SUPPLEMENTARY INFORMATION:

Table of Contents

I. Public Participation

II. Background

III. Authority

IV. Challenges Relating to Foreign Importers of Record

V. Addressing the Challenges Relating to Foreign Importers of Record

VI. Explanation of Amendments to CBP Regulations

A. Amendments to New Part 110

B. Amendments to Part 111

C. Amendments to Part 141

D. Amendments to Part 142

E. Amendments to Part 171

F. Severability

G. Alternative and Request for Comments

VII. Delayed Compliance Date

VIII. Statutory and Regulatory Requirements

A. Administrative Procedure Act

B. Executive Orders 12866, 13563 and 14192

C. Regulatory Flexibility Act

D. Paperwork Reduction Act

E. Unfunded Mandates Reform Act of 1995

IX. Signing Authority

I. Public Participation

Interested persons are invited to participate in this rulemaking by submitting written data, views, or arguments on any aspect of this rulemaking. U.S. Customs and Border Protection (CBP) also invites comments that relate to the economic or federalism effects that might result from this rule. If appropriate to a specific comment, the commenter should reference the specific portion of the rule, explain the reason for any recommended change, and include data, information, or authority that supports the recommended change.

II. Background

On June 3, 2026, the President signed Executive Order (E.O.) 14411 (Strengthening Customs Enforcement).^[1] Section 1 of the E.O. emphasizes the importance of customs enforcement for purposes of national security, foreign policy, and the economy of the United States. It further states that effective customs enforcement prevents the importation of unlawful and dangerous goods, ensures importers of record (IORs) are correctly identified and held accountable for duties owed, and guarantees compliance with numerous Federal laws, including laws governing forced labor, rules of origin, origin marking, intellectual property, revenue collection, and product safety.

The E.O. calls for customs reform to remedy systemic inefficiencies, loopholes, insufficient enforcement mechanisms, and outdated processes that have created opportunities for malign actors to evade Federal law. IORs often use various arrangements and schemes to undervalue imports, withhold critical information about themselves and the goods being imported or its production process, and/or avoid payment of duties. These actions threaten national security, threaten product safety, undermine foreign relations, disadvantage domestic businesses, and harm Americans.

Sections 2(b) and (c) of E.O. 14411 direct the Secretary of the Department of Homeland Security, through the issuance or modification of relevant regulations, policy or guidance, to prohibit foreign IORs from making informal entry pursuant to 19 U.S.C. 1498 and to require foreign IORs who want to make formal entry to either be a Customs Trade Partnership Against Terrorism (CTPAT) validated participant or use a licensed customs broker who is a CTPAT validated participant. Section 10 of the E.O. provides definitions for certain terms, such as “foreign IOR” and “U.S. IOR,” that are intended to assist in the enforcement of the E.O.'s directives.

One of CBP's many critical mission sets is to facilitate legitimate trade that supports economic growth while shielding the American public and businesses from illicit trade, including unsafe products, intellectual property theft, and unfair trade practices. In particular, with respect to foreign IORs, CBP faces challenges enforcing their financial obligations to the U.S. government arising from lost revenue, such as from unpaid duties and taxes. In addition, CBP cannot easily ensure that foreign IORs are complying with U.S. customs and trade laws to prevent the importation of dangerous and ( printed page 69978) unlawful goods. These challenges exist primarily because foreign IORs and their assets are primarily located outside the United States.

Consistent with the E.O. and governing statutes, this rulemaking addresses the challenges presented by foreign IORs. Section 2(b) of the E.O. instructs CBP to prohibit foreign IORs from filing informal entry because, among other reasons, such IORs are not similarly situated to U.S. IORs and may be less familiar with U.S. customs laws. Foreign IORs also present challenges when CBP pursues enforcement actions against them. Similarly, Section 2(c) of the E.O. instructs CBP to prohibit foreign IORs who have not been vetted by CBP through CTPAT validation from making formal entry, unless they rely on a CTPAT validated broker to file the entry. This is necessary to treat all IORs equally based on their individualized circumstances to protect the revenue and strengthen national security.

Through CTPAT validation of IORs, CBP is able to ensure proper vetting of foreign IORs that mitigates risks to revenue, domestic industry, American consumers, and national security—CTPAT validation allows CBP to pursue effective enforcement against foreign IORs and provides heightened visibility into their corporate structures and supply chains. Because CTPAT validation offers CBP stronger insight into foreign IORs, CBP is not prohibiting foreign IORs who are CTPAT validated from filing informal entry in this rulemaking. Similarly, CBP is not prohibiting foreign IORs from filing informal entry through a CTPAT validated broker in this rulemaking. However, as further detailed in section VI.G. below, CBP will be monitoring the informal entries filed by foreign IORs and their brokers following the effective date of the rule. If CBP determines that informal entries filed by foreign IORs present risks to the revenue, national security, or public health and safety, CBP will take action to fully prohibit foreign IORs from using informal entry to enter goods for consumption.

CBP will only allow a foreign IOR to enter goods for consumption ^[2] on its own behalf, i.e., to serve as the IOR for the entry, whether an informal or formal entry,^[3] if the foreign IOR is CTPAT validated. Further, consistent with Section (2)(c) of the E.O., the only way for a foreign IOR who is not CTPAT validated to secure the entry and release of goods is by designating a CTPAT validated and licensed customs broker to make entry on the foreign IOR's behalf.

This rulemaking implements these requirements for foreign IORs when filing entries pursuant to the authority in 19 U.S.C. 1484 and 1498. This rule will assist CBP in preventing foreign parties from evading U.S. customs and trade laws and will level the playing field for U.S. IORs by holding foreign IORs to the same standards and enforcement mechanisms to which U.S. IORs are currently held. Heightened requirements for foreign IORs will further CBP's mission to protect the American public and ensure the collection of revenue owed to the United States. With this rule, foreign IORs are prohibited from making informal entry of merchandise for consumption for which a CBP Form 3461 or 7501 must be filed unless the foreign IOR is either a CTPAT validated participant or uses a CTPAT validated and licensed customs broker. To make formal entry, a foreign IOR must also either be a CTPAT validated participant or use a CTPAT validated and licensed customs broker to enter merchandise for consumption. Foreign parties who are not CTPAT validated IORs must designate a licensed customs broker who is a CTPAT validated participant to file entry on their behalf. A designated licensed customs broker who is a CTPAT validated participant must act as the importer of record for the entry if such foreign parties are not the owner or purchaser of the merchandise being entered.

CBP is leveraging the CTPAT program to increase transparency as to foreign IORs transacting customs business in the United States and to better identify the merchandise they are importing. CTPAT validated participants have been vetted by CBP, have demonstrated that they are meeting certain security requirements, i.e., the minimum security criteria (MSC), and have a known history of compliance, resulting in a higher degree of accountability and visibility into the foreign IOR's supply chain and security. Where a customs broker is acting on behalf of a foreign party, CBP is utilizing the existence of CTPAT validated and licensed brokers in the transaction to ensure transparency and accountability for a segment of the trade that presents higher risk than others.

III. Authority

Under section 66 of title 19 of the United States Code (19 U.S.C. 66), the Secretary of the Treasury ^[4] is authorized to prescribe regulations to be used in carrying out the provisions of laws relating to raising revenue from imports or to duties on imports, or to warehousing, and give directions to CBP officers and prescribe such rules and forms to be observed by them as may be necessary for the proper execution of the law. Section 1624 of title 19 (19 U.S.C. 1624) authorizes the Secretary of the Treasury to make such rules and regulations as may be necessary to carry out the provisions of the Tariff Act of 1930, codified at 19 U.S.C. 1001 et seq.

Section 4320 of title 19 (19 U.S.C. 4320) ^[5] authorizes the Secretary of the Department of Homeland Security (DHS) to establish, among other things, a program that ensures collection of sufficient information to allow CBP to verify the existence of an IOR (19 U.S.C. 4320(b)(1)(A)), sufficient information to allow CBP to identify linkages or other affiliations between importers (19 U.S.C. 4320(b)(1)(B)), and sufficient information to allow CBP to identify changes in address and corporate structure of an importer (19 U.S.C. 4320(b)(1)(C)). Section 4321 of title 19 (19 U.S.C. 4321) authorizes the Commissioner of CBP, as part of an importer risk assessment program, to develop risk assessment guidelines for ( printed page 69979) IORs, including nonresident importers,^[6] and procedures to ensure increased oversight of products imported by new nonresident importers relating to the enforcement of priority trade issues. ^[7] See19 U.S.C. 4321(a) and (b). Section 4321(c) excludes validated Tier 2 and Tier 3 CTPAT participants from the requirements of 19 U.S.C. 4321.^[8]

Sections 1484 and 1498 of title 19 (19 U.S.C. 1484 and 1498) authorize the Secretary of the Treasury to prescribe regulations for the declaration and entry of merchandise. All merchandise imported into the customs territory of the United States is subject to entry and clearance procedures, unless excepted. See section 141.4(a) of title 19 of the Code of Federal Regulations (19 CFR 141.4(a)). These procedures ensure the proper appraisement, valuation, and tariff classification of the merchandise for the purpose of collecting the lawful amount of duties owed, as well as ensuring compliance with all laws and regulations administered and enforced by CBP. Sections 1484 and 1498 provide for different procedures for the entry and clearance of merchandise depending upon the aggregate value of the shipment. There are “formal entry” procedures established by 19 U.S.C. 1484 and 1485, which are generally applicable to shipments of merchandise valued in excess of $2,500. Title 19 CFR part 142 implements 19 U.S.C. 1484, as amended, and prescribes formal entry procedures.

Section 1498 of title 19 (19 U.S.C. 1498) authorizes special rules and regulations for the entry of certain merchandise, which includes section 1498(a)(1)(A) concerning shipments of merchandise valued at $2,500 or less (referred to as “informal entries”). Such entries may be, but are not required to be, subject to the requirements for formal entry prescribed at 19 U.S.C. 1484 and 1485. Informal entry regulations are found at 19 CFR part 143, subpart C. While informal entries are “excepted” from formal entry requirements, as noted, the Secretary of the Treasury may include any formal entry requirement in the rules and regulations governing informal entry. 19 U.S.C. 1498(b). The statutory framework of 19 U.S.C. 1498 authorizes, in effect, a less stringent entry process than under 19 U.S.C. 1484, which has developed into a process with fewer forms and procedures as compared to the formal entry process. As a result, informal entry procedures are generally less burdensome and complex than the formal entry procedures. However, CBP may require formal entry for any merchandise if deemed necessary for purposes of admissibility, revenue protection, or the efficient conduct of customs business. 19 CFR 143.22.

Section 1641 of title 19 (19 U.S.C. 1641) authorizes the Secretary of the Treasury to prescribe such regulations relating to the customs business of customs brokers as the Secretary considers necessary to protect importers and the revenue of the United States, including regulations relating to the furnishing of information to CBP, and to carry out the provisions of 19 U.S.C. 1641.

Section 1592 of title 19 (19 U.S.C. 1592) authorizes CBP to assess civil penalties against any person who, by fraud, gross negligence or negligence, enters or introduces, or attempts to enter or introduce, merchandise into commerce of the United States by means of a material false statement or omission.

The Security and Accountability for Every (SAFE) Port Act of 2006 (Pub. L. 109-347, 120 Stat. 1884 (2006), 6 U.S.C. 961 et seq.) authorizes the Secretary of DHS, acting through the Commissioner of CBP, to establish a voluntary government-business initiative to build cooperative relationships that strengthen and improve overall security of the international supply chain and U.S. border security, and facilitate the movement of secure cargo through the international supply chain, known as CTPAT. See6 U.S.C. 962, 964 and 965. The CTPAT program plays a crucial role in safeguarding the economic and national security of the United States by acting as a vital component of CBP's multi-layered, risk-based security strategy. By securing international supply chains, the program helps prevent the entry of terrorist weapons, narcotics, and other contraband, thereby mitigating threats to national security. The CTPAT program contributes to the nation's prosperity by ensuring the free and fair flow of legitimate trade, preventing costly disruptions, and fostering a secure trade environment. The program's commitment to customs and trade enforcement provides an essential platform to combat trade fraud and protect American consumers and industries.

