CBP Issues Long-Awaited Revised Broker Regulations

6 min

On Tuesday, October 18, 2022, U.S. Customs and Border Protection (CBP) published two final rules implementing long-awaited changes to its customs broker regulations (19 C.F.R. Part 111). Issued after an extended review by the agency, and engagement with the Commercial Customs Operations Advisory Committee (COAC) and broker community, the rules are intended to modernize broker regulations by better aligning them with brokers' contemporary business practices and CBP's current operations. CBP's move of substantial trade functions away from ports and into the Centers of Excellence and Expertise (CEEs) in 2016 and the agency's increasing reliance on the Automated Commercial Environment (ACE) for customs filings and data interchange support these revisions.


With the CEEs handling significant trade functions—such as processing entry summaries; handling protests, suspensions, and extensions of liquidation; addressing issues involving merchandise classification and country of origin marking, and so forth—CBP has embraced a push toward a nationwide organizational structure based on subject-matter expertise rather than geographic location. Furthermore, in CBP's view, the creation of the ACE single-window system has decreased the need for brokers to be physically located near specific ports of entry. Thus CBP has pushed for broker rules and requirements to keep apace.

In April 2016, the COAC Broker Regulations Working Group (BRWG) made 37 recommendations to modernize Part 111 of the CBP regulations. The changes focused on the following areas: the evolving role of the broker; confidentiality, cybersecurity, and record retention; responsible supervision and control and employee reporting; and licensing and permits, among other issues.

CBP incorporated many of the BRWG recommendations in two Notices of Proposed Rulemaking (NPRMs), published on June 5, 2020 (here and here). Since then, the proposed rules remained under internal review until the agency's announcement and release of the final rules on October 18, 2022. In many instances, the final rules implement the proposed changes with little or no revision.

Summary of Changes

Several key changes to the broker regulations are summarized below and will become effective on December 19, 2022.

Single National Permit. CBP is 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. Within the new national framework, broker districts and district permits (and district permit waivers) are eliminated. CBP is automatically transitioning active district permits into national permits before the new rule's effective date to ensure no lapse in permit activity for customs brokers impacted by this process. Licensed brokers who already hold a national permit are not affected.

New "Processing Center" Term Defined. The final rule defines a new term, "Processing Center," to mean the broker management operations of a CEE responsible for processing national permit applications, broker license applications, and other submissions required by Part 111 for licensed brokers. These functions will be handled by the CEEs rather than at the port level.

Codifying U.S. Customs Business to Mean Conduct within the U.S. Customs Territory. The final rule now codifies CBP's current practice of requiring that customs business only be conducted within the customs territory of the United States. See 19 C.F.R. § 111.3 ("Customs business must be conducted within the customs territory of the United States…") (emphasis added).

Knowledgeable Point of Contact. The final rule requires brokers to designate a knowledgeable point of contact. The contact must be available to CBP during and outside of normal operating hours in case of questions or concerns. While the new requirement in § 111.3(b) does not require 24-hour availability, CBP is requiring a point of contact to cover operating hours across all time zones, should CBP need to contact an importer regarding the release of goods.

Revising Rules Regarding the Broker-Client Relationship. The final rule requires all brokers to execute a customs power of attorney (POA) directly with the importer of record or drawback claimant to transact customs business on their behalf. In cases of non-compliance, brokers are required to advise clients on proper corrective actions for any errors or omissions and must retain records of such communication.

Strengthening Cybersecurity and Recordkeeping Practices. The final rule codifies CBP's requirement that brokers maintain original records within U.S. customs territory, including electronic records, and implements a new affirmative requirement to notify CBP when there has been a "breach" of broker records.

Furthermore, by § 111.21(d), CBP is now requiring contact information for the broker employee responsible for brokerage-wide recordkeeping requirements in order to facilitate efficient processing of entries and entry summaries.

Clarifying the Rules Around Client Confidentiality. A revised § 111.24 confirms CBP's existing position that brokers may share client information with third parties when authorized in writing by the client. This writing may be within the customs POA or in a separate written release. The confidentiality requirement does not apply to information that is "properly" available from open public sources.

Updating the "Responsible Supervision and Control" Framework. The final rule updates requirements for exercising "responsible supervision and control" over customs business performed under a broker license, with a list of specific factors that CBP will consider in determining whether the standard has been met, set forth in § 111.28. While the proposed rule outlined 15 factors, they were consolidated into 13 in the final rule.

A sole proprietorship, partnership, association, or corporation must now employ a "sufficient number of licensed brokers," the number of which depends on multiple factors, including the size of the broker entity, the skills and abilities of the employees and supervising employees, and the complexity and similarity of tasks. Brokers must now also provide a "supervision plan" at the time of permit application, per a new § 111.19(b)(8), although details remain forthcoming.

Reporting Requirement for "False or Misleading Information." Under a newly revised § 111.32, a broker is prohibited from filing or assisting in the filing of any claim, document, affidavit, or other papers known by the broker to be false. Most significantly, upon separating or terminating representation of a client as a result of determining the client is intentionally using the broker to defraud the U.S. government or commit a criminal act against the U.S. government, a broker is now required to "document and report" the matter to CBP, which includes providing the client's name and the reason for the separation or termination.

Increasing Licensing Fees. CBP is increasing fees for the broker license application to $300 for individuals and $500 for organizations to recover costs associated with application reviews and vetting of applicants to better align the processing expenses between the application types.

New Electronic Payment and Submission System—the eCBP Portal. The final rule announces the deployment of a new payment and submission system, the eCBP portal, as part of CBP's Electronic Payment Options (ePO) effort to address customs revenue collections capability gaps. The eCBP portal is intended to reduce transmission errors by streamlining the payment and submission process and to support security-related decision making by CBP personnel.

Elimination of District Permit Fees. Concurrently, in a second final rule, CBP is eliminating all references to customs broker district permit user fees to align with the announced changes.

Additional Information and Guidance

Do you have questions about how the new broker regulations may impact your import or customs activity? Venable's International Trade and Logistics Group is available to provide guidance and assistance.