule’s economic analysis
approach to this final rule, updating the
data as necessary.
This final rule is not a ‘‘significant
regulatory action,’’ under section 3(f) of
Executive Order 12866. Accordingly,
the Office of Management and Budget
(OMB) has not reviewed this regulation.
CBP has prepared the following analysis
to help inform stakeholders of the
impacts of this final rule.
1. Need and Purpose of the Final Rule
Current customs broker regulations
are based on the district system in
which entry, entry summary, and postsummary activity are all handled by the
ports within a permit district. In the
concurrent final rule document, CBP is
modernizing the regulations governing
customs brokers to better reflect the
current work environment and
streamline the customs broker
permitting process to save money.
Under the terms of the concurrent final
rule document, CBP is transitioning all
brokers to national permits and
expanding 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 is eliminating the requirement for
brokers to maintain district permits and
pay the annual user fee. Therefore, this
final rule eliminates customs broker
district permit annual user fees. CBP has
prepared the following analysis to help
inform stakeholders of the impacts of
this final rule.
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.3 Under
the baseline, or the world as it was
without this final rule, a district permit
was required for each district in which
a customs broker intended to conduct
customs business. Brokers could apply
for district permits either concurrently
with their licenses or later on in their
careers. Brokers who hold at least one
3 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 final rule.
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district permit also had the option to
hold a national permit, which allows a
broker to operate throughout the
customs territory of the United States.4
The concurrent final rule document
eliminates the district permitting
process and automatically grants a
national permit to each district permit
holder who does not already hold a
national permit. Going forward, licensed
brokers have the option to apply for a
single national permit either
concurrently with their licenses or later
in their careers. With this final rule in
place, district permit user fees are
eliminated, and brokers continue to pay
permit fees only for national permits.
Each district or national permit requires
a one-time permit fee of $100 and an
annual user fee.5 The annual user fee is
$153.19 for calendar year 2022, but is
adjusted for inflation each year.6 Given
the uncertainty of future inflation, for
the purposes of this analysis, we use
this fee amount for the full period of
analysis.
The number of new permits issued
each year depends, in part, on the
number of new licenses issued. CBP
issues both individual broker licenses as
well as corporate licenses, which may
be held by partnerships, associations, or
corporations.7 The number of licenses
issued has been declining for the last
several years at a rate of one percent for
corporate licenses and four percent for
individual licenses (see Table 1).
Additionally, not all licensed brokers
choose to apply for a permit. Although
virtually all corporate license holders do
hold a permit, many individual brokers
work under the auspices of a corporate
permit and never hold their own permit.
Based on data from CBP’s Broker
Management Branch (BMB),
approximately 13.5 percent of
individual brokers hold a district
permit.8
TABLE 1—LICENSING HISTORY
Total
licenses issued
Year
2016
2017
2018
2019
2020
2021
...........................................................................................................................
...........................................................................................................................
...........................................................................................................................
...........................................................................................................................
...........................................................................................................................
...........................................................................................................................
3. Benefits
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Brokers must pay an annual permit
user fee for each permit held. The
permit user fee is payable for each
district permit and national permit a
customs broker holds, including when a
district permit is issued concurrently
with the broker’s license. As a result of
the concurrent final rule document,
district permits are eliminated and
customs brokers only need to pay an
annual user fee for a single national
permit.9 Therefore, the savings accrued
to brokers and CBP as a result of many
fewer user fees paid qualifies as a
benefit and not as a transfer payment
because CBP is eliminating the district
4 When first introduced in 2000, the national
permit was restricted to certain activities, allowing
a broker to place an employee in the facility of a
client for whom the broker is conducting customs
business; file electronic drawback claims;
participate in remote location filing; and make
representations after the entry summary has been
accepted. Since the national permit was introduced,
and with the full implementation of ACE,
restrictions have been gradually eliminated such
that only some activities requiring physical
presence at the port require a district permit in lieu
of a national permit. Those restrictions will be lifted
with the concurrent final rule document in place.
5 If a broker chooses to receive a permit with the
license, then the $100 permit fee is waived. Under
the new national permitting system, brokers
receiving a national permit will pay the $100 permit
fee regardless of when they do so.
6 The annual user fee payable for calendar year
2022 is $153.19 (86 FR 66573). It will be adjusted
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Corporate
licenses issued
653
580
558
464
187
496
21
16
27
15
7
31
Individual
licenses issued
632
564
531
449
180
465
permits themselves, as well as the work
that goes along with processing and
issuing them.10
Under the baseline, both brokers
holding existing permits and brokers
issued new permits must pay the annual
user fee for each permit held. As of
January 2022, there were 15,226 active,
licensed customs brokers.11 2,365
brokers hold at least one district
permit.12 Of those, 1,914 brokers hold a
national permit in addition to their
district permit(s). The 2,365 brokers
who hold at least one district permit
hold a total of 3,345 district permits, for
an average of 1.4 district permits per
permitted broker.
Based on recent licensing history,
CBP projects that over the period of
analysis from 2022–2026, 2,072 new
individual licenses and 75 new
corporate licenses will be issued.13 As
stated above, 13.5 percent of individual
brokers and 100 percent of corporate
brokers hold at least one district permit.
