Attachment 2(d)
SCHEME 1: NO CHANGE
GENERAL OBSERVATIONS
- It is necessary to maintain the integrity of the Customs Brokers License by keeping the same or similar licensing requirements in place.
- No compelling reason to change but cedes he may be going against the tide
- Brokers desire permitting in the district in order to maintain the level of standards required
- CBP should not have concerns as to which customs broker gives that responsible supervision and control. Effectiveness is in what CBP should be interested. The brokerage house knows its customers, its personnel and needs better than CBP. …the regulatory structure should not be so rigid as to make it counterproductive to give responsible supervision and control of a permitted branch.
- “There is no greater resource to ensure due diligence and responsible care on the part of a licensed CHB than the hands on oversight of a licensed CHB(s)”
- “The government has the licensing process to help them assure themselves of a certain level of knowledge on the process they are overseeing.”
- “We are trying to hold on to the past”
REGULATORY PROPOSAL
REGULATORY CHANGE Y / N
STATUTORY CHANGE Y / N
NCBFAA PROS
NCBFAA CONS
- Current waiver process is subjective, tedious, time-consuming
CBP PROS
CBP CONS
- Hard to determine where work is being done and therefore enforce
SCHEME 2: NATIONAL PERMIT
REGULATORY PROPOSAL
REGULATORY CHANGE Y / N
STATUTORY CHANGE Y / N
GENERAL OBSERVATIONS
- ACE leading towards national permit
- RLF leading towards national permit
- CEEs leading towards national permit
- Ebonds leading towards national permit
- Would require two individual licensed individuals
- Perhaps a national permit with a minimum/maximum number of brokers and permits
- Perhaps a national permit with limitations on type of activities permitted, e.g., differentiate land, water, air,
- The current permit scheme is as antiquated as a wind up watch
- If we had only a national permit we would lose a lot of hands-on training and passing on of knowledge
NCBFAA PROS
- Responsible supervision and control in a RLF environment has been successful
- “It makes absolutely no sense to have a “local” permit and a national permit. If we have a national permit, that should allow us to file entries anywhere, local or other ports.”
NCBFAA CONS
- May be a slippery slope towards undesirable deregulation
- May make it easier for lower-quality performers to enter the market
- Another concern is the ease with which someone might be able to enter the market on a national basis if the license/permit qualifier is changed.
- A DECRESE IN LICENSED BROKER OVERSIGHT LESSENS THE SECURITY OF TRADE AND THE INTEGRITY OF THE DATA BEING USED FOR SECURITY TARGETING PURPOSES.
- Eliminates CBP ability to administer enforcement measures in smaller increments
- Reduces the demand for individual
- Reduces interest in pursuing profession
- Regarding decisions made by a Broker CEE, the broker should have right of appeal to HQS
- “I agree with you about local port permits, and local licensed brokers. I see the elimination of this as troubling, but understand the remote filing world of today.”
- “Eliminating the brokers and the permits may eliminate the small broker, and put us in a web based commodity arrangement without any broker related importer compliance concerns.”
- “Benefits a relatively small number of firms, particularly medium to large sized CHB’s as opposed to the overall number of smaller CHB firms in operation who serve as the backbone of the CHB industry”
CBP PROS
CBP CONS
SCHEME 2A: NATIONAL PERMIT PLUS LICENSE PER PORT WHERE ENTRIES ARE FILED
REGULATORY PROPOSAL
REGULATORY CHANGE Y / N
STATUTORY CHANGE Y / N
See Appendix
SCHEME 3: SMALLER GEOGRAPHICALLY DEFINED REQUIREMENT
- Each office transmitting to CBP should have at a minimum one LCB to ensure responsible supervision and control.
SCHEME 4: LARGER GEOGRAPHIC BOUNDRIES, E.G., MOVE FROM DISTRICTS TO REGIONS
REGULATORY PROPOSAL
REGULATORY CHANGE Y / N
STATUTORY CHANGE Y / N
GENERAL OBSERVATIONS
- Relies on some amount of RS&C from remote location(s)
- Relies on geographic boundaries while CBP is moving towards virtual ‘locations’
- Geographic boundaries are archaic
- District and region boundaries are problematic in certain ports/areas
- May hinder brokers’ ability to serve clients in manners which align with their business practices
- believe that there must be standard guidelines established for all brokers to follow in order to ensure responsible supervision and control and to maintain compliance in offices where a licensed broker is not present (i.e. minimum number of visits, guidelines as to what to audit, review etc.).