CBP encourages participation in this program by providing benefits to participants meeting or exceeding the CTPAT program requirements. An individual or company ^[9] that wishes to participate in the CTPAT program must complete an application in the CTPAT Portal ^[10] demonstrating that it meets the MSC ^[11] to establish eligibility for the program. Once a company is accepted into the program and receives “certified” status, the CTPAT participant will undergo a validation to verify the participant's supply chain security processes. 6 U.S.C. 964. At the conclusion of a successful validation, the participant will be granted “certified—validated” status. 6 U.S.C. 965. Upon becoming a participant in the CTPAT program, an individual or company enjoys a variety of benefits, which are listed on CBP's website at www.cbp.gov/​border-security/​ports-entry/​cargo-security/​ctpat.^[12]

IV. Challenges Relating to Foreign Importers of Record

Unlike other countries that either do not allow foreign persons to act as an IOR or have strict processes for becoming a foreign IOR,^[13] in the United ( printed page 69980) States, a foreign individual or entity may become an IOR and make entry in the United States solely by submitting CBP Form 5106 (Create/Update Importer Identity Form) to request a CBP-assigned number, or by using an Internal Revenue Service (IRS) Employer Identification Number (EIN), which provides only basic contact and business information to CBP. Many of the foreign individuals and entities who become IORs appear to be U.S.-based in the Automated Commercial Environment (ACE) because they list a U.S. address, which may be the address of an agent or post office box for mail. In reality, these foreign individuals or entities have no physical presence and no assets beyond a mailing address in the United States and are considered shell companies. These shell companies obscure the real identity and corporate structure of their owner,^[14] as well as ownership of the entity's assets, enabling tax evasion, financial fraud and other financial crimes. Due to the anonymity of a shell company's identity and the identity of its owner(s), it is difficult to track and verify the company's financial transactions, including customs entries, and to prevent the importation of potentially unsafe merchandise, such as counterfeit goods and precursor chemicals for the purposes of manufacturing illicit substances, into the United States. Thus, these shell companies pose a significant threat to national security, economic security, and public safety.

These shell companies may also engage in misclassification, undervaluation, or other duty evasion schemes, knowing that CBP's options for enforcement are limited when assets and individuals are located outside of the United States and that it is more difficult for CBP to detect linkages and affiliations. In such cases, when detected by CBP, these shell company IORs may be placed on live entry pursuant to 19 CFR 142.13(a)(3), which mandates the filing of an entry summary and deposit of all estimated duties, taxes, and fees owed to obtain the merchandise's release from CBP custody, and may have their immediate delivery privileges discontinued pursuant to 19 CFR 142.25(a). However, the shell company IOR may export the shipment rather than pay the estimated duties, taxes, and fees at that time, making collection efforts fruitless, and later attempt to re-enter the goods under a different shell company. Enforcement actions against shell companies are challenging because the foreign entity may simply shut down an existing shell company and begin importing as a new shell company. When an IOR is registered with CBP by submitting CBP Form 5106, CBP is only aware that the entity is a foreign IOR if the IOR lists its foreign address.^[15] Once the IOR has begun importing and becomes liable for the payment of duties, penalties, or liquidated damages, CBP may later learn through its investigations and enforcement actions that an IOR who listed a U.S. address was in reality a shell company set up on behalf of a foreign company to avoid paying CBP debts that become due or evade other enforcement consequences. By this point, the economic damage undercutting U.S. domestic industry has already been completed.

The United States faces substantial challenges when seeking to enforce U.S. customs and trade laws against foreign IORs. One of these challenges is the enforcement of financial obligations to the U.S. government, including duties. Pursuing the collection of duties, penalties, and liquidated damages is often ineffective because these entities' operations are outside U.S. jurisdiction, and their assets and key individuals are located outside U.S. jurisdiction. While CBP can use tools such as “live entry” ^[16] and discontinuance of immediate delivery privileges pursuant to 19 CFR 142.13 and 142.25 to secure future obligations, amounts already owed to CBP often go uncollected if the entity is unwilling to pay. Data collected from October 2020 through the beginning of February 2026 shows that the unpaid bill amount per entry is $29.16 for foreign IORs as compared to $22.57 for U.S. IORs, which is 29% lower for U.S. IORs.^[17] As of February 6, 2026, the total principal bill amount (not including interest) owed by non-CTPAT foreign IORs for uncollected bills that were opened on or after October 1, 2020, and remained unpaid, was $1.01 billion. After CBP audits uncovered $1.16 billion in lost revenue from foreign IORs between January 1, 2020, and August 27, 2026, CBP was able to recoup only $35.7 million, implying a collection rate of 3.1% for the missed payments.^[18] For U.S. IORs, that collection rate was 15.2%. Additionally, live entry and discontinuance of immediate delivery privileges are limited in their effectiveness where foreign IORs reconstitute their identities and create new fake companies. These new shell companies operate under a different name and exist solely to evade enforcement consequences for violations of U.S. law. While CBP's enforcement authority extends to any individual or entity importing merchandise into the United States, enforcement is often more effective against individuals and entities located within the United States. When an IOR's operations and the majority if not all of its financial assets are located outside the United States, CBP's ability to compel compliance with U.S. customs and trade laws, conduct investigations, collect owed revenue, identify linkages and affiliations, or enforce penalties is significantly reduced. Moreover, the government's ability to pursue legal action against, or collect duties from, these foreign entities is more complex because they are not subject to U.S. jurisdiction due to the revenue rule.

The revenue rule is a longstanding common law doctrine that permits the courts of one country to refuse to entertain lawsuits that are initiated by a foreign country to enforce the foreign country's revenue laws. Her Majesty the Queen v. Gilbertson, 597 F.2d 1161, 1164-1165 (9th Cir. 1979); see also Holman v. Johnson, (1775) 98 Eng. Rep. 1120-1121 (K.B. 1775) (stating that “no country ever takes notice of the revenue laws of another”). The rationale behind the rule is threefold: first, the international principle of comity precludes the courts of one nation from scrutinizing (and potentially bringing embarrassment upon) the public laws of another nation; second, one nation's utilization of another nation's court system to enforce its own revenue laws is an extension of the former nation's sovereign power, and that assertion of sovereign power within the territory of another nation violates national sovereignty principles; and third, permitting the courts of one nation to interpret the complex revenue laws of a ( printed page 69981) foreign nation would result in great administrative difficulties at great expense to the interpreting nation. Gilbertson, 597 F.2d at 1164 (quoting Moore v. Mitchell, 30 F.2d 600, 604 (2nd Cir. 1929)); Gov't of India v. Taylor, (1955) A.C. 491, 511-514 (H.L. 1955). Thus, the revenue rule protects the independent sovereignty of each nation and prevents the courts of one country from becoming an extension of the judicial branch of another. Lawsuits to recover U.S. customs duties, penalties, and liquidated damages are all within the jurisdiction of the federal courts. See, e.g.,28 U.S.C. 1331, 1582. However, enforcement of such a judgment from a federal court in a foreign jurisdiction would likely be precluded by that jurisdiction's observance of the revenue rule, or at least time-consuming and exceedingly difficult to pursue.

Verification of the accuracy of import and entry documentation, conducting audits, or performing site visits of a foreign IOR's premises are all considerably more difficult and resource intensive for foreign IORs. CBP also faces challenges in enforcing CBP recordkeeping requirements on foreign IORs. Although all importers, foreign and U.S., are subject to recordkeeping requirements under 19 U.S.C. 1508, it is much easier and more straightforward for CBP to conduct document verification and examination of records for domestic entities. Communication barriers and lack of understanding of U.S. laws and regulations can further hamper CBP's enforcement ability and result in delays, difficulty in resolving issues, and a higher incidence of errors and non-compliance.

Generally speaking, it is inherently more complex for CBP to ensure compliance by foreign IORs, as compared to U.S. IORs. Foreign IORs may exploit U.S. customs and trade laws and refuse to pay their customs debts, knowing the challenges posed by international enforcement of domestic customs laws and regulations. Because of these challenges in holding foreign IORs accountable, there is decreased incentive for foreign IORs to comply with U.S. laws and regulations intended to ensure the safety of imported merchandise and to secure the revenue; foreign IORs avoid the consequences that U.S. IORs face, because their assets and key individuals may be beyond the reach of CBP and the U.S. courts. Principles such as the revenue rule reinforce why it is important for the United States to impose heightened requirements on foreign IORs, who can more easily evade payment of amounts owed and other consequences for noncompliance with U.S. customs and trade laws. These challenges are unique in the context of foreign IORs.

V. Addressing the Challenges Relating to Foreign Importers of Record

It is critical that CBP be able to counter the challenges discussed above through meaningful and effective enforcement actions. Thus, pursuant to the authorities set forth above, and consistent with E.O. 14411, CBP is implementing additional requirements for foreign IORs to make entry. This rule will require foreign IORs to be CTPAT validated, or to use a CTPAT validated and licensed customs broker to make entry. These new requirements will promote compliance and accountability. Licensed customs brokers will have new responsibilities corresponding with the new foreign IOR requirements to verify and declare that their client meets the qualifications to be considered a U.S. IOR before reporting as a U.S. IOR. Lastly, this rule will impose a new requirement on U.S. IORs to declare their qualification as a U.S. IOR.

To implement these new requirements, CBP is establishing a new part 110 (Importers of Record) in title 19 of the CFR. This new part contains two sections laying out the qualifications to be considered a “U.S. importer of record,” or “foreign importer of record,” as well as a new definitions section defining the terms “beneficial owner,” and “physical domestic assets.” This new part 110 provides predictability and standardization for trade members which previously did not exist.

First, CBP establishes the requirements that must be met to be considered a U.S. IOR in new 19 CFR 110.2(a), to allow CBP, IORs, and customs brokers to know who qualifies as a U.S. IOR and who does not. Pursuant to this new provision, a U.S. IOR is an individual who is a United States citizen or lawful permanent resident, or an entity that is organized under the laws of the United States, is located in the United States, and maintains at all times: (i) at least 51% of beneficial owner(s) who are United States citizens or lawful permanent residents and have control of the entity; or (ii) direct ownership of a significant amount of unencumbered real property in the United States. With respect to real property ownership, the property can be subject to some encumberment, but the net unencumbered value of the real property must be of a significant amount. Whether an individual or entity qualifies as a U.S. IOR is subject to verification by CBP as set forth in a new § 110.2(b). A foreign IOR is defined as an IOR who does not meet the criteria of a U.S. IOR, pursuant to § 110.3.

In the new § 110.2(b), CBP has set forth a verification process for confirming that a party meets the requirements to be considered a U.S. IOR. The determination of whether an entity qualifies as a U.S. IOR or a foreign IOR will vary depending upon the circumstances in each instance. To verify that an entity is located in the United States for qualification as a U.S. importer of record, CBP will take into account, among other considerations, the size and scale of the overall operations of the entity and whether it is an instrumentality of a foreign manufacturer without a substantial presence in the United States. Criteria which CBP may consider in its discretion and to the extent relevant, include, but are not limited to, whether: (1) the entity's principal place of business is in the United States; (2) the entity has a physical presence in the United States where substantial business transactions are conducted, such as paying employees, generating revenue, or operating retail locations; (3) the entity maintains sufficient unencumbered physical domestic assets, as defined in § 110.1; (4) the entity directly owns a sufficient amount of unencumbered real property in the United States; (5) the entity's gross sales generally exceed its cost of goods sold and the entity is structured in a manner that it is anticipated to generate its own profit; and (6) the entity is sufficiently capitalized. As good governance, CBP is providing this non-exhaustive list of criteria that CBP will consider when verifying the identity and status of an IOR. These criteria are flexible as CBP cannot predict all possible circumstances that may be relevant for verification purposes. Having the newly created criteria available will allow CBP to verify that an entity's declaration meets the requirements under § 110.2, which in turn increases supply chain security, revenue protection, and compliance with the customs law of the United States.

In its verification, CBP may review records, such as, proof of citizenship or lawful permanent residence, corporate charters, financial statements and records, purchase receipts, or documents of title, provided at the request of CBP. Pursuant to 19 U.S.C. 1508, an IOR, or other party who imports merchandise into the customs territory of the United States, or an agent of an IOR or person whose activities require the filing of a declaration or entry, or both, must make, keep, and render for examination and inspection records which pertain to ( printed page 69982) any such activity and are normally kept in the ordinary course of business.^[19] To ensure CBP can adequately verify the status of IORs, the IOR must, pursuant to 19 U.S.C. 1508, comply with statutory recordkeeping and production requirements, and CBP retains the authority to request proof from the IOR as to its qualification as a U.S. IOR.

CBP is taking a comprehensive approach to distinguish the level of risk associated with foreign and U.S. IORs, to establish requirements commensurate with that risk, thus putting all importers (including nonresident importers as described in 19 U.S.C. 4321) on equal footing. These new regulatory provisions require consideration of both substance (such as ownership, physical presence, and U.S.-based assets) and form (such as place of incorporation or organization and address) as indicators of whether an individual or entity is a U.S. or foreign IOR. The existing references to a “nonresident importer” in CBP regulations (found in subparts B and C of part 141) capture importers who are not U.S. citizens or lawful permanent residents or not entities organized under the laws of the United States or its territories; that is, importers who have met a low threshold to qualify as nonresident importers. A nonresident importer could simply be an importer who is not incorporated within the customs territory of the United States (§ 141.18), whereas a foreign IOR is an individual or entity who has not satisfied a variety of specific criteria, such as at least 51% beneficial ownership or direct ownership of a significant amount of unencumbered real property in the United States. The existing references to a “nonresident importer” within CBP regulations are not in conflict with the new regulations for U.S. IORs and foreign IORs, as these new regulations create additional requirements for importers. The regulatory changes implemented by this rule that distinguish a U.S. IOR from a foreign IOR present a clearer framework for importers and a higher threshold to qualify as a U.S. IOR. Central to these new definitions is ensuring that physical assets of the importer are located in the United States, increasing the likelihood that CBP can collect revenue owed from all IORs and enabling CBP to better identify potential linkages and affiliations when an importer's assets are transferred.

