Heightened Requirements for Foreign Importers of Record

Issuing agencies

Abstract

This document amends the U.S. Customs and Border Protection (CBP) regulations, consistent with Section 2 of Executive Order 14411, "Strengthening Customs Enforcement," by establishing new requirements for foreign importers of record (IORs) when making entry, and corresponding responsibilities for licensed customs brokers with regard to their clients. The new regulations also set forth consequences for foreign IORs and customs brokers who fail to comply with the new requirements.

Full Text

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<title>Federal Register, Volume 91 Issue 214 (Friday, November 6, 2026)</title>
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[Federal Register Volume 91, Number 214 (Friday, November 6, 2026)]
[Rules and Regulations]
[Pages 69977-70007]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-22735]


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DEPARTMENT OF HOMELAND SECURITY

U.S. Customs and Border Protection

19 CFR Parts 110, 111, 141, 142 and 171

[USCBP-2026-1387; CBP Dec. 26-19]
RIN 1685-AA48


Heightened Requirements for Foreign Importers of Record

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

ACTION: Interim final rule; request for comments.

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SUMMARY: This document amends the U.S. Customs and Border Protection 
(CBP) regulations, consistent with Section 2 of Executive Order 14411, 
``Strengthening Customs Enforcement,'' by establishing new requirements 
for foreign importers of record (IORs) when making entry, and 
corresponding responsibilities for licensed customs brokers with regard 
to their clients. The new regulations also set forth consequences for 
foreign IORs and customs brokers who fail to comply with the new 
requirements.

DATES: This interim final rule is effective on January 5, 2027. As 
explained in Section VII, licensed customs brokers may submit requests 
for delayed compliance with the changes in Sec.  111.29 of title 19 of 
the Code of Federal Regulations (19 CFR 111.29) prior to January 5, 
2027. All customs brokers are expected to be in full compliance with 
the requirements of this rule no later than May 6, 2027.
    Comment date: Comments on the rule must be received on or before 
January 5, 2027.

ADDRESSES: You may submit comments, identified by docket number, 
through the Federal eRulemaking Portal: <a href="http://www.regulations.gov">http://www.regulations.gov</a>. 
Follow the instructions for submitting comments via docket number 
USCBP-2026-1387.
    Instructions: All submissions received must include the agency name 
and docket number for this rulemaking. All comments received will be 
posted without change to <a href="http://www.regulations.gov">http://www.regulations.gov</a>, including any 
personal information provided. For detailed instructions on submitting 
comments and additional information on the rulemaking process, see the 
``Public Participation'' heading of the SUPPLEMENTARY INFORMATION 
section of this document.
    Docket: For access to the docket to read background documents and 
submitted comments, go to <a href="http://www.regulations.gov">http://www.regulations.gov</a>.

FOR FURTHER INFORMATION CONTACT: Anita Rivera, Branch Chief, Revenue 
Enforcement Branch, Trade Modernization Division, Trade Programs 
Directorate, Office of Trade, at (771) 233-2939 or 
<a href="/cdn-cgi/l/email-protection#a2e4cdd0c7cbc5ccebedf0e2c1c0d28cc6cad18cc5cdd4"><span class="__cf_email__" data-cfemail="abedc4d9cec2ccc5e2e4f9ebc8c9db85cfc3d885ccc4dd">[email&#160;protected]</span></a>.

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.
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    \1\ 91 FR 35125 (June 10, 2026). A Fact Sheet accompanying the 
Executive Order, issued the same day, emphasizes the goal of 
comprehensive customs reform through various actions to be taken by 
the Department of Homeland Security (DHS) and CBP to strengthen the 
enforcement of U. S. customs laws and promote economic strength and 
national security by combatting customs fraud. See <a href="https://www.whitehouse.gov/fact-sheets/2026/06/fact-sheet-president-donald-j-trump-strengthens-customs-enforcement/">https://www.whitehouse.gov/fact-sheets/2026/06/fact-sheet-president-donald-j-trump-strengthens-customs-enforcement/</a>.
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    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

[[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.
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    \2\ Encompassing all entries for consumption (19 CFR 141.0a(f)), 
to include entries filed upon importation, and upon withdrawal from 
a bonded warehouse or a Foreign Trade Zone.
    \3\ As explained in more detail below, these requirements are 
applicable to merchandise for which an informal entry is required to 
be filed on CBP Form 3461 or 7501, or their electronic equivalents, 
and for which a formal entry is required to be filed.
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    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.
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    \4\ The Homeland Security Act of 2002 generally transferred the 
functions of the U.S. Customs Service from the Treasury Department 
to the Secretary of the Department of Homeland Security. See Public 
Law 107-296, 116 Stat. 2142; 6 U.S.C. 203 (``there shall be 
transferred to the Secretary [of Homeland Security] the functions . 
. . of (1) the United States Customs Service of the Department of 
the Treasury, including the functions of the Secretary of the 
Treasury relating thereto''). Nevertheless, pursuant to Section 412 
of the HSA, the Treasury Department retained authority related to 
various customs revenue functions, including those functions found 
in the Tariff Act of 1930 [(Pub. L. 71-361, 46 Stat. 590, as amended 
(codified at 19 U.S.C. 1202 et seq.)). 6 U.S.C. 212(a)(1), (2). But 
the Secretary of the Treasury may delegate any such retained 
authority at the Treasury Secretary's discretion. 6 U.S.C. 
212(a)(1). Consistent with this delegation authority, the Secretary 
of the Treasury issued Treasury Order 100-20 (available at <a href="https://home.treasury.gov/about/general-information/orders-and-directives/treasury-order-100-20">https://home.treasury.gov/about/general-information/orders-and-directives/treasury-order-100-20</a>), delegating the authorities contained in 6 
U.S.C. 212 and 215 to the Secretary of Homeland Security. All 
further references to the ``Secretary of Treasury'' should be 
construed as referring to the Secretary of Homeland Security unless 
specified otherwise.
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    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