- “Any change beyond the proposed Regional process is premature given the many changes Customs is trying to implement. CEE’s and ACE in particular. The way we do business in the future with these major changes will impact us and then we can look more closely at what makes sense as far as regulating us under those new circumstances.”
NCBFAA PROS
- Can be an interim step in direction of national permit giving brokers time to adjust VI
- Can be an interim step during which NCBFAA can see how CBP organizes broker management VI
- Give brokerage community time to adjust
NCBFAA CONS
- May result in employment of fewer individual LCB
- Brokers do not need time to adjust
CBP PROS
CBP CONS
- Hard to determine where work is being done and therefore enforce
SCHEME 5: NUMBER OF LCB TIED TO PRODUCTION ACTIVITY, E.G., 1 LCB PER X ENTRIES
REGULATORY PROPOSAL
REGULATORY CHANGE Y / N
STATUTORY CHANGE Y / N
NCBFAA PROS
Likely to increase number of LCB required
NCBFAA CONS
- Need to define what type(s) of entries to be measured
- Conceivably there could be brokers conducting customs business but not producing entries
- Entry production has numerous variables—volume, repetition, automation, complexity, etc.
- Does not take non-entry work into consideration in customs business activities
- May be trick to craft regulatory language
CBP PROS
CBP CONS
- Hard for CBP to determine
SCHEME 6: NUMBER OF LCB TIED TO NUMBER OF EMPLOYEES [CONDUCTING CUSTOMS BUSINESS]
REGULATORY PROPOSAL
REGULATORY CHANGE Y / N
STATUTORY CHANGE Y / N
NCBFAA PROS
- Possibly use a former CBP model for internal management of a 1:15ratio
- “Each firm needs to supervise its people, not its transactions.”
- ‘I see how tying the number of licenses to employees might preserve the value of thelicense
NCBFAA CONS
- Need to define what employees are counted
- May be hard for CBP to measure
- Could result in locations with no LCB on site; could result in locations performing a lot of customs business with no LCB on site
- Could result in customs business being done with the focus on post-transaction audit rather than active supervision during performance of customs business or cargo clearance process
- MAY NECESSITATE A WAIVER MECHANISM
CBP PROS
- May align with CBP studies/models
CBP CONS
- May prove difficult for CBP to enforce
- CBP may be hesitant to write this level of specificity into regulations, may be a challenge with OMB
SCHEME 7: COMBINATION OF LCB PER 15 EMPLOYEES [CONDUCTING CUSTOMS BUSINESS] PLUS NATIONAL PERMIT
SCHEME 8: COMBINATION OF LCB PER X TRANSACTIONS PLUS LCB PER GEOGRAPHIC BOUNDRY
GENERAL OBSERVATIONS
REGULATORY PROPOSAL
REGULATORY CHANGE Y / N
STATUTORY CHANGE Y / N
NCBFAA PROS
NCBFAA CONS
CBP PROS
CBP CONS
- Adds administrative complexity for CBP
SCHEME 9: LICENSE REQUIRED PER BROKER CENTER OF OPERATIONS
GENERAL OBSERVATIONS
- Is a center of operations a geographic or virtual location?
- Variation—CBP determine if broker is conducting responsible supervision and control in an account management way rather than transactional.
REGULATORY PROPOSAL
REGULATORY CHANGE Y / N
STATUTORY CHANGE Y / N
NCBFAA PROS
- Gives broker flexibility to move work from center to center thereby managing work/employee ratio
NCBFAA CONS
- Not all brokers are organized/operate in this manner
- Could result in a broker having one center and one LCB [this could happen anyway under current permit regulations.]
