[Senate Report 118-27]
[From the U.S. Government Publishing Office]
Calendar No. 67
118th Congress } { Report
SENATE
1st Session } { 118-27
_______________________________________________________________________
CUSTOMS TRADE PARTNERSHIP AGAINST TERRORISM (CTPAT) PILOT PROGRAM
ACT OF 2023
__________
R E P O R T
of the
COMMITTEE ON HOMELAND SECURITY AND
GOVERNMENTAL AFFAIRS
UNITED STATES SENATE
to accompany
S. 794
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]
May 11, 2023.--Ordered to be printed
_________
U.S. GOVERNMENT PUBLISHING OFFICE
39-010 WASHINGTON : 2023
COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS
GARY C. PETERS, Michigan, Chairman
THOMAS R. CARPER, Delaware RAND PAUL, Kentucky
MAGGIE HASSAN, New Hampshire RON JOHNSON, Wisconsin
KYRSTEN SINEMA, Arizona JAMES LANKFORD, Oklahoma
JACKY ROSEN, Nevada MITT ROMNEY, Utah
ALEX PADILLA, California RICK SCOTT, Florida
JON OSSOFF, Georgia JOSH HAWLEY, Missouri
RICHARD BLUMENTHAL, Connecticut ROGER MARSHALL, Kansas
David M. Weinberg, Staff Director
Zachary I. Schram, Chief Counsel
Christopher J. Mulkins, Director of Homeland Security
Katie A. Conley, Professional Staff Member
William E. Henderson III, Minority Staff Director
Christina N. Salazar, Minority Chief Counsel
Kendal B. Tigner, Minority Professional Staff Member
Laura W. Kilbride, Chief Clerk
Calendar No. 67
118th Congress } { Report
SENATE
1st Session } { 118-27
======================================================================
CUSTOMS TRADE PARTNERSHIP AGAINST TERRORISM (CTPAT) PILOT PROGRAM ACT
OF 2023
_______
May 11, 2023.--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. 794]
[Including cost estimate of the Congressional Budget Office]
The Committee on Homeland Security and Governmental
Affairs, to which was referred the bill (S. 794) 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 without amendment and recommends that the
bill 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. 794, the Customs Trade Partnership Against Terrorism
(CTPAT) Pilot Program Act of 2023, 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.\1\
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\1\On November 3, 2021, the Committee approved S. 2322, to require
the a pilot program on the participation of non-asset-based third-party
logistics providers in the Customs-Trade Partnership Against Terrorism,
with a substitute amendment that added asset-based 3PLs in the pilot
program, as well as a requirement for GAO to assess the effectiveness
of the CTPAT program. With the exception of the short title, that bill,
as amended, is the same as S. 794. Accordingly, this committee report
is, in many respects, similar to the committee report for S. 2322. See
S. Rept. 117-99.
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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. 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. The program created a customs
clearance process for trusted merchants that want to
voluntarily submit themselves to enhanced security screening
measures.\2\
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\2\U.S. Customs and Border Protection, CTPAT: Customs Trade
Partnership Against Terrorism www.cbp.gov/border-security/ports-entry/
cargo-security/ctpat) (accessed Dec. 9, 2021).
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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. 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.\3\ 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. 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.\4\
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\3\Security and Accountability For Every Port Act of 2006, Pub. L.
No. 109-347, Sec. 211 (2006).
\4\Government Accountability Office, Supply Chain Security:
Providing Guidance and Resolving Data Problems Could Improve Management
of the Customs-Trade Partnership Against Terrorism Program (GAO-17-84)
(Feb. 8, 2017) (www.gao.gov/assets/gao-17-84.pdf).
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In 2008, the Federal government issued CTPAT guidance that
included eligibility requirements for 3PLs to participate in
the program. 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.'' 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. 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.\5\ 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 and customs
brokers.\6\ 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.\7\
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\5\U.S. Customs and Border Protection, Customs-Trade Partnership
Against Terrorism (C-TPAT) Minimum Security Criteria: Third Party
Logistics Providers (3PL) (Jan. 2009) (www.cbp.gov/sites/default/files/
documents/3pl_security_criteria_3.pdf).