[[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\ See 19 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\
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    \5\ On February 24, 2016, Congress enacted the Trade 
Facilitation and Trade Enforcement Act of 2015 (TFTEA), Public Law 
114-125, 130 Stat. 122 (19 U.S.C. 4301 note). Sections 114 and 115 
of TFTEA added sections 4320 (Importer of record program) and 4321 
(Establishment of importer risk assessment program) to title 19 of 
the U.S. Code. Section 116 of TFTEA amended 19 U.S.C. 1641, adding 
paragraph (i) (Identification of importers).
    \6\ Section 4321(e)(2) defines a ``nonresident importer'' as an 
importer who is (A) an individual who is not a citizen of the United 
States or an alien lawfully admitted for permanent residence in the 
United States; or (B) a partnership, corporation, or other 
commercial entity that is not organized under the laws of a 
jurisdiction within the customs territory of the United States (as 
such term is defined in General Note 2 of the Harmonized Tariff 
Schedule of the United States) or in the Virgin Islands of the 
United States.
    \7\ Section 4322 of title 19 (19 U.S.C. 4322) established seven 
``priority trade issues,'' including import safety and revenue, and 
provided procedures for future changes to the list of priority trade 
issues.
    \8\ In this interim final rule, CBP is referring to the tier 
system of the CTPAT program only in the context of 19 U.S.C. 4321. 
Although initially referred to as Tier 1, Tier 2, and Tier 3 for 
CTPAT program participants, CBP has transitioned to using the terms 
``certified,'' ``certified--validated,'' and ``certified--
exceeding'' when referring to the various levels of the CTPAT 
program.
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    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. See 6 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 <a href="https://www.cbp.gov/border-security/ports-entry/cargo-security/ctpat">https://www.cbp.gov/border-security/ports-entry/cargo-security/ctpat</a>.\12\
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    \9\ See 6 U.S.C. 962. Businesses eligible to apply for CTPAT 
partnership include U.S. importers of record; non-resident Canadian 
importers; U.S./Canada highway carriers; U.S./Mexico highway 
carriers; air, rail and sea carriers; licensed U.S. customs brokers; 
U.S. marine port authority/terminal operators; certain third-party 
logistics providers (3PLs); U.S. freight consolidators; ocean 
transportation intermediaries and non-vessel operating common 
carriers (NVOCCs); Mexican and Canadian manufacturers; and Mexican 
long-haul highway carriers. In addition, CBP is conducting a pilot 
(90 FR 52690), Nov. 21, 2025)) for certain types of asset-based and 
non-asset-based 3PLs that are currently not eligible to participate 
in the CTPAT program, pursuant to the Customs Trade Partnership 
Against Terrorism Pilot Program Act of 2023 (Pub. L. 118-98, 138 
Stat. 1575).
    \10\ See <a href="http://trade.cbp.dhs.gov/ctpat/ctpat-portal-ui">trade.cbp.dhs.gov/ctpat/ctpat-portal-ui</a>.
    \11\ See 6 U.S.C. 963. See also <a href="https://www.cbp.gov/border-security/ports-entry/cargo-security/ctpat">https://www.cbp.gov/border-security/ports-entry/cargo-security/ctpat</a>-customs-trade-partnership-
against-terrorism/apply/security-criteria.
    \12\ This list may change as benefits are updated to improve the 
program.
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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

[[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.
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    \13\ For example, Mexico, Brazil, India, South Korea, Vietnam, 
and China do not allow foreign persons to act as IORs. The European 
Union (EU) allows foreign IORs, however, the importer must obtain a 
unique identification number and in many EU Member States must 
obtain a local Value-Added Tax (VAT) registration. Japan requires 
all non-resident importers to utilize an attorney for customs 
procedure when importing into Japan to ensure proper compliance with 
customs rules.
    \14\ While CBP Form 5106 includes a section (3J) for information 
regarding the beneficial owner and company officer of an entity, it 
is optional and frequently, an entity does not provide this 
information when submitting the form. For example, from July 2021 
through June 2026, only 2.88% of IORs who are registered as foreign 
in ACE provided the company position title of a company officer, 
3.17% provided the name of a beneficial owner or company officer, 
1.52% provided an email and phone number of a company officer or 
beneficial owner, and 0.38% provided passport details of a company 
officer or beneficial owner.
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    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.
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    \15\ Foreign individuals or entities may indicate in section 1E 
of CBP Form 5106 that they are requesting a CBP-assigned number 
because they are not a U.S. resident but are not required to do so, 
as the data elements in this section are optional.
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    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.
---------------------------------------------------------------------------

    \16\ The term ``live entry'' colloquially refers to the 
requirement of filing of an entry summary, with payment of any 
estimated duties, taxes, and fees owed, as a prerequisite to 
obtaining the release of imported merchandise from CBP custody. 19 
CFR 142.13(a).
    \17\ Source: CBP Office of Finance data, obtained on February 
17, 2026.
    \18\ Source: received from CBP's Office of Trade (OT) on August 
27, 2026. Obtained from Trade Regulatory Audit Management System.
---------------------------------------------------------------------------

