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. Today's webinar is on the customs broker modernization regularizations detailed changes to 19
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CFR 111. You will be on mute during the presentation. We ask you submit any questions you have
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in the chat feature. I would like to pass it over to deputy executive director Rob cosowsky.
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>> I'm pleased to welcome you today's webinar. On October 18th CBP published two rules. The
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first titled modernization of customs broker regulations both with an effective date of December
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19, 2022. These new rabs are really a culmination of strong collaboration of government and
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industry and designed to meet the challenges of the modern operating environment.
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During today's webinar we will walk through the key changes in the regulations and take time the
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address your questions. The team will cover as many question as we are able in the webinar. We
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ask that you submit any questions you may have through the webinar tool itself. I will turn it
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over to broker management chief Hilda hub ard. Thank you.
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>> Good afternoon and thank you so much DXD for your kind introduction. So pretty excited today
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to be talking about the 111 final rule. This is a webinar for the 111 final rule. We are a
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commercial operations revenue entry. My name is Melba hub ard and I am the branch chief for the
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branch here in Washington DC. I'm excited to be providing introductory information for this
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webinar.
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Next slide. There are numerous amounts of resources for the customs brochure regulation changes
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which will provide that information a little bit later and definitely we will have a Q&A, a
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question and answer, at the end to answer as many questions of yours as we can. We certainly want
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to be able to get to as many final questions as possible. Some questions we may not be able to
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get to but we certainly will circle back and answer those questions as well. But we will
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definitely want to get to as many final rule questions as we possibly can. Next slide.
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So let me talk a little bit about the timeline. This is how most of you know -- this is the
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timeline we have. Most of you know that this started long time ago and you know over some number
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of years ago but the actual MPRM was from June 5th, 2020. We have the noticed of proposed rule
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making back in June of 2020. We had a comment period which happened after that and we took in all
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of the stakeholder comments and took those in. There was a timeframe for that for you to submit
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your questions and your comments on that. We also had a period where we adjudicated the comments
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along with our regulations and rulings attorneys and then we came to a period where DHS and
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treasury did their review and that was completed a little bit earlier and this year in 2022 and
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again the big deal is that the federal register publication occurred on October 18th, 2022. So
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definitely the next step is that the final rule will be effective. There is a delayed effective
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date, 60 days delayed effective date and it will be December 19th, 2022. That is how your
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regulation development timeline ruled out. It was published on October 18th.
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>> Jenine del galdo. I'm with the broker management branch and I'm going to begin covering some
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of the slides and I'll be sharing the presentation with my colleague Kim Mack. So we today are
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going to cover not the full extent of the changes in the final rule because there are a lot of
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them, but what we are covering is today the major changes that we think will have the most affect
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and are of the most interest to the trade community.
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The first item I want to talk about in the final rule is a new definition we included under 111 and
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it is the processing center. We created the rule to better define CBP management. The processor
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center the broker management operations within the center of excellence and expertise responsible
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for processing broker license applications, national permit applications as well as any other
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required submissions for already licensed brokers and all of the reporting activities you are
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required to do through regulation. While we have a new definition the process isn't different
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than what you're doing right now.
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You will continue to submit your information to the port location through which your license was
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issued or through which your national permit location. If your license was issued out of
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Cleveland, that means your national permit is issued through Cleveland. You will submit your reporting information, your payments,
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your changes to address to those locations. And they will be managing that file that belongs to
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you for that information you presented.
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Okay. I also wanted to let everyone know we have a contact list at the processing centers. It is
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located on RCP.gov main page under the contact list. You can certainly go there to see the
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contact information for the BMO's located at the various port locations and the centers they are
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affiliated with. Next slide please.
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Okay. We have also changed -- this is the major change that everybody is excited about made in the
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final rule. We established a national permit structure. We are eliminated broker districts and
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district permits and transactional all brokers to a single national permit effective December
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19th, 2022. Brokers can conduct customs business throughout the United States territory. The
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structure is eliminating district permit qualifiers. There will no longer be a need for a
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district permit qualifier. It is simplifying since everybody will have one permit, everybody is
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transacting customs business.
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It will also eliminate the current permit fee waiver that's allowed upon initial license
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application and permit submission. So everyone who submits a national permit application will
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have a $100 fee for the permit application. So that waiver is also going way.
