82 FR 29714 - Modernization of the Customs Brokers Examination
DEPARTMENT OF HOMELAND SECURITY
U.S. Customs and Border Protection Federal Register Volume 82, Issue 125 (June 30, 2017)
U.S. Customs and Border Protection
Federal Register Volume 82, Issue 125 (June 30, 2017)
| Page Range | 29714-29719 | |
| FR Document | 2017-13829 |
[Federal Register Volume 82, Number 125 (Friday, June 30, 2017)] [Rules and Regulations] [Pages 29714-29719] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2017-13829] ======================================================================= ----------------------------------------------------------------------- DEPARTMENT OF HOMELAND SECURITY U.S. Customs and Border Protection 19 CFR Part 111 [Docket No. USCBP-2016-0059; CBP Dec. No. 17-05] RIN 1651-AB07 Modernization of the Customs Brokers Examination AGENCY: U.S. Customs and Border Protection, Department of Homeland Security. ACTION: Final rule. ----------------------------------------------------------------------- SUMMARY: This document adopts as a final rule, with changes, the amendments proposed to the U.S. Customs and Border Protection (CBP) regulations concerning the customs broker's examination provisions. Specifically, this rule transitions the examination to a computer automated customs broker examination, adjusts the dates of the examination to account for the fiscal year transition period and payment schedule requirements, and increases the examination fee to cover the cost of delivering the exam. DATES: Effective July 31, 2017. FOR FURTHER INFORMATION CONTACT: Julia Peterson, Chief, Broker Management Branch, Office of Trade, U.S. Customs and Border Protection, (202) 863-6601, [email protected]. SUPPLEMENTARY INFORMATION: Background Section 641 of the Tariff Act of 1930, as amended (19 U.S.C. 1641), provides, among other things, that a person (an individual, corporation, association, or partnership) must hold a valid customs broker's license and permit in order to transact customs business on behalf of others, sets forth standards for the issuance of a broker's license and permit, and provides for disciplinary action against brokers that have engaged in specific infractions. This section also provides that an examination may be conducted to assess an applicant's qualifications for a license. The regulations issued under the authority of section 641 are set forth in title 19 of the Code of Federal Regulations, part 111 (19 CFR part 111). Part 111 sets forth the regulations regarding, among other things, the licensing of, and granting of permits to, persons desiring to transact customs business as customs brokers. These regulations also include the qualifications required of applicants and the procedures for applying for licenses and permits, including examination procedures and requirements. Currently, a customs broker's examination consists of a paper test booklet and a scannable answer sheet which is administered by the Office of Personnel Management (OPM). CBP supplements OPM's resources by providing CBP officials to proctor the examination and space to conduct the examination. There is a $200 fee to take the examination. This fee, which has not changed since 2000, currently does not cover the administrative costs of the paper-based examination as the costs of administering the examination have increased. At the same time that CBP is looking to update its fee to reflect the costs of administering the exam, OPM has informed CBP that it will no longer administer the paper- based examination and it is shifting all the examinations it administers to an electronic format. On September 14, 2016, CBP published a document in the Federal Register (81 FR 63149) proposing to amend title 19 of the Code of Federal Regulations (``19 CFR'') to modernize the customs broker's examination provisions. Specifically, CBP proposed amending the customs broker's examination provisions, which are contained in 19 CFR part 111, to permit automation of the examination. CBP proposed removing references to the ``written'' examination to accommodate the transition from the paper and pencil format to an electronic format; and proposed removing the requirement that CBP grade the examinations to permit officials at the Office of Personnel Management (OPM) or OPM contractors to grade the examinations. CBP proposed removing the reference to ``Headquarters'' to allow CBP offices nationwide to assist in preparing the examination. CBP also proposed moving the examination dates to the fourth Monday in April and October to allow more time between the start of the federal fiscal year and the October examination date. To cover the costs of administering the examination, plus the cost of automating the examination, CBP proposed to increase the fee. CBP proposed removing the special examination provision because it was unnecessary. Finally, to better reflect CBP's organizational structure, CBP proposed updating the information on whom to contact when an applicant either would miss an examination, or would file an appeal of examination results. CBP proposed these changes to benefit both applicants and CBP. For applicants, automation would standardize the testing environment and equipment for all examinations, and provide earlier notification of test scores. For CBP, automation would provide for a more efficient use of CBP staff and administrative resources. The notice of proposed rulemaking requested public comments. The public comment period closed on November 14, 2016. Discussion of Comments Eight comments were received in response to the notice of proposed rulemaking. Comment: Six commenters sought clarification about the transition from a paper and pencil format to computer automated examinations as described in [[Page 29715]] the proposed rule. Three of them requested an additional explanation of how the removal of ``written'' from the description of the examination in the proposed regulations determined the examination format. One commenter suggested replacing ``written'' with another term, such as ``multiple choice,'' to describe the exact examination format in the regulations. CBP Response: CBP disagrees that the regulations need to define a specific form of examination. CBP is removing the term ``written'' to describe the examination from the regulation to provide flexibility in the transition from the paper and pen format to delivering the examination via computer. For that reason, CBP is not limiting the examination format by including specific parameters, such as ``multiple choice.'' CBP understands the applicants' desire for transparency on the type of question (e.g. multiple choice, true/false, essay) that will appear on the examination; therefore, CBP will provide guidance to the public on CBP.gov prior to the administration of the electronic examination. Comment: Several commenters raised specific questions about the process of taking the new electronic examination. Commenters asked whether applicants could choose a testing site; whether applicants could bring electronic reference materials to the site, and, if not, whether they would have sufficient space to use their paper reference materials and receive scrap paper for solving problems; whether they could change their answers during the allotted time; whether they could skip questions and return to them later; and whether the computer program would track skipped questions for the examinee. Commenters also asked whether CBP would have a contingency plan for technical