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Federal Register / Vol. 86, No. 173 / Friday, September 10, 2021 / Proposed Rules
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in any number of trade-related areas, including entry, admissibility, classification, valuation, and duty rates for imported goods. Some brokers specialize in a specific area of customs business, like drawback or valuation, while others are more general practitioners. As of 2021, there are 13,822 active individual brokers in the United States.19
To become a licensed customs broker, an eligible individual 20 must pass the Customs Broker License Examination, submit a broker license application and appropriate fees to CBP, and be approved by CBP.21 Once applicants have passed the broker exam, they may apply for an individual, corporate, partnership, or association license. To maintain the license, the individual broker or the licensed entity for corporations, partnership, or associations must submit a triennial report and requisite fees. The triennial report and fees are due on February 28, every three years, since 1985.22 Once an individual has been approved as a licensed customs broker, the primary ongoing requirement for maintaining the license under current regulations is the submission of the triennial report and appropriate fee in 3-year cycles. Given the established 3-year cycle of triennial reporting, CBP employs a 6-year period of analysis to calculate costs and benefits that result from this proposed rule, accounting for two triennial cycles.
A broker license may be suspended or revoked, or a monetary penalty assessed, for several violations ranging from falsifying information on the license application to willfully and intentionally deceiving, misleading, or threating a client.23 CBP generally assesses monetary penalties for less but does not include the mere electronic transmission of data received for transmission to CBP. See 19 U.S.C. 1641a2.
19 A customs broker may voluntarily suspend his or her license for a number of reasons and may reactivate the license at a later time. A brokers license may also be suspended as part of a penalty.
For more information, see 19 CFR 111.52.
20 To be eligible, an individual must be a United States citizen at least 21 years of age, in possession of good moral character, and not be an employee of the U.S. Government. For more information, see U.S. Customs and Border Protection, Becoming a Customs Broker Dec. 12, 2018, available at https
www.cbp.gov/trade/programs-administration/
customs-brokers/becoming-customs-broker.
21 To be approved, a broker who has passed the broker exam must also pass an investigation of his or her relevant background. See section III.B. of this NPRM.
22 19 CFR 111.30d. For more information on the triennial report, see U.S. Customs and Border Protection, 2021 Customs Broker Triennial Status Report FAQs Feb. 26, 2021, available at https
help.cbp.gov/s/article/Article-1711?language=en_
US.
23 See, e.g., 19 U.S.C. 1641d1 and g2.

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serious infractions, such as the incorrect filing of entry forms or the misclassification of goods. However, the majority of civil monetary penalties assessed against brokers for violations of 19 U.S.C. 1641 involve egregious violations or the failure to take satisfactory corrective actions following written notice and a reasonable opportunity to remedy the deficiency as the penalties process provides noncompliant brokers with several opportunities to avoid or mitigate penalty liability.24 Monetary penalties may not exceed $30,000 per violation and averaged $22,697 from 2017
2020.25
In the fiscal years from 2017 to 2020, CBP assessed an average of 66 penalties to brokers per year.26 However, in FY
2017 and FY 2018, CBP assessed 20 and 21 penalties, respectively, while in FY
2019 and FY 2020, CBP assessed over 100 penalties each year see Table 1.
The significant increase in penalties from 2018 to 2019 and into 2020 is likely due to rapid changes in the international trade environment in those years. During that time, CBP began enforcing several significant changes in the realm of international trade, including new antidumping and countervailing duties AD/CVD and the tariffs imposed by the Trump Administration under section 201 of the Trade Act of 1974 19 U.S.C. 2251, as 24 In the case of non-egregious violations, CBP
will first attempt to work with the broker through the informed compliance process of communication and education. See U.S. Customs and Border Protection, Electronic Invoice Program EIP and Remote Location Filing RLF Handbook May 2013, p. 22, available at https www.cbp.gov/sites/
default/files/assets/documents/2016-Dec/Revised_
eip_rlf_handbook_12-15_16.pdf. This is an attempt to improve the brokers performance, and precedes the issuance of a pre-penalty notice, which is a written notice that advises the broker of the allegations or complaints against the broker. See id.;
19 CFR 111.92a. If this process fails to remedy the deficiencies, or in case of egregious violations, CBP
will issue a pre-penalty notice to the broker, which, inter alia, explains that the broker has the right to respond to the allegations or complaints. See 19
CFR 111.92a. If the broker files a timely response to the pre-penalty notice, CBP will either cancel the case, issue a penalty notice in an amount lower than that provided in the pre-penalty notice, or issue a penalty notice in the same amount as the pre-penalty notice. See 19 CFR 111.92b. Upon the issuance of the penalty notice, the broker is afforded the opportunity to file a petition for relief in accordance with the provisions of 19 CFR part 171, which may result in the cancellation or mitigation of the penalty, and subsequently a supplemental petition for relief. See 19 CFR 111.93
and 111.95.
25 19 U.S.C. 1641d2B. Penalty information comes from CBPs Seized Currency and Asset Tracking System SEACATS. Although the average value of assessed penalty is $22,697, CBP allows brokers to mitigate penalties, such that the amount collected is often significantly less, averaging $2,664 from 20172020.
26 SEACATS.

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amended, section 232 of the Trade Expansion Act of 1962 19 U.S.C. 1862, as amended, and sections 301 through 310 of the Trade Act of 1974 19 U.S.C.
2411 et seq., as amended.27 These changes affected a significant number of imported goods. CBP provided many opportunities for individual brokers to learn about the changes, including webinars, Question and Answer sessions, public forums, and Federal Register notices. External organizations, like regional broker associations, also provided information regarding these changes to the customs laws, which would have led to greater understanding for individual brokers.
Although CBP sought information in the ANPRM on the number of companies employing brokers who already complete continuing education, CBP did not receive enough specific information to estimate the proportion of companies already providing ongoing training. However, based on information gathered via self-reporting by individual brokers, CBP is aware of about 300
companies that employ at least one broker who holds an industry certification that requires annual continuing education.28 In the fiscal years from 2017 to 2019, those companies were responsible for 54
percent of the entries but only 10
percent of the penalties.29 Overall, these 300 companies filed 73,906,967 of 136,466,361 filed entries between 2017
and 2020, but only account for 26 of 267
total penalties assessed in that period.30
For companies outside of this group, CBP does not know how much continuing education is currently taken.
27 Trade remedies implemented by CBP include Section 201 trade remedies on solar cells and panels, and washing machines and parts; Section 232 trade remedies on aluminum and steel; Section 232 trade remedies on derivatives; Section 301
trade remedies to be assessed on certain goods from China; and Section 301 trade remedies to enforce U.S. rights in the large civil aircraft dispute before the World Trade Organization. See U.S. Customs and Border Protection, Trade Remedies, available at https www.cbp.gov/trade/programsadministration/trade-remedies last visited on May 11, 2021.
28 Information was provided by the National Customs Broker and Forwarders Association of America NCBFAA. Nine companies employ at least 48 brokers certified by programs provided by the NCBFAAs Education Institute NEI, and often employ more. An additional 292 companies employing at least one broker with an NEI
certification were identified via a survey of NEIs students.
29 Significant at the 99 percent confidence level.
30 Entry data was pulled from ACE, and penalty data from SEACATS.

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