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And the other piece to the national permit is it is shifting the receipt processing and management
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of the national permit to the processing centers. So headquarters will no longer review and
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process the national permit application. Next slide please.
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Under 111.3 we've changed language or added language for customs business within the U.S. customs
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territory. So we've codified what was already in policy. All customs business must be conducted
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within the U.S. Brokers conducting customs business meaning brokers with permits must also
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maintain, designate and maintain a point of contact during and outside normal operating hours to
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respond to customs issues. Short hand term for that 247POC. Those are the 2 pieces we have added
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under 111.3. Next slide please.
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Under broker fee changes, CBP is increasing the license application fee from $200 to 300 for a
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individual license and 500 for an organization license. This change is to recover some of the
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cost associated with processing license applications and also better aligning the processing
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expenses between a individual license application and an organization application. There is a
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significant amount of work that goes into an organization license. Less amount of work that goes
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into a individually processed. And we are also allowing in regulation we added language to allow
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electronic submission of broker application and fees through an electronic system if it exists.
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Right now we have the ECBT portal that's available for some submissions and we expect in the
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future to have additional capabilities for submitting broker license applications and fees. It is
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coming down the road. Next slide please.
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Under the broker exam and the license we have some changes to electronic piece. So now CBP can
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provide exam results electronically instead of via mail. We have put into the regulations that
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exam appeals and appeal decisions can be received electronically and decisions issued
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electronically. Alternatives to on site testing can also be provided in new regulation such as
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remote proctored exam option that we would offer concurrent with the on site testing. And we've
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added into the license portion of the regulations that if an applicant is denied a license they
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must address how they've -- they must include in their next license application if they were apply
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again how the deficiencies that resulted in the denial have been corrected.
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And we've also added a couple elements to the scope of the background information. So for lice
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applications we are now going to be looking at not only the accuracy of statements provided in the
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interview. We are also going to be -- I'm sorry. Not only looking at the financial
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responsibility, but we've added the accuracy of statements made in the interview. That's the
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addition to that section. And we've also added that we can consider an association, a
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individual's association with individuals or groups that may present a risk to the security or the
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revenue collections of the U.S. government. So those are two additions to the scope of background
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investigation for a broker license application.
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Next slide please. Under cyber security and records requirements 11121 and 111.23 records must be
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maintained within the U.S. customs territory. This regulatory requirement isn't referring to
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copies. It is referring to the originals of the records. I want to point everybody to 19 ( ) for
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what the original is as it applies to records if you are curious about that.
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Brokers must now notify CBP when there has been a breach of electronic or physical broker records
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and provide the compromised numbers from that breach. The initial notification and submission of
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the known IR numbers should be reported within 72 hours of finding out about the breach and then
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after that there is a stepped timeframe for which the broker should provide updated lists of
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breached IR numbers as they are found. The language is also providing a notification contact for
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providing that information and it is the office of information technology security operations
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center. And we've also added language to allow brokers to share contact information with third
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parties when they are authorized in writing by the client. The authorization could be within the
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power of attorney or it could be a separate authorization document. Next slide please.
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Under responsibility supervision and control 111.28 we have added some additional information. The
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10 factor we have shifted the 10 responsibility supervisor and control factors out of 111.101.
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The 3 new factors are addressing communications between the broker and it's officers or members
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and communications document between the brokers and CBP. We've also added the timeliness of
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payments to the government when the money has been received by the brokers. I am paraphrasing
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there. I recommend you go look at those 3 additional factors for the specific language. We've
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also made minor changes to some of the already existing factors. For instance in factor 6 we
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updated the language from availability of a individually licensed broker to availability of a
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sufficient number of brokers. What that means will be unique to each broker and may depend on the
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size of the broker, the ability of the employees and their managers and the complexity and similarity of the tasks that are being performed.
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Sufficient number of brokers is unique to each broker and their situation.
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The last responsible supervisor and control piece is when applying for a national permit new
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applicants must provide a supervisor plan that details how responsible supervision and control
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will be exercised over the business. This plan will be unique to each broker and may depend on
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size of the brokerage, complexity of the business they are conducting, types of transactions and
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many other considerations to take into account when developing their plan.
