NCBFAA, Brokers Urge Withdrawal of CBP Filer Code Revocation Proposal

The NPRM, while perhaps an effort to protect brokers' rights, goes too far and isn't consistent with "statutory and constitutional protections" that are already granted to customs brokers, the associations said. The revocation of a filer code is a "death knell to a customs broker" and while an importer self-filer whose code is revoked can hire another broker, a customs broker whose code is revoked will be unable to operate at all, it said. "Absent a situation where CBP could demonstrate that the entire enterprise was involved in a coordinated scheme to put the public health and/or safety at risk, it is difficult to imagine a scenario which would justify such an extraordinary and catastrophic result," said the NCBFAA. The NCBFAA has said it would likely pursue legal action the first time CBP were to revoke an entry filer code (see 13041123).

The rulemaking fails to weigh the constitutional requirements outlined in the Supreme Court decision in Matthews v. Eldridge, the association said. The agency should consider the property interests that would suffer, risks of erroneous revocation and list the governmental and societal benefits that would come from a revocation without prior notice or hearing, it said. CBP leans heavily on the Administrative Procedure Act in the NPRM, but points to no authority saying CBP can go outside due process requirements of the Fifth Amendment, said NCBFAA. CBP seems interested in giving itself the ability to go around 19 USC Section 1641, which outlines the process under which CBP can stop a broker from being involved in customs business, said NCBFAA. Instead of dealing with the statutory requirements of shutting down a broker, "the agency could simply pull the filer code and wait for the broker to go out of business," it said. "This administrative workaround is clearly unacceptable."

CBP should also provide guidance on the exact meaning of "misuse" of a filer code, which CBP uses as the threshold for the possibility of filer code suspension or revocation, the group said. The "scope of activity that could be interpreted as entry filer code misuse is incredibly broad, and leaves open the possibility that a customs broker's entry filer code could be unjustifiably suspended or revoked," according to the NCBFAA. CBP should give brokers the same protections as they receive as Automated Broker Interface filers, allowing for a "probational" status before revocation of ABI privileges, said NCBFAA.

The reliance on the opinion of the port director to determine the need for a filer code suspensions is a "broad reach," said Gary Ryan, president of Airport Brokers Corp., a nine-employee brokerage in Seattle, in his comments (here). Port directors most likely have different opinions as to what would necessitate a filer code revocation based on "willfulness" or "public health, interest or safety," he said. There's been discussions with CBP officials about the possibility of including Intellectual Property Right violations within the definition of "public health, interest or safety" and there's potential to expend the definition even further, he said.

Guillermo Lizarraga, a broker who in 2010 won a CIT case against CBP for deactivating his filer code without due process (see 11102009), also weighed in against the proposal (here). "I had to fight in order to save my business and be able to keep my clients by being able to provide them service electronically," he said. "Such an important decision shouldn't be left for the local Port Director."

Many of the comments are available (here), though not all were posted online as of press time. Email ITTNews@warren-news.com for a copy of the NCBFAA comments.