[Federal Register Volume 75, Number 165 (Thursday, August 26, 2010)]
[Rules and Regulations]
[Pages 52456-52458]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-21254]



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DEPARTMENT OF HOMELAND SECURITY

U.S. Customs and Border Protection

19 CFR Part 111

[USCBP-2008-0059; CBP Dec. 10-28]
RIN 1651-AA74


Customs Broker License Examination Individual Eligibility 
Requirements

AGENCY: Customs and Border Protection, Department of Homeland Security.

ACTION: Final rule.

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SUMMARY: This final rule adopts, with one modification, proposed 
changes U.S. Customs and Border Protection (CBP) regulations regarding 
the requirements that an individual must satisfy in order to take the 
written examination for an individual customs broker's license, which 
is administered by CBP. Under this final rule, in order to be eligible 
to take the examination, an individual must on the date of examination 
be a citizen of the United States who has attained the age of 18 years 
and who is not an officer or employee of the U.S. Government. These 
changes will facilitate the overall licensing process by enabling 
individuals who have attained the age of 18 to take the examination in 
order to gain valuable experience while ensuring they would not be 
precluded from obtaining a license upon turning 21 because of 
citizenship or employment status.

DATES: Effective Date: This final rule is effective on September 27, 
2010.

FOR FURTHER INFORMATION CONTACT: Anita Harris, Chief, Broker Compliance 
Branch, Office of International Trade, (202) 863-6069.

SUPPLEMENTARY INFORMATION:

Background

    Section 641 of the Tariff Act of 1930, as amended (19 U.S.C. 1641), 
provides that a person (an individual, corporation, association, or 
partnership) must hold a valid customs broker's license and permit in 
order to transact customs business on behalf of others, sets forth 
standards for the issuance of broker's licenses and permits, and 
provides for the taking of disciplinary action against brokers that 
have engaged in specified types of infractions. In the case of an 
applicant for an individual broker's license, section 641 states that 
the Secretary of the Treasury may conduct an examination to determine 
such applicant's qualifications for a license. Section 641 also 
authorizes the Secretary of the Treasury to prescribe rules and 
regulations relating to the customs business of brokers as necessary to 
protect importers and the revenue of the United States and to carry out 
the provisions of section 641.
    The Homeland Security Act of 2002, 6 U.S.C. 101 et seq., Public Law 
107-296 (Nov. 25, 2002) (the ``HSA'') established the Department of 
Homeland Security (DHS) and transferred the U.S. Customs Service from 
the Department of the Treasury to DHS, effective March 1, 2003. Section 
1502 of the HSA renamed the ``Customs Service'' as the ``Bureau of 
Customs and Border Protection,'' which has since been renamed U.S. 
Customs and Border Protection (CBP). See 72 FR 20131 (April 23, 2007) 
and 75 FR 12445 (March 16, 2010).
    Treasury Department Order No. 100-16 (see Appendix to 19 CFR Part 
0) delegates to DHS the authority to prescribe the rules and 
regulations relating to customs brokers.
    The regulations issued under the authority of section 641 are set 
forth in part 111 of title 19 of the Code of Federal Regulations (19 
CFR part 111). Part 111 includes detailed rules regarding the licensing 
of, and granting of permits to, persons desiring to transact customs 
business as customs brokers. These rules include the qualifications 
required of applicants and the procedures for applying for licenses and 
permits. Section 111.11 (19 CFR 111.11) sets forth the basic 
requirements for obtaining a broker's license. Paragraphs (a)(1) 
through (a)(4) of Sec.  111.11 provide that, in order to obtain a 
customs broker's license, an individual must: Be a citizen of the 
United States upon applying for the license and not an officer or 
employee of the United States; attain the age of 21 prior to the date 
of application for such license; Be of good moral character; and, 
obtain a passing grade on the written examination within a 3-year 
period before submission of the application.
    The regulations relating to the written examination for an 
individual customs broker's license are set forth in Sec.  111.13 (19 
CFR 111.13). Paragraph (b) of Sec.  111.13, pertaining to the date and 
place of the examination, provides that an individual intending to take 
the examination must advise the appropriate port director in writing at 
least 30 calendar days prior to the scheduled examination date and 
remit the $200 examination fee prescribed in paragraph (a) of Sec.  
111.96. There were previously no additional requirements in Sec.  
111.13 that were required to be fulfilled in order for an individual to 
sit for the customs broker's license examination.

