May 26, 2006
As a result of the controversy involving the Dubai Ports World's proposal to purchase and run certain U.S. port operations, Congress has been active in legislation that will address certain supply chain security issues. Recently, on May 4, 2006, the House of Representatives amended and passed H.R. 4954, the Security and Accountability for Every (SAFE) Port Act. The Senate has not passed comparable legislation, and, thus, H.R. 4954 has not been enacted into law. H.R. 4954 includes many provisions designed to strengthen port security. This newsletter will focus on the ones that pertain to Customs-Trade Partnership Against Terrorism (C-TPAT).
Summary of Provisions in H.R. 4954 That Pertain to C-TPAT
At present, C-TPAT is not governed by any Customs regulations or statutes. It is a voluntary program, administrated by CBP. H.R. 4954 (the Bill) authorizes the Secretary of the Department of Homeland Security (DHS) to establish C-TPAT in order to strengthen the port security of the U.S. Thus, H.R. 4954 would codify the C-TPAT program. A summary of the highlights in the Bill that pertain to C-TPAT is as follows:
Under the Bill, DHS would review C-TPAT security standards on an annual basis, identify which entities are eligible for C-TPAT, and establish the minimum requirements for C-TPAT eligibility.
The Bill defines the benefits that are accorded to the three tiers of C-TPAT participants:
- Tier 1: This tier consists of certified participants. Those in this tier are offered only limited C-TPAT benefits.
- Tier 2: These are validated participants. The Act requires DHS to validate a C-TPAT participant not later than one year after being certified. This can be done either by CBP or certified third parties. The benefits include reduced examinations and priority processing for searches.
- Tier 3: DHS would be required to establish a third tier, which will afford additional benefits to participants to go beyond the minimum requirements. These benefits could include the following:
- Expedited release of tier three cargo into destination ports within the U.S. during all threat levels designated by DHS;
- Reduced or streamlined bonding requirements;
- Preference to vessels;
- Further reduced examinations;
- Priority processing for examination;
- Further reduced scores in the Automated Target system (ATS); and
- Streamlined billing of any customs duties or fees.
DHS is to establish consequences (penalties, revocation, etc.) for a C-TPAT member's failure to meet C-TPAT standards, or the intentional submission of any misleading fact.
DHS is to conduct a pilot program to determine the extent to which third parties can be certified to conduct validations on behalf of CBP.
The Act would establish a process whereby the C-TPAT member would be re-validated every three years.
Additional Provisions to Strengthen Port Security
In addition to the provisions outlined above regarding C-TPAT, there are many provisions in the Bill designed to increase container and port security, including the following.
At present, shippers are required to submit certain information to DHS prior to the loading of cargo on vessels at foreign seaports. The Bill would increase the information that would need to be submitted for improving high-risk targeting.
DHS would be required to develop a plan to improve the ATS (Automated Targeting System) to identify high risk cargo, and to consider the following.
The cost and feasibility of
(a) requiring additional non-manifest documentation for each container;
(b) adjusting the time period allowed by law for revisions to a container cargo manifest;
(c) adjusting the time period allowed by law for submission of entry data for vessel or cargo; and
(d) such other actions as may be considered beneficial.
Standards for sealing containers: The Bill requires DHS to establish minimum standards and verification procedures in order to secure shipping containers in transit to the United States.
The Bill authorizes DHS to establish the Container Security Initiative (CSI), a program which is currently in effect. Thus, the Bill, in effect, codifies CSI.
EDI System: The Bill requires DHS to develop a secure electronic data information (EDI) system to collect and share information in order to assist securing the supply chain. DHS is to consult with the private sector and the Commercial Operations Advisory Committee (COAC).
H.R. 4954 would require DHS to conduct, within six months after date of enactment, a pilot project that is similar to the Integrated Container Inspection System (ICIS), which is being tested at the port of Hong Kong. Under ICIS, 100% of the containers undergo a gamma ray, optical character recognition, and radiation scanning. ICIS is consistent with the policy of pushing out the borders.
DHS is also to develop a program within one year to improve the security of empty containers.
The Bill would require the President to establish the International Trade Data System (ITDS), which would be a uniform system for the electronic collection and dissemination of security data.
The Bill would require DHS to issue a rule for regulations on the implementation of Transportation Security Cards, as set forth in 46 U.S.C. §70105. These cards would be issued to individuals at seaport facilities. DHS would also be required to compare each individual who has unescorted access to a secured area of a seaport facility against terrorist watch lists.
If you have any questions on any of the issues raised in this newsletter, please contact Steve Spraitzar at (415) 288-0427 or via email at firstname.lastname@example.org, or George R. Tuttle at (415) 288-0428 or via email at email@example.com.
Stephen Spraitzar and George R. Tuttle 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 © 2006 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.