[Senate Report 117-99]
[From the U.S. Government Publishing Office]


                                                      Calendar No. 350
117th Congress     }                                     {      Report
                                 SENATE
 2d Session        }                                     {      117-99
_______________________________________________________________________

                                     



                    CTPAT PILOT PROGRAM ACT OF 2021

                               __________

                              R E P O R T

                                 of the

                   COMMITTEE ON HOMELAND SECURITY AND

                          GOVERNMENTAL AFFAIRS

                          UNITED STATES SENATE

                              to accompany

                                S. 2322

            TO REQUIRE A PILOT PROGRAM ON THE PARTICIPATION
           OF NON-ASSET-BASED THIRD-PARTY LOGISTICS PROVIDERS
           IN THE CUSTOMS-TRADE PARTNERSHIP AGAINST TERRORISM






[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]







                 April 27, 2022.--Ordered to be printed 
                             _________
                              
                              
                 U.S. GOVERNMENT PUBLISHING OFFICE
                 
29-010                   WASHINGTON : 2022
                 
                 
                 
                 
                 
                 
                 
                 
                 
                 
        COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS

                   GARY C. PETERS, Michigan, Chairman
THOMAS R. CARPER, Delaware           ROB PORTMAN, Ohio
MAGGIE HASSAN, New Hampshire         RON JOHNSON, Wisconsin
KYRSTEN SINEMA, Arizona              RAND PAUL, Kentucky
JACKY ROSEN, Nevada                  JAMES LANKFORD, Oklahoma
ALEX PADILLA, California             MITT ROMNEY, Utah
JON OSSOFF, Georgia                  RICK SCOTT, Florida
                                     JOSH HAWLEY, Missouri

                   David M. Weinberg, Staff Director
                    Zachary I. Schram, Chief Counsel
               Katie A. Conley, Professional Staff Member
                Pamela Thiessen, Minority Staff Director
            Sam J. Mulopulos, Minority Deputy Staff Director
       Jeremy H. Hayes, Minority Senior Professional Staff Member
                     Laura W. Kilbride, Chief Clerk











                                                      Calendar No. 350
117th Congress     }                                     {      Report
                                 SENATE
 2d Session        }                                     {      117-99

======================================================================



 
                    CTPAT PILOT PROGRAM ACT OF 2021

                                _______
                                

                 April 27, 2022.--Ordered to be printed

                                _______
                                

 Mr. Peters, from the Committee on Homeland Security and Governmental 
                    Affairs, submitted the following

                              R E P O R T

                         [To accompany S. 2322]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Homeland Security and Governmental 
Affairs, to which was referred the bill (S. 2322), to require a 
pilot program on the participation of non-asset-based third-
party logistics providers in the Customs-Trade Partnership 
Against Terrorism, having considered the same, reports 
favorably thereon with an amendment (in the nature of a 
substitute) and recommends that the bill, as amended, do pass.

                                CONTENTS

                                                                    Page
  I. Purpose and Summary.............................................. 1
 II. Background and Need for the Legislation.......................... 2
III. Legislative History.............................................. 3
 IV. Section-by-Section Analysis of the Bill, as Reported............. 4
  V. Evaluation of Regulatory Impact.................................. 5
 VI. Congressional Budget Office Cost Estimate........................ 5
VII. Changes in Existing Law Made by the Bill, as Reported............ 6

                         I. PURPOSE AND SUMMARY

    S. 2322, the Customs Trade Partnership Against Terrorism 
(CTPAT) Pilot Program Act of 2021, expands the U.S. Customs and 
Border Protection's (CBP) existing CTPAT program to pilot the 
participation of asset-based and non-asset based third-party 
logistics providers (3PLs). The bill requires the Department of 
Homeland Security (DHS) to create the pilot program within 180 
days of enactment. The bill also requires the DHS Secretary to 
submit a report to Congress that outlines recommendations 
stemming from the pilot program. Finally, the bill requires the 
Government Accountability Office (GAO) to submit a report to 
appropriate congressional committees that assesses the 
effectiveness of the CTPAT program.