difficulties, whether CBP was going to test the automated examination program before requiring it nationwide, whether it would provide a practice test, when it would provide the answer key, and when it would provide the results to the applicants. CBP Response: CBP understands the concerns about a new examination format; thus CBP will provide guidance to the public on CBP.gov prior to the administration of the electronic examination. The selection of an examination location depends on the information in the application. Applicants select their business port when they register for the customs broker's examination; CBP assigns the applicants to the exam locations closest to their selected port. With the examination location notification, CBP will provide the applicant with contingency plans for system failures, power outages, and other site-related breakdowns or emergencies. The examination sites themselves will offer ample room for hard copies of reference material, and the guidance on CBP.gov will describe the permitted reference materials. Applicants will receive scrap paper at examination sites. The examination sites, however, will provide access to only one computer monitor per examinee: Applicants will not have access to a second monitor or be permitted to access reference materials on-line. The electronic examination itself will allow applicants to skip answers, to return to skipped or completed answers, and to change their answers during the examination period. After the broker's examination development team completes its testing of the electronic examination, CBP will provide a link to a sample practice examination so that applicants can familiarize themselves with the format and how to navigate within the examination. The guidance CBP will provide on CBP.gov will include information on how and when CBP anticipates it will provide a copy of the examination and its answer key. CBP will post the examination online at CBP.gov after the completion of all the examinations at all examination locations. CBP will post the examination answer key on CBP.gov after it vets the examination results. Comment: Several commenters questioned the examination fee increase to $390, or requested more information about the basis for the increase in the fee. They compared the new fee to other licensing fees, and the increase in the examination fee to increases resulting from inflation or changes in the cost of living since 2000; and stated that the fee would be expensive for individuals beginning their trade careers. Com ment ers questioned how automation could be so expensive when it would save administrative resources. CBP Response: CBP appreciates that the fee may be expensive for some individuals but CBP disagrees that its examination fee increase is too high as it is set to cover CBP's costs to provide the exam under the new exam process. The fee is not being changed merely to adjust the existing fee for inflation, or to bring it in line with licensing fees for exams in unrelated fields, but to reflect CBP's costs of providing the exam. The Office of Personnel Management has informed CBP that it will soon no longer administer the current paper based examination. Instead, the exam will now be electronic and provided at private testing centers. While the automation itself saves money by reducing the time spent preparing and grading the exam, the need to rent testing centers with professional proctors will increase the overall exam costs. The increase in costs over time due to inflation, coupled with the need to change to an all-electronic exam administered at private testing centers, makes it necessary to increase the customs broker exam fee from $200 to $390 for CBP to recover all of its costs to administer the customs broker exam. Comment: Commenters said that an individual's brokerage does not always reimburse for the cost of the exam and that $390 would be a large expense for individuals. CBP Response: CBP acknowledges that not all brokerages reimburse their employees for the cost of the exam and some only reimburse their employees when they pass the exam. This is consistent with the analysis that indicates only that there is some portion of brokerages who do reimburse their employees and that there are brokers who are sole proprietors. This discussion takes place in the Regulatory Flexibility Act section of this document, which analyzes the impact on small entities. Small entities, as defined by the Regulatory Flexibility Act, includes small businesses but does not include individuals (other than sole proprietors). Therefore, the cost to individuals was not analyzed in this section. For an analysis of the costs of this rule to all parties, see the Executive Orders 13563, 12866, and 13771 and Regulatory Flexibility Act sections in this notice. Comment: Several commenters requested additional information on what costs were covered by the fee. CBP Response: As requested, CBP has revised the administrative costs section in the fee study to include a more detailed description of what is included in the costs for informational purposes. Exam administration costs are the costs associated with administering the customs broker license exam. CBP contracts with the U.S. Office of Personnel Management (OPM) to administer the exam. The contracted services include, but are not limited to: The development of the exam onto an electronic platform, the renting of testing locations, the providing of equipment and proctors, the grading of the exam, the mailing of individual score sheets to each examinee, and the providing to CBP of an array of exam metrics including distractor analysis and frequency distribution. The fee study documenting the proposed fee changes, entitled ``Customs Broker License Examination Fee Study,'' has [[Page 29716]] been included in the docket of this rulemaking (Docket No. USCBP-2016- 0059). As stated in the fee study, there were two inputs to determining the new examination fee--the costs to both CBP and OPM and the number of examinees. The cost of administering the examination is increasing to $390 because CBP now has to hire professional proctors and rent out formal testing centers instead of using port staff to proctor the exam and port facilities to administer the exam. Comment: Several commenters objected to eliminating the special examination provision, mentioned CBP had applied the provision in 2001, and requested that it remain, in case of extenuating circumstances or unforeseen emergencies. CBP Response: CBP agrees and will retain the special examination provision at 19 CFR 111.13(c) with changes to reflect that the special examination will also be modernized to allow for electronic testing. In addition, CBP changed the provision to require that special examination requests be submitted to the Executive Assistant Commissioner, Office of Trade. Comment: Although no one objected to moving the customs broker's examination dates later in April and October, several commenters suggested that neither Monday nor Friday were ideal dates for business reasons. CBP Response: CBP agrees that moving the exam administration date to the fourth Wednesday in October and in April would be beneficial. Accordingly, CBP changed the administration date from the fourth Monday to the fourth Wednesday in 19 CFR 111.13(b). Conclusion Accordingly, after review of the comments and further consideration, CBP has decided to adopt as final, with the changes discussed above, and grammatical corrections, the proposed rule published