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Current permit holders as of today, now are not required to submit a supervisor plan. However, CBP
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is recommending as a best practice to ensure responsible supervisor and control that all brokers
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develop a plan or system and have that in place. Again, it is a not a requirement for current
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permit holders to submit that plan to CBP. You can find additional information on responsible
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supervision and control factors by checking out our customs broker modernization regulations web
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page. Kim will talk about what is there in a few slides.
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Next piece is under 111.28B. We have made some changes to the timeline brokers must report new
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employees. They must report within 30 days of start of employment and terminated within 30 days
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of termination. CBP is no longer requiring brokers to report on employees prior employers nor
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prior home addresses. This will significantly reduce some of the information brokers have to
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submit on their employees. The other piece we have removed is CBP no longer requires to submit
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with it with their annual report. The list should be complete -- should be a fair reflection of
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the broker's employees at all times.
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So brokers must report information through the ace commercial environment portal, the ace portal.
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Under new regulations that is the expectation. If the broker doesn't have an ace portal account,
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then they would provide that information to the processing center in writing. We are highly
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encouraging brokers with permits to get a portal account so they can begin sending employee
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information as well as other information that can be reported to the portal. Next slide please.
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The next piece of regulation I will talk about is false information. That's under 111.32. Brokers
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must not give, solicit, or procure any false or misleading information or testimony in any matter
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pending before DHS or to any DHS representative. That has been added. The other piece that has
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been added is brokers must document and report to CBP when they cease business with a client as a
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result of that broker determining the client is intentionally intending to use the broker to
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defraud the U.S. government or commit a criminal act against the government. We are providing
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governance in the customs broker guidance to the trade community document that we've made
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available on our website on our CBP.gov dedicated website. I recommend everybody pull that
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document and take a look at it. Next slide please.
00:28:49.868 --> 00:29:00.146
Under 111.36 we have the broker client relationship piece. So we have changed the POA
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requirements. Under new regulations brokers must execute a customs power of attorney and not via
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another unlicensed third party. So brokers currently operating with a power of attorney assigned
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by a freight forwarded will need to obtain a POA that is direct. That requirement to execute
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directly with a client does not prohibit the broker A, broker B relationship where broker A
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exercises the authority granted in a POA and appoints a broker B by exCUTZing a subsidiary power
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of attorney on the client's behalf. That continues to be allowed under the new regulation, the
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broker A, broker B relationship.
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Brokers must advise the client on the client on actions required on the part of the client. They
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should be retaining a record of that communication.
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So the last piece I'm going to talk about beforehanding it over to Kim is the broker reporting and
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the automated environment. So in the regulations we've modernized the way in which brokers may
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report information to CBP by allowing them to report it electronically through the ace portal
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account which would satisfy regulatory requirements for reporting. The pieces that they can
00:31:04.269 --> 00:31:16.437
report and meet regulation are new and terminated employee information. I know that was allowed
00:31:16.437 --> 00:31:24.185
in legacy ace. It was a little bit clunky in legacy ace. We are in the modernized portal
00:31:24.185 --> 00:31:29.426
improving upon that and it will be a better system for you to do the new reporting through. The
00:31:29.426 --> 00:31:36.535
other pieces you can report are office of record address and record keeping location information.
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The record keeping point of contact information and the knowledgeable 24/7 point of contact
00:31:45.272 --> 00:31:55.830
information I talked about earlier. If you do not have an ace portal account that information
00:31:55.830 --> 00:32:00.647
will need to be submitted to the processing center.
00:32:00.647 --> 00:32:07.436
And the other piece I touched on earlier is that we will allow the electronic -- we have electronic
00:32:07.436 --> 00:32:21.940
submission options for exam applications and triannual status reports and all fees electronically.
00:32:21.940 --> 00:32:37.389
Currently we have the TSR and exam applications and fees in the ECBP portal. So you can report
00:32:37.389 --> 00:32:47.651
or file exam applications through the ECP portal today. We expect to have the license and permit
00:32:47.651 --> 00:32:56.275
applications and the user fees associated with those developed in the portal at a future date as
00:32:56.275 --> 00:33:08.090
well as user fees. But that is not coming for another year the user fee piece and then the others
00:33:08.090 --> 00:33:09.028
will follow.
00:33:09.028 --> 00:33:19.396
That is all I have on the regulation piece. I'm going to pass it over to my colleague Kim Mack.