              II. BACKGROUND AND NEED FOR THE LEGISLATION

    In response to the attacks on September 11, 2001, the 
federal government engaged with the trade community to enhance 
supply chain security to protect the U.S. from acts of 
terrorism.\1\ One such enhancement was the Customs Trade 
Partnership Against Terrorism (CTPAT), which began in November 
2001. CTPAT is a partnership between the federal government and 
the private sector that seeks to improve security throughout 
the supply chain, from the point of origin (including 
manufacturer, supplier, or vendor) through a point of 
distribution to the destination.\2\ The program created a 
customs clearance process for trusted merchants that want to 
voluntarily submit themselves to enhanced security screening 
measures.\3\
---------------------------------------------------------------------------
    \1\U.S. Customs and Border Protection, CTPAT: Customs Trade 
Partnership Against Terrorism (https://www.cbp.gov/border-security/
ports-entry/cargo-security/ctpat) (accessed Dec. 9, 2021).
    \2\Id.
    \3\Id.
---------------------------------------------------------------------------
    On October 13, 2006, President George W. Bush signed the 
Security and Accountability For Every (SAFE) Port Act of 2006, 
which legislatively authorized CBP's CTPAT program.\4\ The SAFE 
Port Act of 2006 required CBP to expand the eligible enrollment 
entities to include other organizations that strengthen 
security along critical points in the international supply 
chain.\5\ Having established they meet CBP's minimum security 
criteria, members are eligible for benefits including: reduced 
examination rates, access to Free and Secure Trade (FAST) 
lanes, and front of the line processing.\6\ By ensuring that 
participants meet minimum security standards, CTPAT helps CBP 
improve trade facilitation by enhancing the security of 
incoming cargo and processing of cargo through ports of entry, 
which also benefits CTPAT members. According to a 2017 GAO 
review, there were more than 11,000 members of CTPAT as of 
September 2016, whose shipments made up more than half of the 
cargo entering the country.\7\
---------------------------------------------------------------------------
    \4\Security and Accountability For Every Port Act of 2006, Pub. L. 
No. 109-347, Sec. 211 (2006).
    \5\Id.
    \6\Government Accountability Office, Supply Chain Security: 
Providing Guidance and Resolving Data Problems Could Improve Management 
of the Customs-Trade Partnership Against Terrorism Program at 11 (GAO-
17-84) (Feb. 8, 2017) (https://www.gao.gov/assets/gao-17-84.pdf).
    \7\Id. at 2.
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    In 2008, the Federal government issued CTPAT guidance that 
included eligibility requirements for 3PLs to participate in 
the program.\8\ The guidance defined 3PLs as ``a firm that 
provides outsourced or `third party' logistics services to 
companies for part, or sometimes all of their supply chain 
management function.''\9\ There are two types of 3PLs: asset-
based and non asset-based. Asset based 3PLs own warehousing 
facilities, vehicles, aircraft, or any other transportation 
assets. Non asset-based 3PLs perform services such as quoting, 
booking, routing, and auditing.\10\ In its guidance, CBP 
excluded non-asset based 3PLs, noting that non-asset based 3PLs 
do not physically take possession of freight or add a 
significant national security value to the program.\11\ Despite 
this guidance, CBP has, in fact, allowed some non-asset based 
3PLs eligibility into the CTPAT program, including indirect air 
carriers, non-vessel operating common carriers)\12\ and customs 
brokers.\13\ Additionally, non-asset based 3PLs do have a role 
in safety and national security by selecting those logistics 
carriers entering the country and assuring that those carriers 
are legitimate and understand the cargo they are 
transporting.\14\
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    \8\U.S. Customs and Border Protection, Customs-Trade Partnership 
Against Terrorism (C-TPAT) Minimum Security Criteria: Third Party 
Logistics Providers (3PL) (Jan. 2009) (https://www.cbp.gov/sites/
default/files/documents/3pl_security_criteria_3.pdf).
    \9\Id. at 1.
    \10\Id. at 2.
    \11\Id. at 2.
    \12\U.S. Customs and Border Protection, Air Freight Consolidators, 
Ocean Transport Intermediaries, and Non-Vessel Operating Common 
Carriers (NVOCC) Security Criteria (https://www.cbp.gov/border-
security/ports-entry/cargo-security/ctpat/security-guidelines/air-
freight-ocean-transport-nvocc) (accessed Dec. 9, 2021).
    \13\U.S. Customs and Border Protection, U.S. Customs Broker 
Eligibility Requirements (https://www.cbp.gov/border-security/ports-
entry/cargo-security/ctpat/security-guidelines/customs-brokers) 
(accessed Dec. 9, 2021).
    \14\U.S. Customs and Border Protection, Minimum Security Criteria--
Third Party Logistics Providers (3PLs) (Mar. 2020) (https://
www.cbp.gov/sites/default/files/assets/documents/2020-Apr/
CTPAT%203PLs%20MSC%20March%202020.pdf).
---------------------------------------------------------------------------
    S. 2322 addresses the current exclusion of certain 3PLs by 
creating a CBP pilot program that allows non-asset based 3PLs 
and additional asset-based 3PLs to participate in CTPAT. Within 
180 days of the enactment of this legislation, DHS must 
establish a pilot program that includes up to 20 trusted 
vendors--10 asset-based 3PLs and 10 non asset-based 3PLs. The 
pilot shall take place for at least one year, and the DHS 
Secretary will submit a report to Congress that outlines 
recommendations that stem from the pilot.
    Because the nature of the 3PLs eligible for the pilot 
program differs from those currently participating, under the 
pilot CBP will determine the entities to participate as well as 
eligibility and minimum-security criteria (MSC) for the 
participants.\15\ After identifying eligibility and MSC, CBP 
will evaluate applications of potential participants.\16\ For 
those applicants who are accepted for participation, CBP will 
work with the selected participants to identify a location to 
complete the validation visit, where CBP reviews the 
participant's supply chain security procedures.\17\ After 
concluding the validations of all pilot participants, CBP will 
evaluate the process under the pilot to see what worked, what 
did not, and where they can improve.\18\
---------------------------------------------------------------------------
    \15\Email from Office of Congressional Affairs, U.S. Customs and 
Border Protection, to Senate Committee on Homeland Security and 
Governmental Affairs Majority Staff (Feb. 11, 2022).
    \16\Id.
    \17\U.S. Customs and Border Protection, CTPAT Validation Process 
(https://www.cbp.gov/border-security/ports-entry/cargo-security/c-tpat-
customs-trade-partnership-against-terrorism/apply/validation) (accessed 
Dec. 9, 2021).
    \18\Email from Office of Congressional Affairs, U.S. Customs and 
Border Protection, to Senate Committee on Homeland Security and 
Governmental Affairs Majority Staff (Feb. 11, 2022).
---------------------------------------------------------------------------

