[Federal Register Volume 78, Number 49 (Wednesday, March 13, 2013)]
[Proposed Rules]
[Pages 15889-15891]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-05673]

Proposed Rules
                                                Federal Register

This section of the FEDERAL REGISTER contains notices to the public of 
the proposed issuance of rules and regulations. The purpose of these 
notices is to give interested persons an opportunity to participate in 
the rule making prior to the adoption of the final rules.


Federal Register / Vol. 78, No. 49 / Wednesday, March 13, 2013 / 
Proposed Rules

[[Page 15889]]


Office of the Secretary

6 CFR Part 5

[Docket No. DHS-2012-0073]

Privacy Act of 1974: Implementation of Exemptions; Department of 
Homeland Security U.S. Customs and Border Protection--DHS/CBP-018--
Customs--Trade Partnership Against Terrorism (C-TPAT) System, System of 

AGENCY: Privacy Office, DHS.

ACTION: Notice of proposed rulemaking.


SUMMARY: The Department of Homeland Security is giving concurrent 
notice of a newly established system of records pursuant to the Privacy 
Act of 1974 for the ``Department of Homeland Security/U.S. Customs and 
Border Protection, DHS/CBP-018--Customs--Trade Partnership Against 
Terrorism (C-TPAT) System of Records'' and this proposed rulemaking. In 
this proposed rulemaking, the Department proposes to exempt portions of 
the system of records from one or more provisions of the Privacy Act 
because of criminal, civil, and administrative enforcement 

DATES: Comments must be received on or before April 12, 2013.

ADDRESSES: You may submit comments, identified by docket number DHS-
2012-0073, by one of the following methods:
     Federal e-Rulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
     Fax: 202-343-4010.
     Mail: Jonathan R. Cantor, Acting Chief Privacy Officer, 
Privacy Office, Department of Homeland Security, Washington, DC 20528.
    Instructions: All submissions received must include the agency name 
and docket number for this notice. All comments received will be posted 
without change to http://www.regulations.gov, including any personal 
information provided.
    Docket: For access to the docket to read background documents or 
comments received, go to http://www.regulations.gov.

FOR FURTHER INFORMATION CONTACT: For general questions please contact: 
Laurence E. Castelli (202-325-0280), CBP Privacy Officer, U.S. Customs 
and Border Protection, 90 K Street NE., Washington, DC 20229. For 
privacy issues please contact: Jonathan R. Cantor (202-343-1717), 
Acting Chief Privacy Officer, Privacy Office, Department of Homeland 
Security, Washington, DC 20528.


I. Background

    In accordance with the Privacy Act of 1974, 5 U.S.C. 552a, the 
Department of Homeland Security (DHS), U.S. Customs and Border 
Protection (CBP) is giving concurrent notice of a newly established 
system of records for the DHS/CBP-018-C-TPAT System of Records and this 
proposed rulemaking.
    CBP is publishing a new system of records notice to notify the 
public about the system and offer a description of how CBP collects and 
maintains information pertaining to prospective, ineligible, current, 
or former trade partners in C-TPAT; other entities and individuals in 
their supply chains; and members of foreign governments' secure supply 
chain programs that have been recognized by CBP, through a mutual 
recognition arrangement or comparable arrangement, as being compatible 
with C-TPAT.
    CBP will use the information collected and maintained through the 
C-TPAT program to carry out its trade facilitation, law enforcement, 
and national security missions. In direct response to 9/11, CBP 
challenged the trade community to partner with the government to design 
a new approach to supply chain security--one that protects the United 
States from acts of terrorism by improving security while facilitating 
the flow of compliant cargo and conveyances. The result was the 
Customs-Trade Partnership Against Terrorism (C-TPAT)--an innovative, 
voluntary government/private sector partnership program. C-TPAT is a 
voluntary program in which certain types of businesses agree to 
cooperate with CBP in the analysis, measurement, monitoring, reporting, 
and enhancement of their supply chains.
    Businesses accepted in to C-TPAT are called partners and agree to 
take actions to protect their supply chain, identify security gaps, and 
implement specific security measures and best practices in return for 
facilitated processing of their shipments by CBP. The program focuses 
on improving security from the point of origin (including manufacturer, 
supplier, or vendor) through a point of distribution to the 
destination. The current security guidelines for C-TPAT program members 
address a broad range of topics including personnel, physical, and 
procedural security; access controls; education, training and 
awareness; manifest procedures; conveyance security; threat awareness; 
and documentation processing. These guidelines offer a customized 
solution for the members, while providing a clear minimum standard that 
approved companies must meet.
    Businesses eligible to fully participate in C-TPAT include U.S. 
importers; U.S./Canada highway carriers; U.S./Mexico highway carriers; 
rail and sea carriers; licensed U.S. Customs brokers; U.S. marine port 
authority/terminal operators; U.S. freight consolidators; ocean 
transportation intermediaries and non-operating common carriers; 
Mexican and Canadian manufacturers; and Mexican long-haul carriers. As 
part of its development, CBP plans to include exporters from the United 
States in C-TPAT.
    There are three tiers of C-TPAT partnership, with each tier having 
its own set of requirements and corresponding facilitated processing. 
In general, businesses are considered applicants until CBP has vetted 
the information in the application and accepted the business into the 
program. Once accepted, the business is designated as a Tier One 
certified partner, and a site visit is arranged. The site visit is used 
to validate the partner's supply chain security and leads to importers 
becoming Tier Two validated partners (other business types become 
certified, validated non-importers). If an importer with Tier Two 
validated partner status exemplifies best practices in its supply chain 
security, it may attain Tier Three validated partner status. As a 
business progresses up the tiers, it receives more facilitated 
processing at ports of entry.