Under the baseline, an average of 1.4
district permits held by each broker
results in 396 new individual permits
and 105 new corporate permits, for a
total of 501 permits. See Table 2 for a
summary of licensing and permitting
over the period of analysis under
baseline conditions.
for inflation each year. Sections 24.22 and 24.23 of
title 19 CFR provide for and describe the
procedures that implement the requirements of the
Fixing America’s Surface Transportation Act (FAST
Act) (Pub. L. 114–94, December 4, 2015), which
amended section 13031 of the Consolidated
Omnibus Budget Reconciliation Act (COBRA),
requiring the Secretary of the Treasury to adjust
certain customs COBRA user fees and
corresponding limitations to reflect certain
increases in inflation. Specifically, section 24.22(k)
sets forth the methodology to determine the change
in inflation as well as the factor by which the fees
and limitations will be adjusted, if necessary.
7 19 U.S.C. 1641(b)(3). For any corporate license,
at least one member of the organization must hold
an individual license.
8 Data pulled from ACE on May 10, 2021 and
March 31, 2022.
9 The reduction of the fee revenue will result in
fewer 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.
10 As described in OMB Circular A–4, transfer
payments occur when ‘‘. . . monetary payments
from one group [are made] to another [group] that
do not affect total resources available to society.’’
11 Data supplied by BMB on May 10, 2021 and
March 31, 2022. Data is pulled from ACE. The
12,861 brokers who do not hold any permits are
unaffected by this final rule.
12 This figure represents all current licensed
brokers that are permit holders, regardless of what
year they received their license.
13 The COVID–19 pandemic and the resulting
delays and closures resulted in anomalous data for
2020 for corporate licenses. Therefore, CBP
removed 2020 from the projection, and used data
from 2015–2019 instead to project over the period
of analysis from 2022–2026.
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TABLE 2—PROJECTION OF LICENSING AND PERMITTING UNDER BASELINE CONDITIONS
New
individual
licenses
Year
2022
2023
2024
2025
2026
New
individual
ermits
New corporate
licenses issued
New corporate
permits
Total
permits
...............................................................................................
...............................................................................................
...............................................................................................
...............................................................................................
...............................................................................................
447
430
414
398
383
86
82
79
76
73
15
15
15
15
15
21
21
21
21
21
107
103
100
97
94
Total ........................................................................................
2,072
396
75
105
501
* Totals
may not sum due to rounding.
Therefore, CBP will issue 355 new
permits over the period of analysis (see
Table 3). Because CBP is eliminating the
district permit system, these 355
With the concurrent final rule
document in place, newly licensed
brokers choosing to hold a permit
require only a single national permit.
permits will be issued as national
permits even though, under baseline
conditions, they would have been
district permits.
TABLE 3—PROJECTION OF PERMITS UNDER THE FINAL RULE
New
individual
licenses
Year
2022
2023
2024
2025
2026
New corporate
permits
Total new
national
permits
...........................................................................................................................
...........................................................................................................................
...........................................................................................................................
...........................................................................................................................
...........................................................................................................................
447
430
414
398
383
60
58
56
54
52
15
15
15
15
15
75
73
71
69
67
Total ....................................................................................................................
2,072
280
75
355
* Totals
may not sum due to rounding.
With the final rule in place, brokers
currently holding only district permits
or holding a national permit in addition
to their district permit(s) continue to
pay the annual user fee for a single
national permit.14 As of January 2021, 9
brokers each hold more than one district
permit and do not hold a national
permit.15 Altogether, those brokers hold
18 district permits, for an average of 2
permits each. With the final rule in
place, those brokers each pay for a
single national permit instead of paying
for the 18 district permits they currently
collectively hold. Furthermore, there are
1,914 brokers holding at least one
district permit and one national permit.
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New
individual
permits
14 As stated above, those brokers only holding
district permits will be automatically granted a
national permit under the terms of the concurrent
final rule document.
15 Brokers who hold a single district permit will
have that district permit transitioned to a national
permit and will continue to pay the same amount
in user fees. Therefore, they are financially
unaffected by the final rule.
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Those brokers hold a total of 2,880
district permits. With the final rule in
place, these brokers only need to pay
the user fee for their national permits
and will no longer pay fees for their
2,880 district permits. Overall, brokers
holding permits at the start of the period
of analysis will no longer need to pay
for 2,889 permits.16
Combining both existing and
projected permits, over the period of
analysis brokers who hold permits will
pay the user fee for 364 permits under
the terms of the final rule. This includes
355 new national permits issued during
the period of analysis in place of 396
new district permits (see Tables 2 and
3 above). An additional 9 existing
district permits held by brokers only
holding district permits under the
baseline will be transitioned to national
permits. Those 9 brokers will no longer
16 This includes the 9 permits forgone by brokers
holding only more than one district permit and the
2,880 district permits held by brokers holding both
district and national permits.
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pay for the 9 additional district permits
currently held, which will be
eliminated. Finally, 1,914 brokers who
hold a national permit and at least one
district permit under the baseline will
only continue paying for their national
permits and will no longer pay for 2,880
district permits. Overall, brokers will no
longer pay for 3,035 district permits
over the period of analysis. With a 2022
user fee of $153.19 per permit, brokers
will save $2,281,330 from 2022–2026.
See Table 4 for a summary of these
savings.
17 Under the baseline, these permits would be
issued as district permits. Under the final rule, they
will be issued as national permits.
18 For the first three columns, the total number of
permits is additive throughout the period of
analysis instead of at the end of the period (that is,
all permits issued in 2021 must also be paid for in
2022, 2023, 2024, and 2025 in addition to new
permits issued in those years) so the total is equal
to the number of permits existing in the final year.
The total savings are calculated by summing the
savings in each year.