                        III. LEGISLATIVE HISTORY

    Senator John Cornyn (R-TX) introduced S. 2322, the CTPAT 
Pilot Program Act of 2021, on July 13, 2021, along with 
Senators Robert Menendez (D-NJ), Tom Carper (D-DE), and Tim 
Scott (R-SC). The bill was referred to the Committee on 
Homeland Security and Governmental Affairs. Senators Margaret 
Hassan (D-NH) and James Lankford (R-OK) joined as cosponsors on 
November 1, 2021 and November 16, 2021, respectively. The 
Committee considered S. 2322 at a business meeting on November 
3, 2021.
    During the business meeting, a substitute amendment was 
offered by Senator Carper that added asset-based 3PLs in the 
pilot program, as well as a requirement for GAO to assess the 
effectiveness of the CTPAT program. The Carper Substitute 
Amendment was adopted by voice vote en bloc with Senators 
Peters, Hassan, Sinema, Rosen, Padilla, Ossoff, Portman, 
Johnson, Lankford, Romney, Scott, and Hawley present. The 
Committee ordered the bill, as amended, reported favorably by 
voice vote en bloc with Senators Peters, Hassan, Sinema, Rosen, 
Padilla, Ossoff, Portman, Johnson, Lankford, Romney, Scott, and 
Hawley present.

        IV. SECTION-BY-SECTION ANALYSIS OF THE BILL, AS REPORTED

Section 1. Short title

    This section designates the name of the bill as the 
``Customs Trade Partnership Against Terrorism Pilot Program Act 
of 2021'' or the ``CTPAT Pilot Program Act of 2021.''

Section 2. Definitions

    This section defines the terms ``appropriate congressional 
committees'' and ``CTPAT.''