00:33:19.396 --> 00:33:26.905
She's goes to talk on the permit transition process that's currently happening and provide you
00:33:26.905 --> 00:33:31.792
with information on our resources that we have available.
00:33:31.792 --> 00:33:39.306
>> Kim Mack: Thank you Jeannine. I'm Kim Mack with the broker management branch. Next slide
00:33:39.306 --> 00:33:52.944
please. Okay. The next piece is about the national permit transaction process. One of the major
00:33:52.944 --> 00:33:59.135
changes included in the final role includes the eleck nation of the district permit and the
00:33:59.135 --> 00:34:05.955
brokers operating under the national permit. We have approximately 270 broker that do not have a
00:34:05.955 --> 00:34:20.981
national perpt. So what we have done is the BMO's have created national permits with those
00:34:20.981 --> 00:34:31.157
brokers. In the meantime their district permits will remain active until the final role is in
00:34:31.157 --> 00:34:39.303
effect. The branch has posted a list of those on CBP.gov and e-mails each of the brokers to
00:34:39.303 --> 00:34:50.101
notify them of such. The BMO's will also notify the licensed qualifier for each broker that has a
00:34:50.101 --> 00:34:59.248
pending national permit creating and provide them to opportunity to send qualifier information
00:34:59.248 --> 00:35:08.611
prior to the effective date. Once this rule goes into effect any first time district permits that
00:35:08.611 --> 00:35:15.017
were previously submitted for processing but not yet processed those will be required to amend
00:35:15.017 --> 00:35:24.214
their applications and meet the new national permit requirements. These applications will now be
00:35:24.214 --> 00:35:30.040
accepted and processed through the processing center which is something Jeannine touched on in the
00:35:30.040 --> 00:35:40.816
beginning. Next slide please.
00:35:40.816 --> 00:35:51.066
So CBP deployed national broker permit functionality to cert testing on October 18th, of 2022. If
00:35:51.066 --> 00:36:04.311
brokers have questions regarding testing and cert you should contact your client rep.
00:36:04.311 --> 00:36:10.028
I'm sure during the anticipation of the final rule publishing most of you if not all of you are
00:36:10.028 --> 00:36:21.917
familiar with the designated pages on CBP.gov. Now the rule has published the branch has updated
00:36:21.917 --> 00:36:26.755
these pages to include additional information and resource links. We are trying to get as much
00:36:26.755 --> 00:36:34.402
information out there as possible for everyone. We've posted the customs broker guidance for the
00:36:34.402 --> 00:36:43.206
trade community. The 111 regulation comparison chart is a great old versus new comparison for
00:36:43.206 --> 00:36:50.938
everyone. Information and fact sheets on both the key changes to the modernized regulations and
00:36:50.938 --> 00:37:00.427
factors for responsible supervisor and control. There is a POA job aid, power of attorney job aid
00:37:00.427 --> 00:37:06.502
and links to the messages that have been put out there, registration links to the webinar. If you
00:37:06.502 --> 00:37:13.987
have not registered for the second webinar on November 9th, this is where you can find it. There
00:37:13.987 --> 00:37:22.036
is information on the national permit process as well as the list of brokers currently transacting
00:37:22.036 --> 00:37:35.669
business. There is also the final rule FAQ's to view. Next slide please.
00:37:35.669 --> 00:37:42.320
So we will take the rest of the webinar time to address questions given the volume of participates
00:37:42.320 --> 00:37:49.550
and the time remaining we won't be able to answer all of them. We will follow up on the next
00:37:49.550 --> 00:38:11.372
webinar on November 9th or through another communications method like FAQs.
00:38:11.372 --> 00:38:33.444
>> Melba Hubbard: We can use the last few minutes for questions. I do see where we are running
00:38:33.444 --> 00:38:35.163
out of time. I would say to you that we definitely appreciate your questions. They'll will help
00:38:35.163 --> 00:38:43.010
us compose our FAQs and provide additional information in the next webinar. We certainly will use
00:38:43.010 --> 00:38:52.403
that information to provide additional information again on our -- let me go on camera -- to
00:38:52.403 --> 00:39:02.842
provide that information in the future. It is extremely important to provide your input and we
00:39:02.842 --> 00:39:04.528
appreciate it.