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TABLE 4—TOTAL SAVINGS [2022 U.S. DOLLARS]
Total district
permits
under the
baseline
Year
2022
2023
2024
2025
2026
District permits
no longer
paid for
Total permits
under the
final rule17
Savings
.................................................................................................
.................................................................................................
.................................................................................................
.................................................................................................
.................................................................................................
3,005
3,108
3,208
3,305
3,399
84
158
229
298
364
2,921
2,950
2,979
3,007
3,035
$447,393
$451,959
$456,398
$460,709
$464,871
Total18 .......................................................................................
3,399
364
3,035
$2,281,330
4. Costs
5. Net Benefits
The elimination of the annual user fee
for district permits does not result in
any costs to brokers, but as noted above,
this final rule yields the aforementioned
savings.
The total annual monetized savings
for customs brokers results from
switching from a district permitting
system to a national permitting system.
Specifically, brokers will only pay the
annual permit user fee for a single
national permit instead of for each of
the potentially several district permits
held. As shown in Table 5 below, total
savings over the period of analysis are
approximately $2.3 million dollars.
TABLE 5—TOTAL ANNUAL UNDISCOUNTED SAVINGS FOR BROKERS FROM 2022–2026
[2022 U.S. dollars]
Year
2022
2023
2024
2025
2026
Total savings
.....................................................................................................................................................................................................
.....................................................................................................................................................................................................
.....................................................................................................................................................................................................
.....................................................................................................................................................................................................
.....................................................................................................................................................................................................
$447,393
451,959
456,398
460,709
464,871
Total ..............................................................................................................................................................................................
2,281,330
Note: Values may not sum to total due to rounding.
Table 6 summarizes the monetized
costs and benefits of this final rule to
individual and corporate customs
brokers. As shown, the total monetized
present value net benefit of this final
rule over a five-year period of analysis
from 2022–2026 ranges from
approximately $1.9 to $2 million and
the annualized net benefit is
approximately $456,000. In 2022, we
estimate that 462 brokers will receive
their broker licenses (447 individual
licenses plus 15 corporate licenses). The
adoption of this final rule will result in
an average annual net benefit per broker
in 2022 of $987 ($456,000 annualized
net benefit/462 total new brokers for
2022).
TABLE 6—PRESENT VALUE AND ANNUALIZED NET BENEFIT OF FINAL RULE
3% Discount rate
Present value
Total Cost ....................................................................................................
Total Benefit ................................................................................................
Total Net Benefit .........................................................................................
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VI. 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 notfor-profit organization; or a small
VerDate Sep<11>2014
18:04 Oct 17, 2022
Jkt 259001
$0
2,027,555
2,027,555
governmental jurisdiction (locality with
fewer than 50,000 people).
The final rule will apply to all
customs brokers, regardless of size.
Accordingly, the final rule will affect a
substantial number of small entities.
However, as stated above in section V.5
‘‘Net Benefits,’’ the final rule will result
in an average annualized savings per
customs broker of $987. Since brokers,
on average, will benefit as a result of
this final rule, and the savings are
relatively small on a per broker basis, it
will not have a significant impact on
PO 00000
Frm 00006
Fmt 4701
Sfmt 4700
7% Discount rate
Annualized
$0
456,008
456,008
Present value
$0
1,868,359
1,868,359
Annualized
$0
455,675
455,675
customs brokers. Accordingly, CBP
certifies that this final rule does not
have a significant impact on a
substantial number of small entities.
VII. 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
E:\FR\FM\18OCR2.SGM
18OCR2
Federal Register / Vol. 87, No. 200 / Tuesday, October 18, 2022 / Rules and Regulations
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 final 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 her or
his delegate) to approve regulations
related to certain customs revenue
functions.
Chris Magnus, the Commissioner of
CBP, having reviewed and approved
this document, is delegating the
authority to electronically sign this
document to Robert F. Altneu, who is
the Director of the Regulations and
Disclosure Law Division for CBP, for
purposes of publication in the Federal
Register.
19 CFR Part 24
Accounting, Claims, Exports, Freight,
Harbors, Reporting and recordkeeping
requirements, Taxes.
19 CFR Part 111
Administrative practice and
procedure, Brokers, Penalties, Reporting
and recordkeeping requirements.
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 amended as set
forth below.
PART 24—CUSTOMS FINANCIAL AND
ACCOUNTING PROCEDURE
1. The general and specific authority
citations for part 24 continue 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.).
khammond on DSKJM1Z7X2PROD with RULES2
*
*
*
*
Section 24.22 also issued under Sec. 892,
Pub. L. 108–357, 118 Stat. 1418 (19 U.S.C.
58c); Sec. 32201, Pub. L. 114–94, 129 Stat.
1312 (19 U.S.C. 58c); Pub. L. 115–271, 132
Stat. 3895 (19 U.S.C. 58c).
§ 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;
■
■
■
VerDate Sep<11>2014
PART 111—CUSTOMS BROKERS
3. The general and specific authority
citations for part 111 are 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.
4. In § 111.19, revise the section
heading and paragraph (c) to read as
follows:
■
§ 111.19
National permit.
*
List of Subjects
*
ii. Removing the second sentence; and
iii. Removing the word ‘‘port’’ from
the third sentence and adding in its
place the words ‘‘processing Center (see
§ 111.1)’’; and
■ b. Paragraph (i)(9) is amended by
removing the phrase ‘‘for district
permits, class code 497;’’ from the first
sentence.