CBP PROS
CBP CONS
SCHEME 9: CONTRACT AND RULING STRUCTURE
REGULATORY PROPOSAL
REGULATORY CHANGE Y / N
STATUTORY CHANGE Y / N
NCBFAA PROS
- A variation of this theme—voluntary program where CBP recognizes more compliant brokers
NCBFAA CONS
CBP PROS
- Modeled after an existing provision--drawback
CBP CONS
- Concept previously rejected by CBP although unclear why
General Observations
NCBFAA OBJECTIVES
- RESPONSIBLE SUPERVISION AND CONTROL
- KEEPING VALUE OF LICENSE
- ENSURING ADEQUATE PROFESSIONALISM
- ENSURING TECHNICAL EXPERTISE IN BROKERAGE OFFICES, EVEN IF REMOTELY
- Professionalism should be the responsibility of the brokerage community and NEI a vehicle
- EFFECTIVE BROKER MANAGEMENT STRUCTURE/PROCEDURES IN CBP
- BROKER MANAGEMENT CEE
- CENTRALIZED BROKER MANAGEMENT
- Broker management should be out of the 20 OFO offices
- Local broker management offices with reporting into a CEE system
- Having CBP acknowledge the worth of the licensed broker
- Flexibility on how we perform our business is important.
- Results and accountability of work is important.
- Mirror the flexibility of the CEEs
- Private business should be encouraged to develop its own answers for a well working and ______product.
- Brokerage firms do invest in physical facilities in ports; those operations should have some recognition by CBP
- Local locations should have a business license not permit.
CBP OBJECTIVES
- Ease of administration
- Able to measure/monitor regulatory compliance
- Able to measure/monitor effectiveness of regulation
- Ensure responsible supervision and control JP
- EFFECTIVE BROKER MANAGEMENT STRUCTURE/PROCEDURES IN CBP
- Speculation—CBP is pushing permitting reform to conform with their CEE structure and gain labor efficiencies
- Speculation—CBP wants a national permit
GENERAL OBSERVATIONS
Numerous comments linking permit discussion to defining customs business
CUSTOMS COMMITTEE RESULTS
AREA 1
- Came to the consensus that we would prefer one national permit, and not have any geographic divides.
- Came to the general consensus that there be no link to where the LCB(s) are to where the work is performed; where the licensed broker is located compared to where the employees are working should not be dictated by CBP, as long as the appropriate ratio is met.
- Came to the general consensus that the definition of customs business should be clear to facilitate the ratio requirement and came to the general consensus that customs business should be conducted in the US.
- Came to the general consensus in favor of a LCB per X employees conducting customs business
- Came to the consensus that we want to protect the value of our licenses
AREA 2
AREA 3
AREA 4 attached
AREA 5 attac
AREA 6 Trend is to increase the number of LCB per firm to enhance quality and competitive stance
AREA 7
AREA 8
AREA 9
ATTACHMENT FOR SCHEME 2A
AUTHOR: Kathy Carlton
DATE: 01-31-14
My position is that CBP require a National permit for Brokers, with a minimum of one Licensed Customs Broker for each office transmitting entries at local ports within the current 44 districts. I believe we need to move away from the local permitting, double permitting (national and local) but still continue reasonable supervision and control by keeping the current Customs Broker licensing requirements in place (Broker for each local port).
Regarding the discussion about number of entries per Licensed Customs Brokers in any given area, I think that should be decided by the Company on a corporate level, not with CBP. CBP already has guidelines in place regarding supervision and control. Each Company transacting Customs business is best to make the decision as to how many Licensed Customer broker is required to be Customs Compliant. Many large Brokers have a Compliance Dept. that addresses this issue.
It is necessary to maintain the integrity of the Customs Brokers License by keeping the same or similar licensing requirements in place.
ATTACHMENT FOR SCHEME 4
AUTHOR: Amy Magnus
DATE: 02-01-14
When I worked for the Customs Service (note we were a service at that time), there were various supervision models created by the Office of Personnel Management which we as Customs managers were to observe. These staffing models called for a certain number of supervisors per number of employees as OPM has divined that a ratio was required to provide adequate supervision over the government’s work. To the best of my remembrance, there was a ratio of something like 1 to 15 (or close) for Import Specialists. I see the work that brokers do most akin to Import Specialists, and when we tear a page from the Customs’ own rule book, we make the most traction with Customs. Why not adopt their own OPM model for the provision of responsible supervision and control? CBP has moved away from geographic boundaries, and OPM must have given CBP some guidance as they stood up their CEEs in terms of how this supervision over Import Specialists was going to be accomplished in their new virtual concept. We don’t need to recreate the wheel – we simply need to add our own cart on a chassis that’s already been built.”