    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

[[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 Sec.  110.2(b). A foreign IOR is defined as an IOR who does 
not meet the criteria of a U.S. IOR, pursuant to Sec.  110.3.
    In the new Sec.  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 Sec.  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 Sec.  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

[[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.
---------------------------------------------------------------------------

    \19\ See also 19 CFR part 163 for the recordkeeping requirements 
applicable to IORs, among other persons, listed in Sec.  163.2.
---------------------------------------------------------------------------

    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 
(Sec.  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 Sec.  110.2(a)(2)(iii)(A) regarding U.S. IORs, CBP is 
defining the term ``beneficial owner'' in new Sec.  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

[[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.
---------------------------------------------------------------------------

    \20\ The Corporate Transparency Act, title LXIV of the William 
M. (Mac) Thornberry National Defense Authorization Act for Fiscal 
Year 2021, Public Law 116-283 (Jan. 1, 2021), established a 
definition for ``beneficial owner'' as part of the reporting 
requirement to FinCEN for U.S. and foreign entities, which was 
implemented in the regulation at 31 CFR 1010.380(d).
---------------------------------------------------------------------------

    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 Sec.  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.
---------------------------------------------------------------------------

    \21\ See Black's Law Dictionary (12th ed. 2024) (defining 
``alter ego'' as ``A corporation used by an individual or a 
subservient corporation in conducting personal business, the result 
being that a court may impose liability on the individual or 
subservient corporation by piercing the corporate veil when someone 
dealing with the corporation is a victim of fraud, illegality, or 
injustice.'').
    \22\ See Black's Law Dictionary (12th ed. 2024) (defining 
``piercing the corporate veil'' as ``the judicial act of imposing 
personal liability on otherwise immune corporate officers, 
directors, or shareholders for the corporation's wrongful acts.''). 
This doctrine disregards the corporate entity's separate legal 
existence, treating corporate officers, directors, or shareholders 
as liable for corporate debts.
---------------------------------------------------------------------------

    CBP is adding two new sections to subpart B of part 141 (Sec.  
141.21 and Sec.  141.22), pertaining to the right to make entry and 
declarations on entry. Pursuant to paragraph (a) of new Sec.  141.21, a 
foreign IOR, as defined in Sec.  110.3, may not enter merchandise for 
consumption unless specific requirements are met. This restriction is 
applicable to merchandise entered for consumption (Sec.  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\
---------------------------------------------------------------------------

    \23\ Operationally, this new requirement is applicable to 
informal entry types 11, 12, and 13, and all formal entry types. For 
more information on entry types, please see <a href="https://www.cbp.gov/trade/automated/catair">https://www.cbp.gov/trade/automated/catair</a>.
---------------------------------------------------------------------------

    Pursuant to Sec.  141.21(b)(1), if the foreign IOR is CTPAT 
validated and has the right to make entry pursuant to Sec.  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 Sec.  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 (Sec.  141.46) who is not an importer of 
record, and that principal would qualify as a foreign importer of 
record pursuant to Sec.  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 (Sec.  141.46) is not 
the owner or purchaser of the merchandise.
---------------------------------------------------------------------------

    \24\ Use of a CTPAT validated broker does not confer CTPAT 
benefits on the IOR or the principal on the broker's power of 
attorney.
---------------------------------------------------------------------------

    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 Sec.  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.

[[Page 69984]]

IOR, as defined in Sec.  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 (Sec.  141.0a(a)) and entry summary (Sec.  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 
Sec.  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 (Sec.  
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 
Sec.  110.2 should leave this checkbox blank, to indicate that they are 
instead covered by Sec.  110.3. Beginning January 5, 2027 these updated 
forms, and their electronic equivalents, must be used for each entry 
and entry summary filing.
---------------------------------------------------------------------------

    \25\ In the electronic versions of CBP Form 3461 and CBP Form 
7501, the filer will not make this declaration using a checkbox, but 
will instead indicate ``Yes'' or ``No'' to declare whether the IOR 
is a U.S. IOR. For simplicity in this document, CBP will refer to 
this as a checkbox as it appears on CBP Form 3461 and CBP Form 7501.
---------------------------------------------------------------------------

    If a designated customs broker who is not CTPAT validated acts as 
the IOR for the entry on behalf of a client, Sec.  141.22(a)(2) 
requires that the customs broker identify the principal on the power of 
attorney at the time of filing an entry (Sec.  141.0a(a)) and entry 
summary (Sec.  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 Sec.  141.22(b) states that for purposes of a verification 
conducted under Sec.  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.
---------------------------------------------------------------------------

    \26\ See <a href="https://www.cbp.gov/trade/centers-excellence-and-expertise-information/cee-directory">https://www.cbp.gov/trade/centers-excellence-and-expertise-information/cee-directory</a>.
---------------------------------------------------------------------------

    In addition to these new provisions, CBP is also updating Sec.  
141.46, regarding the requirement to obtain an executed power of 
attorney before transacting customs business on behalf of a principal. 
CBP is amending Sec.  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\
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    \27\ This amendment revokes by operation of law any prior ruling 
issued by CBP to the extent that it conflicts with this new 
requirement. See 19 CFR 177.12(d)(1). For example, this amendment 
revokes the holding in Headquarters Ruling Letter 223772, dated 
August 6, 1992, that ``[n[o power of attorney is required . . . 
[when b]rokers will make entry in [their] own name as the importer 
of record.''
---------------------------------------------------------------------------