In support of § 110.2(a)(2)(iii)(A) regarding U.S. IORs, CBP is defining the term “beneficial owner” in new § 110.1. CBP is including the “beneficial owner” condition in the requirements for a U.S. IOR because illicit actors often use corporate structures, such as shell companies, to conceal their identities, which undermines U.S. national security and threatens the domestic economy. Shell companies can shield identities of the beneficial owners, enabling them to transact business in the United States without facing legal consequences and evading enforcement mechanisms, creating an uneven playing field for U.S. businesses engaged in legitimate trade. Including a definition of “beneficial owner” enables CBP to identify the true individual or individuals exercising control over the entity responsible for the importation of goods. Also, by defining “beneficial owner,” CBP is providing clarity and transparency to trade members as to CBP's understanding of who qualifies as a beneficial owner. At the same time, CBP is facilitating compliance and revenue collection as a clear definition will reduce the ability of bad actors to use shell companies to evade duties and other customs and trade law requirements.

The term “beneficial owner” means, with respect to an entity, an individual who is a natural person, and directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise, either exercises substantial control over the entity, or owns or controls not less than 25 percent of the ownership interests of the entity. The “beneficial owner” definition includes circumstances where multiple layers of entity ownership exist between the natural person and the entity, such as a corporation that is owned by another corporation that is owned by a natural person, in which case the natural person is the beneficial owner despite the layers of entity ownership. The definition specifically excludes: (1) a minor child, as defined in the State in which the entity is formed, or in the case of an entity that was not formed in the United States an individual who has not yet attained the age of 18, if the parent or guardian of the minor child meets the definition of a beneficial owner; (2) an individual acting as a nominee, intermediary, custodian, or agent on behalf of another individual; (3) an individual acting solely as an employee of a corporation, limited liability company, or other similar entity and whose control over or economic benefits from such entity are derived solely from the employment status of the person, provided that such a person is not a senior officer; (4) an individual whose only interest in a corporation, limited liability company, or other similar entity is through a right of inheritance; or (5) a creditor of a corporation, limited liability company, or other similar entity, unless the creditor meets the requirements of an individual who, directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise exercises substantial control over the entity or owns or controls not less than 25 percent of the ownership interests of the entity. For purposes of this definition, an individual might be a beneficial owner through substantial control, ownership interest, or both. Substantial control can be exercised by an individual who is either a senior officer ( e.g., the entity's president, or chief executive officer), has the authority to appoint or remove certain officers of the entity, or is an important decision-maker regarding the entity's business, finances and structure. Ownership interests that establish ownership rights in the entity include shares of equity, stock voting rights, or any other mechanism used to establish ownership. As all entities are substantially controlled by one or more individual(s), every entity must have at least one beneficial owner for purposes of determining as to whether an entity is a U.S. IOR. An entity may have multiple beneficial owners and there is no maximum number of beneficial owners.

To develop this definition, CBP reviewed a preexisting Financial Crimes Enforcement Network (FinCEN) definition (31 CFR 1010.380(d)), established by statute ^[20] to provide further consistency for the overall understanding of “beneficial owner” and expectations for trade members. This definition expands on the FinCEN definition by adding a paragraph to account for instances where an entity is incorporated/formed in the United States and is owned entirely by one or more other entities that are also incorporated/formed in the United States, but the natural persons who ultimately own the various layers of entities are not U.S. citizens or lawful permanent residents. This additional language is intended to clarify that natural persons must be identified as the beneficial owners, even where multiple layers of entity ownership exist ( printed page 69983) and that such multiple layers of entity ownership do not diminish the obligation to report the natural person beneficial owners. It is noteworthy that “beneficial owner” is defined in this document for the purpose of this rulemaking and CBP is not bound by FinCEN's interpretation of that term in other contexts, nor are these regulations impacted by whether FinCEN requires submission of beneficial ownership information.

Lastly, CBP is adding a definition of “physical domestic assets,” which becomes relevant when CBP verifies whether an IOR qualifies as a U.S. IOR pursuant to new § 110.2(b)(3). “Physical domestic assets” are defined as cash deposited in a U.S. bank account, U.S. Treasury bonds, and real property, inventory, machinery, and/or equipment that is physically located in the United States. It is important to note that CBP did not use the term “tangible” in this context as tangible assets may include accounts receivable which CBP purposefully excluded from this definition. Assets identified as physical domestic assets in CBP's definition are more readily capable of being traced and seized, which increases the likelihood of successful collection of customs debts. The physical nature of the assets is important for serving the purpose of these regulations. Valuation of intangible assets is often speculative and subject to manipulation, particularly in the context of IORs who may be structured as a separate entity from a retailer ultimately selling the product to the public. Additionally, receivables may be due from foreign parties, creating the potential for manipulation of their valuation and diminishing the likelihood of collection.

This definition of “physical domestic assets” covers a limited universe of assets that are relevant for the purpose of determining affiliations of entities. CBP needs to understand affiliations because foreign IORs can easily evade CBP requirements and verifications by creating new companies. By considering the types of assets covered under this definition, CBP is better able to identify shell companies that foreign actors use to evade U.S. customs laws. In addition, CBP's ability to pursue collection from successor companies, alter egos ^[21] or other parties when piercing the corporate veil ^[22] is increased, potentially reaching physical domestic assets improperly transferred to individuals tied to the shell company, such as corporate officers or shareholders.

CBP is adding two new sections to subpart B of part 141 (§ 141.21 and § 141.22), pertaining to the right to make entry and declarations on entry. Pursuant to paragraph (a) of new § 141.21, a foreign IOR, as defined in § 110.3, may not enter merchandise for consumption unless specific requirements are met. This restriction is applicable to merchandise entered for consumption (§ 141.0a(f)) for which a formal entry is required to be filed or, if an informal entry is filed, for which an informal entry is required to be filed on CBP Form 3461 and/or CBP Form 7501, or their electronic equivalents.^[23]

Pursuant to § 141.21(b)(1), if the foreign IOR is CTPAT validated and has the right to make entry pursuant to § 143.26 for informal entry or 19 U.S.C. 1484(a)(2)(B) for formal entry, the foreign IOR may enter merchandise for consumption or designate a customs broker to make entry. A CTPAT validated foreign IOR choosing to hire a customs broker may elect to hire a CTPAT validated broker, or a non-CTPAT validated broker.

Pursuant to § 141.21(b)(2), a foreign IOR who is not CTPAT validated must designate a customs broker licensed under 19 U.S.C. 1641 who is validated through the CTPAT program to either make entry or to act as the importer of record on the entry.^[24] If a customs broker acts as the importer of record for the entry on behalf of a principal on the power of attorney (§ 141.46) who is not an importer of record, and that principal would qualify as a foreign importer of record pursuant to § 110.3 of this chapter, the broker must also be validated through the CTPAT program. The designated customs broker who is validated through the CTPAT program must act as the IOR for the entry if the principal on the power of attorney (§ 141.46) is not the owner or purchaser of the merchandise.

It is important to note that, upon the effective date of this rule (January 5, 2027), being a licensed customs broker alone is not sufficient to file entry on behalf of a foreign IOR or a foreign principal on a broker's power of attorney, unless that foreign IOR is itself a CTPAT validated IOR. CBP has limited visibility into the information pertaining to a foreign party when a customs broker is filing the entries on behalf of the foreign party. A CTPAT validated broker has demonstrated to CBP that it has controls in place to give the broker insight into its client and the client's supply chain. As a result, CBP is requiring that a customs broker acting on behalf of a non-CTPAT validated foreign IOR be CTPAT validated, to ensure that a trusted party is filing the entry and entry summary. This places CBP in a better position to protect the revenue, ensure supply chain security, and guarantee the safety of the American public.

CTPAT is highly effective in securing international supply chains by requiring its participants to implement stringent security measures for their cargo, personnel, and facilities. This program encourages companies to proactively identify and mitigate risks such as terrorism, smuggling, and other illicit activities within their supply chains. By partnering with the private sector, CTPAT enables CBP to enhance cargo security and streamline legitimate trade, allowing enforcement resources to focus on higher-risk shipments. CTPAT's primary focus is on security and trade compliance, and its operational model inherently promotes transparency. The program requires participants to submit detailed security profiles and engage in a rigorous validation process with CBP to confirm compliance with established MSC, fostering a clear understanding of security practices between the government and the trade community. In addition, CBP is more likely to collect debt from CTPAT validated participants than from non-CTPAT participants. The analysis in section VIII.B. below shows that, on average, the uncollected bill amount per entry summary for CTPAT validated foreign IORs is much lower than for non-CTPAT foreign IORs, who more easily evade payment of outstanding bills, penalties, or claims for liquidated damages.

New § 141.22 regulates entry by a U.S. IOR and addresses the declaration requirement for U.S. IORs, including verification of the declaration by CBP. Pursuant to paragraph (a), a party who has the right to make entry and meets the requirements to be considered a U.S. ( printed page 69984) IOR, as defined in § 110.2, may continue to enter merchandise without the need for CTPAT validation, subject to the existing requirements and applicable procedures for formal entry and informal entry in 19 CFR parts 142 and 143. U.S. IORs may also elect to designate a customs broker who is not CTPAT validated. At the time of filing an entry (§ 141.0a(a)) and entry summary (§ 141.0a(b)), qualification as a U.S. IOR must be declared. Before filing, the IOR, or the broker on behalf of the IOR, must review the requirements in § 110.2, as well as the definitions for “beneficial owner,” and “physical domestic assets,” and assess whether all the criteria of a U.S. IOR are met. If the party satisfies the criteria, the IOR or the broker on behalf of the IOR must select the checkbox ^[25] on CBP Forms 3461 and 7501, declaring the qualification as a U.S. IOR. CBP updated CBP Forms 3461 and 7501, and their electronic equivalents, by adding a checkbox for IORs (or customs brokers filing an entry on their behalf) to declare that the IOR or principal on the power of attorney (§ 141.46) meets the criteria of a U.S. IOR. Foreign IORs and principals who do not meet the requirements to be considered a U.S. IOR under § 110.2 should leave this checkbox blank, to indicate that they are instead covered by § 110.3. Beginning January 5, 2027 these updated forms, and their electronic equivalents, must be used for each entry and entry summary filing.

If a designated customs broker who is not CTPAT validated acts as the IOR for the entry on behalf of a client, § 141.22(a)(2) requires that the customs broker identify the principal on the power of attorney at the time of filing an entry (§ 141.0a(a)) and entry summary (§ 141.0a(b)). As a result, the principal must have a CBP Form 5106 on file with CBP. On the updated CBP Forms 3461 and 7501, and their electronic equivalents, the customs broker will select the checkbox indicating that the broker is acting as the IOR on behalf of a principal, and provide the principal's IOR number, if applicable, or other identifier linked to the CBP Form 5106 on file, if no IOR number exists. If the broker is not making entry on behalf of a principal and is instead identified as the IOR to make entry on their own behalf, no principal need be identified.

New § 141.22(b) states that for purposes of a verification conducted under § 110.2(b), the decision as to whether an individual or entity qualifies as a U.S. IOR will be made by the appropriate Center of Excellence and Expertise (Center) Director.^[26] The appropriate Center is the importer's assigned Center, or if an importer has not yet been assigned to a Center, the appropriate Center is the Center that most closely aligns with the Harmonized Tariff Schedule of the United States classification of the highest in total value commodity imported by that importer.

In addition to these new provisions, CBP is also updating § 141.46, regarding the requirement to obtain an executed power of attorney before transacting customs business on behalf of a principal. CBP is amending § 141.46 to clarify that a power of attorney must be executed whenever a customs broker is transacting customs business on behalf of a client, even when the broker is acting as the IOR for an entry.^[27]

CBP is also updating § 142.13 which sets forth the conditions under which CBP may require live entry and § 142.25 which sets forth the conditions under which CBP may discontinue immediate delivery privileges. Live entry conditions the release of merchandise upon the filing of an entry summary with a deposit of all estimated duties, taxes, and fees—release thus cannot occur until payment is tendered. Section 142.13 currently lists various conditions when CBP may require live entry, and § 142.25 currently lists various conditions when CBP may discontinue immediate delivery privileges. In this interim final rule, CBP is adding another condition for when live entry may be required and when immediate delivery privileges may be discontinued: when the IOR, including a broker acting as the IOR on behalf of a principal on the power of attorney, inaccurately declares to CBP its qualification as a U.S. IOR as required under § 141.22. See new § 142.13(a)(5) and § 142.25(a)(5). If the IOR inaccurately declares that it qualifies as a U.S. IOR, CBP now has the ability to require live entry and discontinue immediate delivery privileges. In addition to the changes in §§ 142.13(a) and 142.25(a), CBP is also adding a new paragraph (e) to § 142.13 and a new paragraph (c) to § 142.25 that state that CBP may impose the requirement of live entry and discontinue immediate delivery privileges pursuant to §§ 142.13(a) and 142.25(a) on importers making formal and informal entry under the provisions of either part 142 or part 143.

