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Newsletter

Customs Beefs Up C-TPAT Program

April 1, 2005

On March 25, 2005, U.S. Customs and Border Protection (CBP) announced new, stricter participation requirements for its Customs-Trade Partnership Against Terrorism (C-TPAT) program.

The new program requirements, as published, would give lower risk companies increased benefits. For example, According to Commissioner Bonner, in remarks about the pending changes, said that in exchange for adopting tighter security requirements the new "top tier" low-risk shippers would receive a "green lane" through Customs. This means, in most cases, that goods imported by C-TPAT companies would not be subject to inspection, but would receive immediate release. (Of course, Customs said this about the original C-TPAT program too.)

According to Customs, the new minimum-security criteria help solidify membership expectations and more clearly define and establish Customs' baseline expectation for security requirements for C-TPAT participants.  

IMPLEMENTATION DATES & PHASE IN PERIODS

NEW IMPORTERS WISHING TO JOIN C-TPAT: For mporters wishing to join the C-TPAT program on or after March 25, 2005, will need to meet or exceed the security criteria before they will be 'certified' and eligible for benefits. Applications for new membership will only be accepted electronically, via the C-TPAT web-based online application for importers, with submission of a completed, comprehensive security profile.   

EXISTING C-TPAT MEMBER IMPORTERS: For importers who are already a member of the C-TPAT program, having completed and received the memorandum of agreement signed by CBP, a gradual, phased implementation approach will be followed, which provides existing members more time to address the security measures outlined in the criteria. The components outlined in the security criteria document have been segmented into three distinct phases, each with their own timeline.

  • PHASE 1 - HARDENING OF THE PHYSICAL SUPPLY CHAIN: Under the first phase, existing member importers will have 60 days from the March 25 effective date to address the following three security criteria:

    1. Container Security (seals, inspections, storage).

    2. Physical Security (fencing, lighting, parking, building structure, locking devices and key controls, lighting, alarm systems, video surveillance cameras).

    3. Physical Access Controls (employees, visitors, deliveries, challenging and removing unauthorized persons).

  • PHASE 2 - INTERNAL SUPPLY CHAIN MANAGEMENT PRACTICES: Within 120 days of the March 25 effective date, existing member importers will review and enhance the more internal or procedural security elements:

    1. Personnel Security (pre-employment verifications, background checks, personnel termination procedures).

    2. Procedural Security (documentation processing, manifest procedures, shipping and receiving, cargo discrepancies).

    3. Information Technology Security (password protection, accountability).

    4. Security Training and Threat Awareness.

  • PHASE 3 - BUSINESS PARTNER REQUIREMENTS: During the final phase, existing member importers will be afforded 180 days from the March 25 effective date to address the Business Partner Requirement elements. C-TPAT participants must have written and verifiable processes for the selection of business partners, including manufacturers, product suppliers, and vendors, and documentation substantiating that business partners throughout their supply chain are meeting C-TPAT security criteria, or equivalent supply chain security program criteria administered by a foreign Customs administration.

CERTIFICATIONS: Existing C-TPAT member importers will not be required to provide a written certification that the security criteria have been met, nor will previously submitted and accepted security profiles need to be resubmitted. It will be understood that existing C-TPAT importer participants must meet or exceed these baseline security criteria by the end of each implementation phase. CBP will continue to use validations to gauge whether or not C-TPAT importer participants have adopted these security criteria. Those C-TPAT importer participants found to be deficient may have benefits suspended, or may be removed from the program entirely.

To assist in the implementation of these security criteria, a Frequently Asked Questions (FAQs) document has been provided, and the trade is encouraged to submit questions to the C-TPAT Industry Partnership email address at Industry.Partnership@dhs.gov. Periodic updates to the FAQs will be provided.

CBP will continue to work with members who demonstrate a commitment towards strengthening their entire supply chain, and benefits will be provided accordingly.

OVERVIEW OF MINIMUM SECURITY REQUIREMENTS

CBP will now require the following for program participation:

•  C-TPAT importer participants must conduct a comprehensive assessment of their international supply chains based upon the new C-TPAT security criteria, and appropriate security measures must be implemented and maintained throughout the importer's supply chains based on a security risk assessment.

•  Where an C-TPAT importer participant out-sources or contracts elements of its supply chain, such as a foreign facility, conveyance, domestic warehouse, or other elements, the C-TPAT importer participant must work with business partners to ensure that they have appropriate security measures in place and adhered to.