    CBP is also updating Sec.  142.13 which sets forth the conditions 
under which CBP may require live entry and Sec.  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 Sec.  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 Sec.  141.22. See new 
Sec.  142.13(a)(5) and Sec.  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 Sec. Sec.  142.13(a) and 142.25(a), CBP is 
also adding a new paragraph (e) to Sec.  142.13 and a new paragraph (c) 
to Sec.  142.25 that state that CBP may impose the requirement of live 
entry and discontinue immediate delivery privileges pursuant to 
Sec. Sec.  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 Sec.  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 Sec.  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 Sec.  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 Sec.  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 Sec.  141.22, CBP must have the 
ability to request proof from the broker that the broker has verified 
that the client is in

[[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 Sec.  110.1, CBP has added new definitions for 
the terms ``beneficial owner,'' and ``physical domestic assets.'' In 
new Sec.  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 Sec.  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 Sec. Sec.  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 
Sec.  110.2. CBP is also amending Sec.  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 (Sec.  
141.21 and Sec.  141.22). New Sec.  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 Sec.  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 Sec.  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 Sec.  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 Sec.  141.22. CBP is also adding 
a new Sec.  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.
---------------------------------------------------------------------------

    \28\ Courts have uniformly held that the Administrative 
Procedure Act (APA), 5 U.S.C. 551 et seq., 5 U.S.C. 706(2), 
authorizes courts to sever and set aside ``only the offending parts 
of the rule.'' Carlson v. Postal Regulatory Comm'n, 938 F.3d 337, 
351 (D.C. Cir. 2019); see, e.g., K Mart Corp. v. Cartier, Inc., 486 
U.S. 281, 294 (1988).
---------------------------------------------------------------------------

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.

[[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 Sec.  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 <a href="http://SAM.gov">SAM.gov</a>, 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 <a href="http://www.cbp.gov/trade/strengthening-customs-enforcement/delayed-compliance">www.cbp.gov/trade/strengthening-customs-enforcement/delayed-compliance</a>. 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\
---------------------------------------------------------------------------

    \29\ Mast Indus., Inc. v. Regan, 96 F.Supp. 1567, 1582 (finding 
the foreign affairs exception applies when the regulation is 
``clearly and directly'' involved in a foreign affairs function).
---------------------------------------------------------------------------

    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\
---------------------------------------------------------------------------

    \30\ Id.
    \31\ See Am. Ass'n of Exps. & Imps.-Textile & Apparel Grp. v. 
United States, 751 F.2d 1239, 1249 (Fed. Cir. 1985) (noting that 
foreign affairs exception covers agency actions ``linked intimately 
with the Government's overall political agenda concerning relations 
with another country'').
---------------------------------------------------------------------------

    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\
---------------------------------------------------------------------------

    \32\ Jifry v. FAA, 370 F.3d 1174, 1179 (D.C. Cir. 2004) 
(citations omitted).
---------------------------------------------------------------------------

    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\
---------------------------------------------------------------------------

    \33\ See S. Doc. No. 248, 79th Cong., 2d Sess. 200 (1946).
    \34\ See Jifry v. FAA, 370 F.3d 1174, 1179 (D.C. Cir. 2004); 
NRDC v. Nat'l Highway Traffic Safety Admin., 894 F.3d 95, 114 (2d 
Cir. 2018).
---------------------------------------------------------------------------

    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\
---------------------------------------------------------------------------

    \35\ Mack Trucks, Inc. v. EPA, 682 F.3d 87, 95 (D.C. Cir. 2012).
    \36\ See United States v. Dean, 604 F.3d 1275, 1279 (11th Cir. 
2010) (to delay regulations would harm the public interest because 
it would delay the registration of sex offenders who would evade 
registration requirements during the notice and comment period, 
putting the public's safety at risk).
    \37\ See Mack Trucks, Inc. v. EPA, 682 F.3d 87, 95 (D.C. Cir. 
2012).
---------------------------------------------------------------------------

    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

[[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 <a href="/cdn-cgi/l/email-protection#0b6a69684b6a696825686466"><span class="__cf_email__" data-cfemail="32535051725350511c515d5f">[email&#160;protected]</span></a>, 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

[[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.
BILLING CODE 9111-14-P

[[Page 69989]]

[GRAPHIC] [TIFF OMITTED] TR06NO26.004


[[Page 69990]]


[GRAPHIC] [TIFF OMITTED] TR06NO26.005

BILLING CODE 9111-14-C
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

[[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.
[GRAPHIC] [TIFF OMITTED] TR06NO26.006

[GRAPHIC] [TIFF OMITTED] TR06NO26.007

    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.
[GRAPHIC] [TIFF OMITTED] TR06NO26.008


[[Page 69992]]


    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.
---------------------------------------------------------------------------

    \38\ Source for number of permitted brokers: CBP Office of 
Trade, October 2, 2026.
---------------------------------------------------------------------------

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%.
---------------------------------------------------------------------------

    \39\ Source: received from OT on August 27, 2026. Obtained from 
Trade Regulatory Audit Management System.
    \40\ Source: based on trade data from October 1, 2020, to 
February 6, 2026, from ACE and open bill data from Office of 
Finance, obtained on February 17, 2026.
    \41\ CBP scaled the total import values from October 1, 2020, to 
February 6, 2026 by 2,431/1,955 to estimate the total import values 
from January 1, 2020, to August 27, 2026, so that CBP could compare 
the total import values with the total loss of revenue over the same 
time period.
[GRAPHIC] [TIFF OMITTED] TR06NO26.009

    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

[[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.
---------------------------------------------------------------------------

    \42\ An open bill is created when an entry liquidates for an 
increase, and an open bill is considered delinquent at 31 days old 
and unpaid. If a bill is only partially paid, it remains open and 
delinquent until the remaining amount is paid in full or otherwise 
resolved.
[GRAPHIC] [TIFF OMITTED] TR06NO26.010

    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).
---------------------------------------------------------------------------

    \43\ The number of open bills per entry summary is a very low 
number, and so CBP reports the number of open bills per 10,000 entry 
summaries for readability, even though the total uncollected bill 
amount per entry summary equals the total uncollected bill amount 
per open bill times the number of open bills per entry summary, not 
per 10,000 entry summaries.
[GRAPHIC] [TIFF OMITTED] TR06NO26.011

    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).