in the Federal Register (81 FR 63149) on September 14, 2016. Specifically, the final rule will change the examination dates to the fourth Wednesday in April and October (not the fourth Monday); and, will retain the special examination provision with changes in Sec. 111.13(c) (19 CFR 111.13(c)). Executive Orders 13563, 12866, and 13771 Executive Orders 12866 (``Regulatory Planning and Review'') and 13563 (``Improving Regulation and Regulatory Review'') direct agencies to assess the costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). Executive Order 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. Executive Order 13771 (``Reducing Regulation and Controlling Regulatory Costs'') directs agencies to reduce regulation and control regulatory costs and provides that ``for every one new regulation issued, at least two prior regulations be identified for elimination, and that the cost of planned regulations be prudently managed and controlled through a budgeting process.'' The Office of Management and Budget (OMB) has not designated this rule a significant regulatory action under section 3(f) of Executive Order 12866. Accordingly, OMB has not reviewed it. As this rule is not a significant regulatory action, this rule is exempt from the requirements of Executive Order 13771. See OMB's Memorandum ``Guidance Implementing Executive Order 13771, Titled `Reducing Regulation and Controlling Regulatory Costs' '' (April 5, 2017). 1. Purpose of the Rule Customs brokers are private individuals and/or business entities (partnerships, associations or corporations) that are regulated and empowered by CBP to assist importers and exporters in meeting federal requirements governing imports and exports. Customs brokers have an enormous responsibility to their clients and to CBP that requires them to properly prepare importation and exportation documentation, file these documents timely and accurately, classify and value goods properly, pay duties and fees, and safeguard their clients' information. CBP currently licenses brokers who meet a certain set criteria. One criterion is that each prospective broker must first pass a broker license exam. CBP's current paper-based examination method will soon no longer be available and so CBP is shifting to an all-electronic exam. The all-electronic exam has benefits to both CBP and the trade, such as a faster processing time, which lets examinees know their results more quickly and efficiently, and a significant reduction in administrative duties for CBP employees. However, administering this new electronic exam is also more expensive. Additionally, the current $200 fee does not cover the costs of the current paper exam. CBP is therefore increasing the examination fee from $200 to $390 in order to fully cover all of CBP's costs of administering the broker examination. CBP is also changing the date of the semi-annual customs broker exam from the first Monday in October and April to the fourth Wednesday in October and April for easier administration. 2. Background It is CBP's responsibility to ensure that only qualified individuals and business entities can perform customs business on another party's behalf. The first step in meeting the eligibility requirements for a customs broker license requires an individual to pass the customs broker license examination. Currently paper-based, the customs broker examination is an open-book examination consisting of 80 multiple-choice questions. An individual currently must meet the following criteria in order to be eligible to take the customs broker examination:Be a U.S. citizen at least 18 years of age; \1\ --------------------------------------------------------------------------- \1\ Although U.S. citizens at least 18 years old may take the broker license exam, a U.S. citizen must be at least 21 years old to apply to become a licensed customs broker. An individual has three years, from the time the individual takes the customs broker exam, to apply to become a licensed customs broker. --------------------------------------------------------------------------- Not be an employee of the U.S. federal government; and Pay a $200 examination fee. The customs broker examination is offered semi-annually, in April and October, and an examinee has four and a half (4.5) hours to complete it. Based on prior year exams from 2004 to 2013, CBP estimates that there will be approximately 2,600 examinees per year, or 1,300 examinees per session. Currently the broker exam is given at 50 testing locations around the country. CBP anticipates that changing the exam format from paper-based to electronic would result in no change in the number of testing locations in the country; the only change would be the type of testing location. The exam is currently administered at hotels and ports throughout the country. In the future, the exam will instead be held at privately operated formal testing locations. Beginning in October 2017, the current paper testing option will no longer be available and the broker examination will be fully electronic. Despite the higher costs of an electronic exam, it has many favorable features which would benefit both CBP and the examinees, including shorter wait times for examinees to get their test results and a reduction in the time CBP staff [[Page 29717]] spends on administrative matters related to the exam, such as arranging facility space for and proctoring the exam, fielding questions from examinees and mailing test result notices. 3. Costs As discussed above, CBP currently charges a $200 fee for the customs broker license examination. This fee is used to offset the costs associated with providing the services necessary to operate the customs broker license examination. Based on a recently completed fee study entitled, ``Customs Broker License Examination Fee Study,'' CBP has determined that these fees are no longer sufficient to cover its costs.\2\ Currently, examinees go to either a port or to a rented event space in a hotel to take the paper exam with a 35-page test booklet and a scannable answer sheet, which must subsequently be collected and graded. The new all-electronic version of the exam will be administered entirely on a computer where the examinees answer the questions directly on the screen and the exam is graded automatically. As the electronic exam uses all private facilities with professional proctors, this automated method will be more expensive than the paper exam. Furthermore, the current fee is not enough to cover even the current costs of administering the exam. Exam administration costs include the development of the exam in an electronic platform, the renting of testing locations, the providing of equipment and proctors, the grading of the exam, the mailing of individual score sheets to each examinee, and the providing to CBP of an array of exam metrics including distractor analysis and frequency distribution. As stated above, the current $200 fee has not been changed since 2000. According to data provided by CBP's Broker Management Branch, administrative and testing costs have increased since the fee was last changed. This increase in administrative fees coupled with switching to an all-electronic exam administered at private testing centers, makes it necessary to increase the customs broker exam fee from $200 to $390 for CBP to recover all of its costs to administer the customs broker exam. --------------------------------------------------------------------------- \2\ The fee study is included in the docket of this rulemaking (Docket No. USCBP-2016-0059). --------------------------------------------------------------------------- CBP has determined that the fee of $390 is necessary to recover the costs associated with administering the customs broker license examination once the exam is made electronic. The customs broker examination is an established service provided by CBP that already requires a fee payment. Absent this rule, CBP would be operating the exam at a loss and this fee is intended to offset that loss. As such, a change in the fee is not a net cost to society, but rather a transfer payment from test takers to the government.