Finally, CBP is making changes to regulations in part 111 and in Appendix B to part 171 pertaining to a customs broker's responsibilities with respect to its clients and the consequences for failing to meet those responsibilities. Current § 111.29(a) sets forth a customs broker's responsibility to exercise due diligence in making financial settlements and answering correspondence, among other responsibilities. CBP is adding a new § 111.29(a)(2) to include the responsibility of a customs broker to verify that a client meets the qualifications to be considered a U.S. IOR, after redesignating existing paragraph (a) as paragraph (a)(1). A customs broker, prior to filing a declaration on behalf of a client pursuant to § 141.22, must verify that the client qualifies as a U.S. IOR. Verification requires a customs broker to request and review client records establishing that the criteria specified in the definition of U.S. IOR are met. As mentioned above, the client records may include, but are not limited to, proof of citizenship or lawful permanent residence, corporate charters, financial statements and records, purchase receipts, or documents of title. If a customs broker determines during the review of the client records that the client is not a U.S. IOR, the broker must cease filing entries on behalf of the client if the broker is not CTPAT validated. CBP has also updated § 111.21(a) and 111.23, to require that the broker maintain records related to the broker's verification for five years from the date of the verification.

These new provisions are in line with the statutory mandate of section 116 of TFTEA (19 U.S.C. 1641(i)). Brokers must ensure that they are filing accurate information on behalf of their clients, and that their clients are who they say they are. CBP recommends, as a good business practice, that customs brokers obtain information from their client at the time of obtaining a power of attorney, to allow sufficient time for the broker to complete the verification process before filing entry.

For verification purposes under § 141.22, CBP must have the ability to request proof from the broker that the broker has verified that the client is in ( printed page 69985) fact a U.S. IOR, and the customs broker must comply with the recordkeeping and production requirements in 19 U.S.C. 1508, as discussed above.

Additionally, CBP is revising paragraph (K) in Appendix B to part 171 which contains guidelines for the imposition and mitigation of penalties for violations of 19 U.S.C. 1592. These guidelines are used by CBP in arriving at a just and reasonable assessment and disposition of liabilities arising under 19 U.S.C. 1592 within the stated limitations. Paragraph (K) states that if a customs broker commits a section 1592 violation and the violation involves fraud, or the customs broker commits a grossly negligent or negligent violation and shares in the benefits of the violation to an extent over and above customary brokerage fees, the customs broker will be subject to the mitigation guidelines of Appendix B. However, if the broker commits either a grossly negligent or negligent violation of section 1592 (without sharing in the benefits of the violation as described above), CBP may proceed against the customs broker pursuant to the limited remedies provided under 19 U.S.C. 1641 (monetary penalty, suspension or revocation of a license or permit). CBP is updating this language to state that subject to CBP's discretion, if a customs broker commits a violation of 19 U.S.C. 1592, the customs broker may be subject to penalties under 19 U.S.C. 1592 or any other enforcement actions available under the law, including 19 U.S.C. 1641.

Economic security is national security, and customs law enforcement is essential to protect the economy of the United States and the health and safety of the American people. Customs law enforcement requires the ability to assess stringent penalties to ensure an adequate deterrent effect on customs brokers that fail to comply with the law. Historically, CBP has penalized brokers pursuant to 19 U.S.C. 1641, which sets a maximum monetary penalty amount of $30,000 for violations. Moreover, pursuant to existing paragraph (K) in Appendix B to part 171, CBP has assessed penalties against customs brokers pursuant to 19 U.S.C. 1592 only in those cases where the broker was involved in a violation with a culpability level of fraud or where the agency could demonstrate the broker benefited from the violation. Although penalties up to $30,000 are available under 19 U.S.C. 1641, customs brokers still commit violations and repeatedly represent foreign IORs who fail to comply with U.S. laws. With this amendment to paragraph (K), CBP is enhancing its enforcement options against brokers to include broader applicability of penalties under 19 U.S.C. 1592, for which a maximum penalty may be assessed at the domestic value of the merchandise. As such, CBP envisions that higher penalties will have a greater deterrent effect on customs brokers that fail to comply with the law.

VI. Explanation of Amendments to the CBP Regulations

A. Amendments to Part 110

CBP is creating a new part 110 in title 19 of the CFR, and adding subparts A and B. In new § 110.1, CBP has added new definitions for the terms “beneficial owner,” and “physical domestic assets.” In new § 110.2, CBP has laid out the requirements to be considered a U.S. importer of record, and the verification requirements associated with that status. In new § 110.3, CBP has explained that any IOR not qualified to be considered a U.S. IOR is considered a foreign IOR. Subpart B is reserved.

B. Amendments to Part 111

CBP is amending part 111, in accordance with the requirements discussed above. Specifically, CBP is amending §§ 111.21 and 111.23 by adding the requirement that brokers maintain records related to verifying that the client meets the threshold for a U.S. IOR under § 110.2. CBP is also amending § 111.29 by redesignating paragraph (a) as a new paragraph (a)(1) and adding a new paragraph (a)(2) to include a customs broker's responsibility for verifying a client's qualification as a U.S. IOR.

C. Amendments to Part 141

CBP is amending part 141, in accordance with the requirements discussed above. Specifically, CBP is adding two new sections (§ 141.21 and § 141.22). New § 141.21 states that a foreign IOR may not enter merchandise for consumption unless it is a CTPAT validated IOR or designates a customs broker who is CTPAT validated, and lays out associated requirements. New § 141.22 states that a U.S. IOR must submit a declaration as to its qualification as a U.S. IOR at the time of filing an entry and entry summary. CBP has also amended § 141.46 to clarify that a power of attorney is required even when the broker is acting as the IOR for an entry. In addition, the general authority citation for part 141 is revised to include 19 U.S.C. 4320 and 4321.

D. Amendments to Part 142

CBP is amending part 142, in accordance with the requirements discussed above. Specifically, CBP is amending § 142.13 by adding a new paragraph (a)(5) that states that CBP may impose a live entry requirement if the importer inaccurately declares to CBP its qualification as U.S. IOR pursuant to § 141.22. CBP is also adding a new § 142.13(e) to clarify that CBP may impose a live entry requirement on formal and informal entries under the provisions of part 142 and part 143.

E. Amendments to Part 171

CBP is amending Appendix B to part 171, which sets forth guidelines for the imposition and mitigation of penalties for violations under 19 U.S.C. 1592. Specifically, CBP is revising paragraph (K) in Appendix B, as discussed above.

F. Severability

CBP intends for the provisions contained in this rulemaking to be severable from each other and to be given effect to the maximum extent possible, such that if a court holds that any provision is invalid or unenforceable—whether in its entirety or as to a particular person or circumstance—the other provisions will remain in effect as to any other person or circumstance.^[28] The various provisions in this IFR are designed to function sensibly without the others, and CBP intends for them to be severable so that each can operate independently.

G. Alternative and Request for Comments

As noted in Section II, above, although Section 2(b) of the E.O. directs CBP to prohibit foreign IORs from filing informal entry, CBP has not implemented that prohibition in this interim final rule. However, CBP will continue to monitor informal entries for consumption filed by CTPAT validated foreign IORs and CTPAT validated brokers on behalf of foreign IORs. If CBP determines that requiring that informal entries for foreign IORs be filed by a CTPAT validated party is insufficient to protect the revenue, national security, and the health and safety of the American people, CBP may prohibit informal entries for consumption filed by a foreign IOR or a broker acting on their behalf. CBP welcomes public comment on this alternative, in addition to the approach implemented by this interim final rule. ( printed page 69986)

VII. Delayed Compliance Date

In consideration of the business process changes needed for licensed customs brokers to verify whether a client meets the requirements to be considered a U.S. IOR, CBP will accept requests from brokers to delay compliance with the new verification requirement for customs brokers in § 111.29. Brokers who are currently subject to any of the following enforcement actions are ineligible for delayed compliance: removal from the CTPAT program, revocation of CBP Form 5106 filing privileges, suspension or debarment by a Federal agency and identified with an exclusion record in the System for Award Management Exclusions List on SAM.gov, entry filer code suspension, or broker license revocation proceedings. Such requests must be submitted by January 5, 2027 and must include an explanation of the need for delayed compliance. For additional details on how to submit a request for delayed compliance, see www.cbp.gov/​trade/​strengthening-customs-enforcement/​delayed-compliance. If delayed compliance is approved, customs brokers must continue to make satisfactory progress toward compliance by demonstrating a good faith effort to comply with this rule to the extent of the broker's current ability during the compliance period. All customs brokers are expected to be in full compliance with the requirements of this rule no later than May 6, 2027.

VIII. Statutory and Regulatory Requirements

A. Administrative Procedure Act

The Administrative Procedure Act (APA), 5 U.S.C. 551 et seq., generally requires agencies to publish a notice of proposed rulemaking in the Federal Register , and to provide interested persons the opportunity to submit comments prior to issuance of a final rule. As an initial matter, the requirements of the APA do not apply to the extent that the rulemaking involves a foreign affairs function of the United States. 5 U.S.C. 553(a)(1).^[29]

This interim final rule addresses challenges resulting from importations by foreign IORs. Securing America's borders, regulating and vetting foreign actors, and protecting its citizens from external threats is a foreign affairs function of the United States. Importations into the United States across America's borders can pose threats to U.S. citizens, including threats from contraband and harmful materials that can flow across the border, as well as narcotics trafficking and other destabilizing or unlawful activities, including the flow of dangerous drugs, weapons, and technology. Further, ensuring foreign parties abide by U.S. trade law is a core foreign affairs function. Unchecked importations by foreign actors into the United States can undermine domestic markets and supply chains—for instance, foreign government assistance and subsidies, such as tax breaks to foreign manufacturers, enable them to sell cheaper goods and disadvantage domestic companies. In response, the U.S. may establish antidumping and/or countervailing duties to counteract foreign government assistance and subsidies. Tracking and vetting foreign importers is critical to counteracting bad actors in the trade space, preventing evasion of U.S. trade law, and upholding the integrity of domestic markets and supply chains. If customs and trade laws cannot be adequately enforced against foreign importers of record, it leaves American citizens vulnerable to foreign actors and foreign governments. Accordingly, this rule is clearly and directly involved in a core foreign affairs function.^[30] Moreover, proceeding without notice and comment will allow the Department to timely address sensitive foreign-policy and national-security matters that affect relations with foreign governments. This rule directly impacts foreign actors, including foreign importers, manufacturers, and businesses. Foreign governments, especially those whose citizens and businesses this rule most affect, may seek to retaliate against the United States or United States exporters. Bypassing notice and comment will reduce the risk the United States suffers retaliation from foreign governments based on this rule. Therefore, this interim final rule involves the foreign affairs function of the United States and is not subject to notice and comment under the APA.^[31]

Further, as discussed above, the revenue rule permits a court of one country to refuse to allow lawsuits initiated by another country to enforce the foreign country's revenue laws, absent an agreement between the two countries to enforce the collection of a foreign IOR's debt. The revenue rule is a means to avoid interfering with foreign relations and a country's national sovereignty by preventing another country from enforcing its own laws within the borders of another country. Therefore, this interim final rule involves the foreign affairs function of the United States.

Further, the APA provides an exception to advance notice and comment requirements “when the agency for good cause finds (and incorporates the finding and a brief statement of reasons therefor in the rules issued) that notice and public comment thereon are impracticable, unnecessary, or contrary to the public interest.” 5 U.S.C. 553(b)(B). The good cause exception “excuses notice and comment in emergency situations . . . or where delay could result in serious harm.” ^[32]

Notice and comment is impracticable when the due and required execution of agency functions would be unavoidably prevented by undertaking public rulemaking proceedings.^[33] Impracticability can occur when there is an imminent hazard to persons or property within the United States, or when immediate implementation of a rule might directly affect public safety.^[34]

The public interest prong of the good cause exception applies when ordinary procedures of notice and comment, generally presumed to serve the public interest, would actually harm the public interest.^[35] These interests include public safety and public health.^[36] This prong is distinct from the need for immediacy under the impracticability prong and is “appropriately invoked when the timing and disclosure requirements of the usual procedures would defeat the purpose of the proposal.” ^[37]

CBP finds that good cause exists to issue this rule as an interim final rule. Delaying the publication of this interim final rule for purposes of providing public notice and comment would be impracticable. As mentioned above, non-CTPAT foreign IORs are importing ( printed page 69987) goods that may be dangerous to the American public, such as narcotics and counterfeits. In the past, CBP has seized unsafe merchandise for failure to meet Consumer Product Safety Commission standards, unsafe merchandise that is not compliant with the Food and Drug Administration's regulations, and other imports such as counterfeit merchandise that threatens public safety. Data ranging from October 2020 through the beginning of February 2026 shows that the rate of seizure incidents is higher for non-CTPAT foreign IORs, which have 6.38 seizures per million entry summaries, than for CTPAT validated foreign IORs, which have 1.14 seizures per million entry summaries, as discussed in the analysis below. In recent years, CBP has seen an increase in the number of seizures of violative goods attempted to be imported by foreign IORs. Thus, CBP must act now to avoid further harm to persons and property in the United States.