■
■
18:04 Oct 17, 2022
Jkt 259001
*
*
*
*
(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
processing Center (see § 111.1) or
through a CBP-authorized EDI system at
the time the permit application is
submitted.
*
*
*
*
*
■ 5. In § 111.96, revise paragraph (c) to
read as follows:
§ 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
the processing 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 processing Center
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63267
will notify the broker in writing of the
failure to pay and the revocation of the
permit.
*
*
*
*
*
Robert F. Altneu,
Director, Regulations & Disclosure Law
Division, Regulations & Rulings, Office of
Trade, U.S. Customs and Border Protection.
Approved:
Thomas C. West, Jr.,
Deputy Assistant Secretary of the Treasury
for Tax Policy.
[FR Doc. 2022–22151 Filed 10–17–22; 8:45 am]
BILLING CODE 9111–14–P
DEPARTMENT OF HOMELAND
SECURITY
U.S. Customs and Border Protection
DEPARTMENT OF THE TREASURY
19 CFR Parts 24 and 111
[USCBP–2020–0009;CBP Dec. 22–21]
RIN 1651–AB16
Modernization of the Customs Broker
Regulations
U.S. Customs and Border
Protection, Department of Homeland
Security, Department of the Treasury.
ACTION: Final rule.
AGENCY:
This document adopts as
final, with changes, proposed
amendments to the U.S. Customs and
Border Protection (CBP) regulations
modernizing the customs broker
regulations. CBP is transitioning all
customs brokers to a single national
permit and expanding 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 is eliminating
broker districts and district permits,
which in turn removes the need for the
maintenance of district offices, and
district permit waivers. CBP is also
updating, among other changes, the
responsible supervision and control
oversight framework, ensuring that
customs business is conducted within
the United States, and requiring that a
customs broker have direct
communication with an importer. These
changes are designed to enable customs
brokers to meet the challenges of the
modern operating environment while
maintaining a high level of service in
customs business. Further, CBP is
increasing fees for the broker license
application to recover some of the costs
associated with the review of customs
SUMMARY:
E:\FR\FM\18OCR2.SGM
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]]>Agencies
[Federal Register Volume 87, Number 200 (Tuesday, October 18, 2022)]
[Rules and Regulations]
[Pages 63262-63267]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-22151]
[[Page 63261]]
Vol. 87
Tuesday,
No. 200
October 18, 2022
Part IV
Department of Homeland Security
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U.S. Customs and Border Protection
Department of the Treasury
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19 CFR Parts 24 and 111
Elimination of Customs Broker District Permit Fee and Modernization of
the Customs Broker Regulations; Final Rules
Federal Register / Vol. 87 , No. 200 / Tuesday, October 18, 2022 /
Rules and Regulations
[[Page 63262]]
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DEPARTMENT OF HOMELAND SECURITY
U.S. Customs and Border Protection
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DEPARTMENT OF THE TREASURY
19 CFR Parts 24 and 111
[USCBP-2020-0010; CBP Dec. 22-22]
RIN 1515-AE43
Elimination of Customs Broker District Permit Fee
AGENCY: U.S. Customs and Border Protection, Department of Homeland
Security; Department of the Treasury.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: This document amends the U.S. Customs and Border Protection
(CBP) regulations to eliminate customs broker district permit fees.
Concurrently with this final rule, CBP is publishing a final rule to,
among other things, eliminate customs broker districts (see
``Modernization of the Customs Broker Regulations'' RIN 1651-AB16).
Specifically, CBP is transitioning all brokers to national permits and
expanding 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. As a result of the elimination
of customs broker districts, CBP is amending in this document the
regulations to eliminate customs broker district permit fees.
DATES: Effective December 19, 2022.
FOR FURTHER INFORMATION CONTACT: Melba Hubbard, Chief, Broker
Management Branch, (202) 863-6986, [email protected].
SUPPLEMENTARY INFORMATION:
I. 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 existing customs broker 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.
On June 5, 2020, U.S. Customs and Border Protection (CBP) published
a notice of proposed rulemaking (NPRM) in the Federal Register (85 FR
34549), proposing the elimination of customs broker district permit
fees in parts 24 and 111. The NPRM solicited public comments on the
proposed rulemaking, with a 60-day comment period, which closed on
August 4, 2020. No comments were received in response to this NPRM.
In a concurrent NPRM, published elsewhere in the same issue of the
Federal Register (see ``Modernization of the Customs Broker
Regulations'' RIN 1651-AB16)(85 FR 34836)), CBP proposed to amend its
regulations by modernizing the customs broker 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 proposed to transition all
brokers to national permits and 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 proposed to eliminate broker districts and
district permits, which would also eliminate the need for district
permit waivers and the requirement for brokers to maintain district
offices. CBP received 55 public comments during the 60-day solicitation
period and addressed those comments in a concurrent final rule
document, published elsewhere in this issue of the Federal Register
(see ``Modernization of the Customs Broker Regulations'' RIN 1651-
AB16)(hereinafter, referred to as the ``concurrent final rule
document'').
II. Discussion of Regulatory Changes to Parts 24 and 111
Part 24
Part 24 of title 19 of the CFR (19 CFR part 24) sets forth
regulations concerning customs financial and accounting procedures.
Section 24.22 describes the customs Consolidated Omnibus Budget
Reconciliation Act (COBRA) user fees and corresponding limitations for
certain services. Specifically, paragraph (h) of Sec. 24.22 deals with
the annual customs broker permit user fee. In this final rule, CBP has
eliminated in Sec. Sec. 24.22(h) and (i)(9), references to the customs
broker district permit user fee, conforming with amendments in the
concurrent final rule document, which eliminates broker districts and
district permits.