[[Page 69994]]

[GRAPHIC] [TIFF OMITTED] TR06NO26.012

    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).
[GRAPHIC] [TIFF OMITTED] TR06NO26.013

    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.
---------------------------------------------------------------------------

    \44\ Source: U.S. Customs and Border Protection, Importers, 
accessed August 20, 2025. Available at: <a href="https://www.cbp.gov/border-security/ports-entry/cargo-security/ctpat/importers">https://www.cbp.gov/border-security/ports-entry/cargo-security/ctpat/importers</a>.
---------------------------------------------------------------------------

    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

[[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.
---------------------------------------------------------------------------

    \45\ Some foreign IORs will become CTPAT validated themselves, 
which would also help with revenue collection, but this effect will 
be limited to a fraction of Canadian IORs, who are the only foreign 
IORs eligible for CTPAT validation.
    \46\ Source: U.S. Customs and Border Protection, Minimum 
Security Criteria--U.S. Customers Brokers, accessed August 20, 2025. 
Available at: <a href="https://www.cbp.gov/sites/default/files/assets/documents/2022-May/CTPAT%20U.S.%20Customs%20Brokers%20MSC%20October%202021%20%28508%29.pdf">https://www.cbp.gov/sites/default/files/assets/documents/2022-May/CTPAT%20U.S.%20Customs%20Brokers%20MSC%20October%202021%20%28508%29.pdf</a>.
---------------------------------------------------------------------------

    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.
[GRAPHIC] [TIFF OMITTED] TR06NO26.014

    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.
---------------------------------------------------------------------------

    \47\ Source: cost estimate obtained from CBP Office of Field 
Operations on August 24, 2026.
---------------------------------------------------------------------------

    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

[[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.
---------------------------------------------------------------------------

    \48\ Source: obtained from CBP Trade Transformation Office on 
August 27, 2026.
---------------------------------------------------------------------------

    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.
---------------------------------------------------------------------------

    \49\ CBP bases this wage on the FY 2025 salary and benefits of 
the national average of CBP Revenue Positions. Source: Email 
correspondence with CBP's Office of Finance on June 11, 2026.
---------------------------------------------------------------------------

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

[[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.
---------------------------------------------------------------------------

    \50\ U.S. Customs and Border Protection. Supporting Statement 
for Paperwork Reduction Act Submission OMB Number 1651-0077: 
Customs-Trade Partnership against Terrorism (CTPAT) and Trade 
Compliance.
    \51\ To calculate this loaded wage rate CBP multiplied the 
Bureau of Labor Statistics' (BLS) 2025 median hourly wage rate for 
Cargo and Freight Agents ($25.13), which CBP assumes best represents 
the wage for brokers, by the ratio of BLS' Q4 2025 total 
compensation to wages and salaries for Office and Administrative 
Support occupations (1.497), the assumed occupational group for 
brokers, to account for non-salary employee benefits, ($37.62 in 
2025 dollars). To adjust to 2026 dollars, CBP assumes an annual 
increase of 3.36% based on the December 2025 12-month percent change 
in the Employment Cost Index. Source of median wage rate: U.S. 
Bureau of Labor Statistics. Occupational Employment and Wage 
Statistics, 2025 National Occupational Employment and Wage Estimates 
United States, OCC_code 43-5011. Updated May 15, 2026. Available at 
<a href="https://www.bls.gov/oes/special-requests/oesm25nat.zip">https://www.bls.gov/oes/special-requests/oesm25nat.zip</a>. Accessed May 
21, 2026. The total compensation to wages and salaries ratio is 
equal to the total compensation cost per hour worked for Office and 
Administrative Support occupations ($37.47) divided by the wages and 
salaries cost per hour worked for the same occupation category 
($25.03). See ``Table 2. Employer Costs for Employee Compensation 
for civilian workers by occupational and industry group.'' Bureau of 
Labor Statistics, ``Employer Costs for Employee Compensation--
December 2025.'' Released March 20, 2026. Available at <a href="https://www.bls.gov/news.release/archives/ecec_03202026.pdf">https://www.bls.gov/news.release/archives/ecec_03202026.pdf</a>. Accessed May 
21, 2026. Source of Employment Cost Index: Bureau of Labor 
Statistics ``Employment Cost Index, Continuous data.'' Data used was 
for civilian workers, total compensation for all industries all 
occupations current dollar index number. December 2025 Index 
(173.64), December 2024 Index (168.0). CBP estimates a 3.36% 
(173.64/168.0)-1) increase in 2025. Updated April 30, 2026. 
Available at <a href="https://www.bls.gov/eci/tables.htm">https://www.bls.gov/eci/tables.htm</a>. Accessed May 21, 
2026.
---------------------------------------------------------------------------

    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.
[GRAPHIC] [TIFF OMITTED] TR06NO26.015

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\
---------------------------------------------------------------------------

    \52\ See 19 CFR part 111.
---------------------------------------------------------------------------

    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.
---------------------------------------------------------------------------

    \53\ Source: obtained from CBP Office of Trade on October 2, 
2026.
---------------------------------------------------------------------------

    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.