Furthermore, under the “contrary to public interest” prong, advance notice of new requirements would significantly increase the incentive on the part of foreign IORs to “flood the market” by importing high volumes of illicit merchandise during a notice and comment period before the rule takes effect, thereby compounding the very challenges that CBP is addressing with this interim final rule. IOR accounts are being created with false or incomplete information, likely by shell companies who are attempting to disguise their identity. CBP's records show that between March 2019 and the end of September 2025, individuals and entities created approximately 55,000 accounts with fake phone numbers, such as 123456789, and 45,000 accounts with fake email addresses, such as emails beginning with “noemail,” or abc@abc.com, etc., hindering CBP's ability to contact an IOR for validation of entry information and enforcement and revenue collection purposes. If CBP provides notice and comment before implementing these new requirements, CBP anticipates a significant increase in new IOR accounts created with false information, further complicating CBP's enforcement efforts against IORs that are disguising their identity as a foreign IOR and attempting to import illicit merchandise prior to a final rule taking effect.

CBP is only able to identify IORs as foreign if they list a foreign address on CBP Form 5106, but there are likely many more foreign persons and entities using incorrect U.S. addresses or shell companies to import goods, preventing CBP from knowing the true importer's identity and location. Recently, CBP discovered over 870 unique CBP Form 5106 accounts sharing a single physical address, most of which were found to be linked to foreign entities. Because foreign IORs cannot be held accountable through the same mechanisms as U.S. IORs, CBP's debt collection and enforcement efforts can be frustrated as foreign IORs have less incentive to comply with U.S. law. If CBP provides advance notice of new requirements for foreign IORs, those foreign importers may create shell companies, and already existing shell companies may create new shell companies, to evade U.S. laws and the new requirements established by this interim final rule. Due to technological advances pertaining to duty collection and targeting, enforcement, and processing, CBP is now equipped to address the challenges relating to foreign IORs. Waiting to counter the above-mentioned challenges would harm CBP's ability to collect lawful revenue owed and take effective enforcement action to address violations of U.S. customs and trade laws, disadvantage the domestic industry, and would allow a gap that invites the importation of illegal and dangerous merchandise into the United States.

As discussed above, this interim final rule establishes new requirements for foreign IORs and U.S. IORs when making entry in the United States. Requiring CTPAT validated status of foreign IORs and customs brokers lowers the risk associated with foreign IORs as CBP has more visibility into CTPAT validated participants and assurances regarding the security of their supply chains compared to foreign IORs and customs brokers who are not CTPAT validated participants. These new requirements will allow CBP to more effectively focus its efforts on higher risk importers to interdict illicit drugs, intellectual property violative goods, misclassified merchandise, and other goods that pose risks to public safety. The new requirements will also enable CBP to better ensure the collection of duties, taxes, and fees from foreign IORs. Data ranging from October 2020 through the beginning of February 2026 shows, on average, that CTPAT foreign IORs owe CBP $1.21 in uncollected bills per entry summary, compared to non-CTPAT foreign IORs who owe $34.08 per entry summary. A prolonged rulemaking process would create uncertainty that would undermine the credibility and effectiveness of CBP's actions to limit entry by foreign IORs to CTPAT validated participants.

However, CBP recognizes that IORs and customs brokers need time to make adjustments to comply with this rule. Therefore, CBP is publishing this interim final rule with a 60-day delayed effective date to give IORs and brokers time to modify the relevant business processes that are affected by this interim final rule. Customs brokers are provided additional time to comply with the new due diligence responsibility of verifying a client's qualification as a U.S. IOR and maintaining the associated records. CBP is also soliciting public comments on this interim final rule and will consider all timely submitted comments in determining whether and how to revise the rule in a subsequent final rule. Given the public safety and revenue implications of continued imports by foreign IORs into the United States, CBP has attempted to strike a balance between its need to address these urgent requirements while still providing sufficient time for IORs and customs brokers to comply with the regulatory changes involved in this rulemaking, as well as providing for an opportunity to comment. For the reasons discussed above, this rule is exempt from the prior public notice and comment requirements of the APA under both the foreign affairs exception and the good cause exception.

B. Executive Orders 12866, 13563, and 14192

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. Executive Order 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. Executive Order 14192 (Unleashing Prosperity Through Deregulation) directs agencies to significantly reduce the private expenditures required to comply with Federal regulations and provides that “any new incremental costs associated with new regulations shall, to the extent permitted by law, be offset by the elimination of existing costs associated with at least 10 prior regulations.”

The Office of Management and Budget (OMB) has designated this rule a “significant regulatory action” under section 3(f) of Executive Order 12866, although not economically significant under section 3(f)(1). Accordingly, the rule has been reviewed by the Office of Management and Budget.

This rule is not an Executive Order 14192 regulatory action because it is being issued with respect to a national ( printed page 69988) security or homeland security function of the United States. The benefit-cost analysis demonstrates that the regulation is anticipated to improve national or homeland security as its primary direct benefit or is issued with respect to foreign affairs related functions of the United States and OIRA and the promulgating agency agree the regulation qualifies for a `good cause' exception under 5 U.S.C. 553(b)(B). See OMB Memorandum M-25-20, “Guidance Implementing Section 3 of Executive Order 14192, titled `Unleashing Prosperity Through Deregulation' ” (Mar. 26, 2025). Additionally, this proposed rule is exempt from Executive Order 14192 under section 5(c) of Executive Order 14192. Table 1 shows an accounting statement for the effects of the rule.

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( printed page 69990)

Background

To fulfill its mission, CBP must ensure that importers of record (IORs) pay the applicable duties, taxes, and fees for their imports as well as any monetary penalties issued by CBP. Sometimes, CBP discovers that an IOR underpaid its duties through misrepresentations such as undervaluation, false country of origin, transshipment, misclassification, or false invoices. Other times, an IOR will simply refuse to pay any duties in the first place. Upon discovery of underpayment, CBP can issue a penalty to the IOR, but the IOR may not cooperate in paying. CBP can collect on the basic importation and entry bond, but sometimes the bond saturates, meaning that it does not cover the full amount owed. In that case, CBP can try to seize the IOR's assets. This option can be difficult when the IOR is foreign, as a foreign IOR may have few if any real assets in the United States, and whatever assets the foreign IOR has in its home country may be unreachable to the U.S. government. CBP can require the IOR to file live entry and suspend immediate delivery privileges for all future importations until that IOR makes any outstanding payments to CBP, but foreign IORs may be able to evade these requirements through creation of shell companies. When an IOR is based outside the United States, CBP has less visibility into the IOR's operations and assets than it does with U.S. IORs, making it easier for the foreign IOR to conceal its identity and harder for CBP to hold the IOR and its affiliates accountable. As a result, foreign IORs that receive or anticipate enforcement or collection actions by CBP will sometimes switch to a new name to evade consequences for past actions. Foreign IORs can therefore avoid payments to CBP and other consequences more easily than U.S. IORs can, giving the former an unfair advantage.

While CBP has limited visibility into many foreign IORs' operations, IORs that are CTPAT validated are generally more transparent and trustworthy in their transactions and dealings with CBP. The CTPAT program ensures that participants meet minimum security criteria and abide by best practices. It also creates more visibility into the participants' supply chain and operations because the CTPAT participant must be in communication with its contact in CBP to show that it is continuing to meet the requisite standards. The CTPAT participant must also have visibility into the operations of businesses that it interacts with to ensure the supply chain is secure, as represented to CBP upon validation. Hence, if an IOR is not CTPAT validated, but uses a CTPAT validated broker, that broker will have obtained more information about the IOR's business than a non-CTPAT validated broker would have, and CBP will be better able to obtain information regarding the IOR from the broker if necessary. Requiring foreign IORs to be CTPAT validated or use CTPAT validated brokers will therefore strengthen CBP's ability to enforce collections on foreign IORs by increasing transparency into the foreign IORs' business and supply chain practices.

Purpose of the Rule

CBP faces challenges in enforcing collection of duties, penalties, and liquidated damages against foreign IORs because these IORs often have few, if any, physical assets in the United States and their bond does not fully cover amounts lawfully owed to CBP. This rule requires foreign IORs to either be CTPAT validated or to use a CTPAT validated broker so that the foreign IORs meet stricter standards of security and transparency. CTPAT validated brokers have more information about their clients' supply chains, and this information could improve CBP's ability to collect payments from the foreign IOR and identify other non-compliance with U.S. customs and trade laws. Furthermore, foreign entities will have more incentive to avoid exporting prohibited goods to the United States or otherwise violate CBP requirements if they are trying to maintain their CTPAT validated status. U.S. IORs will also have to provide documentation proving that they are a U.S. IOR at CBP's request, which will help CBP to determine which IORs claiming to be U.S. IORs are in fact foreign shell companies.

Baseline for the Rule

In this regulatory impact assessment (RIA), CBP analyzes the effects of the rule by comparing a baseline and an alternative scenario. Currently, foreign IORs import shipments into the United States without being CTPAT validated or using a CTPAT validated broker. Under this rule, foreign IORs would have to be CTPAT validated or use CTPAT validated brokers to enter merchandise into the United States. The effects of the rule are therefore the differences between the world under the current baseline and the world under this rule.

Population Affected

For the purposes of this analysis, CBP assessed whether IORs were foreign or U.S. based on the physical address provided on CBP Form 5106. However, there could be IORs that listed a U.S. address but who would more accurately be classified as foreign. Some of these IORs might be foreign shell companies being intentionally dishonest, while others might be self-labeling as U.S. IORs in good faith but not meet the standard to be considered a U.S. IOR that is laid out in this rule. As a result, this analysis may underestimate the true number of foreign IORs. There could also be some businesses that have given CBP a foreign address but could meet the standard to be considered a U.S. entity under the rule. To the extent that the number of foreign IORs differs from the estimates below, the true effects of the rule would differ from CBP's estimates. If more IORs are foreign than CBP estimates, then the true benefits and costs of the rule will both be higher than expected. The benefits would be ( printed page 69991) higher than CBP's estimate because CBP would be strengthening its enforcement capabilities for an even greater number of IORs than estimated, while the costs would be higher because a greater number of non-CTPAT validated foreign IORs would be disallowed from using a non-CTPAT validated broker than estimated.

IORs and brokers will be the main entities affected by the rule. Table 2 shows the number of IORs who made an entry summary between October 1, 2020, and February 6, 2026. Of those IORs, 16% were foreign, and 84% were U.S. IORs. CTPAT validated IORs are a small percentage of both foreign and U.S. IORs. Only 0.4% of foreign IORs are CTPAT validated, but, as shown in Table 3, 68% of foreign IORs already use CTPAT validated brokers. The remaining 32% of foreign IORs will not be able to continue importing into the United States unless they switch brokers or become CTPAT validated themselves.

Table 4 shows the number of active brokers, of which 21% are CTPAT validated, 1% are CTPAT certified, and 78% are not CTPAT validated. About two-thirds of brokers have submitted an entry summary for a foreign IOR.

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As shown in Table 4, there were 3,100 brokers that filed entry summaries between October 1, 2020, and February 6, 2026. CBP uses this number as its estimate for the number of brokers that will make entry and be affected by the rule in the 5 years following the rule's effective date. The number of currently permitted brokers, as of October 2, 2026, is 2,600, but this figure underestimates the number of brokers who will be affected by the rule because it does not include brokers who are not yet permitted but will be in the future.^[38] For the purposes of estimating the number of submissions of the Broker Delayed Compliance Request Form, however, CBP uses the number of currently permitted brokers, 2,600, because that form will only be accepted for a limited time.

Benefits

Under the rule, CBP will be better equipped to enforce payments for duties, penalties, and liquidated damages from foreign IORs, and CBP will have more knowledge of which IORs are foreign or domestic. One of CBP's many critical mission sets is to facilitate legitimate trade that supports economic growth while shielding the American public and businesses from illicit trade, including unsafe products, intellectual property theft, and unfair trade practices. However, CBP cannot easily ensure that foreign IORs are complying with U.S. customs and trade laws to prevent the importation of dangerous and unlawful goods, potentially unsafe merchandise, such as counterfeit goods and precursor chemicals for the purposes of manufacturing illicit substances, into the United States. This program encourages companies to proactively identify and mitigate these risks within their supply chains, and these new requirements will allow CBP to more effectively focus its efforts on higher risk importers to interdict illicit drugs, intellectual property violative goods, misclassified merchandise, and other goods that pose risks to public safety.

CBP

The rule will aid CBP in enforcing duty payments by foreign IORs. At present, foreign IORs are difficult to collect payments from, as a foreign IOR may have no physical offices, bank accounts, or assets in the United States that CBP can seize. Moreover, without a physical presence in the country, a foreign shell company may import merchandise and disappear—before a demand for payment is even issued. Therefore, when CBP discovers unpaid duties, fees, penalties, and liquidated damages, it is typically more successful at collecting from U.S. IORs than foreign IORs. From January 1, 2020, to August 27, 2026, CBP audits uncovered a loss of revenue from U.S. IORs totaling $4.3 billion and from foreign IORs totaling $1.16 billion.^[39] The loss of revenue was higher for U.S. IORs because U.S. IORs imported roughly 10 times more by value than foreign IORs over that period.^[40] Thus, proportionally, the loss of revenue as compared to total value of imports was 0.06% for foreign IORs, as compared to 0.02% for U.S. IORs.^[41] Moreover, as discussed below, in terms of CBP's ability to collect, the gap becomes even wider. After identifying unpaid duties and other unpaid amounts owed to CBP, CBP was able to collect a portion of what the IORs owed. As shown in Table 4, CBP collected $654 million from U.S. IORs after identifying the loss of revenue, implying a collection rate of 15.2% for what had gone unpaid. For foreign IORs, CBP collected $35.7 million, a collection rate of only 3.1%.