In the concurrent NPRM, CBP had proposed to add a new definition in
Sec. 111.1 for a ``Designated Center'', which was defined as the
Center through which an individual, partnership, association, or
corporation submits an application for a broker's license, or as
otherwise designated by CBP for already-licensed brokers. After further
consideration of how CBP will be processing broker matters and taking
into account the public comments received with regard to the proposed
definition, CBP has determined in the concurrent final rule document to
modify the proposed definition to better align with current and future
processes regarding brokers.
CBP has concluded that a definition of ``Processing Center'' much
better reflects how CBP will manage broker applications and broker
submissions.\1\ As described in the concurrent final rule document, the
term ``Processing Center'' means the broker management operations of a
Center that processes applications for licenses under Sec. 111.12(a)
and permits under Sec. 111.19(b), as well as submissions by already-
licensed brokers required in part 111. The applications and submissions
will be managed by Center personnel, who are broker management officers
(BMOs) in 41 port locations throughout the U.S. customs territory.\2\
Current brokers will continue to submit any submissions to a location
where the broker license was issued, and any new applicants for a
license or permit should choose a location where the applicant intends
to reside and or conduct customs business. Thus, CBP changed the
proposed language in Sec. 24.22(h) from ``designated Center'' to
``processing
[[Page 63263]]
Center (see Sec. 111.1)'', adding a reference as to where the
definition for processing Center may be found.
---------------------------------------------------------------------------
\1\ In this document, CBP uses ``Processing Center'' in quotes
to denote a replacement of the proposed term ``Designated Center'';
when the words ``processing Center'' without quotation marks are
used, CBP is referring to the Center of Excellence and Expertise
that is actually performing a processing function.
\2\ A chart of all 41 BMO locations can be found online on CBP's
website at https://www.cbp.gov/trade/programs-administration/customs-brokers, by clicking on the tab titled ``Broker Management
Officer (BMO) Contact Information.''
---------------------------------------------------------------------------
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. Specifically,
paragraph (c) describes permit fees. As CBP is eliminating district
permits in the concurrent final rule document, this document makes
conforming amendments to Sec. 111.19 by eliminating fees for district
permits. In addition, CBP has removed the specific permit application
and permit user fee amounts and replaced the numerical figures with a
reference to the relevant fee provision in Sec. 111.96(b) and (c). CBP
changed the proposed term ``designated Center'' to ``processing
Center'', as explained above, in Sec. 111.19(c), and revised the
second half of the second sentence of paragraph (c) to replace the
reference to ``online'' submission of the fee payment with a reference
to the use of a CBP-authorized EDI system. This last change was made to
conform references to electronic submissions throughout part 111. In
addition, CBP re-phrased the last part of the sentence in paragraph
(c), without changing the meaning, to state that the fee needs to be
submitted at the time the permit application is submitted. The changes
to Sec. 111.96(b) can be found in the concurrent final rule document.
Elimination of District Permit Fees
Section 111.96 describes fees required throughout part 111.
Paragraph (c) of Sec. 111.96 describes the permit user fee. To reflect
the elimination of broker districts and district permits, CBP has
eliminated the customs broker district permit user fee, and specified
that the user fee is applicable for national permits only, issued under
Sec. 111.19(a).
As discussed in the concurrent final rule document, CBP published
an interim final rule that transferred certain trade functions from the
port director to the Center director (see 81 FR 92978, December 20,
2016). Similarly, certain broker management functions previously
performed by the port directors are transferred to the processing
Centers as part of this final rule. CBP has revised the last sentence
of Sec. 111.96(c) by splitting it into two sentences, with the second
sentence providing that the processing Center will notify the broker in
writing of the failure to pay and the revocation of the permit. For the
reasons explained above, CBP replaced the proposed term ``designated
Center'' in Sec. 111.96(c) with the term ``processing Center''. CBP
also removed the reference to ``director'' to clarify that submissions
must be made to the broker management operations of a Center, meaning
to one of the BMO locations throughout the U.S. customs territory. As
not only Center directors will be handling broker matters, but any BMO,
depending on where the broker license was issued, CBP determined that
the removal of the reference to ``director'' was more appropriate.
III. Other Conforming Amendments
The authority for part 111 currently provides a specific authority
citation for Sec. 111.3. When the text of Sec. 111.3 was transferred
to Sec. 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 has corrected this oversight
in this final rule document by adding a specific authority citation for
Sec. 111.2, and by removing the specific authority citation for Sec.
111.3. An identical amendment is made in the concurrent final rule
document.
IV. Conclusion
Upon further consideration, CBP has decided to adopt, with changes
as described above, as final the proposed regulations published in the
Federal Register (85 FR 34549) on June 5, 2020.
V. Executive Orders 13563 and 12866
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.
As mentioned above, on June 5, 2020, CBP published in the Federal
Register an NPRM titled, ``Elimination of Customs Broker District
Permit Fee,'' and received no comments from the public. Therefore, CBP
adopts the regulatory amendments specified in the NPRM, with the
addition of a change to the proposed term ``Designated Center.''
``Designated Center'' will be replaced with ``Processing Center,'' in
accordance with the same change made in the concurrent final rule
document, as explained above, as well as additional minor changes for
consistency purposes. With the adoption of the proposed regulatory
amendments, CBP applies the 2020 proposed rule's economic analysis
approach to this final rule, updating the data as necessary.