00:39:04.528 --> 00:39:13.770
Our first question for Jeannine or Kim is how will the new POA rules be made live? Will there be a
00:39:13.770 --> 00:39:27.244
grandfather period? Will there be a delay before we enter a potential penalty phase? Kim or
00:39:27.244 --> 00:39:32.032
Jeannine have a comment response to that?
00:39:32.032 --> 00:39:47.612
>> Jeannine Delgado. Thank you Melba. We are providing another webinar in 2 weeks where we talk
00:39:47.612 --> 00:39:50.246
about operationalizing these two regulations. We will have more information about the POA and
00:39:50.246 --> 00:39:58.413
implementation of it. But I just want to be clear that the regulations go into effect on December
00:39:58.413 --> 00:40:08.859
19th. So you should start looking at your POAs now. We will certainly give you better guidance
00:40:08.859 --> 00:40:19.908
on the whole operational part of the POA on the next webinar on November 9th.
00:40:19.908 --> 00:40:27.252
>> Melba Hubbard: The next question I want to respond to. The next question is regarding
00:40:27.252 --> 00:40:34.388
continuing education and the question was what was CBP's thought process in not including the
00:40:34.388 --> 00:40:42.569
continuing education? I just wanted to mention that continuing education is a different NPRM and
00:40:42.569 --> 00:40:49.766
a final rule will be coming on the continuing education separately from this 111 final rule. I
00:40:49.766 --> 00:40:56.023
did want to put that in there and get that response. And this question is extremely -- I want
00:40:56.023 --> 00:41:03.844
everybody to know the question is this. For those of us that are already on a national permit, is
00:41:03.844 --> 00:41:13.332
there anything that we need to do? So they are asking whether if you already have a national
00:41:13.332 --> 00:41:19.001
permit, what is their responsibility here for Jeannine or Kim.
00:41:19.001 --> 00:41:33.355
>> Jeannine Delgado: From policy side, if you already have a national permit then on December
00:41:33.355 --> 00:41:41.659
19th nothing changes for you. You will continue to transmit your entry packages using that
00:41:41.659 --> 00:41:51.311
national permit. And if we have identified as Kim said the 370ish people who don't have a
00:41:51.311 --> 00:41:58.978
national permit we will turn the one -- we will turn on the pending national permit we have
00:41:58.978 --> 00:42:07.729
created based on your local permit information on December 19th and you will operate using that
00:42:07.729 --> 00:42:14.460
permit.
00:42:14.460 --> 00:42:23.683
>> Melba Hubbard: Thank you Jeannine.
00:42:23.683 --> 00:42:33.677
>> Jeannine Delgado: Dan if you have anything else to add.
00:42:33.677 --> 00:42:41.004
>> Dan: You are good Jeannine. Thank you so much.
00:42:41.004 --> 00:42:48.242
>> Melba Hubbard: All right. Let's go to the next couple of questions.
00:42:48.242 --> 00:42:59.701
>> Jeannine Delgado: Can I chime in one more thing? I'm looking at the next question. If you
00:42:59.701 --> 00:43:05.883
only have a district permit now and are one of the people being transitioned I suggest you talk to
00:43:05.883 --> 00:43:12.735
either -- not your supervisor -- that's not what I was trying to say. Your service provider
00:43:12.735 --> 00:43:22.312
and/or your ABI client rep about cert testing just because that gives you an opportunity to run
00:43:22.312 --> 00:43:29.417
data through the test system and make sure everything is operating for you and you understand how
00:43:29.417 --> 00:43:38.610
everything works or your service provider does.
00:43:38.610 --> 00:43:46.887
>> Melba Hubbard: Next question. The question is regarding the sufficient number of brokers.
00:43:46.887 --> 00:43:57.765
How will CBP monitor if the company has a sufficient number of licensed brokers? I think that is
00:43:57.765 --> 00:44:00.688
speaking to responsible supervision and control.
00:44:00.688 --> 00:44:07.477
>> Jeannine Delgado: Again, that is the kind of information we will covering in our next webinar.