Open bill statistics show that foreign IORs that are CTPAT validated are much more likely to pay what they owe. Many IORs have open bills with CBP, meaning that they have unpaid duties, taxes, and fees that are past due. Some of these IORs may be slow and untimely in making payments, while others have no intention of ever paying. Open bills are a more common problem for entries made by non-CTPAT validated IORs than by CTPAT validated IORs, possibly because CBP has more leverage and information when dealing with CTPAT validated IORs. By requiring non-CTPAT validated foreign IORs to either become CTPAT validated or use a CTPAT validated broker, the rule will increase visibility into the foreign IORs' supply chains and thereby help CBP enforce payment. The transparency gained through this interim final rule concerning an IOR's foreign IOR status is also anticipated to assist with CBP's ( printed page 69993) identification and enforcement against shell companies and to enhance CBP's understanding of linkages and affiliations among foreign IORs, and shell companies. Moreover, stricter penalty enforcement by CBP could motivate foreign IORs to give more accurate information, including classification and valuation, for their imports in the first place, reducing the need for CBP to issue penalties.

CTPAT validated foreign IORs are much more compliant in making payments to CBP than non-CTPAT validated foreign IORs are, as shown by open bill statistics. To calculate the amount owed by different categories of IORs, CBP looked at bills that were opened between October 1, 2020, and February 6, 2026, and that were still open on February 6, 2026.^[42] As of February 6, 2026, the total amount owed by non-CTPAT validated foreign IORs for open bills was $1,015,627,712. CBP excluded interest when calculating the amount owed for the open bills. To compare CTPAT validated and non-CTPAT validated foreign IORs, CBP divided each group's total uncollected bill amount by the number of entry summaries made during that same period to calculate the average uncollected bill amount per entry summary. On average, CTPAT validated foreign IORs owe CBP $1.21 in uncollected bills per entry summary, while non-CTPAT validated foreign IORs owe $34.08 per entry summary. A comparison of non-CTPAT validated and CTPAT validated U.S. IORs yields similar results, shown in Table 5.

The difference between CTPAT validated and non-CTPAT validated foreign IORs' average uncollected bill amount per entry can be decomposed into the difference between the average amount owed on an open bill and the number of open bills per entry summary. These different components are shown in Table 6. One can see that the number of open bills per 10,000 entry summaries ^[43] is only slightly higher for non-CTPAT validated foreign IORs, but the average open bill is much larger for non-CTPAT validated foreign IORs ($68,763) than for CTPAT validated foreign IORs ($2,501).

The above tables focus on the average open bill amount per entry summary. One could instead look at the average open bill amount per IOR. Dividing the total uncollected bill amount by the number of IORs in each category reveals that CTPAT validated foreign IORs actually have a larger uncollected bill amount per IOR than non-CTPAT validated foreign IORs do. To understand why, CBP decomposed the open bill amount per IOR into two statistics: (1) the open bill amount per IOR with an open bill and (2) the share of IORs with open bills. Table 7 shows that non-CTPAT validated foreign IORs with open bills have an open bill amount of $978,447, which is larger than CTPAT validated foreign IORs' average of $192,979. However, dividing the total number of open bills by the number of IORs, one sees that CTPAT validated foreign IORs have more open bills (4.44 per 100 IORs) than non-CTPAT validated foreign IORs (0.55 per 100 IORs).

( printed page 69994)

One likely reason that CTPAT validated foreign IORs have more open bills than non-CTPAT validated foreign IORs is that CTPAT validated foreign IORs make many more entries. Between October 1, 2020, and February 6, 2026, the average CTPAT validated foreign IOR made 7,053 entry summaries, while the average non-CTPAT validated foreign IOR made 159 entry summaries. It is reasonable for CTPAT validated foreign IORs to have 8 times more open bills per IOR than non-CTPAT validated foreign IORs when the CTPAT validated foreign IORs also make 44 times more entry summaries per IOR than the non-CTPAT validated foreign IORs. Therefore, open bills per entry summary are a more reliable indicator of CBP's collection difficulties than open bills per IOR when comparing different categories of IORs. Once again, the average open bill per entry summary is starkly higher for non-CTPAT validated IORs ($34.08) than CTPAT validated IORs ($1.21).

Not only is there a clear correlation between open bills and CTPAT validation, but there are also reasons why CTPAT validation actually causes IORs to have lower open bills. Most importantly, one of the requirements for CTPAT validation is that the importer “maintain no evidence of financial debt to CBP for which the responsible party has exhausted all administrative and judicial remedies for relief, a final judgment or administrative disposition has been rendered, and the final bill or debt remains unpaid at the time of the initial application or annual renewal.” ^[44] Moreover, participation in the CTPAT program gives CBP more visibility into the IOR's business, helping CBP to contact and enforce collections from the CTPAT validated IOR. Meeting the security requirements of CTPAT may also prevent the IOR from doing something (such as undervaluing imports) that would lead to a large duty increase in the first place.

CBP expects to collect more revenue under the rule as a result of stricter enforcement of duties, penalties, and liquidated damages. CBP cannot estimate the revenue increase because CBP cannot assume that the rule will lead to a 100% collection rate or that the foreign IORs that switch to using CTPAT validated brokers under the rule will become exactly as compliant as CTPAT validated IORs. Whatever the increase in revenue, part of that revenue will be a benefit of the rule, and part will be a transfer. While the increased revenue collected by the U.S. government would come directly from foreign IORs, those foreign IORs could pass on some share of the burden to U.S. individuals through price adjustments. To the extent that the revenue ultimately comes from U.S. individuals, the revenue is a transfer, not a benefit of the rule, as the gain to the U.S. government would equal the loss to the individuals. To the extent that the foreign IORs themselves bear the burden of increased payments to CBP, that share of the increased revenue is a benefit of the rule, as it entails a transfer from foreign entities to the U.S. government. However, revenue aside, the fact that CBP will be more strictly enforcing payments is a benefit in itself. Some IORs are already cooperative in paying what they owe, while other IORs try to avoid paying duties and other obligations. Hence, without strict enforcement, the cooperative IORs are at a disadvantage, especially against foreign IORs with no assets in the United States that try to evade payments. By helping CBP compel foreign IORs to pay duties, penalties, and liquidated damages, the rule will make the playing field more level between U.S. and foreign IORs.

The rule will help CBP with the collection of payments from foreign IORs because more foreign IORs will be using CTPAT validated brokers, who are more knowledgeable about their clients than non-CTPAT validated brokers are.^[45] Foreign shell companies are ( printed page 69995) particularly difficult for CBP to collect revenue from because they can disappear and reappear later with a new name and contact information. However, CTPAT validated brokers have additional information on their clients besides the bare contact information, as the CTPAT minimum security criteria require CTPAT validated brokers to screen new business partners and monitor current partners. The minimum security criteria suggest the following to CTPAT validated brokers as vetting elements that can help determine if a company is legitimate: verifying the company's business address and how long it has been at that address; conducting research on the internet on both the company and its principals; checking business references; and requesting a credit report.^[46] CBP could request this information from the brokers if the foreign IOR gave it to them. Alternatively, if the foreign IOR refuses to give any information to CTPAT validated brokers for screening purposes, then the brokers may refuse to do business with the foreign IOR, which, under the rule, would prevent the foreign IOR from importing.

Besides increasing CBP's collection of revenue, the rule could also help prevent the shipment of prohibited goods to the United States. The number of seizures per million entries is over five times larger for non-CTPAT validated foreign IORs (6.38) than CTPAT validated foreign IORs (1.14). By requiring foreign IORs to either become CTPAT validated or use a CTPAT validated broker, the rule will increase transparency into foreign IORs' operations, making it more difficult for bad actors to export prohibited goods to the United States.

The rule will also help to keep the supply chain safer from terrorist threats. Under the rule, more brokers will choose to become CTPAT validated so that they can continue serving non-CTPAT validated foreign IORs, and some foreign IORs may choose to become CTPAT validated so that they are not required to hire a CTPAT validated broker, though only foreign IORs that are Canadian are currently eligible for CTPAT validation. The increase in CTPAT validated entities will make the supply chain safer because an entity seeking CTPAT validation must work with CBP to identify security gaps and implement specific security measures and best practices. If the entity does not meet the minimum security criteria, CBP will recommend that the company address specific weaknesses as a condition to obtain CTPAT validation. The entity must also develop an internal validation process that preserves the security measures documented in its supply chain security profile. Therefore, entities that become CTPAT validated will make their supply chains less vulnerable to intrusion by terrorists or terrorist organizations. Besides increasing the number of CTPAT validated entities, the rule will also make the supply chain more secure by causing more non-CTPAT foreign IORs to use CTPAT validated brokers. One of the minimum security criteria for CTPAT validated customs brokers is that personnel “must review the information included in import/export documents to identify or recognize suspicious cargo shipments.” CTPAT validated brokers are therefore more vigilant than non-CTPAT validated brokers with regard to the cargo that their clients are importing.

Costs

CBP

The increased participation in CTPAT under the rule will result in costs to CBP. When a company applies for CTPAT validation, CBP must review the company's application and security profile. If CBP certifies the company, CBP then conducts a validation to verify that the company's stated security measures are implemented. This process may include interviews, document review, and site visits to domestic or foreign locations. During a site visit, CBP supply chain security specialists (SCSS) review in detail the entity's import supply chain security procedures to determine whether the security procedures in place meet CTPAT standards. The SCSS later document their findings from the visit in a validation report. Even after a company receives CTPAT validation, CBP continues to incur costs from the company's CTPAT participation, such as the costs of revalidation. CBP estimates that the increase in CTPAT participation will result in costs to CBP totaling $10.9 million, including the costs of additional staffing, travel, equipment, and automation.^[47] For this analysis, CBP assumes that the $10.9 million will be spread evenly across the regulatory period, implying an annual cost of $1.09 million per year.

The rule will also result in programming costs for CBP. Under the rule, CBP Forms 3461 and 7501 and their electronic equivalents will need to be updated to include two checkboxes. One checkbox would be checked if the broker is acting as the IOR on behalf of the principal on the power of attorney, with a field for identifying the principal by IOR number or other identifier tied to CBP Form 5106. The second ( printed page 69996) checkbox would be checked if the IOR (or principal, if the broker is acting as the IOR on behalf of the principal) is a U.S. IOR. CBP estimates that making these updates will result in programming costs of $1,222,871 for the government.^[48] For this analysis, CBP assumes that the programming costs will be incurred in the first year of the regulatory period, 2027. Combining the programming costs with the costs of increased CTPAT participation, the total costs to CBP under the rule will equal an estimated $12,122,871. Under a discount rate of 3%, the annualized costs to CBP are $1,229,182 per year. In addition to these quantified costs, CBP will also incur time costs from enforcing the rule. When investigating a particular IOR claiming to be a U.S. IOR, CBP may ask the broker to supply documentation from the IOR to prove the IOR is a U.S. IOR. Obtaining and verifying this documentation will carry a time burden for CBP.

Finally, CBP will incur costs from processing brokers' delayed compliance requests in the first year of the rule. When the rule is published, brokers will have 60 days after the publishing date to verify that their clients claiming to be U.S. IORs are indeed U.S. IORs. Brokers that expect to have difficulty meeting this deadline may submit a Broker Delayed Compliance Request Form, containing the broker's identifying information along with the reason the broker is requesting an extension. If CBP approves the form, the broker will have 6 months instead of 60 days after the publication date to verify its clients and thereby come into compliance with the rule. CBP expects that all 2,600 currently permitted brokers will submit a form and that the average time burden for CBP to process a form will be 0.5 minutes. Hence, the total time burden for CBP to process Broker Delayed Compliance Request Forms will be 21.67 hours. The average hourly wage of a CBP Trade and Revenue employee is $95.34.^[49] Therefore, the cost of CBP's time burden of processing the forms would be $2,066.

Brokers

Non-CTPAT Validated Brokers

Under the rule, brokers that are not CTPAT validated will no longer be allowed to make entry for foreign IORs that are not CTPAT validated. This restriction will lead to a decrease in customers for those brokers, but CBP does not count those brokers' loss of business as a cost to society. CBP assumes non-CTPAT validated foreign IORs will switch to using CTPAT validated brokers and that the non-CTPAT validated brokers' loss will therefore equal the CTPAT validated brokers' gain. Thus, from a societal perspective, the shift in clients from some brokers to others is a transfer, not a cost, of the rule. CBP discusses this effect further in the Transfers section below.

Under the rule some non-CTPAT validated brokers will seek to become CTPAT validated and will incur costs in doing so. The costs of CTPAT validation do not come in the form of any fees that the applicants have to pay to CBP, but rather in the additional labor hours it takes for the applicants to complete the validation process and to meet and maintain the high standards of security required of CTPAT validated companies. Becoming and remaining CTPAT validated generally requires a company to apply to CBP's CTPAT program, implement the applicable minimum security criteria, complete a security profile, train personnel, maintain program eligibility and participate in CBP validation and revalidation activities.