\3\ CBP does recognize, however, that the fee change may have a distributional impact on prospective customs brokers. In order to inform stakeholders of all potential effects of the final rule, CBP has analyzed the distributional effects of the final rule in section ``5. Dis tribu tional Impact.'' --------------------------------------------------------------------------- \3\ Transfer payments are monetary payments from one group to another that do not affect total resources available to society. See OMB Circular A-4. --------------------------------------------------------------------------- 4. Benefits As discussed above, CBP is increasing the customs broker license examination fee from $200 to $390. The broker exam fee was last changed in 2000 when it was reduced from $300 to the current fee of $200. The lower cost paper-based examination that is currently being administered is being replaced by an all-electronic exam in an effort to fully modernize the customs broker testing procedure. This fee increase will allow CBP to fully recover all of its costs, including those to provide a fully electronic version of the customs broker examination beginning in October 2017. As discussed above, the fee increase is neither a cost nor a benefit of this rule since the broker exam fee is already an established fee. Thus, the fee increase is considered a transfer payment. As stated above, in order to inform stakeholders of all potential effects of the final rule, CBP has analyzed the distributional effects of the final rule in section ``5. Dis tribu tional Impact.'' In addition to increasing the examination fee, CBP is changing the date the examination is given from the first Monday in October and April to the fourth Wednesday in October and April. Administering the examination on the first Monday in October is administratively difficult because it is too close to the conclusion of the Federal Government's fiscal year at the end of September. With this rule's changes, CBP and the examinees will benefit through greater predictability in years where federal budgets are uncertain. 5. Distributional Impact Under the final rule, the customs broker license examination fee will increase from $200 to $390 in order for CBP to fully recover all of its costs to administer the broker examination. As noted above, these costs are increasing due to a shift in the administration of the exam that will go into effect beginning with the October 2017 exam. The customs broker license examination fee will cost individuals an additional $190 when they register to take the customs broker license examination. As discussed above, CBP estimates that there will be 2,600 examinees per year (1,300 per session) who will take the customs broker license examination. Using this estimate and the additional cost that each examinee will incur, CBP estimates that the fee increase will result in a transfer payment to the government of approximately $494,000 per year (2,600 examinees per year * $190 proposed fee increase = $494,000). Regulatory Flexibility Act This section examines the impact of the rule on small entities as required by the Regulatory Flexibility Act (5 U.S.C. 601 et seq.), as amended by the Small Business Regulatory Enforcement and Fairness Act of 1996 (SBREFA). 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 prospective brokers who take the broker exam. The fee is paid by the individual taking the broker exam and individuals are not considered small entities under the Regulatory Flexibility Act. However, some of these individuals are sole proprietors or may be reimbursed for this expense by their brokerage, so we consider the impact on these entities. The U.S. Census Bureau categorizes customs brokers (as well as freight forwarders and marine shipping agents) under the North American Industry Classification (NAICS) code 488510. As shown in Exhibit 1 below, approximately 96 percent of business entities in this NAICS code are small. As this rule will affect any prospective broker or his/her employer, regardless of its size, this rule has an impact on a substantial number of small entities. The direct impact of this rule on each individual customs broker examinee, or his/her employer, is the fee increase of $190. To assess whether this is a significant impact, we examine the annual revenue for customs brokers. The U.S. Census Bureau categorizes customs brokers under the NAICS code 488510. In addition to customs brokers, this NAICS code also includes freight [[Page 29718]] forwarders and marine shipping agents.\4\ The Small Business Administration (SBA) publishes size standards that determine the criteria for being considered a small entity for the purposes of this analysis. The SBA considers a business entity classified under the 488510 NAICS code as small if it has less than $15 million in annual receipts. We obtained the number of firms in each revenue category provided by the U.S. Census Bureau (see Exhibit 1 below). To estimate the average revenue of all firms under this NAICS code, we first assumed that each firm in each revenue category had receipts of the midpoint of the range. For example, we assumed that the 4,354 firms with annual receipts of between $100,000 and $499,000 had average receipts of $300,000. We then used the number of firms in each category to calculate the weighted average revenue across all small firms. Using this method, we estimate that the weighted average revenue for small businesses in this NAICS code is $1,496,197. The $190 increase in the broker exam fee, then, represents 0.01 percent of the weighted average annual revenue for brokers. CBP does not consider 0.01 percent of revenue per exam to be a significant impact. Accordingly, CBP certifies that this rule does not have a significant economic impact on a substantial number of small entities. --------------------------------------------------------------------------- \4\ http://www.census.gov/cgi-bin/sssd/naics/naicsrch?code=488510&search=2012%20NAICS%20Search. Exhibit 1--Business Entity Data for NAICS Code 488510 ------------------------------------------------------------------------ Number of Annual receipts ($) (Midpoint) firms Small ------------------------------------------------------------------------ <100,000 (50,000)................. 1,834 Yes. 100,000-499,999 (300,000)......... 4,354 Yes. 500,000-999,999 (750,000)......... 2,040 Yes. 1,000,000-2,499,999 (1,750,000)... 2,300 Yes. 2,500,000-4,999,999 (3,750,000)... 1,087 Yes. 5,000,000-7,499,999 (6,250,000)... 427 Yes. 7,500,000-9,999,999 (8,750,000)... 242 Yes. 10,000,000-14,999,999 (12,500,000) 233 Yes. >15,000,000....................... 548 No. ------------------------------------- Total......................... 