Notice of Proposed Rulemaking

    On May 27, 2008, CBP published a notice of proposed rulemaking in 
the Federal Register (73 FR 30328; the ``NPRM'') that proposed to amend 
Sec.  111.13 to more closely align the basic requirements that an 
individual must satisfy to take the written examination for a customs 
broker's license with the basic requirements an individual must satisfy 
to obtain an customs broker's license. In order to be eligible to take 
the written examination under the amendments proposed in the NPRM, an 
individual would be required to be a U.S. citizen on the date of 
examination and not be an officer or employee of the U.S. Government, 
and to have attained the age of 21 prior to the date of examination.
    The NPRM explained that the proposed amendments would facilitate 
the overall licensing process by helping to ensure that those sitting 
for the examination are not automatically precluded from obtaining a 
license by reason of age, citizenship status, or employment. It was 
also noted that limiting the examination to U.S. citizens is a 
reasonable security measure that conforms to the existing citizenship 
requirement for obtaining a license. In addition, by barring U.S. 
Government employees from taking the examination, the changes proposed 
in the NPRM would help to eliminate the appearance of any conflict of 
interest or unfair advantage that might be associated with their 
Federal Government employment.
    The NPRM also proposed non-substantive amendments to Sec.  
111.13(a), (c), and (e) to reflect the nomenclature changes effected by 
the transfer of the U.S. Customs Service to the Department of Homeland 
Security.
    Comments were solicited in the NPRM of May 27, 2008. The comment 
period closed on July 28, 2008.

Discussion of Comments

    Four commenters responded to the solicitation of comments in the 
NPRM. A description of the comments received and CBP's response is set 
forth below.
    Comment: One commenter did not support the proposed requirement 
that an individual attain the age of 21 prior to the date of the broker 
examination because this requirement would inhibit the career potential 
of individuals who can currently take and pass the examination and 
subsequently apply to obtain a customs broker's license upon turning 21 
years old. In this regard, the commenter suggests that CBP reduce the 
age limitation proposed in the NPRM.
    CBP Response: After further considering the age limit issue, CBP

[[Page 52457]]

agrees with the commenter that the limit should be lowered from the 
proposed 21 years to 18 years of age to provide greater opportunities 
for individuals who have graduated from high school and are in the 
process of gaining work experience before being eligible to apply for a 
broker's license. CBP notes that the age of majority (adulthood) in the 
United States is generally considered to be 18 years and that age 18 is 
consistent with the requirement that an application for an individual 
broker's license must be submitted within a 3-year period after the 
applicant takes and passes the written examination. See 19 CFR 
111.12(a). A less restrictive age requirement ensures that an 
individual will still be able to apply to obtain a license upon turning 
21 years old while having the opportunity to work under the supervision 
and control of a licensed broker or brokerage for a greater time period 
after having taken the exam. Accordingly, since CBP is adopting the 
commenter's suggestion to modify the age limit, Sec.  111.13(b) is 
amended in the final rule to require that an individual must only be 18 
years old on the date of the examination.
    Comment: One commenter, an association that provides a preparatory 
training course for individuals intending to take the written 
examination, stated that it was initially concerned that the age and 
citizenship requirements proposed in the NPRM would negatively impact 
its business by reducing the number of applicants who are eligible to 
sit for the examination. However, the commenter specifically noted that 
only one out of 203 applicants enrolled in its course for the October 
2008 examination would not have met the age and citizenship 
requirements to take the examination as proposed in the NPRM. As such, 
the commenter supports the proposed amendments since there was no 
economic impact on its business.
    CBP Response: CBP appreciates the commenter's input and its review 
of the potential impact that the proposed amendments would have had on 
its business. Since CBP is modifying the age requirement from 21 years 
to 18 years based upon the input of another commenter, CBP believes 
there is even less of a restriction on those who would likely enroll in 
the commenter's preparatory course.
    Comment: A commenter opposed the amendments in the NPRM based upon 
the amount of time it takes to obtain a license after passing the 
examination. The commenter would only support the proposed amendments 
if CBP was required to issue a license within six months of passing the 
examination.
    CBP Response: CBP understands the commenter's concern regarding the 
timely issuance of customs brokers' licenses after passing the 
examination. However, CBP believes that requiring licenses to be issued 
within a mandatory timeframe would not be operationally practical or in 
furtherance of CBP's mission of facilitating legitimate trade. In this 
regard, CBP initially notes that the broker's examination is intended 
only to evaluate and verify an applicant's knowledge of relevant 
customs laws and regulations. The background investigation described in 
Sec.  111.14, which must be completed after an individual passes the 
examination but before a license is issued, is intended to verify the 
accuracy of the statements made in the application, the business 
integrity of the applicant, and the moral character and reputation of 
the applicant. CBP has a legitimate interest in closely scrutinizing 
applicants who will be transacting customs business on behalf of 
importers before granting a license. Considering the general scope of 
the background investigation, the circumstances unique to each 
applicant's background that may require more time to investigate, and 
the number of Federal agencies that may ultimately assist in the 
investigation (e.g., Federal Bureau of Investigation, U.S. Immigration 
and Customs Enforcement, CBP), it is clear that imposing a regulatory 
requirement to issue a license within an arbitrary time frame would not 
be operationally practical and would hinder CBP's ability to verify 
that licenses are issued to qualified individuals.
    Comment: One commenter, a large clothing retailer, did not support 
the amendment in the NPRM to preclude non-U.S. citizens from taking the 
examination. In support of its position, the commenter states that the 
private sector does not have an equivalent to the examination and notes 
that employers may hire and promote individuals based solely upon their 
ability to pass the examination. In addition, the commenter states that 
preventing non-U.S. citizens from taking the examination would be 
discriminatory since it would prevent legal resident aliens from 
advancing their careers in the sense that the examination is the only 
measurement of an individual's competence in the trade compliance 
field.
    CBP Response: CBP initially notes that the customs broker's license 
examination is not designed to be used as a tool by private sector 
employers to gauge whether job applicants or current employees possess 
the requisite knowledge to be employed or promoted in the trade 
compliance field. Rather, the examination is administered so that CBP 
can evaluate and verify an applicant's knowledge of relevant customs 
laws and regulations for purposes of granting an individual customs 
broker's license. In addition, CBP disagrees that the examination is 
the only measurement of an individual's competence in the trade 
compliance field because employers have the option to utilize 
privately-developed benchmarks or other academic tools to evaluate an 
individual's aptitude. Moreover, CBP disagrees that preventing non-U.S. 
citizens from taking the examination would be discriminatory because 
the amendment set forth in the NPRM and adopted in this document will 
merely align the requirement for taking the examination with the 
existing statutory requirement of citizenship for obtaining a license. 
See 19 U.S.C. 1641(b)(2).