[[Page 15890]]

    Information is collected directly from C-TPAT partners or applicant 
businesses seeking membership in C-TPAT and indirectly from trade 
partners or through Mutual Recognition Arrangements (MRA) or memoranda 
of understanding relating to harmonization efforts between CBP and the 
foreign secured supply chain program. In the course of enrolling, 
certifying, and validating C-TPAT trade partners and their supply 
chains, the C-TPAT system will receive personally identifiable 
information (PII) and confidential business information from trade 
entities and their representatives.
    To participate in the C-TPAT program, a company is required to 
submit a confidential, on-line application using the C-TPAT Security 
Link Portal, https://ctpat.cbp.dhs.gov. The C-TPAT Security Link Portal 
is the public-facing portion of the C-TPAT system used by applicants to 
submit the information in their company and supply chain security 
profiles. Initially, the applicant business provides basic business-
identifying information in the company profile using the online 
application form. This business-identifying information is used to 
verify the identity and actual existence of the applicant business and 
may include basic identifying elements and/or PII used in the 
importation of cargo, such as U.S. Social Security Numbers (SSN) for 
sole proprietors, Internal Revenue Service Business Identification 
Numbers, and Customs assigned identification numbers (such as 
Manufacturer Identification numbers and Broker/Filer codes, etc.). 
Point of contact information is collected for the business, as well as 
owner information.
    Additionally, the applicant business must complete a Supply Chain 
Security Profile (SCSP). The information provided in the SCSP is a 
narrative description of the procedures the applicant business uses to 
adhere to each C-TPAT Security Criteria or Guideline articulated for 
their particular business type (importer, customs broker, freight 
forwarder, air, sea, and land carriers, contract logistics providers, 
etc.) together with any supporting documentation. Data elements entered 
by the applicant business are accessible for update or revision through 
the C-TPAT Security Link Portal. An applicant's SCSP must provide 
supply chain security procedures for each business in the applicant's 
supply chain, even if those businesses are not, or do not desire to 
become partners of C-TPAT separately. This information is focused on 
the security procedures of those businesses (e.g., whether the business 
conducts background investigations on employees), rather than the 
individuals related to those businesses (e.g., a list of employee 
    A CBP Supply Chain Security Specialist (SCSS) vets the SCSP 
information provided by the applicant by querying that information 
through various information sources and systems, and queries of 
publicly available data (e.g., through Google). The SCSS will then 
evaluate the SCSP information against the results provided by such 
system vetting, derogatory or otherwise, and indicate whether the 
applicant is fit for the program in the Security Link Portal. 
Derogatory vetting results are incorporated into an issue paper for a 
C-TPAT supervisor's approval, and the issue paper is stored separately 
from the Security Link Portal on an internal C-TPAT SharePoint, which 
is only accessible by appropriate CBP employees and supervisors.
    Vetting results containing personally identifiable information 
(PII) are not stored in the C-TPAT Security Link Portal. When a query 
reveals derogatory information about a business applicant or partner, 
the SCSS makes a notation on the internal portion of the C-TPAT 
Security Link Portal indicating the existence of derogatory information 
and a citation to the appropriate records. For instance, if a query of 
an applicant in TECS results in derogatory information, the TECS ID is 
used as an identifier for the record in the C-TPAT Security Link 
Portal, rather than the contents of the TECS record. However, specific 
details regarding the incident or violation giving rise to the 
unfavorable analysis will be maintained within the C-TPAT SharePoint 
site and the relevant source system. The SCSS is responsible for 
vetting all C-TPAT applicants, and conducts this vetting of business 
entities every 6-12 months to ensure continued compliance.
    DHS is issuing this Notice of Proposed Rulemaking to exempt 
portions of the system of records from certain provisions of the 
Privacy Act.