[[Page 69998]]

[GRAPHIC] [TIFF OMITTED] TR06NO26.016

[GRAPHIC] [TIFF OMITTED] TR06NO26.017

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.
[GRAPHIC] [TIFF OMITTED] TR06NO26.018


[[Page 69999]]


[GRAPHIC] [TIFF OMITTED] TR06NO26.019

[GRAPHIC] [TIFF OMITTED] TR06NO26.020

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.
---------------------------------------------------------------------------

    \54\ CBP assumes that IORs have the same average wage as 
brokers, and therefore the average value of the time burden would be 
the same for both parties.
---------------------------------------------------------------------------

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.
[GRAPHIC] [TIFF OMITTED] TR06NO26.021


[[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.
[GRAPHIC] [TIFF OMITTED] TR06NO26.022

    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%.
[GRAPHIC] [TIFF OMITTED] TR06NO26.023

[GRAPHIC] [TIFF OMITTED] TR06NO26.024

    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.<SUP>55 56</SUP> 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.
---------------------------------------------------------------------------

    \55\ September 1 was chosen as the start because it was shortly 
after the de minimis exemption was suspended, which may have had an 
effect on demand for broker services.
    \56\ Choosing a sample size of 300 allowed us to construct a 95% 
confidence interval of the share of brokers for whom at least a 
fifth of their clients are foreign IORs with a margin of error of 
less than 5 percentage points. CBP calculates this share in the 
sample to be 9.47%, with a margin of error of 4.32%, yielding a 95% 
confidence interval of (13.34%, 21.99%). However, the main focus in 
this subsection is on the distribution of the share of IOR clients 
who are foreign across brokers, rather than a single proportion.

---------------------------------------------------------------------------

[[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.
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[GRAPHIC] [TIFF OMITTED] TR06NO26.026

[GRAPHIC] [TIFF OMITTED] TR06NO26.027


[[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.
---------------------------------------------------------------------------

    \57\ Source: Information obtained from ACE on February 17 and 
March 25, 2026, based on entry summary data between October 1, 2020, 
and February 6, 2026. ``U.S. IORs'' are IORs with a physical address 
in the U.S. according to CBP Form 5106.
---------------------------------------------------------------------------

    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

[[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.
[GRAPHIC] [TIFF OMITTED] TR06NO26.028

    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 
Sec.  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

[[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.
---------------------------------------------------------------------------

    \58\ See 19 CFR part 163 for the recordkeeping requirements 
applicable to IORs, among other persons, listed in section 163.2.
---------------------------------------------------------------------------

    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. See 2 U.S.C. 1532(a). In 
addition, an action is exempt from UMRA if it is necessary for national 
security. See 2 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.

List of Subjects

19 CFR Part 110

    Administrative practice and procedure, Importers, Reporting and 
recordkeeping requirements.

19 CFR Part 111

    Administrative practice and procedure, Brokers, Penalties, 
Reporting and recordkeeping requirements.

19 CFR Part 141

    Reporting and recordkeeping requirements.

19 CFR Part 142

    Canada, Mexico, Reporting and recordkeeping requirements.

19 CFR Part 171

    Administrative practice and procedure, Law enforcement, Penalties, 
Seizures and forfeitures.

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:

0
1. Add part 110 to read as follows:

PART 110--IMPORTERS OF RECORD

Sec.
110.0 [Reserved]
Subpart A--General Provisions
110.1 Definitions.
110.2 U.S. importer of record.
110.3 Foreign importer of record.
Subpart B--[Reserved]

    Authority: 5 U.S.C. 301; 19 U.S.C. 66, 1202 (General Note 3(i), 
Harmonized Tariff Schedule of the United States), 1484, 1498, 1623, 
1624, 4320.


Sec.  110.0  [Reserved]

Subpart A--General Provisions


Sec.  110.1  Definitions.

    Beneficial owner. The term ``beneficial owner'':
    (1) Means, with respect to an entity, an individual who:
    (i) Is a natural person; and
    (ii) Directly or indirectly, through any contract, arrangement, 
understanding, relationship, or otherwise--
    (A) Exercises substantial control over the entity; or
    (B) Owns or controls not less than 25 percent of the ownership 
interests of the entity; and
    (2) 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 of the entity despite the layers of entity ownership; and
    (3) Does not include:
    (i) 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;
    (ii) An individual acting as a nominee, intermediary, custodian, or 
agent on behalf of another individual;
    (iii) An individual acting solely as an employee of a corporation, 
limited liability company, or other similar entity and whose control 
over or

[[Page 70005]]

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;
    (iv) An individual whose only interest in a corporation, limited 
liability company, or other similar entity is through a right of 
inheritance; or
    (v) A creditor of a corporation, limited liability company, or 
other similar entity, unless the creditor meets the requirements of 
paragraph (3)(i) of this definition.
    (4) Beneficial ownership can be accomplished through substantial 
control, ownership interests, or both. Every entity must have at least 
one beneficial owner. An entity may have multiple beneficial owners.
    Physical domestic assets. The term ``physical domestic assets'' 
means cash deposited in a U.S. bank account, U.S. Treasury bonds, and 
the following assets when physically located in the United States: real 
property, inventory, machinery, and/or equipment.


Sec.  110.2  U.S. importer of record.