13,065 96 Percent are Small (12,517/13,065). ------------------------------------------------------------------------ Source: U.S. Census Bureau. Signing Authority This document is being issued in accordance with 19 CFR 0.2(a), which provides that the authority of the Secretary of the Treasury with respect to CBP regulations that are not related to customs revenue functions was transferred to the Secretary of Homeland Security pursuant to section 403(l) of the Homeland Security Act of 2002. Accordingly, this final rule to amend such regulations may be signed by the Secretary of Homeland Security (or his delegate). List of Subjects in 19 CFR Part 111 Administrative practice and procedure, Brokers, Customs duties and inspection, Penalties, Reporting and recordkeeping requirements. Amendments to the CBP Regulations For the reasons given above, part 111 of title 19 of the Code of Federal Regulations (19 CFR part 111) is amended as set forth below: PART 111--CUSTOMS BROKERS 0 1. The authority citation for part 111 continue 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 111.3 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. Sec. 111.11 [Amended] 0 2. In Sec. 111.11, paragraph (a)(4) is amended by removing the words ``a written'' and adding in its place the word ``an''. Sec. 111.12 [Amended] 0 3. In Sec. 111.12, paragraph (a) is amended by removing the word ``written'' from the two places that it appears in the fifth and sixth sentences. Sec. 111.13 [Amended] 0 4. In Sec. 111.13: 0 a. The section heading is revised; 0 b. Paragraph (a) is amended by: 0 1. Removing the word ``written'' in the first sentence; 0 2. Removing the words ``and graded at'' in the second sentence and adding in their place the word ``by''; and 0 3. Removing the phrase ``Headquarters, Washington, DC'' from the second sentence; 0 c. Paragraphs (b) through (d) and (f) are revised. The revisions read as follows: Sec. 111.13 Examination for individual license. * * * * * (b) Basic requirements, date, and place of examination. In order to be eligible to take the examination, an individual must on the date of examination be a citizen of the United States who has attained the age of 18 years and who is not an officer or employee of the United States Government. CBP will publish a notice announcing each examination on its Web site. Examinations will be given on the fourth Wednesday in April and October unless the regularly scheduled examination date conflicts with a national holiday, religious observance, or other foreseeable event and the agency publishes in the Federal Register an appropriate notice of a change in the examination date. An individual who intends to take the examination must complete the electronic application at least 30 calendar days prior to the scheduled examination date and must remit the $390 examination fee prescribed in Sec. 111.96(a) at that time. CBP will give notice of the exact time and place for the examination. (c) Special examination. If a partnership, association, or corporation loses the required member or officer [[Page 29719]] having an individual broker's license (see Sec. 111.11(b) and (c)(2)) and its license would be revoked by operation of law under the provisions of 19 U.S.C. 1641(b)(5) and Sec. 111.45(a) before the next scheduled examination, CBP may authorize a special examination for a prospective applicant for an individual license who would serve as the required licensed member or officer. CBP may also authorize a special examination for an individual for purposes of continuing the business of a sole proprietorship broker. A special examination for an individual may also be authorized by CBP if a brokerage firm loses the individual broker who was exercising responsible supervision and control over an office in another district (see Sec. 111.19(d)) and the permit for that additional district would be revoked by operation of law under the provisions of 19 U.S.C. 1641(c)(3) and Sec. 111.45(b) before the next scheduled examination. A request for a special examination must be submitted to the Executive Assistant Commissioner, Office of Trade, in writing and must describe the circumstances giving rise to the need for the examination. If the request is granted, the Executive Assistant Commissioner, Office of Trade or his/her designee, will notify the prospective examinee of the exact time and place for the examination. If the individual attains a passing grade on the special examination, the application for the license may be submitted in accordance with Sec. 111.12. The examinee will be responsible for all additional costs incurred by CBP in preparing and administering the special examination that exceed the $390 examination fee prescribed in Sec. 111.96(a), and those additional costs must be reimbursed to CBP before the examination is given. (d) Failure to appear for examination. If a prospective examinee advises the Office of Trade at the Headquarters of U.S. Customs and Border Protection, Attn: Broker Management Branch, electronically in a manner specified by CBP at least 2 working days prior to the date of a regularly scheduled examination that he will not appear for the examination, CBP will refund the $390 examination fee referred to in paragraph (b) of this section. No refund of the examination fee or additional reimbursed costs will be made in the case of a special written examination provided for under paragraph (c) of this section. * * * * * (f) Appeal of failing grade on examination. If an examinee fails to attain a passing grade on the examination taken under this section, the examinee may challenge that result by filing a written appeal with the Office of Trade at the Headquarters of U.S. Customs and Border Protection, Attn: Broker Management Branch, within 60 calendar days after the date of the written notice provided for in paragraph (e) of this section. CBP will provide to the examinee written notice of the decision on the appeal. If the CBP decision on the appeal affirms the result of the examination, the examinee may request review of the decision on the appeal by writing to the Executive Assistant Commissioner, Office of Trade, U.S. Customs and Border Protection, within 60 calendar days after the date of the notice on that decision. Sec. 111.96 [Amended] 0 5. In Sec. 111.96: 0 a. Paragraph (a) is amended by removing the word ``written'' from the second sentence and removing the phrase ``$200 examination fee'' in the second sentence and adding in its place the phrase ``$390 examination fee''; and 0 b. Paragraph (e) is amended by removing the words ``United States Customs Service'' and adding in their place the words ``U.S. Customs and Border Protection, or paid by other CBP-approved payment method''. Dated: June 27, 2017. Elaine C. Duke, Deputy Secretary. [FR Doc. 2017-13829 Filed 6-29-17; 8:45 am] BILLING CODE 9111-14-P
![29714 Federal Register / Vol. 82, No. 125 / Friday, June 30, 2017 / Rules and Regulations
II. Regulatory Requirements ACTION: Final rule. increased. At the same time that CBP is
This Policy Guidance is a non-binding looking to update its fee to reflect the
SUMMARY: This document adopts as a costs of administering the exam, OPM
general statement of policy articulating final rule, with changes, the
considerations relevant to the Bureau’s has informed CBP that it will no longer
amendments proposed to the U.S. administer the paper-based examination
exercise of its supervisory and Customs and Border Protection (CBP)
enforcement authority. It is therefore and it is shifting all the examinations it
regulations concerning the customs administers to an electronic format.