Broadly, the minimum security criteria for CTPAT validation require a company to assess security risks across its international supply chain, including business partners, facilities, conveyances, cargo handling, personnel, cybersecurity, and procedural controls. To manage these risks, the company must vet and monitor relevant supply chain partners and encourage or require appropriate security practices. The company must keep its security profile current, address identified weaknesses, and cooperate with CBP reviews, validations, and revalidations. To ensure that its business practices will continue to meet the minimum security criteria, the company must maintain a documented supply chain security program aligned to CTPAT minimum security criteria for its business type.

After reviewing the minimum security criteria, an applicant for CTPAT validation must submit an application through the CTPAT portal and provide required company and supply chain information. The applicant then completes and submits a detailed security profile describing how the company meets CTPAT criteria. CBP reviews the application and security profile. If accepted, the company may receive certified status before validation, depending on the business type and CBP review. CBP then conducts a validation to verify that the company's stated security measures are implemented. This process may include interviews, document review, and site visits to domestic or foreign locations. If CBP identifies gaps, the company must take corrective action within required timeframes. To maintain CTPAT validation, the company must update its profile as operations change, perform periodic reviews, maintain records, and participate in CBP revalidation, typically on a recurring cycle.

CBP does not currently charge a direct application or membership fee for CTPAT participation. However, companies seeking CTPAT validation should expect indirect costs, which may include: staff time to prepare the application, security profile, risk assessments, and documentation; security upgrades, such as facility access controls, seals, cargo tracking, lighting, fencing, CCTV, cybersecurity controls, or personnel screening procedures; training for employees and relevant business partners; travel or hosting costs associated with validation or revalidation visits; consultant or third-party support costs, if the company chooses to use outside assistance; and ongoing program management costs to monitor partners, update procedures, maintain documentation, and respond to CBP findings. The companies that will choose to seek CTPAT validation under the rule will include foreign IORs and U.S. brokers.

CTPAT validation is not a one-time event but an ongoing supply chain security commitment. Therefore, being CTPAT validated entails both the upfront cost to become CTPAT validated and the recurring cost to maintain the high security standards. CBP estimates that the average time burden of applying for CTPAT validation is 20 hours.^[50] Based on an hourly wage of $38.88,^[51] CBP estimates ( printed page 69997) that the average cost of this time burden equals $777.60. Though CBP can estimate the average application cost, it cannot quantify the total cost of CTPAT validation applications under the rule because CBP cannot predict the number of applications that would be made. Regarding post-application costs, CBP is unable to quantify the costs of maintaining high security standards after the application but believes these costs could be significant for the brokers that choose to become CTPAT validated. Some brokers have more clients or deal with more complex supply chains than others, and these differences could create significant differences across brokers in the amount of labor required to maintain high security standards, which makes quantification difficult. Brokers may recover some of these costs from their clients in the form of higher fees for services. Hence, the rule could lead to higher broker fees as newly validated CTPAT brokers pass at least a portion of the costs on to their clients.

The number of non-CTPAT validated brokers is shown in Table 10. From October 1, 2020, to February 6, 2026, 1,401 non-CTPAT brokers served a foreign IOR. Some of those brokers may be motivated to become CTPAT validated as a result of this rule. There are also 28 brokers that are CTPAT certified but not CTPAT validated, and the additional cost of becoming CTPAT validated for them is probably much smaller than for the non-CTPAT brokers.

Brokers Who Serve U.S. IORs

All brokers, both CTPAT validated and non-CTPAT validated, who serve U.S. IORs will incur additional costs under the rule because those brokers will need to obtain records from the U.S. IORs to confirm their domestic status. Such records may include, but are not limited to, proof of citizenship or lawful permanent residence, corporate charters, financial statements, purchase receipts, or documents of title. If circumstances suggest the IOR may be orchestrating U.S. assets simply for purposes of attaining U.S. IOR status without an intention for those assets to remain in the United States, then the broker should ask additional follow-up questions and request additional information. Ultimately, if the broker's concerns are not allayed, it should refuse to certify or re-certify the IOR as a U.S. IOR. The brokers will also need to present the documentation they obtain from U.S. IORs to CBP upon request. Therefore, brokers will be required to retain the documents for 5 years from the date the verification is conducted so that the information will be accessible to CBP when debt arises. All brokers are U.S.-based, per CBP regulations.^[52]

As shown in Table 11, almost 1 million U.S. IORs were active between October 1, 2020, and February 6, 2026. These U.S. IORs made up the majority of IORs and were responsible for the majority of entries. Table 12 shows that there are 323 U.S. IORs per broker, meaning that the average broker will have to obtain documentation for about 323 IORs as a result of the rule. CBP cannot estimate the cost of collecting and maintaining this documentation but believes these costs could be substantial. The precise cost is difficult to quantify because there will be large variation in how long it takes brokers to verify that their U.S. IOR clients are U.S. IORs. An IOR can qualify as a U.S. IOR based either on its beneficial owners' status or on the IOR's U.S. assets, and some IORs will have more complex corporate structures or asset holdings than others. Therefore, providing documentation of one's status as a U.S. IOR to a broker will be straightforward for some IORs and laborious for others.

As discussed above, brokers will be required to verify their U.S. clients' status as U.S. IORs within 60 days of the rule's publication date, but they may submit a Broker Delayed Compliance Request Form to request an extension. If CBP approves the request, the broker will have 6 months after the rule's publication date to verify its clients. CBP estimates that the average time burden to submit the form will be 20 minutes and that all 2,600 currently permitted brokers will submit a form.^[53] The total time burden will therefore be 866.67 hours. At an average hourly wage of $38.88, the cost of this time burden will equal $33,696.

Finally, two checkboxes and a field to provide the IOR number of the principal, if applicable, will be added to CBP Form 3461, CBP Form 7501, and their electronic equivalents. However, CBP expects the cost of simply checking the boxes and entering the IOR number of the principal to be negligible, as discussed in the PRA section below.

( printed page 69998)

Importers of Record

All IORs Who Use Brokers

The rule could increase the workload for CTPAT validated brokers, since some foreign IORs will need to switch from their current non-CTPAT validated broker to a CTPAT validated broker. If CTPAT validated brokers struggle to take on so many new clients in a short period of time, then IORs of all kinds could be negatively affected. CBP therefore examined whether CTPAT validated brokers are likely to have the capacity to handle the additional workload under the rule. Based on entry summary statistics, CBP expects that CTPAT validated brokers will be able to accommodate the new demand for their services, even in the short term, because foreign IORs make up a relatively small portion of the overall trade volume. The top row of Table 13 shows the number of non-CTPAT validated foreign IORs who did not use a CTPAT validated broker, as well as the number and value of entry summaries made by those IORs. The next two rows show those figures as a percentage of all foreign IORs and as a percentage of all IORs, respectively. About a third of foreign IORs are non-CTPAT validated IORs who use non-CTPAT validated brokers, meaning the rule will affect a significant share of foreign IORs. However, only 16% of IORs are foreign. Therefore, the share of all IORs who are non-CTPAT validated participants and use non-CTPAT validated brokers is much smaller than a third. As shown in the bottom row, these IORs make up only 5.4% of the total market and are responsible for 2.6% of entry summaries. Table 14 shows the number and share of IORs who used CTPAT validated brokers, as well as the number and value of the entry summaries. Using the numbers in these two tables, CBP estimated the percentage increase in broker services for CTPAT validated brokers if all of the non-CTPAT validated foreign IORs that currently use non-CTPAT validated brokers switch to CTPAT validated brokers under the rule. In that scenario, CTPAT validated brokers would see a 9.3% increase in clients and a 3.1% increase in the number of entries. If this increase in the quantity demanded for broker services were to be distributed evenly across all CTPAT validated brokers, CBP expects that the brokers would not have much difficulty handling the increase in business. Therefore, the overall broker market will probably be able to provide the same total amount of broker services under the rule as in the baseline. The relative increase in revenue for CTPAT validated brokers will most likely be close to the relative increase in entries handled by them, which is an estimated 3.1%. All brokers that do U.S. customs business are U.S.-based.

( printed page 69999)

Non-CTPAT Validated Foreign IORs Using Non-CTPAT Validated Brokers

CBP expects that non-CTPAT validated foreign IORs using non-CTPAT validated brokers in the baseline will switch to a CTPAT validated broker under the rule. While there are plenty of CTPAT validated brokers available, this switch will not be frictionless. Each IOR will probably research different CTPAT validated brokers and perhaps contact several of them to get quotes for services. This process of searching for a new broker will take time. Moreover, these CTPAT validated brokers will have stricter information requirements for their customers than non-CTPAT validated brokers do, on average. CBP assumes that some if not most of the cost of the extra work done by the CTPAT validated brokers to maintain CTPAT compliance is passed on to the customers in the form of higher broker fees. Therefore, most of the cost of the extra work will fall on the IORs, and these costs will equal the difference between the new rates charged by the CTPAT validated brokers and the old rates charged by the non-CTPAT validated brokers, though CBP lacks an estimate for this rate difference.

There may also be foreign IORs under the rule that decide to apply for CTPAT validation so that they are not required to hire a CTPAT-validated broker, though only foreign IORs that are Canadian are currently eligible for CTPAT validation. Becoming and remaining CTPAT validated generally requires a company to apply to CBP's CTPAT program, implement the applicable minimum security criteria, complete a security profile, and participate in CBP validation and revalidation activities. While there is no fee charged for participation in the CTPAT program, obtaining CTPAT validation entails many indirect costs, which are discussed in more detail above in the subsection regarding the costs of the rule to non-CTPAT validated brokers. Per the discussion above, the cost of the average time burden of applying for CTPAT validation is $777.60,^[54] but CTPAT validation entails post-application time burdens of maintaining high security standards as well.

U.S. IORs

Just as the brokers for U.S. IORs will incur the cost of obtaining documentation from U.S. IORs proving their U.S. residence, the U.S. IORs will incur the cost of gathering and providing the documentation to the brokers and keeping records afterward. While CBP is unable to estimate this cost, it could be substantial on aggregate. From October 1, 2020, to February 6, 2026, there were almost 1 million U.S. IORs who made entry. These IORs were 84.2% of IORs and responsible for 85.2% of entry summaries, as shown in the table below.

( printed page 70000)

Transfers

Under the rule, non-CTPAT validated foreign IORs who were previously using non-CTPAT validated brokers will need to switch to CTPAT validated brokers to continue importing into the United States. This movement in clients will result in a decrease in revenue for non-CTPAT validated brokers and an increase in revenue for CTPAT validated brokers. Any increased revenue received by CTPAT validated brokers would therefore constitute a transfer from non-CTPAT validated brokers. CBP discusses that transfer in this section.

As shown in Table 17, non-CTPAT validated brokers make up 79% of brokers that have filed an entry summary and 70% of brokers that have filed an entry summary for a foreign IOR.

Table 18 shows the number of IORs with entry summaries facilitated by non-CTPAT validated brokers, as well as the number of such entry summaries and their value. Though non-CTPAT validated brokers make up a majority of brokers, they are responsible for only 17.2% of entry summaries. Combining Table 18 and Table 13 from the Costs Section, CBP calculates that, overall, non-CTPAT validated brokers will see a decrease in clients of 12.5% and a decrease in entry summaries of 15.0%.

The negative effect of the rule on non-CTPAT validated brokers will not be evenly distributed. Some non-CTPAT validated brokers serve mostly U.S. IORs and will therefore not lose many clients under the rule, while other brokers get a larger share of their business from foreign IORs and will see a larger reduction in clients. To estimate the distribution of the rule's impact on non-CTPAT validated brokers, CBP took a random sample of 300 non-CTPAT brokers who made an entry summary between September 1, 2025, and February 6, 2026.^[55 56] For each broker, CBP calculated the share of the broker's clients that were foreign IORs, the share of entry summaries that were for foreign IORs, and the share of entry summary value for foreign IORs. For each of these three variables, CBP took the 1st through 9th deciles, plus the 95th, 98th, and 99th percentiles. These distribution statistics are shown in Table 20. The total number of active non-CTPAT validated brokers is 2,428, and CBP estimates in the second column the total number of brokers that are at or above the percentile in the first column.

( printed page 70001)

Looking at the 50th percentile in Table 20, one sees that more than half of non-CTPAT brokers rely very little on foreign IORs. These brokers will not be seriously affected by the rule. Further down the table, non-CTPAT brokers in the 90th percentile get about a quarter of their business from foreign IORs. CBP estimates that 243 brokers are at or above this level of reliance on foreign IORs as clients. Finally, the 2% of brokers (or approximately the top 50) who get the greatest share of business from foreign IORs file 72% of their entry summaries for foreign IORs. Under the rule, these brokers will need to either downsize significantly, find a new client base, or become CTPAT validated, which takes time. Once again, their loss will equal the CTPAT validated brokers' gain. As shown in Table 22 (borrowed from Table 14 in the Costs Section), CTPAT validated brokers will see an estimated increase of 3.1% in their entry summaries under the rule. The overall percentage increase for CTPAT validated brokers will be smaller than the percentage decrease for non-CTPAT validated brokers, as the former do more business in the baseline.