Phase 1 Details

Container Security and Inspection

Vendors must have procedures to ensure Container integrity is maintained to protect against the introduction of unauthorized material and/or personnel. C-TPAT Importers must require that, at point of container loading, procedures be in place to inspect, seal, and maintain the integrity of the shipping containers. A seven-point inspection process is recommended and use of a high security mechanical seal that meets or exceeds PAS ISO 17712 affixed to all loaded sea containers bound for the U.S.

Physical Security
C-TPAT Importers should incorporate the following C-TPAT physical security criteria throughout their supply chains as applicable:

Cargo handling and storage facilities in domestic and foreign locations must have physical barriers and deterrents that guard against unauthorized access.  

Fencing
Perimeter fencing should enclose the areas around cargo handling and storage facilities. Interior fencing within a cargo handling structure should be used to segregate domestic, international, high value, and hazardous cargo. All fencing must be regularly inspected for integrity and damage.

Gates and Gate Houses
Gates through which vehicles and/or personnel enter or exit must be manned and/or monitored. The number of gates should be kept to the minimum necessary for proper access and safety.

Parking
Private passenger vehicles should be prohibited from parking in or adjacent to cargo handling and storage areas.

Building Structure
Buildings must be constructed of materials that resist unlawful entry. The integrity of structures must be maintained by periodic inspection and repair.

Locking Devices and Key Controls
All external and internal windows, gates and fences must be secured with locking devices. Management or security personnel must control the issuance of all locks and keys.

Lighting
Adequate lighting must be provided inside and outside the facility, including the following areas: Entrances and exits, cargo handling and storage areas, fence lines and parking areas.

Alarms Systems and Video Surveillance Cameras
Alarm systems and video surveillance cameras should be utilized to monitor premises and prevent unauthorized access to cargo handling and storage areas.

Phase 2 Details

Personnel Security
Participants must have demonstrable processes in place to screen prospective employees and to periodically check current employees.

Pre-Employment Verification
Application information, such as employment history and references, must be verified prior to employment.

Background Checks/Investigations
Consistent with foreign, federal, state, and local regulations, background checks and investigations should be conducted for prospective employees. Once employed, periodic checks and reinvestigations should be performed based on cause and/or the sensitivity of the employee's position.

Personnel Termination Procedures
Companies must have procedures in place to remove identification, facility, and system access for terminated employees.

Information Technology Security
Password Protection
Automated systems must use individually assigned accounts that require a periodic change of password. IT security policies, procedures and standards must be in place and provided to employees in the form of training.

Security Training and Threat Awareness
A threat awareness program should be established and maintained by security personnel to recognize and foster awareness of the threat posed by terrorists at each point in the supply chain. Employees must be made aware of the procedures the company has in place to address a situation and how to report it. Additional training should be provided to employees in the shipping and receiving areas, as well as those receiving and opening mail. Additionally, specific training should be offered to assist employees in maintaining cargo integrity, recognizing internal conspiracies, and protecting access controls. These programs should offer incentives for active employee participation.

Accountability
A system must be in place to identify the abuse of IT, including improper access, tampering or the altering of business data. All system violators must be subject to appropriate disciplinary actions for abuse.

Procedural Security
Security measures must be in place to ensure the integrity and security of processes relevant to the transportation, handling, and storage of cargo in the supply chain.

Documentation Processing
Procedures must be in place to ensure that all information used in the clearing of merchandise/cargo is legible, complete, accurate, and protected against the exchange, loss or introduction of erroneous information. Documentation control must include safeguarding computer access and information.

Manifesting Procedures
To help ensure the integrity of cargo received from abroad, procedures must be in place to ensure that information received from business partners is reported accurately and timely.

Shipping & Receiving
Arriving cargo should be reconciled against information on the cargo manifest. The cargo should be accurately described, and the weights, labels, marks and piece count indicated and verified. Departing cargo should be verified against purchase or delivery orders. Drivers delivering or receiving cargo must be positively identified before cargo is received or released.

Cargo Discrepancies
All shortages, overages, and other significant discrepancies or anomalies must be resolved and/or investigated appropriately. Customs and/or other appropriate law enforcement agencies must be notified if illegal or suspicious activities are detected - as appropriate.