exempt from notice and comment broker’s examination provisions. On September 14, 2016, CBP
rulemaking requirements under the Specifically, this rule transitions the published a document in the Federal
Administrative Procedure Act pursuant examination to a computer automated Register (81 FR 63149) proposing to
to 5 U.S.C. 553(b). Because no notice of customs broker examination, adjusts the amend title 19 of the Code of Federal
proposed rulemaking is required, the dates of the examination to account for Regulations (‘‘19 CFR’’) to modernize
Regulatory Flexibility Act does not the fiscal year transition period and the customs broker’s examination
require an initial or final regulatory payment schedule requirements, and provisions. Specifically, CBP proposed
flexibility analysis. 5 U.S.C. 603(a), increases the examination fee to cover amending the customs broker’s
604(a). The Bureau has determined that the cost of delivering the exam. examination provisions, which are
this Policy Guidance does not impose contained in 19 CFR part 111, to permit
DATES: Effective July 31, 2017.
any new or revise any existing automation of the examination. CBP
recordkeeping, reporting, or disclosure FOR FURTHER INFORMATION CONTACT: Julia
Peterson, Chief, Broker Management proposed removing references to the
requirements on covered entities or ‘‘written’’ examination to accommodate
members of the public that would be Branch, Office of Trade, U.S. Customs
and Border Protection, (202) 863–6601, the transition from the paper and pencil
collections of information requiring format to an electronic format; and
OMB approval under the Paperwork julia.peterson@cbp.dhs.gov.
proposed removing the requirement that
Reduction Act, 44 U.S.C. 3501, et seq. SUPPLEMENTARY INFORMATION:
CBP grade the examinations to permit
Dated: June 26, 2017. Background officials at the Office of Personnel
Richard Cordray, Management (OPM) or OPM contractors
Section 641 of the Tariff Act of 1930,
Director, Bureau of Consumer Financial to grade the examinations. CBP
as amended (19 U.S.C. 1641), provides,
Protection. proposed removing the reference to
among other things, that a person (an ‘‘Headquarters’’ to allow CBP offices
[FR Doc. 2017–13799 Filed 6–29–17; 8:45 am] individual, corporation, association, or nationwide to assist in preparing the
BILLING CODE 4810–25–P partnership) must hold a valid customs examination. CBP also proposed moving
broker’s license and permit in order to the examination dates to the fourth
transact customs business on behalf of Monday in April and October to allow
DEPARTMENT OF COMMERCE others, sets forth standards for the more time between the start of the
issuance of a broker’s license and federal fiscal year and the October
Bureau of Industry and Security permit, and provides for disciplinary examination date. To cover the costs of
action against brokers that have engaged administering the examination, plus the
15 CFR Part 744 in specific infractions. This section also cost of automating the examination, CBP
provides that an examination may be proposed to increase the fee. CBP
Control Policy: End-User and End-Use
conducted to assess an applicant’s proposed removing the special
Based
qualifications for a license. examination provision because it was
CFR Correction The regulations issued under the unnecessary. Finally, to better reflect
authority of section 641 are set forth in CBP’s organizational structure, CBP
■ In Title 15 of the Code of Federal title 19 of the Code of Federal
Regulations, Parts 300 to 799, revised as proposed updating the information on
Regulations, part 111 (19 CFR part 111). whom to contact when an applicant
of January 1, 2017, on page 498, in Part 111 sets forth the regulations
supplement number 4 to part 744, under either would miss an examination, or
regarding, among other things, the would file an appeal of examination
United Arab Emirates, remove the entry licensing of, and granting of permits to,
for ‘‘Indira Mirchandani’’. results. CBP proposed these changes to
persons desiring to transact customs benefit both applicants and CBP. For
[FR Doc. 2017–13802 Filed 6–29–17; 8:45 am] business as customs brokers. These applicants, automation would
BILLING CODE 1301–00–P regulations also include the standardize the testing environment and
qualifications required of applicants and equipment for all examinations, and
the procedures for applying for licenses provide earlier notification of test
DEPARTMENT OF HOMELAND and permits, including examination scores. For CBP, automation would
SECURITY procedures and requirements. provide for a more efficient use of CBP
Currently, a customs broker’s staff and administrative resources. The
U.S. Customs and Border Protection examination consists of a paper test notice of proposed rulemaking
booklet and a scannable answer sheet requested public comments. The public
19 CFR Part 111 which is administered by the Office of comment period closed on November
[Docket No. USCBP–2016–0059; CBP Dec. Personnel Management (OPM). CBP 14, 2016.
No. 17–05] supplements OPM’s resources by
providing CBP officials to proctor the Discussion of Comments
RIN 1651–AB07
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examination and space to conduct the Eight comments were received in
Modernization of the Customs Brokers examination. There is a $200 fee to take response to the notice of proposed
Examination the examination. This fee, which has rulemaking.
not changed since 2000, currently does Comment: Six commenters sought
AGENCY: U.S. Customs and Border not cover the administrative costs of the clarification about the transition from a
Protection, Department of Homeland paper-based examination as the costs of paper and pencil format to computer
Security. administering the examination have automated examinations as described in
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![29718 Federal Register / Vol. 82, No. 125 / Friday, June 30, 2017 / Rules and Regulations
forwarders and marine shipping agents.4 1 below). To estimate the average estimate that the weighted average
The Small Business Administration revenue of all firms under this NAICS revenue for small businesses in this
(SBA) publishes size standards that code, we first assumed that each firm in NAICS code is $1,496,197. The $190
determine the criteria for being each revenue category had receipts of increase in the broker exam fee, then,
considered a small entity for the the midpoint of the range. For example, represents 0.01 percent of the weighted
purposes of this analysis. The SBA we assumed that the 4,354 firms with average annual revenue for brokers. CBP
considers a business entity classified annual receipts of between $100,000 does not consider 0.01 percent of
under the 488510 NAICS code as small and $499,000 had average receipts of revenue per exam to be a significant
if it has less than $15 million in annual $300,000. We then used the number of impact. Accordingly, CBP certifies that
receipts. We obtained the number of firms in each category to calculate the this rule does not have a significant
firms in each revenue category provided weighted average revenue across all economic impact on a substantial
by the U.S. Census Bureau (see Exhibit small firms. Using this method, we number of small entities.