    (a) Qualification as U.S. importer of record. To be considered a 
U.S. importer of record, a party must be:
    (1) An individual who is a United States citizen or lawful 
permanent resident; or
    (2) An entity that meets the following requirements:
    (i) The entity must be located in the United States;
    (ii) The entity must be organized under the laws of the United 
States; and
    (iii) Either:
    (A) At all times, at least 51% of beneficial owner(s) of the 
entity, as defined in Sec.  110.1, must be United States citizens or 
lawful permanent residents and have control of the entity; or
    (B) The entity must maintain direct ownership of a significant 
amount of unencumbered real property in the United States at all times.
    (b) Verification. Whether an individual or entity qualifies as a 
U.S. importer of record is subject to verification by CBP. The 
determination of whether an entity qualifies as a U.S. importer of 
record 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, 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 that CBP 
may consider in its discretion and to the extent any are relevant, 
include, but are not limited to, the following:
    (1) Whether the entity's principal place of business is in the 
United States;
    (2) Whether the entity has a physical presence where substantial 
business transactions are conducted in the United States, including, 
but not limited to, paying employees, generating revenue, or operating 
retail locations;
    (3) Whether the entity maintains sufficient unencumbered physical 
domestic assets, as defined in Sec.  110.1;
    (4) Whether the entity directly owns a significant amount of 
unencumbered real property in the United States;
    (5) Whether 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) Whether the entity is sufficiently capitalized.


Sec.  110.3  Foreign importer of record.

    An importer of record who does not meet the criteria to be 
considered a U.S. importer of record pursuant to Sec.  110.2 is a 
foreign importer of record.

Subpart B--[Reserved]

PART 111--CUSTOMS BROKERS

0
2. 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
3. Revise Sec.  111.21(a) to read as follows:


Sec.  111.21  Record of transactions.

    (a) Each broker must keep current in a correct, orderly, and 
itemized manner records of account reflecting all his financial 
transactions as a broker. He must keep and maintain on file copies of 
all his correspondence and other records relating to his customs 
business, including records related to verifications conducted pursuant 
to Sec.  111.29(a)(2).
* * * * *

0
4. Revise Sec.  111.23(b) to read as follows:


Sec.  111.23  Retention of records.

* * * * *
    (b) Period of retention. The records described in this section, 
other than powers of attorney, must be retained for at least five years 
after the date of entry. Records related to a verification conducted 
pursuant to Sec.  111.29(a)(2) must be retained for five years from the 
date the verification is conducted. Powers of attorney must be retained 
until revoked, and revoked powers of attorney and letters of revocation 
must be retained for five years after the date of revocation or for 
five years after the date the client ceases to be an ``active client'' 
as defined in Sec.  111.29(b)(2)(ii), whichever period is later. When 
merchandise is withdrawn from a bonded warehouse, records relating to 
the withdrawal must be retained for five years from the date of 
withdrawal of the last merchandise withdrawn under the entry.

0
5. In Sec.  111.29, revise the section heading and paragraph (a) to 
read as follows:


Sec.  111.29  Diligence in correspondence, paying monies, and 
verification of U.S. importers of record.

    (a) Due diligence by broker. Each broker must exercise due 
diligence in:
    (1) Making financial settlements, in answering correspondence, and 
in preparing or assisting in the preparation and filing of records 
relating to any customs business matter handled by him as a broker. 
Payment of duty, tax, or other debt or obligation owing to the 
Government for which the broker is responsible, or for which the broker 
has received payment from a client, must be made to the Government on 
or before the date that payment is due. Payments received by a broker 
from a client after the due date must be transmitted to the Government 
within five working days from receipt by the broker. Each broker must 
provide a written statement to a client accounting for funds received 
for the client from the Government, or received from a client where no 
payment to the Government has been made, or received from a client in 
excess of the Governmental or other charges properly payable as part of 
the client's customs business, within 60 calendar days of receipt. No 
written statement is required if there is actual payment of the funds 
by a broker.
    (2) Verifying that a client meets the requirements to be considered 
a U.S. importer of record prior to making a declaration to CBP pursuant 
to Sec.  141.22 of this chapter. A broker, prior to filing a 
declaration on behalf of a client pursuant to Sec.  141.22 of this 
chapter, must verify that the client meets the requirements to qualify 
as a U.S. importer of record pursuant to Sec.  110.2 of this chapter. 
Each broker must request and review a client's records to determine 
that the criteria to be considered a U.S. importer of record as 
specified in Sec.  110.2 of this chapter, are satisfied. Such records 
may include, but are not limited to, proof of citizenship or lawful 
permanent residence, corporate charters, financial statements

[[Page 70006]]

and records, purchase receipts, or documents of title.
* * * * *

PART 141--ENTRY OF MERCHANDISE

0
6. The general authority citation for part 141 is revised to read as 
follows:

    Authority: 19 U.S.C. 66, 1448, 1484, 1498, 1624, 4320 and 4321.
* * * * *

0
7. Add Sec. Sec.  141.21 and 141.22 to read as follows:


Sec.  141.21  Entry by foreign importer of record.