Conclusion

    After analysis of the comments and further review of matter, CBP 
has decided to adopt as final, with the modification discussed above in 
the comment analysis, the NPRM published in the Federal Register (73 FR 
30328) on May 27, 2008. In addition, minor editorial changes have been 
made to the regulatory text for clarity.

Regulatory Flexibility Act

    Pursuant to the provisions of the Regulatory Flexibility Act (5 
U.S.C. 601 et seq.), it is certified that the amendments in this 
document do not have a significant economic impact on a substantial 
number of small entities because the final rule more closely aligns the 
requirements for taking the written examination for an individual 
customs broker's license with the requirements for actually obtaining a 
customs broker's license as to citizenship and employment. Accordingly, 
the amendments set forth in this document are not subject to the 
regulatory analysis or other requirements of 5 U.S.C. 603 and 604.

Executive Order 12866

    This final rule does not meet the criteria to be considered an 
economically ``significant regulatory action'' under Executive Order 
12866 because it will not result in the expenditure of over $100 
million in any one year. The Office of Management and Budget (OMB) has 
not reviewed this rule under that Order.

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Signing Authority

    This document is being issued by CBP in accordance with Sec.  
0.1(b)(1) of the CBP regulations (19 CFR 0.1(b)(1)).

List of Subject in 19 CFR Part 111

    Administrative practice and procedure, Brokers, Customs duties and 
inspection, Imports, Licensing, Reporting and recordkeeping 
requirements.

Amendments to the CBP Regulations

0
For the reasons set forth in the preamble, part 111 of title 19 of the 
Code of Federal Regulations (19 CFR part 111) is amended as set forth 
below.

PART 111--CUSTOMS BROKERS

0
1. The general authority citation for part 111 continues to read as 
follows:

    Authority:  19 U.S.C. 66, 1202 (General Note 3(i), Harmonized 
Tariff Schedule of the United States), 1624, 1641.
* * * * *

0
2. In Sec.  111.13:
0
a. Paragraph (a) is amended by removing the words ``Customs 
Headquarters'' and adding in its place, the words ``Customs and Border 
Protection (CBP) Headquarters'';
0
b. Paragraph (b) is amended by revising the heading and adding a new 
first sentence;
0
c. Paragraph (c) is amended by removing the word ``Customs'' each place 
it appears and adding in its place, the term ``CBP''; and
0
d. Paragraph (e) is amended by removing the word ``Customs'' in the 
first sentence and adding in its place, the term ``CBP''.
    The addition and revision to paragraph (b) read as follows:


Sec.  111.13  Written examination for individual license.

* * * * *
    (b) Basic requirements, date, and place of examination. In order to 
be eligible to take the written examination, an individual must on the 
date of examination be a citizen of the United States who has attained 
the age of 18 years and who is not an officer or employee of the United 
States Government. * * *
* * * * *

    Dated: August 18, 2010.
Alan Bersin,
Commissioner, U.S. Customs and Border Protection.
[FR Doc. 2010-21254 Filed 8-25-10; 8:45 am]
BILLING CODE 9111-14-P