Highlights of House-Passed SAFE Port Act (Part I - C-TPAT)

(Although the House has passed H.R. 4954, it is not in effect. Generally, in order for a bill to be implemented, identical versions of that bill must be passed by both the House and Senate and then the bill must be approved (enacted) by the President.)

This is Part I of a multi-part series of summaries on H.R. 4954 and provides highlights of the bill's provisions for the Customs-Trade Partnership Against Terrorism (C-TPAT), including tiers 1 - 3, a pilot of third party validations, etc. See future issues for additional summaries on H.R. 4954.

Customs-Trade Partnership Against Terrorism (C-TPAT)

H.R. 4954 would authorize the Secretary of Homeland Security (Secretary) to establish a voluntary program (to be known as the Customs-Trade Partnership Against Terrorism) to strengthen and improve the overall security of the international supply chain and U.S. border security. According to Congressional sources, H.R. 4954 codifies and strengthens the existing C-TPAT program.

H.R. 4954 would require the Secretary to review the minimum security requirements of C-TPAT at least every year and update such requirements as necessary. In addition, H.R. 4954 outlines the entities that would be eligible for C-TPAT, as well as establishes certain minimum requirements for an applicant seeking to participate in C-TPAT.

H.R. 4954 also outlines specific benefits for C-TPAT Tier One, Two, and Three Participants as follows:

Tier One - certified participants. According to H.R. 4954, the Secretary may offer limited benefits to C-TPAT participants whose security measures and supply chain security practices have been certified in accordance with established guidelines.

Tier Two - validated participants. H.R. 4954 would require the Secretary to validate the security measures and supply chain security practices of a C-TPAT participant not later than one year after it has been certified. Under H.R. 4954, the validation would be done either directly or through third party entities certified in accordance with H.R. 4954. H.R. 4954 notes that such validations shall include assessments at appropriate foreign locations utilized by the participant as part of the supply chain.

According to H.R. 4954, the Secretary shall extend benefits to each validated C-TPAT participant which may include reduced examinations and priority processing for searches.

H.R. 4954 also states that if a C-TPAT participant's security measures and supply chain security practices fail to meet the validation requirements, the CBP Commissioner may deny the participant C-TPAT benefits on a temporary or permanent basis or suspend or expel the participant from C-TPAT.

In addition, the bill would provide a participant whose C-TPAT benefits were denied, suspended, etc. as a result of a failed validation, to appeal the CBP Commissioner's decision to the Secretary.

Tier Three - beyond minimum criteria, may include use of container security devices. H.R. 4954 would require the Secretary to establish a third tier of C-TPAT that offers additional benefits to C-TPAT participants that demonstrate a sustained commitment beyond the minimum criteria for participation in C-TPAT. H.R. 4954 would establish additional criteria for Tier Three participants that may include criteria to ensure the utilization of container security devices, etc.

H.R. 4954 would allow the Secretary, in consultation with the Commercial Operations Advisory Committee (COAC) and the National Maritime Security Advisory Committee, to provide Tier Three benefits to C-TPAT participants which may include:

expedited release of tier three cargo into destination ports within the U.S. during all threat levels designated by the Secretary;

reduced or streamlined bonding requirements;

preference to vessels;

further reduced examinations;

priority processing for examinations;

further reduced scores in the Automated Targeting System (ATS); and

streamlined billing of any customs duties or fees.

Consequences of failing to meet requirements, false and misleading information. H.R. 4954 would also establish consequences if a C-TPAT participant's security measures and supply chain security practices fail to meet any of the requirements of H.R. 4954's C-TPAT subtitle, as well as if a C-TPAT participant intentionally provides false or misleading information. Included in this section is an opportunity for a C-TPAT participant to appeal any such decision.

Pilot of third party entity C-TPAT validations. H.R. 4954 would also require the Secretary of Homeland Security to conduct a pilot program to test the feasibility, costs, and benefits of utilizing third parties to conduct C-TPAT validations. Not later than 30 days after the completion of the pilot program, the Secretary would be required to submit a report to the appropriate congressional committees that contains the results of the pilot program and the determination of whether or not to expand the use of third party entities to conduct C-TPAT validations.

H.R. 4954 states that in conducting a pilot program and if the Secretary determines to expand the use of third party entities to conduct validations of C-TPAT participants upon completion of the pilot program, the Secretary shall develop, document, and update as necessary minimum standard operating procedures for validations of C-TPAT participants, etc.

Certification of third party entities, monitoring, etc. H.R. 4954 also provides information on the certification of third party entities, information for establishing limits of liability insurance, including details on litigation and risk management protections, additional requirements, monitoring, revocation of certification, etc.

Revalidation of C-TPAT members every three years. H.R. 4954 would also establish a process for revalidation for C-TPAT members which would occur not less frequently that once during every 3-year period following the initial validation.

Inclusion in C-TPAT of importers of non-containerized cargoes. H.R. 4954 would allow the Secretary to consider the potential for C-TPAT participation by importers of non-containerized cargoes that otherwise meet the requirements under the C-TPAT subtitle.

Authorization of FY 2007-2012 appropriations. H.R. 4954 would authorize the appropriation of $75 million of each of fiscal years (FYs) 2007 through 2012 to carry out the C-TPAT provisions in H.R. 4954.

(See ITT's Online Archives or 05/08/06 news, 06050805, for BP summary on the passage of H.R. 4954 and the amendments which were adopted prior to passage.)

H.R. 4954 available at http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=109_cong_bills&docid=f:h4954eh.txt.pdf.