This final rule is not a ``significant regulatory action,'' under
section 3(f) of Executive Order 12866. Accordingly, the Office of
Management and Budget (OMB) has not reviewed this regulation. CBP has
prepared the following analysis to help inform stakeholders of the
impacts of this final rule.
1. Need and Purpose of the Final Rule
Current customs broker 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 concurrent final
rule document, CBP is modernizing the regulations governing customs
brokers to better reflect the current work environment and streamline
the customs broker permitting process to save money. Under the terms of
the concurrent final rule document, CBP is transitioning all brokers to
national permits and expanding 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 is eliminating the
requirement for brokers to maintain district permits and pay the annual
user fee. Therefore, this final rule eliminates customs broker district
permit annual user fees. CBP has prepared the following analysis to
help inform stakeholders of the impacts of this final rule.
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.\3\ Under the baseline, or the world as it was
without this final rule, a district permit was required for each
district in which a customs broker intended to conduct customs
business. Brokers could apply for district permits either concurrently
with their licenses or later on in their careers. Brokers who hold at
least one
[[Page 63264]]
district permit also had the option to hold a national permit, which
allows a broker to operate throughout the customs territory of the
United States.\4\
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\3\ 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 final rule.
\4\ When first introduced in 2000, the national permit was
restricted to certain activities, allowing a broker to place an
employee in the facility of a client for whom the broker is
conducting customs business; file electronic drawback claims;
participate in remote location filing; and make representations
after the entry summary has been accepted. Since the national permit
was introduced, and with the full implementation of ACE,
restrictions have been gradually eliminated such that only some
activities requiring physical presence at the port require a
district permit in lieu of a national permit. Those restrictions
will be lifted with the concurrent final rule document in place.
---------------------------------------------------------------------------
The concurrent final rule document eliminates the district
permitting process and automatically grants a national permit to each
district permit holder who does not already hold a national permit.
Going forward, licensed brokers have the option to apply for a single
national permit either concurrently with their licenses or later in
their careers. With this final rule in place, district permit user fees
are eliminated, and brokers continue to pay permit fees only for
national permits. Each district or national permit requires a one-time
permit fee of $100 and an annual user fee.\5\ The annual user fee is
$153.19 for calendar year 2022, but is adjusted for inflation each
year.\6\ Given the uncertainty of future inflation, for the purposes of
this analysis, we use this fee amount for the full period of analysis.
---------------------------------------------------------------------------
\5\ If a broker chooses to receive a permit with the license,
then the $100 permit fee is waived. Under the new national
permitting system, brokers receiving a national permit will pay the
$100 permit fee regardless of when they do so.
\6\ The annual user fee payable for calendar year 2022 is
$153.19 (86 FR 66573). It will be adjusted for inflation each year.
Sections 24.22 and 24.23 of title 19 CFR provide for and describe
the procedures that implement the requirements of the Fixing
America's Surface Transportation Act (FAST Act) (Pub. L. 114-94,
December 4, 2015), which amended section 13031 of the Consolidated
Omnibus Budget Reconciliation Act (COBRA), requiring the Secretary
of the Treasury to adjust certain customs COBRA user fees and
corresponding limitations to reflect certain increases in inflation.
Specifically, section 24.22(k) sets forth the methodology to
determine the change in inflation as well as the factor by which the
fees and limitations will be adjusted, if necessary.
---------------------------------------------------------------------------
The number of new permits issued each year depends, in part, on the
number of new licenses issued. CBP issues both individual broker
licenses as well as corporate licenses, which may be held by
partnerships, associations, or corporations.\7\ The number of licenses
issued has been declining for the last several years at a rate of one
percent for corporate licenses and four percent for individual licenses
(see Table 1). Additionally, not all licensed brokers choose to apply
for a permit. Although virtually all corporate license holders do hold
a permit, many individual brokers work under the auspices of a
corporate permit and never hold their own permit. Based on data from
CBP's Broker Management Branch (BMB), approximately 13.5 percent of
individual brokers hold a district permit.\8\
---------------------------------------------------------------------------
\7\ 19 U.S.C. 1641(b)(3). For any corporate license, at least
one member of the organization must hold an individual license.
\8\ Data pulled from ACE on May 10, 2021 and March 31, 2022.
Table 1--Licensing History
----------------------------------------------------------------------------------------------------------------
Total licenses Corporate Individual
Year issued licenses issued licenses issued
----------------------------------------------------------------------------------------------------------------
2016................................................... 653 21 632
2017................................................... 580 16 564
2018................................................... 558 27 531
2019................................................... 464 15 449
2020................................................... 187 7 180
2021................................................... 496 31 465
----------------------------------------------------------------------------------------------------------------
3. Benefits
Brokers must pay an annual permit user fee for each permit held.
The permit user fee is payable for each district permit and national
permit a customs broker holds, including when a district permit is
issued concurrently with the broker's license. As a result of the
concurrent final rule document, district permits are eliminated and
customs brokers only need to pay an annual user fee for a single
national permit.\9\ Therefore, the savings accrued to brokers and CBP
as a result of many fewer user fees paid qualifies as a benefit and not
as a transfer payment because CBP is eliminating the district permits
themselves, as well as the work that goes along with processing and
issuing them.\10\
---------------------------------------------------------------------------
\9\ The reduction of the fee revenue will result in fewer 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.
\10\ As described in OMB Circular A-4, transfer payments occur
when ``. . . monetary payments from one group [are made] to another
[group] that do not affect total resources available to society.''