( printed page 70002)

Because the rule will improve CBP's ability to collect duties, penalties, and liquidated damages, the U.S. government will see some increase in revenue under the rule. The increase in government revenue will be in the form of payments made by foreign IORs. However, these foreign IORs will not necessarily shoulder the entire burden of the payments. Through price changes, the foreign IORs could offload some of the burden of these payments onto the U.S. individuals that buy from them. To the extent that U.S. individuals bear some of the burden of increased payments, the increase in revenue will be a transfer, not a benefit of the rule, as the gain to the U.S. government will equal the loss to the U.S. consumers. To the extent that the foreign IORs themselves bear the burden of the increased payments, that increased revenue to the U.S. government is a benefit, as the gain to the U.S. government would be coming from foreign entities.

Net Effect

The net effect of the rule is the difference between the total benefits and the total costs. In this analysis, CBP quantified the populations affected by the rule and discussed the effects of the rule qualitatively, but CBP lacked the information needed to estimate quantitatively either the total benefits or total costs of the rule. Therefore, CBP is unable to calculate the quantified net impact of the rule. In qualitative terms, the benefits of the rule will be to make CBP better positioned to collect revenue and penalties from foreign IORs and to prevent the importation of prohibited goods by foreign IORs. Revenue collection and screening of prohibited goods will improve because CBP will have more visibility into foreign IORs once they become CTPAT validated or begin using CTPAT validated brokers. The costs of the rule will be incurred by CBP, IORs, and brokers. CBP will incur a time cost from enforcing the rule, along with $12.2 million in costs resulting from programming updates, increased CTPAT participation, and processing brokers' requests for delayed compliance. Foreign IORs who are not CTPAT validated and who do not use a CTPAT validated broker will no longer be allowed to enter imported merchandise for consumption. These IORs will have to incur the cost of switching to a CTPAT validated broker and will likely bear the cost of the stricter informational standards set by CTPAT validated brokers, with this cost passed on to the IORs in the form of higher broker fees. In the long run, some of these foreign IORs may join CTPAT and become validated participants in the program, which is free to join but involves indirect costs to meet the requirements of the program, such as additional labor. The IORs who need to find new brokers will not be the only ones affected by the rule. U.S. IORs and the brokers who serve them will face the paperwork burden of proving that they are U.S. IORs. These IORs will need to provide documentation of their domestic status to the brokers, who will store the documentation and present it to CBP when asked for it. Non-CTPAT validated brokers will see a reduction in clients as foreign IORs shift to using CTPAT validated brokers. This effect is a transfer, not a cost to society, because from a societal perspective the loss to the non-CTPAT validated brokers will be offset by the CTPAT validated brokers' gain.

Alternatives

In this section, CBP discusses two regulatory alternatives that are stricter and an alternative that is less strict than the interim final rule. The first stricter alternative would require not only foreign IORs but also U.S. IORs to be CTPAT validated or use a CTPAT validated broker. This alternative would increase transparency and security in U.S. IORs' operations and save brokers from having to review their clients' records to verify their foreign or U.S. status. However, because U.S. IORs have a physical presence in the country, CBP is already better positioned to enforce payments for U.S. IORs than for foreign IORs. Therefore, the relative improvement in enforcement would not be as large for U.S. IORs as for foreign IORs. Moreover, this stricter alternative would cause greater disruption to U.S. imports than the interim final rule would. From October 1, 2020, to February 6, 2026, only 2.6% of entry summaries were made by foreign IORs that were neither non-CTPAT validated nor using a CTPAT validated brokers, and the interim final rule would only affect the entry summaries in that category.^[57] In that same time period, 17.2% of entry summaries were made by foreign or U.S. IORs that were not CTPAT validated or using a CTPAT validated broker. Thus, the stricter regulatory alternative would affect a more significant share of entry summaries. Among active brokers, 78% are non-CTPAT validated and would therefore no longer be able to offer their services until they became CTPAT validated, which is a time intensive task. The share of IORs that would be ineligible to enter merchandise for consumption with their current CTPAT status and broker would increase from 5.4% under the interim final rule to 42.7% under the stricter regulatory alternative. The brokers that are CTPAT validated could have difficulty taking on so many clients. If the ineligible U.S. IORs all switched to CTPAT validated brokers, those brokers would see an increase in their IOR clients of 74.4% and an increase in entry summaries of 20.8%. Due to the higher costs and limited benefit of this scenario, CBP is not pursuing the stricter regulatory alternative.

CBP is considering a second stricter alternative that would prohibit foreign IORs from filing informal entries for consumption, regardless of whether they are a CTPAT member or use a CTPAT member broker. The most common informal entry types for consumption are ET11 entry and postal informal entry. Foreign IORs file approximately 9 percent of ET11 entry summaries and approximately 23 percent of the value of ET11 entry summaries. The practical effect of this stricter alternative would be that importers of informal entries would shift from filing informal entries to filing formal entries. Historically, there has been a difference in the entry requirements for informal entries and formal entries, but CBP is proposing to reduce this difference for ET11 and postal informal entries in a separate rule—CBP is publishing a Notice of Proposed Rulemaking related to Low Value Shipments that would impose stricter entry requirements on ET11 and postal informal entries to more closely match the requirements for formal entry. If that rule becomes effective, there would be little difference in the cost of making formal entry versus ET11 or postal informal entry. Therefore, if, during the final rule for this rulemaking, CBP adopts this stricter alternative, the effects of this alternative on ET11 and postal informal entries would be the additional entry requirements of switching to formal entry during the time period before the Low Value Shipment rule enters into effect. Without knowing the relative timing of future rulemakings, it is impossible to estimate for how long this provision might have costs that are attributable to this rule versus the Low Value Shipments rule. If the Low Value Shipments rule never finalizes, the additional costs to foreign IORs of switching from ET11 or postal informal ( printed page 70003) entry to formal entry would be attributable to this rule. For more information on changes being made to ET11 and postal informal entry, see the analysis for the Low Value Shipments Notice of Proposed Rulemaking.

The less strict alternative would reduce the costs of the interim final rule but also the benefits. In the interim final rule, importers will be required to report whether they are a foreign or U.S. IOR on CBP Form 3461 and CBP Form 7501. Brokers will be expected to obtain documentation from the IORs proving the domestic status of the IOR and to supply this documentation to CBP upon request. The purpose of this new information requirement is to allow CBP to know which IORs are foreign so that CBP can require those foreign IORs to use a CTPAT validated broker if the IOR is not CTPAT validated itself. However, the new information requirement about IORs' domestic status will apply to all brokers, including CTPAT validated brokers. As CTPAT validated brokers will be allowed to make entry for any IOR, foreign or U.S., CBP could waive the new information requirement for CTPAT validated brokers and still be able to implement the rule.

If CTPAT validated brokers did not have to state whether their clients were U.S. or foreign IORs, then those brokers would not have to obtain documentation proving the domestic status of their clients that are U.S. IORs. This alternative would affect a majority of U.S. IORs, as 56% of U.S. IORs already use CTPAT validated brokers, based on figures in the top row of Table 23. If CTPAT validated brokers did not have to state whether the IOR was a U.S. IOR, then those IORs could avoid the paperwork burden of proving they are U.S. IORs. Furthermore, the bottom row of Table 23 shows that the average CTPAT validated broker serves a much larger number of U.S. IORs than the average non-CTPAT validated broker. Therefore, the change would also limit the burden per broker. Without this proposed alternative, the average CTPAT validated broker would need to obtain documentation of domestic status from 866 U.S. IORs. With the proposed alternative, CTPAT validated brokers would not need to obtain this documentation. Only non-CTPAT validated brokers would need to do so, with the average non-CTPAT validated broker needing to obtain documentation from 180 U.S. IORs.

Compared to the main regulatory scenario, this proposed alternative would have the drawback of hampering efforts by CTPAT validated brokers to obtain information about their clients. In the main regulatory scenario, brokers will be required by regulations to “request and review a client's records establishing that the criteria specified in § 110.2 of this chapter, to be considered a U.S. importer of record, are satisfied. Such records may include, but are not limited to, proof of citizenship or lawful permanent residence, corporate charters, financial statements, purchase receipts, or documents of title.” Because of this regulatory requirement, brokers will have the leverage to demand this information from their clients. In the alternative version of the rule, a CTPAT validated broker may still want to review a client's detailed records for the purposes of inspecting the supply chain and thereby maintaining its CTPAT validated status. However, if verifying the client's records were not a regulatory requirement for CTPAT validated brokers, then the clients claiming to be U.S. IORs may be reluctant to provide this documentation to the brokers. As a result, CTPAT validated brokers would have less visibility into their clients' supply chain, or the brokers would have to exert more effort to achieve the desired level of visibility.

C. Regulatory Flexibility Act

The Regulatory Flexibility Act (RFA) (5 U.S.C. 603(b)), as amended by the Small Business Regulatory Enforcement and Fairness Act of 1996 (SBREFA), requires an agency to prepare and make available to the public a regulatory flexibility analysis that describes the effect of a proposed rule on small entities ( i.e., small businesses, small organizations, and small governmental jurisdictions) when the agency is required “to publish a general notice of proposed rulemaking for any proposed rule.” Because this rule is being issued as an interim final rule, on the grounds set forth above, a regulatory flexibility analysis is not required under the RFA.

D. Paperwork Reduction Act

The Paperwork Reduction Act (PRA) of 1995 (44 U.S.C. 3507) requires that CBP consider the impact of paperwork and other information collection burdens imposed on the public. An agency may not conduct, or sponsor, and an individual is not required to respond to, a collection of information unless the collection of information displays a valid Office of Management and Budget (OMB) control number. Implementing this IFR will require both CBP Form 3461 Entry/Immediate Delivery ACE and CBP Form 7501 Entry Summary (and their electronic ( printed page 70004) equivalents) to include two new checkboxes and a new field. One checkbox would be checked if the broker is acting as the IOR on behalf of the principal on the power of attorney. If the broker checks this box and the broker is not CTPAT validated, then the broker will also fill in a field for identifying the principal by IOR number or other identifier tied to CBP Form 5106. The second checkbox would be checked if the IOR (or principal, if the broker is acting as the IOR on behalf of the principal) is a U.S. IOR.

Customs brokers will also need to obtain documentation from their clients (IORs) proving that they are U.S. IORs. Customs brokers will incur costs in obtaining this information from U.S. IORs and keeping records, and U.S. IORs will also incur costs in gathering and providing the information to the customs brokers and keeping their own records.^[58] However, CBP does not expect the time burden for CBP Form 3461, under OMB control number 1651-0024, or CBP Form 7501, under OMB control number 1651-0022, to increase. Once a customs broker has the needed documentation for a U.S. IOR, which is a one-time occurrence for that IOR, there is no additional time burden imposed on the public to submit an additional entry or entry summary form on behalf of the IOR. Furthermore, CBP does not anticipate any additional burden to the public for the time it takes to check the two checkboxes and provide the IOR number of the principal on the power of attorney, if applicable.

Brokers will be able to submit a Broker Delayed Compliance Request Form to request that the deadline to verify their U.S. clients be extended to 6 months after the publication date of this rulemaking. This form is being created for this rule, and the time burden estimates are as follows:

Broker Delayed Compliance Request Form

Estimated Number of Respondents: 2,600.

Estimated Number of Responses: 2,600.

Estimated Time per Response: 20 minutes (0.33 hours).

Estimated Total Annual Burden Hours: 867.

E. Unfunded Mandates Reform Act of 1995

Title II of the Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-38, UMRA) requires each Federal agency to prepare a written statement assessing the effects of any Federal mandate in a proposed rule or final rule for which the agency published a proposed rule, which includes any Federal mandate that may result in a $100 million or more expenditure (adjusted annually for inflation) in any one year by State, local, and tribal governments, in the aggregate, or by the private sector.

A written statement under UMRA is not required unless an agency has published a notice of proposed rulemaking. See2 U.S.C. 1532(a). In addition, an action is exempt from UMRA if it is necessary for national security. See2 U.S.C. 1503(5). As discussed under Section VIII.A., this rule is exempt from notice and comment rulemaking procedures and is necessary for national security. Accordingly, CBP has not prepared a written statement in connection with this rule.

IX. Signing Authority

In accordance with Treasury Order 100-20, the Secretary of the Treasury delegated to the Secretary of Homeland Security the authority related to the customs revenue functions vested in the Secretary of the Treasury as set forth in 6 U.S.C. 212 and 215, subject to certain exceptions. This regulation is being issued in accordance with DHS Delegation 07010.3, Revision 03.2, which delegates to the Commissioner of CBP the authority to prescribe and approve regulations related to customs revenue functions.

Rodney S. Scott, Commissioner, having reviewed and approved this document, has delegated the authority to electronically sign this document to Susan S. Thomas, Executive Assistant Commissioner, Office of Trade, for purposes of publication in the Federal Register .

Amendments to the CBP Regulations

For the reasons set forth above, chapter I of title 19, Code of Federal Regulations (19 CFR chapter I), is amended as set forth below:

91 FR 69977