II. Privacy Act

    The Privacy Act embodies fair information practice principles in a 
statutory framework governing the means by which the U.S. Government 
collects, maintains, uses, and disseminates personally identifiable 
information. The Privacy Act applies to information that is maintained 
in a ``system of records.'' A ``system of records'' is a group of any 
records under the control of an agency from which information is 
retrieved by the name of the individual or by some identifying number, 
symbol, or other identifying particular assigned to the individual. In 
the Privacy Act, an individual is defined to encompass U.S. citizens 
and lawful permanent residents. As a matter of policy, DHS extends 
administrative Privacy Act protections to all individuals when systems 
of records maintain information on U.S. citizens, lawful permanent 
residents, and visitors.
    The Privacy Act allows government agencies to exempt certain 
records from the access and amendment provisions. If an agency claims 
an exemption, however, it must issue a Notice of Proposed Rulemaking to 
make clear to the public the reasons why a particular exemption is 
    DHS is claiming exemptions from certain requirements of the Privacy 
Act for portions of DHS/CBP-018-Customs--Trade Partnership Against 
Terrorism (C-TPAT) System of Records. Information in DHS/CBP-018-
Customs--Trade Partnership Against Terrorism (C-TPAT) System of Records 
relates to official DHS national security, law enforcement, and 
intelligence activities. These exemptions are needed to protect 
information relating to DHS activities from disclosure to subjects or 
others related to these activities. Specifically, the exemptions are 
required to preclude subjects of these activities from frustrating 
these processes; to avoid disclosure of activity techniques; and to 
protect the privacy of third parties. Disclosure of information to the 
subject of the inquiry could also permit the subject to avoid detection 
or apprehension.
    In appropriate circumstances, when compliance would not appear to 
interfere with or adversely affect the law enforcement purposes of this 
system and the overall law enforcement process, the applicable 
exemptions may be waived on a case by case basis.
    A notice of system of records for DHS/CBP-018-Customs--Trade 
Partnership Against Terrorism (C-TPAT) System of Records is also 
published in this issue of the Federal Register.

List of Subjects in 6 CFR Part 5

    Freedom of information, Privacy.

    For the reasons stated in the preamble, DHS proposes to amend 
chapter I of title 6, Code of Federal Regulations, as follows:


1. The authority citation for part 5 is revised to read as follows:

    Authority: Pub. L. 107-296, 116 Stat. 2135 (6 U.S.C. 101 et 
seq.); 5 U.S.C. 301. Subpart

[[Page 15891]]

A also issued under 5 U.S.C. 552. Subpart B also issued under 5 
U.S.C. 552a.