EXHIBIT 1—BUSINESS ENTITY DATA FOR NAICS CODE 488510
Annual receipts Number of
($) Small
firms
(Midpoint)
<100,000 (50,000) ........................................................................................................ 1,834 Yes.
100,000–499,999 (300,000) ......................................................................................... 4,354 Yes.
500,000–999,999 (750,000) ......................................................................................... 2,040 Yes.
1,000,000–2,499,999 (1,750,000) ................................................................................ 2,300 Yes.
2,500,000–4,999,999 (3,750,000) ................................................................................ 1,087 Yes.
5,000,000–7,499,999 (6,250,000) ................................................................................ 427 Yes.
7,500,000–9,999,999 (8,750,000) ................................................................................ 242 Yes.
10,000,000–14,999,999 (12,500,000) .......................................................................... 233 Yes.
>15,000,000 ................................................................................................................. 548 No.
Total ...................................................................................................................... 13,065 96 Percent are Small (12,517/13,065).
Source: U.S. Census Bureau.
Signing Authority Section 111.3 also issued under 19 U.S.C. § 111.13 Examination for individual
1484, 1498; license.
This document is being issued in Section 111.96 also issued under 19 U.S.C.
accordance with 19 CFR 0.2(a), which * * * * *
58c, 31 U.S.C. 9701. (b) Basic requirements, date, and
provides that the authority of the
Secretary of the Treasury with respect to § 111.11 [Amended] place of examination. In order to be
eligible to take the examination, an
CBP regulations that are not related to
■2. In § 111.11, paragraph (a)(4) is individual must on the date of
customs revenue functions was
amended by removing the words ‘‘a examination be a citizen of the United
transferred to the Secretary of Homeland
written’’ and adding in its place the States who has attained the age of 18
Security pursuant to section 403(l) of
word ‘‘an’’. years and who is not an officer or
the Homeland Security Act of 2002.
employee of the United States
Accordingly, this final rule to amend § 111.12 [Amended]
Government. CBP will publish a notice
such regulations may be signed by the
■ 3. In § 111.12, paragraph (a) is announcing each examination on its
Secretary of Homeland Security (or his
amended by removing the word Web site. Examinations will be given on
delegate).
‘‘written’’ from the two places that it the fourth Wednesday in April and
List of Subjects in 19 CFR Part 111 appears in the fifth and sixth sentences. October unless the regularly scheduled
Administrative practice and examination date conflicts with a
§ 111.13 [Amended] national holiday, religious observance,
procedure, Brokers, Customs duties and
inspection, Penalties, Reporting and or other foreseeable event and the
■ 4. In § 111.13:
recordkeeping requirements. agency publishes in the Federal
■ a. The section heading is revised; Register an appropriate notice of a
Amendments to the CBP Regulations ■ b. Paragraph (a) is amended by: change in the examination date. An
For the reasons given above, part 111 ■ 1. Removing the word ‘‘written’’ in the individual who intends to take the
of title 19 of the Code of Federal first sentence; examination must complete the
Regulations (19 CFR part 111) is ■ 2. Removing the words ‘‘and graded electronic application at least 30
amended as set forth below: at’’ in the second sentence and adding calendar days prior to the scheduled
in their place the word ‘‘by’’; and examination date and must remit the
PART 111—CUSTOMS BROKERS $390 examination fee prescribed in
■ 3. Removing the phrase
§ 111.96(a) at that time. CBP will give
■ 1. The authority citation for part 111 ‘‘Headquarters, Washington, DC’’ from
notice of the exact time and place for
continue to read as follows: the second sentence;
the examination.
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■ c. Paragraphs (b) through (d) and (f) (c) Special examination. If a
Authority: 19 U.S.C. 66, 1202 (General
Note 3(i), Harmonized Tariff Schedule of the are revised. partnership, association, or corporation
United States), 1624, 1641. The revisions read as follows: loses the required member or officer
4 http://www.census.gov/cgi-bin/sssd/naics/
naicsrch?code=488510&search=2012%
20NAICS%20Search.
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![Federal Register / Vol. 82, No. 125 / Friday, June 30, 2017 / Rules and Regulations 29719
having an individual broker’s license the examinee may challenge that result withholding of tax on certain U.S.
(see § 111.11(b) and (c)(2)) and its by filing a written appeal with the source income paid to foreign persons,
license would be revoked by operation Office of Trade at the Headquarters of information reporting and backup
of law under the provisions of 19 U.S.C. U.S. Customs and Border Protection, withholding with respect to payments
1641(b)(5) and § 111.45(a) before the Attn: Broker Management Branch, made to certain U.S. persons, and
next scheduled examination, CBP may within 60 calendar days after the date of portfolio interest paid to nonresident
authorize a special examination for a the written notice provided for in alien individuals and foreign
prospective applicant for an individual paragraph (e) of this section. CBP will corporations.
license who would serve as the required provide to the examinee written notice DATES:
licensed member or officer. CBP may of the decision on the appeal. If the CBP Effective Date: These corrections are
also authorize a special examination for decision on the appeal affirms the result effective June 30, 2017.