00:44:07.477 --> 00:44:17.204
Obviously, you will be expected to be providing responsible supervision and control. Customs is
00:44:17.204 --> 00:44:23.627
experiencing concerns or issues with a brokerage. Of course that is something when we do a broker
00:44:23.627 --> 00:44:30.595
visit or issue a compliance notice that is something we are going to be inquiring about to make
00:44:30.595 --> 00:44:42.102
sure that you're covered there. But we will -- it is business as usual as far as expecting the
00:44:42.102 --> 00:44:46.768
broker to provide responsible supervisor and control. That's not changed. Now that you don't
00:44:46.768 --> 00:44:55.954
have district permits you don't have a licensed broker in each district managing a district
00:44:55.954 --> 00:45:04.067
permit. You aneed to ensure you have sufficient brokers within the company to manage that permit.
00:45:04.067 --> 00:45:04.068

00:45:04.068 --> 00:45:15.422
>> Melba Hubbard: On that note, how will CBP monitor if a company has a sufficient number of
00:45:15.422 --> 00:45:22.188
licensed brokers? On that note, will there be an example of a supervision plan is what I wanted
00:45:22.188 --> 00:45:26.197
to put out there.
00:45:26.197 --> 00:45:34.499
>> Jeannine Delgado: At this point we have offered up some information about considerations you
00:45:34.499 --> 00:45:45.331
should have in designing supervision -- I'm sorry -- yeah a supervision plan. But we haven't
00:45:45.331 --> 00:46:11.742
written up we haven't given you an example. Because there is such a huge difference between the
00:46:11.742 --> 00:46:11.743
mom and pop brokers, the soul proprietor brokers and the giant corporate brokers. One side supervision plan is not going to fit all.
00:46:11.743 --> 00:46:21.665
>> Melba Hubbard: If a broker has forwarders who provide the power of attorney in the past, does
00:46:21.665 --> 00:46:30.076
the broker have to get new POAs directly with the importer before 12/19 effective date or will
00:46:30.076 --> 00:46:36.438
brokers be given more time to get the new POAs?
00:46:36.438 --> 00:46:47.126
>> Jeannine Delgado: We will talk about power of attorney in your meeting in 2 weeks. A power of
00:46:47.126 --> 00:46:58.591
attorney assign from a freight forwarder to a brokerage on behalf of the input of record that will
00:46:58.591 --> 00:47:09.570
no longer be a valid power of attorney on December 19th for the new regulations.
00:47:09.570 --> 00:47:25.198
>> Melba Hubbard: I think we have time for one more question. All right. Let me pick one we've
00:47:25.198 --> 00:47:27.043
had.
00:47:27.043 --> 00:47:35.398
>> Jeannine Delgado: I found one I would like to answer. This person says I have a district
00:47:35.398 --> 00:47:43.411
permit. I'm not listed on the website listing with those other brokers that have just a district
00:47:43.411 --> 00:47:53.645
permit. Please advise what that means. Please send us an e-mail at broker management at
00:47:53.645 --> 00:48:03.525
CBP.DHS.gov with your brokerage name, filer code, license number is helpful too so we can take a
00:48:03.525 --> 00:48:09.701
look at add you to the list or figure out why you are not on the list and assist you. If you are
00:48:09.701 --> 00:48:16.407
a broker that is transacting customs business with only a district permit you do not have a
00:48:16.407 --> 00:48:24.991
national permit and you are not on that list we published on our dedicated website. Please reach
00:48:24.991 --> 00:48:30.594
out to us. We want to know.
00:48:30.594 --> 00:48:38.511
>> Melba Hubbard. All right. So there are a number of questions we unfortunately did not get to.
00:48:38.511 --> 00:48:46.744
Actually, excellent questions we again want to respond to and certainly will do that but time not
00:48:46.744 --> 00:48:53.915
permitting we are not able to do that. It is super important to get your feedback and your input
00:48:53.915 --> 00:49:02.765
so that we can perfect our next -- or improve at least our next webinar. I want to thank you for
00:49:02.765 --> 00:49:12.061
your questions and please continue to send those questions in.
00:49:12.061 --> 00:49:21.921
And with that, I will go ahead and turn it over to our host.
00:49:21.921 --> 00:49:30.912
>> This concludes our webinar for this afternoon. Thank you for joining us and have a wonderful
00:49:30.912 --> 00:49:34.435
rest of your day.

00:49:45.956 --> 00:49:45.956
[Webinar concluded]