---------------------------------------------------------------------------
Under the baseline, both brokers holding existing permits and
brokers issued new permits must pay the annual user fee for each permit
held. As of January 2022, there were 15,226 active, licensed customs
brokers.\11\ 2,365 brokers hold at least one district permit.\12\ Of
those, 1,914 brokers hold a national permit in addition to their
district permit(s). The 2,365 brokers who hold at least one district
permit hold a total of 3,345 district permits, for an average of 1.4
district permits per permitted broker.
---------------------------------------------------------------------------
\11\ Data supplied by BMB on May 10, 2021 and March 31, 2022.
Data is pulled from ACE. The 12,861 brokers who do not hold any
permits are unaffected by this final rule.
\12\ This figure represents all current licensed brokers that
are permit holders, regardless of what year they received their
license.
---------------------------------------------------------------------------
Based on recent licensing history, CBP projects that over the
period of analysis from 2022-2026, 2,072 new individual licenses and 75
new corporate licenses will be issued.\13\ As stated above, 13.5
percent of individual brokers and 100 percent of corporate brokers hold
at least one district permit. Under the baseline, an average of 1.4
district permits held by each broker results in 396 new individual
permits and 105 new corporate permits, for a total of 501 permits. See
Table 2 for a summary of licensing and permitting over the period of
analysis under baseline conditions.
---------------------------------------------------------------------------
\13\ The COVID-19 pandemic and the resulting delays and closures
resulted in anomalous data for 2020 for corporate licenses.
Therefore, CBP removed 2020 from the projection, and used data from
2015-2019 instead to project over the period of analysis from 2022-
2026.
[[Page 63265]]
Table 2--Projection of Licensing and Permitting Under Baseline Conditions
----------------------------------------------------------------------------------------------------------------
New New
Year individual individual New corporate New corporate Total
licenses ermits licenses issued permits permits
----------------------------------------------------------------------------------------------------------------
2022.................................... 447 86 15 21 107
2023.................................... 430 82 15 21 103
2024.................................... 414 79 15 21 100
2025.................................... 398 76 15 21 97
2026.................................... 383 73 15 21 94
-----------------------------------------------------------------------
Total............................... 2,072 396 75 105 501
----------------------------------------------------------------------------------------------------------------
\*\ Totals may not sum due to rounding.
With the concurrent final rule document in place, newly licensed
brokers choosing to hold a permit require only a single national
permit. Therefore, CBP will issue 355 new permits over the period of
analysis (see Table 3). Because CBP is eliminating the district permit
system, these 355 permits will be issued as national permits even
though, under baseline conditions, they would have been district
permits.
Table 3--Projection of Permits Under the Final Rule
----------------------------------------------------------------------------------------------------------------
New New Total new
Year individual individual New corporate national
licenses permits permits permits
----------------------------------------------------------------------------------------------------------------
2022.................................................... 447 60 15 75
2023.................................................... 430 58 15 73
2024.................................................... 414 56 15 71
2025.................................................... 398 54 15 69
2026.................................................... 383 52 15 67
-------------------------------------------------------
Total............................................... 2,072 280 75 355
----------------------------------------------------------------------------------------------------------------
\*\ Totals may not sum due to rounding.
With the final rule in place, brokers currently holding only
district permits or holding a national permit in addition to their
district permit(s) continue to pay the annual user fee for a single
national permit.\14\ As of January 2021, 9 brokers each hold more than
one district permit and do not hold a national permit.\15\ Altogether,
those brokers hold 18 district permits, for an average of 2 permits
each. With the final rule in place, those brokers each pay for a single
national permit instead of paying for the 18 district permits they
currently collectively hold. Furthermore, there are 1,914 brokers
holding at least one district permit and one national permit. Those
brokers hold a total of 2,880 district permits. With the final rule in
place, these brokers only need to pay the user fee for their national
permits and will no longer pay fees for their 2,880 district permits.
Overall, brokers holding permits at the start of the period of analysis
will no longer need to pay for 2,889 permits.\16\
---------------------------------------------------------------------------
\14\ As stated above, those brokers only holding district
permits will be automatically granted a national permit under the
terms of the concurrent final rule document.
\15\ Brokers who hold a single district permit will have that
district permit transitioned to a national permit and will continue
to pay the same amount in user fees. Therefore, they are financially
unaffected by the final rule.
\16\ This includes the 9 permits forgone by brokers holding only
more than one district permit and the 2,880 district permits held by
brokers holding both district and national permits.
---------------------------------------------------------------------------
Combining both existing and projected permits, over the period of
analysis brokers who hold permits will pay the user fee for 364 permits
under the terms of the final rule. This includes 355 new national
permits issued during the period of analysis in place of 396 new
district permits (see Tables 2 and 3 above). An additional 9 existing
district permits held by brokers only holding district permits under
the baseline will be transitioned to national permits. Those 9 brokers
will no longer pay for the 9 additional district permits currently
held, which will be eliminated. Finally, 1,914 brokers who hold a
national permit and at least one district permit under the baseline
will only continue paying for their national permits and will no longer
pay for 2,880 district permits. Overall, brokers will no longer pay for
3,035 district permits over the period of analysis. With a 2022 user
fee of $153.19 per permit, brokers will save $2,281,330 from 2022-2026.
See Table 4 for a summary of these savings.
---------------------------------------------------------------------------
\17\ Under the baseline, these permits would be issued as
district permits. Under the final rule, they will be issued as
national permits.