\6\U.S. Customs and Border Protection, Air Freight Consolidators,
Ocean Transport Intermediaries, and Non-Vessel Operating Common
Carriers (NVOCC) Security Criteria (www.cbp.gov/border-security/ports-
entry/cargo-security/ctpat/security-guidelines/air-freight-ocean-
transport-nvocc) (accessed Dec. 9, 2021); U.S. Customs and Border
Protection, U.S. Customs Broker Eligibility Requirements (www.cbp.gov/
border-security/ports-entry/cargo-security/ctpat/security-guidelines/
customs-brokers) (accessed Dec. 9, 2021).
\7\U.S. Customs and Border Protection, Minimum Security Criteria--
Third Party Logistics Providers (3PLs) (Mar. 2020) (www.cbp.gov/sites/
default/files/assets/documents/2020-Apr/
CTPAT%203PLs%20MSC%20March%202020.pdf).
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S. 794 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 type of entities to participate as
well as eligibility and minimum-security criteria (MSC) for the
participants. After identifying eligibility and MSC, CBP will
evaluate applications of potential participants.\8\ 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.\9\ 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.\10\
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\8\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).
\9\U.S. Customs and Border Protection, CTPAT Validation Process
(www.cbp.gov/border-security/ports-entry/cargo-security/c-tpat-customs-
trade-partnership-against-terrorism/apply/validation) (accessed Dec. 9,
2021).
\10\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).
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III. Legislative History
Senator John Cornyn (R-TX) introduced S. 794, the CTPAT
Pilot Program Act of 2023, on March 14, 2023, along with
Senator Tom Carper (D-DE). Senator James Lankford (R-OK) joined
as a cosponsor on March 15, 2023 and Senator Margaret Wood
Hassan (D-NH) joined as a cosponsor on March 21, 2023. The bill
was referred to the Committee on Homeland Security and
Governmental Affairs. The Committee considered S. 794 at a
business meeting on March 29, 2023. The Committee ordered the
bill to be reported favorably by a roll call vote of 11 yeas
and 1 nay, with Senators Peters, Hassan, Sinema, Rosen,
Padilla, Ossoff, Blumenthal, Lankford, Romney, Scott, and
Hawley voting in the affirmative; Senator Paul voting nay; and
with Senators Carper, Johnson, and Marshall voting yea by
proxy, for the record only.
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 2023'' or the ``CTPAT Pilot Program Act of 2023.''
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 terminate the pilot program 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
S. 794 would require the Department of Homeland Security to
implement a five-year pilot program to assess whether including
certain third-party logistics providers in the Customs Trade
Partnership Against Terrorism (CTPAT) program would enhance
port security, combat terrorism, or prevent supply chain
breaches. Third-party logistics providers contract with other
companies to manage part or all of their supply chain. CTPAT is
a voluntary public-private partnership in which entities
involved with international trade cooperate with Customs and
Border Protection (CBP) to strengthen international supply
chains, improve border security, and facilitate the movement of
secure cargo.
S. 794 would require CBP to publish requirements for the
pilot program in the Federal Register within one year of
enactment and submit a report to the Congress on its findings
about the program six months after it ends. The bill also would
require the Government Accountability Office (GAO) to submit a
report to the Congress on the effectiveness of the CTPAT
program within one year of enactment.
Using information from CBP, CBO estimates that the
activities required under S. 794 would not require substantial
action by the agency and would cost less than $500,000 over the
2023-2028 period. In addition, based on the cost of similar
reports, CBO estimates the cost to GAO to publish the report
would be less than $500,000 over the 2023-2028 period. In
total, CBO estimates that implementing S. 794 would cost $1
million over the 2023-2028 period; such spending would be
subject to the availability of appropriated funds.
The CBO staff contact for this estimate is Jeremy Crimm.
The estimate was reviewed by Chad Chirico, Deputy Director of
Budget Analysis.
Phillip L. Swagel,
Director, Congressional Budget Office.
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.
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