    (a) A foreign importer of record, as defined in Sec.  110.3 of this 
chapter, may not enter merchandise for consumption except pursuant to 
the requirements in paragraph (b) of this section. This restriction is 
applicable to merchandise entered for consumption (Sec.  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 or CBP Form 7501, or their electronic equivalents.
    (b) Entry of merchandise for consumption by a party meeting the 
qualifications for a foreign IOR, as defined in Sec.  110.3 of this 
chapter, is restricted to the following:
    (1) If the foreign importer of record is validated through the 
Customs Trade Partnership Against Terrorism (CTPAT) program (6 U.S.C. 
961(a)), and has the right to make entry pursuant to Sec.  143.26 of 
this chapter for informal entry or 19 U.S.C. 1484(a)(2)(B) for formal 
entry, the foreign importer of record may enter merchandise for 
consumption or hire a customs broker licensed under 19 U.S.C. 1641 to 
make entry.
    (2) If the foreign importer of record is not validated through the 
CTPAT program, the foreign importer of record must designate a customs 
broker licensed under 19 U.S.C. 1641 who is validated through the CTPAT 
program (6 U.S.C. 961(a)) to make entry or act as the importer of 
record for the entry. If a customs broker acts as the importer of 
record for the entry on behalf of a principal on the power of attorney 
(see Sec.  141.46 of this chapter) who is not an importer of record, 
and that principal would qualify as a foreign importer of record 
pursuant to Sec.  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 importer of 
record for the entry if the principal on the power of attorney (Sec.  
141.46) is not the owner or purchaser of the merchandise


Sec.  141.22  Entry by U.S. importer of record.

    (a) A party meeting the requirements in Sec.  110.2 of this chapter 
may enter merchandise for consumption, as follows:
    (1) A U.S. importer of record who has the right to make entry 
pursuant to Sec.  143.26 of this chapter for informal entry or 19 
U.S.C. 1484(a)(2)(B) for formal entry, and who meets the requirements 
in Sec.  110.2 of this chapter, may enter merchandise subject to the 
more specific requirements and procedures set forth elsewhere in this 
chapter. At the time of filing an entry (Sec.  141.0a(a)) and entry 
summary (Sec.  141.0a(b)), the importer of record must declare its 
qualification as a U.S. importer of record as defined in Sec.  110.2 of 
this chapter.
    (2) If a party meeting the requirements of Sec.  110.2 of this 
chapter designates a customs broker licensed under 19 U.S.C. 1641 who 
is not validated through the Customs Trade Partnership Against 
Terrorism (CTPAT) program (6 U.S.C. 961(a)) to make entry as the 
importer of record, at the time of filing the entry (141.0a(a)) and 
entry summary (141.0a(b)), the customs broker must identify the 
principal on the power of attorney (Sec.  141.46) and must declare that 
the principal would meet the requirements to be considered a U.S. 
importer of record. In this instance, the principal on the power of 
attorney must have a CBP Form 5106 on file with CBP, pursuant to Sec.  
24.5 of this chapter.
    (b) For purposes of a verification conducted pursuant to Sec.  
110.2(b) of this chapter of the declaration in paragraph (a) of this 
section, the decision as to whether an individual or entity qualifies 
as a U.S. importer of record, as defined in Sec.  110.2 of this 
chapter, will be made by the appropriate Center Director.

0
8. Revise Sec.  141.46 to read as follows:


Sec.  141.46  Power of attorney retained by customhouse broker.

    Before transacting customs business on behalf of a principal, to 
include acting as an importer of record on behalf of the principal, a 
customs broker is required to obtain a valid power of attorney to do 
so. The customs broker is not required to file the power of attorney 
with CBP. Brokers shall retain powers of attorney with their records 
(Sec.  111.1), and make them available for examination as provided in 
subpart C of part 111 of this chapter.

PART 142--ENTRY PROCESS

0
9. The authority citation for part 142 continues to read as follows:

    Authority: 19 U.S.C. 66, 1448, 1484, 1624.

0
10. In Sec.  142.13, add paragraphs (a)(5) and (e) to read as follows:


Sec.  142.13  When entry summary must be filed at time of entry.

    (a) * * *
    (5) Inaccurately declares to CBP, as determined by CBP, that the 
importer, or principal on the power of attorney where the broker acts 
as the importer of record, meets the requirements to be considered a 
U.S. importer of record pursuant to Sec.  141.22 of this chapter.
* * * * *
    (e) CBP may impose the requirement in paragraph (a) of this section 
on importers making entry under the provisions of this part or part 143 
of this chapter.

0
11. In Sec.  142.25, add paragraphs (a)(5) and (c) to read as follows:


Sec.  142.25  Discontinuance of immediate delivery privileges.

    (a) * * *
    (5) Inaccurately declares to CBP that the importer, or principal on 
the power of attorney where the broker acts as the importer of record, 
meets the requirements to be considered a U.S. importer of record 
pursuant to Sec.  141.22 of this chapter, as determined by CBP.
* * * * *
    (c) CBP may impose the requirement in paragraph (a) of this section 
on importers making entry under the provisions of this part or part 143 
of this chapter.

PART 171--FINES, PENALTIES, AND FORFEITURES

0
12. The general authority citation for part 171 continues to read as 
follows:

    Authority: 18 U.S.C. 983; 19 U.S.C. 66, 1592, 1593a, 1618, 1624; 
22 U.S.C. 401; 31 U.S.C. 5321.
* * * * *

0
13. In appendix B to part 171, revise section (K) to read as follows:

Appendix B to Part 171--Customs Regulations, Guidelines for the 
Imposition and Mitigation of Penalties for Violations of 19 U.S.C. 1592

* * * * *
    (K) 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 a 
penalty under 19 U.S.C. 1592 or may be subject to any other 
enforcement action available under the law, including, but

[[Page 70007]]

not limited to, the remedies provided under 19 U.S.C. 1641.
* * * * *

Susan S. Thomas,
Executive Assistant Commissioner, Office of Trade, U.S. Customs and 
Border Protection.
[FR Doc. 2026-22735 Filed 11-5-26; 8:45 am]
BILLING CODE 9111-14-P


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