2. Add new paragraph 70 at the end of Appendix C to part 5 to read as 

Appendix C to Part 5--DHS Systems of Records Exempt From the Privacy 

* * * * *
    70. The DHS/CBP-018-Customs--Trade Partnership Against Terrorism 
(C-TPAT) System of Records consists of electronic and paper records 
and will be used by DHS and its components. The DHS/CBP-018-
Customs--Trade Partnership Against Terrorism (C-TPAT) System of 
Records is a repository of information held by DHS in connection 
with its several and varied missions and functions, including, but 
not limited to the enforcement of civil and criminal laws; 
investigations, inquiries, and proceedings thereunder; and national 
security activities. The DHS/CBP-018-Customs--Trade Partnership 
Against Terrorism (C-TPAT) System of Records contains information 
that is collected by, on behalf of, in support of, or in cooperation 
with DHS and its components and may contain personally identifiable 
information collected by other federal, state, local, tribal, 
foreign, or international government agencies. CBP will not assert 
any exemption with respect to information requested from and 
provided by the C-TPAT applicant including, but not limited to, 
company profile, supply chain information and other information 
provided during the application and validation process. CBP will not 
assert any exemptions for an individual's application data and final 
membership determination in response to a request from that 
individual. However, the Privacy Act requires DHS to maintain an 
accounting of the disclosures made pursuant to all routines uses. 
Disclosing the fact that a law enforcement agency has sought 
particular records may affect ongoing law enforcement activities. As 
such, pursuant to 5 U.S.C. 552a(j)(2), the Secretary of Homeland 
Security has exempted this system from sections (c)(3), (e)(8), and 
(g) of the Privacy Act of 1974, as amended, as is necessary and 
appropriate to protect this information. Further, DHS will claim 
exemption from section (c)(3) of the Privacy Act of 1974, as 
amended, pursuant to 5 U.S.C. 552a(k)(2) as is necessary and 
appropriate to protect this information. Pursuant to exemption 5 
U.S.C. 552a(j)(2) of the Privacy Act, all other C-TPAT data, 
including information regarding the possible ineligibility of an 
applicant for C-TPAT membership discovered during the vetting 
process and any resulting issue papers, are exempt from 5 U.S.C. 
552a(c)(3) and (4); (d); (e)(1), (e)(2), (e)(3), (e)(4)(G), 
(e)(4)(H), (e)(4)(I), (e)(5) and (e)(8); (f), and (g). Pursuant to 5 
U.S.C. 552a(k)(2), information regarding the possible ineligibility 
of an applicant for C-TPAT membership discovered during the vetting 
process and any resulting issue papers are exempt 5 U.S.C. 
552a(c)(3); (d); (e)(1), (e)(4)(G), (e)(4)(H),(e)(4)(I); and (f). 
Exemptions from these particular subsections are justified, on a 
case-by-case basis to be determined at the time a request is made, 
for the following reasons:
    (a) From subsection (c)(3) and (4) (Accounting for Disclosures) 
because release of the accounting of disclosures could alert the 
subject of an investigation of an actual or potential criminal, 
civil, or regulatory violation to the existence of that 
investigation and reveal investigative interest on the part of DHS 
as well as the recipient agency. Disclosure of the accounting would 
therefore present a serious impediment to law enforcement efforts 
and/or efforts to preserve national security. Disclosure of the 
accounting would also permit the individual who is the subject of a 
record to impede the investigation, to tamper with witnesses or 
evidence, and to avoid detection or apprehension, which would 
undermine the entire investigative process.
    (b) From subsection (d) (Access to Records) because access to 
the records contained in this system of records could inform the 
subject of an investigation of an actual or potential criminal, 
civil, or regulatory violation to the existence of that 
investigation and reveal investigative interest on the part of DHS 
or another agency. Access to the records could permit the individual 
who is the subject of a record to impede the investigation, to 
tamper with witnesses or evidence, and to avoid detection or 
apprehension. Amendment of the records could interfere with ongoing 
investigations and law enforcement activities and would impose an 
unreasonable administrative burden by requiring investigations to be 
continually reinvestigated. In addition, permitting access and 
amendment to such information could disclose security-sensitive 
information that could be detrimental to homeland security.
    (c) From subsection (e)(1) (Relevancy and Necessity of 
Information) because in the course of investigations into potential 
violations of federal law, the accuracy of information obtained or 
introduced occasionally may be unclear, or the information may not 
be strictly relevant or necessary to a specific investigation. In 
the interests of effective law enforcement, it is appropriate to 
retain all information that may aid in establishing patterns of 
unlawful activity.
    (d) From subsection (e)(2) (Collection of Information from 
Individuals) because requiring that information be collected from 
the subject of an investigation would alert the subject to the 
nature or existence of the investigation, thereby interfering with 
that investigation and related law enforcement activities.
    (e) From subsection (e)(3) (Notice to Subjects) because 
providing such detailed information could impede law enforcement by 
compromising the existence of a confidential investigation or reveal 
the identity of witnesses or confidential informants.
    (f) From subsections (e)(4)(G), (e)(4)(H), and (e)(4)(I) (Agency 
Requirements) and (f) (Agency Rules), because portions of this 
system are exempt from the individual access provisions of 
subsection (d) for the reasons noted above, and therefore DHS is not 
required to establish requirements, rules, or procedures with 
respect to such access. Providing notice to individuals with respect 
to existence of records pertaining to them in the system of records 
or otherwise setting up procedures pursuant to which individuals may 
access and view records pertaining to themselves in the system would 
undermine investigative efforts and reveal the identities of 
witnesses, and potential witnesses, and confidential informants.
    (g) From subsection (e)(5) (Collection of Information) because 
with the collection of information for law enforcement purposes, it 
is impossible to determine in advance what information is accurate, 
relevant, timely, and complete. Compliance with subsection (e)(5) 
would preclude DHS agents from using their investigative training 
and exercise of good judgment to both conduct and report on 
    (h) From subsection (e)(8) (Notice on Individuals) because 
compliance would interfere with DHS's ability to obtain, serve, and 
issue subpoenas, warrants, and other law enforcement mechanisms that 
may be filed under seal and could result in disclosure of 
investigative techniques, procedures, and evidence.
    (i) From subsection (g) (Civil Remedies) to the extent that the 
system is exempt from other specific subsections of the Privacy Act.

    Dated: February 22, 2013.
Jonathan R. Cantor,
Acting Chief Privacy Officer, Department of Homeland Security.
[FR Doc. 2013-05673 Filed 3-12-13; 8:45 am]