\18\ For the first three columns, the total number of permits is
additive throughout the period of analysis instead of at the end of
the period (that is, all permits issued in 2021 must also be paid
for in 2022, 2023, 2024, and 2025 in addition to new permits issued
in those years) so the total is equal to the number of permits
existing in the final year. The total savings are calculated by
summing the savings in each year.
[[Page 63266]]
Table 4--Total Savings [2022 U.S. dollars]
----------------------------------------------------------------------------------------------------------------
Total district Total permits District permits
Year permits under under the final no longer paid Savings
the baseline rule\17\ for
----------------------------------------------------------------------------------------------------------------
2022.................................... 3,005 84 2,921 $447,393
2023.................................... 3,108 158 2,950 $451,959
2024.................................... 3,208 229 2,979 $456,398
2025.................................... 3,305 298 3,007 $460,709
2026.................................... 3,399 364 3,035 $464,871
-----------------------------------------------------------------------
Total\18\........................... 3,399 364 3,035 $2,281,330
----------------------------------------------------------------------------------------------------------------
4. Costs
The elimination of the annual user fee for district permits does
not result in any costs to brokers, but as noted above, this final rule
yields the aforementioned savings.
5. Net Benefits
The total annual monetized savings for customs brokers results from
switching from a district permitting system to a national permitting
system. Specifically, brokers will only pay the annual permit user fee
for a single national permit instead of for each of the potentially
several district permits held. As shown in Table 5 below, total savings
over the period of analysis are approximately $2.3 million dollars.
Table 5--Total Annual Undiscounted Savings for Brokers From 2022-2026
[2022 U.S. dollars]
------------------------------------------------------------------------
Year Total savings
------------------------------------------------------------------------
2022.................................................... $447,393
2023.................................................... 451,959
2024.................................................... 456,398
2025.................................................... 460,709
2026.................................................... 464,871
---------------
Total............................................... 2,281,330
------------------------------------------------------------------------
Note: Values may not sum to total due to rounding.
Table 6 summarizes the monetized costs and benefits of this final
rule to individual and corporate customs brokers. As shown, the total
monetized present value net benefit of this final rule over a five-year
period of analysis from 2022-2026 ranges from approximately $1.9 to $2
million and the annualized net benefit is approximately $456,000. In
2022, we estimate that 462 brokers will receive their broker licenses
(447 individual licenses plus 15 corporate licenses). The adoption of
this final rule will result in an average annual net benefit per broker
in 2022 of $987 ($456,000 annualized net benefit/462 total new brokers
for 2022).
Table 6--Present Value and Annualized Net Benefit of Final Rule
----------------------------------------------------------------------------------------------------------------
3% Discount rate 7% Discount rate
------------------------------------------------------------------
Present value Annualized Present value Annualized
----------------------------------------------------------------------------------------------------------------
Total Cost................................... $0 $0 $0 $0
Total Benefit................................ 2,027,555 456,008 1,868,359 455,675
Total Net Benefit............................ 2,027,555 456,008 1,868,359 455,675
----------------------------------------------------------------------------------------------------------------
VI. 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 governmental jurisdiction
(locality with fewer than 50,000 people).
The final rule will apply to all customs brokers, regardless of
size. Accordingly, the final rule will affect a substantial number of
small entities. However, as stated above in section V.5 ``Net
Benefits,'' the final rule will result in an average annualized savings
per customs broker of $987. Since brokers, on average, will benefit as
a result of this final 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 final rule does not have
a significant impact on a substantial number of small entities.
VII. 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
[[Page 63267]]
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 final 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 her
or his delegate) to approve regulations related to certain customs
revenue functions.
Chris Magnus, the Commissioner of CBP, having reviewed and approved
this document, is delegating the authority to electronically sign this
document to Robert F. Altneu, who is the Director of the Regulations
and Disclosure Law Division for CBP, for purposes of publication in the
Federal Register.
List of Subjects
19 CFR Part 24
Accounting, Claims, Exports, Freight, Harbors, Reporting and
recordkeeping requirements, Taxes.
19 CFR Part 111
Administrative practice and procedure, Brokers, Penalties,
Reporting and recordkeeping requirements.
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 amended as set forth below.
PART 24--CUSTOMS FINANCIAL AND ACCOUNTING PROCEDURE
0
1. The general and specific authority citations for part 24 continue 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.).
* * * * *
Section 24.22 also issued under Sec. 892, Pub. L. 108-357, 118
Stat. 1418 (19 U.S.C. 58c); Sec. 32201, Pub. L. 114-94, 129 Stat.
1312 (19 U.S.C. 58c); Pub. L. 115-271, 132 Stat. 3895 (19 U.S.C.
58c).
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 ``processing Center (see Sec. 111.1)''; 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 general and specific authority citations for part 111 are
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 processing Center (see Sec.
111.1) or through a CBP-authorized EDI system at the time the permit
application is submitted.
* * * * *
0
5. In Sec. 111.96, revise paragraph (c) 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 processing 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 processing Center will notify the broker in
writing of the failure to pay and the revocation of the permit.
* * * * *
Robert F. Altneu,
Director, Regulations & Disclosure Law Division, Regulations & Rulings,
Office of Trade, U.S. Customs and Border Protection.
Approved:
Thomas C. West, Jr.,
Deputy Assistant Secretary of the Treasury for Tax Policy.
[FR Doc. 2022-22151 Filed 10-17-22; 8:45 am]
BILLING CODE 9111-14-P