an individual for purposes of continuing of the examination, the examinee may Applicability Date: The corrections to
the business of a sole proprietorship request review of the decision on the §§ 1.1441–0; 1.1441–1(b)(7)(ii)(B),
broker. A special examination for an appeal by writing to the Executive (e)(3)(iv)(B) and (C), (e)(4)(ii)(B)(11),
individual may also be authorized by Assistant Commissioner, Office of (e)(4)(ix)(D), (e)(5)(ii) through
CBP if a brokerage firm loses the Trade, U.S. Customs and Border (e)(5)(ii)(B), (e)(5)(ii)(D) through
individual broker who was exercising Protection, within 60 calendar days after (e)(5)(v)(B)(3), (e)(5)(v)(B)(5) through
responsible supervision and control the date of the notice on that decision. (e)(5)(v)(D), and (f) through (f)(4);
over an office in another district (see 1.1441–1T; 1.1441–3(d)(1); 1.1441–4;
§ 111.19(d)) and the permit for that § 111.96 [Amended]
1.6045–1(m)(2)(ii) and (n)(12)(ii); and
additional district would be revoked by ■ 5. In § 111.96: 1.6049–5(c)(1) through (c)(4) are
operation of law under the provisions of ■ a. Paragraph (a) is amended by applicable on January 6, 2017.
19 U.S.C. 1641(c)(3) and § 111.45(b) removing the word ‘‘written’’ from the FOR FURTHER INFORMATION CONTACT:
before the next scheduled examination. second sentence and removing the Nancy Lee, (202) 317–6942 (not a toll-
A request for a special examination phrase ‘‘$200 examination fee’’ in the free number).
must be submitted to the Executive second sentence and adding in its place
SUPPLEMENTARY INFORMATION:
Assistant Commissioner, Office of the phrase ‘‘$390 examination fee’’; and
Trade, in writing and must describe the ■ b. Paragraph (e) is amended by Background
circumstances giving rise to the need for removing the words ‘‘United States The final and temporary regulations
the examination. If the request is Customs Service’’ and adding in their that are the subject of these corrections
granted, the Executive Assistant place the words ‘‘U.S. Customs and are §§ 1.1441–0, 1.1441–1, 1.1441–1T,
Commissioner, Office of Trade or his/ Border Protection, or paid by other CBP- 1.1441–3, 1.1441–4, 1.6045–1, and
her designee, will notify the prospective approved payment method’’. 1.6049–5, promulgated under sections
examinee of the exact time and place for Dated: June 27, 2017. 1441, 6045, 6049, and 7805 of the
the examination. If the individual Elaine C. Duke, Internal Revenue Code. These
attains a passing grade on the special regulations affect persons making
Deputy Secretary.
examination, the application for the payments of U.S. source income to
[FR Doc. 2017–13829 Filed 6–29–17; 8:45 am]
license may be submitted in accordance foreign persons and persons making
with § 111.12. The examinee will be BILLING CODE 9111–14–P
payments to certain U.S. persons subject
responsible for all additional costs to reporting and backup withholding.
incurred by CBP in preparing and
administering the special examination DEPARTMENT OF THE TREASURY Need for Correction
that exceed the $390 examination fee As published, the final regulations
prescribed in § 111.96(a), and those Internal Revenue Service
contain a number of items that need to
additional costs must be reimbursed to be corrected or clarified. Several
CBP before the examination is given. 26 CFR Part 1
portions of TD 9808 could not be
(d) Failure to appear for examination. [TD 9808] incorporated due to inaccurate
If a prospective examinee advises the amendatory instructions. Most of the
Office of Trade at the Headquarters of RIN 1545–BL17 correcting amendments to TD 9808 are
U.S. Customs and Border Protection, RIN 1545–BN74 needed to clarify or correct the results
Attn: Broker Management Branch, of these inaccurate amendatory
electronically in a manner specified by Regulations Regarding Withholding of
instructions. The correcting
CBP at least 2 working days prior to the Tax on Certain U.S. Source Income
amendments also include the addition,
date of a regularly scheduled Paid to Foreign Persons, Information
deletion, or modification of regulatory
examination that he will not appear for Reporting and Backup Withholding on
language to clarify the relevant
the examination, CBP will refund the Payments Made to Certain U.S.
provisions to meet their intended
$390 examination fee referred to in Persons, and Portfolio Interest
purposes, specifically to make a
paragraph (b) of this section. No refund Treatment; Correction
conforming change to the entry in the
of the examination fee or additional AGENCY: Internal Revenue Service (IRS), table of contents (§ 1.1441–0) for
reimbursed costs will be made in the Treasury. § 1.1441–1(e)(4)(ix); to correct
case of a special written examination typographical errors in §§ 1.1441–
ACTION: Correcting amendment.
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provided for under paragraph (c) of this 1(e)(4)(ix)(D), 1.1441–1T(c)(3)(ii), and
section. SUMMARY: This document contains 1.1441–3(d)(1); to clarify that
* * * * * corrections to final and temporary allowances for electronic signatures in
(f) Appeal of failing grade on regulations (TD 9808), which were § 1.1441–1T(e)(4)(i)(B) and use of third
examination. If an examinee fails to published in the Federal Register on party repository in § 1.1441–
attain a passing grade on the Friday, January 6, 2017 (82 FR 2046). 1T(e)(4)(iv)(E) are limited to Forms W–
examination taken under this section, These regulations are related to 8; to remove an obsolete cross-reference
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Document Created: 2017-06-30 06:01:38
Document Modified: 2017-06-30 06:01:38
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
| Publisher | Office of the Federal Register, National Archives and Records Administration | |
| Section | Rules and Regulations | |
| Action | Final rule. | |
| Dates | Effective July 31, 2017. | |
| Contact | Julia Peterson, Chief, Broker Management Branch, Office of Trade, U.S. Customs and Border Protection, (202) 863-6601, [email protected] | |
| FR Citation | 82 FR 29714 | |
| RIN Number | 1651-AB07 | |
| CFR Associated | Administrative Practice and Procedure; Brokers; Customs Duties and Inspection; Penalties and Reporting and Recordkeeping Requirements |
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