52456 Federal Register / Vol. 75, No. 165 / Thursday, August 26, 2010 / Rules and Regulations 

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. 

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 

§ 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 § 111.13 

(19 CFR 111.13). Paragraph (b) of 

§ 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 § 111.96. There were 

previously no additional requirements 

in § 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 

§ 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 nonsubstantive amendments to § 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 

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Federal Register / Vol. 75, No. 165 / Thursday, August 26, 2010 / Rules and Regulations 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, § 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 § 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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52458 Federal Register / Vol. 75, No. 165 / Thursday, August 26, 2010 / Rules and Regulations 

Signing Authority 

This document is being issued by CBP 

in accordance with § 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 

■ 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 

■ 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. 

* * * * * 

■ 2. In § 111.13: 

■ a. Paragraph (a) is amended by 

removing the words ‘‘Customs 

Headquarters’’ and adding in its place, 

the words ‘‘Customs and Border 

Protection (CBP) Headquarters’’; 

■ b. Paragraph (b) is amended by 

revising the heading and adding a new 

first sentence; 

■ c. Paragraph (c) is amended by 

removing the word ‘‘Customs’’ each 

place it appears and adding in its place, 

the term ‘‘CBP’’; and 

■ 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: 

§ 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 

DEPARTMENT OF THE TREASURY 

Internal Revenue Service 

26 CFR Part 301 

[TD 9500] 

RIN 1545–BJ47 

Disclosures of Return Information 

Reflected on Returns to Officers and 

Employees of the Department of 

Commerce for Certain Statistical 

Purposes and Related Activities 

AGENCY: Internal Revenue Service (IRS), 

Treasury. 

ACTION: Final and temporary 

regulations. 

SUMMARY: This document contains final 

and temporary regulations that 

authorize the disclosure of certain items 

of return information to the Bureau of 

the Census (Bureau) in conformance 

with section 6103(j)(1) of the Internal 

Revenue Code (Code). The final and 

temporary regulations are made 

pursuant to a request from the Secretary 

of Commerce. These regulations 

facilitate the assistance of the IRS to the 

Bureau in its statistics programs and 

require no action by taxpayers and have 

no effect on their tax liabilities. The text 

of the temporary regulations also serves 

as the text of the proposed regulations 

[REG–137486–09] set forth in the 

Proposed Rules section in this issue of 

the Federal Register. 

DATES: Effective Date: These regulations 

are effective on August 26, 2010. 

Applicability Date: For dates of 

applicability for this regulation, see 

§§ 301.6103(j)(1)–1(e) and 

301.6103(j)(1)–T(e). 

FOR FURTHER INFORMATION CONTACT: 

Melissa Segal at (202) 622–7950 (not a 

toll-free call). 

SUPPLEMENTARY INFORMATION: 

Background 

Section 6103(j)(1)(A) authorizes the 

Secretary of Treasury to furnish, upon 

written request by the Secretary of 

Commerce, such return or return 

information as the Secretary of Treasury 

may prescribe by regulation to officers 

and employees of the Bureau of the 

Census (Bureau) for the purpose of, but 

only to the extent necessary in, the 

structuring of censuses and conducting 

related statistical activities authorized 

by law. Section 301.6103(j)(1)–1 of the 

regulations further defines such 

purposes by reference to 13 U.S.C. 

chapter 5 and provides an itemized 

description of the return information 

authorized to be disclosed for such 

purposes. 

This document adopts final 

regulations that authorize the IRS to 

disclose an additional item of return 

information requested by the Secretary 

of Commerce to assist the Bureau in 

identifying companies that are actively 

engaged in research and development 

activities for the Bureau’s annual Survey 

of Industrial Research and 

Development. In response to this 

request, on December 31, 2007, the IRS 

and the Treasury Department published 

temporary regulations under 

§ 6103(j)(1). See TD 9373 (72 FR 74192). 

Also on December 31, 2007, the IRS and 

the Treasury Department issued a notice 

of proposed rulemaking crossreferencing those temporary regulations. 

See REG–147832–07 (72 FR 74246). No 

comments were received and no public 

hearing was requested or held. This 

Treasury decision adopts the proposed 

rules with no change. 

This Treasury decision also contains 

temporary regulations that authorize the 

disclosure of additional items of return 

information requested by the Secretary 

of Commerce on the grounds that the 

information is necessary to allow the 

Bureau to study a developing trend of 

increased use of contract workers. The 

text of the temporary regulations also 

serves as the text of the proposed 

regulations set forth in the notice of 

proposed rulemaking on this subject in 

the Proposed Rules section of this issue 

of the Federal Register. 

Explanation of Provisions 

By letter dated February 6, 2006, the 

Secretary of Commerce requested that 

an additional item of return information 

be disclosed to the Bureau’s annual 

Survey of Industrial Research and 

Development. As duly requested by the 

Secretary of Commerce and set forth in 

the proposed regulations, the final 

regulation authorizes the disclosure of 

categorical information on total 

qualified research expenses in three 

ranges: Greater than zero, but less than 

$1 million; greater than or equal to $1 

million, but less than $3 million; and, 

greater than or equal to $3 million. 

Separately, by letter dated July 24, 

2009, the Secretary of Commerce 

requested that additional items of return 

information be disclosed to the Bureau 

for purposes of allowing the Bureau to 

study a developing trend of increased 

use of contract workers. Specifically, the 

Secretary of Commerce requested 

disclosure of the following additional 

items: (1) Total number of documents 

reported on Form 1096 transmitting 

Forms 1099–MISC and (2) Total amount 

reported on Form 1096 transmitting 

Forms 1099–MISC. 

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