Security Training and Threat Awareness
A threat awareness program should be established and maintained by security personnel to recognize and foster awareness of the threat posed by terrorists at each point in the supply chain. Employees must be made aware of the procedures the company has in place to address a situation, and how to report it. Additional training should be provided to employees in the shipping and receiving areas, as well as those receiving and opening mail. Additionally, specific training should be offered to assist employees in maintaining cargo integrity, recognizing internal conspiracies, and protecting access controls. These programs should offer incentives for active employee participation.

Phase 3 Details

The Business Partner Requirement

•  C-TPAT participants are to have written and verifiable processes for the selection of business partners, including manufacturers, product suppliers and vendors.  

•  For business partners eligible for C-TPAT certification (carriers, ports, terminal operators, brokers, consolidators, etc.), the C-TPAT participant must have documentation substantiating whether these business partners are C-TPAT certified or not.

•  If not already C-TPAT certified, current and prospective business partners must demonstrate to the C-TPAT participant that they are meeting C-TPAT security criteria via written confirmation.  

•  Business partners must be subject to verification of compliance with C-TPAT security criteria by the importer based upon a documented risk assessment process.

Through these verifications these verifications, C-TPAT participants can more easily identify if outsourcing occurs at any point in their supply chain and if C-TPAT security standards are being met or exceeded by their business partners. Risk assessment is to be based on factors such as: Volume, country of origin, routing, and potential terrorist threat via openly available information.

C-TPAT participants must ensure business partners develop security processes and procedures consistent with the C-TPAT security criteria to enhance the integrity of the shipment at point of manufacture. Periodic reviews of business partners' facilities should be conducted based on risk, and verify that the vendor is maintaining the security standards required by the importer. At a minimum, vendors must demonstrate that they have procedures to ensure that:

  • Containers are properly examined prior to loading

  • During the loading process and thereafter, container integrity is maintained to protect against the introduction of unauthorized material and/or personnel

  • A high security mechanical seal is affixed to all loaded sea containers bound for the U.S.

ACTION STEPS

Current C-TPAT participants should immediately review existing security safeguards in light of the new requirements, beginning with a review of:

  • Container Security (supplier inspection, loading, seals, and storage).

  • Physical Security (fencing, lighting, parking, building structure, locking devices and key controls, lighting, alarm systems, video surveillance cameras).

  • Physical Access Controls (employees, visitors, deliveries, challenging and removing unauthorized persons)

If your company does not have all of the security features listed, an implementation plan should be developed and a timetable established. If the company believes that certain elements are not necessary or required, the matter should be addressed in writing to Customs with an explanation why the requirement is not necessary. Next, the company should review its:

  • Personnel Security (pre-employment verifications, background checks, personnel termination procedures).

  • Procedural Security (documentation processing, manifest procedures, shipping and receiving, cargo discrepancies).

  • Information Technology Security (password protection, accountability).

  • Security Training and Threat Awareness

Again, if your company does not have all of the security features identified above, an implementation plan should be developed and a timetable established. If the company believes that certain elements are not necessary or required, the matter should be addressed in writing to Customs with an explanation why the requirement is not necessary.  

Finally, C-TPAT participants have 180 days to prepare and implement written and verifiable processes for the selection of business partners, including manufacturers, product suppliers, and vendors; and documentation substantiating that business partners throughout their supply chain are meeting C-TPAT security criteria.

Please contact us for additional information regarding the new C-TPAT minimum-security requirements, or for assistance in conducting a C-TPAT review for conformity with the new C-TPAT minimum-security requirements.

If you have any questions on any of the issues raised in this newsletter, please contact George R. Tuttle, III at geo@tuttlelaw.com (415-288-0428), George R. Tuttle at grt@tuttlelaw.com (415-288-0425), Stephen Spraitzar at sss@tuttlelaw.com (415-288-0427), or Carl D. Cammarata at cdc@tuttlelaw.com (415-288-0426).

George R. Tuttle, III, George R. Tuttle, Stephen Spraitzar, and Carl D. Cammarata are attorneys with the Law Offices of George R. Tuttle in San Francisco. The information in this article is general in nature, and is not intended to constitute legal advice or to create an attorney-client relationship with respect to any event or occurrence, and may not be considered as such.

Copyright 2005 by Tuttle Law Offices.

All rights reserved. Information has been obtained from sources believed to be reliable. However, because of the possibility of human or mechanical error by our offices or by others, we do not guarantee the accuracy, adequacy, or completeness of any information and are not responsible for any errors, omissions, or for the results obtained from the use of such information.

 

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