Section 3. Pilot program on participation of third-party logistics 
        providers in CTPAT

    Subsection (a) requires the DHS Secretary to carry out a 
pilot program to assess whether allowing entities described in 
subsection (b) to participate in CTPAT would enhance port 
security, combat terrorism, prevent supply chain security 
breaches, or otherwise meet the goals of CTPAT. This subsection 
also requires the DHS Secretary to publish a Federal Register 
notice within a year of this legislation's enactment specifying 
the requirements of the pilot program.
    Subsection (b) provides descriptions of non-asset-based and 
asset-based third-party logistics providers that are entities 
eligible to participate in the pilot program described in 
subsection (a).
    Subsection (c) requires the DHS Secretary to ensure that no 
more than 10 non-asset-based third-party logistics providers 
and no more than 10 asset-based third-party logistics providers 
may participate in the pilot program. The subsection also 
requires that participation in the program to be voluntary, and 
that the program shall continue for at least one year after the 
Secretary publishes the required Federal Register notice, and 
shall not continue five years after that date.
    Subsection (d) requires the DHS Secretary to submit a 
report to appropriate congressional committees on the findings 
and recommendations from the pilot program concerning the 
participation in CTPAT of entities described in subsection (b), 
including an assessment of participation by those entities.

Section 4. Report on effectiveness of CTPAT

    Subsection (a) requires the Comptroller General to submit a 
report assessing the effectiveness of CTPAT to appropriate 
congressional committees one year after the date of enactment 
of this bill.
    Subsection (b) requires the report to include: (1) an 
analysis of CBP cargo supply chain security incidents relating 
to criminal activity involving CTPAT participants versus non-
participants over the past five years; (2) an analysis of 
causes for suspension and removal actions of CTPAT participants 
as a result of security incidents over the past five years; (3) 
an analysis of the number of active CTPAT participants with one 
or multiple security incidents while maintaining membership in 
the program; and (4) recommendations to the CBP Commissioner 
for improvements to the CTPAT program to increase prevention of 
cargo supply chain security incidents of participants.

                   V. EVALUATION OF REGULATORY IMPACT

    Pursuant to the requirements of paragraph 11(b) of rule 
XXVI of the Standing Rules of the Senate, the Committee has 
considered the regulatory impact of this bill and determined 
that the bill will have no regulatory impact within the meaning 
of the rules. The Committee agrees with the Congressional 
Budget Office's statement that the bill contains no 
intergovernmental or private-sector mandates as defined in the 
Unfunded Mandates Reform Act (UMRA) and would impose no costs 
on state, local, or tribal governments.

             VI. CONGRESSIONAL BUDGET OFFICE COST ESTIMATE

                                     U.S. Congress,
                               Congressional Budget Office,
                                 Washington, DC, December 22, 2021.
Hon. Gary Peters,
Chairman, Committee on Homeland Security and Governmental Affairs, U.S. 
        Senate, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for S. 2322, the CTPAT 
Pilot Program Act of 2021.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Lindsay 
Wylie.
            Sincerely,
                                         Phillip L. Swagel,
                                                          Director.
    Enclosure.

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    S. 2322 would require the Department of Homeland Security 
(DHS) to carry out a five-year pilot program to include certain 
third-party logistics providers in the customs trade 
partnership against terrorism (CTPAT) program. CTPAT is a 
voluntary program that encourages entities involved in 
international trade to cooperate with Customs and Border 
Protection (CBP) to strengthen international supply chains, 
improve border security, and facilitate the movement of secure 
cargo through the supply chain.
    The bill would require CBP to publish participation 
requirements for the pilot program in the Federal Register 
within one year of the bill's enactment and submit a report to 
the Congress on its findings about the pilot program six months 
after it ends. S. 2322 also would require the Government 
Accountability Office (GAO) to report to the Congress on the 
effectiveness of the CTPAT program within one year.
    Using information from the agency, CBO estimates that any 
new activities required under S. 2322 would not require 
substantial action by DHS and would cost less than $500,000 
over the 2022-2026 period. Furthermore, based on the cost of 
similar activities, CBO estimates the cost to GAO of producing 
the report would be less than $500,000 over the 2022-2026 
period. Taken together, CBO estimates implementing the bill 
would cost $1 million over the 2022-2026 period. All spending 
under the bill would be subject to the availability of 
appropriated funds.
    The CBO staff contact for this estimate is Lindsay Wylie. 
The estimate was reviewed by Leo Lex, Deputy Director of Budget 
Analysis.

       VII. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

    This legislation would make no change in existing law, 
within the meaning of clauses (a) and (b) of subparagraph 12 of 
rule XXVI of the Standing Rules of the Senate, because this 
legislation would not repeal or amend any provision of current 
law.

                                  [all]