```

[House Report 115-323]
[From the U.S. Government Publishing Office]

115th Congress }                                          { REPORT
                        HOUSE OF REPRESENTATIVES
 1st Session   }                                          { 115-323

======================================================================
 
                   C-TPAT REAUTHORIZATION ACT OF 2017

                                _______
                                

 September 25, 2017.--Committed to the Committee of the Whole House on 
            the State of the Union and ordered to be printed

                                _______
                                

  Mr. McCaul, from the Committee on Homeland Security, submitted the 
                               following

                              R E P O R T

                        [To accompany H.R. 3551]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Homeland Security, to whom was referred 
the bill (H.R. 3551) to amend the Security and Accountability 
for Every Port Act of 2006 to reauthorize the Customs-Trade 
Partnership Against Terrorism Program, and for other purposes, 
having considered the same, report favorably thereon with an 
amendment and recommend that the bill as amended do pass.

                                CONTENTS

                                                                   Page
Purpose and Summary..............................................     8
Background and Need for Legislation..............................     8
Hearings.........................................................     8
Committee Consideration..........................................     8
Committee Votes..................................................     9
Committee Oversight Findings.....................................     9
New Budget Authority, Entitlement Authority, and Tax Expenditures     9
Congressional Budget Office Estimate.............................     9
Statement of General Performance Goals and Objectives............    10
Duplicative Federal Programs.....................................    11
Congressional Earmarks, Limited Tax Benefits, and Limited Tariff 
  Benefits.......................................................    11
Federal Mandates Statement.......................................    11
Preemption Clarification.........................................    11
Disclosure of Directed Rule Makings..............................    11
Advisory Committee Statement.....................................    11
Applicability to Legislative Branch..............................    11
Section-by-Section Analysis of the Legislation...................    11
Changes in Existing Law Made by the Bill, as Reported............    18

    The amendment is as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``C-TPAT Reauthorization Act of 2017''.

SEC. 2. CUSTOMS-TRADE PARTNERSHIP AGAINST TERRORISM.

  (a) In General.--Subtitle B of title II of the Security and 
Accountability for Every Port Act of 2006 (6 U.S.C. 961 et seq.) is 
amended to read as follows:

       ``Subtitle B--Customs-Trade Partnership Against Terrorism

``SEC. 211. ESTABLISHMENT OF THE CUSTOMS-TRADE PARTNERSHIP AGAINST 
                    TERRORISM PROGRAM.

  ``(a) In General.--There is established within U.S. Customs and 
Border Protection a voluntary government-private sector partnership 
program to be known as the Customs-Trade Partnership Against Terrorism 
(C-TPAT).
  ``(b) Purpose.--The purposes of the C-TPAT program are to--
          ``(1) strengthen and improve the overall security of the 
        international supply chain and United States border security;
          ``(2) facilitate the movement of secure cargo through the 
        international supply chain;
          ``(3) ensure compliance with applicable law; and
          ``(4) serve as the Authorized Economic Operator program for 
        the United States.
  ``(c) Director.--There shall be at the head of the C-TPAT program a 
Director, who shall report to the Executive Assistant Commissioner of 
the Office of Field Operations (in this subtitle referred to as the 
`Executive Assistant Commissioner') of U.S. Customs and Border 
Protection.
  ``(d) Duties.--The Director of the C-TPAT program shall--
          ``(1) oversee the activities of the C-TPAT program, including 
        certification of C-TPAT participants;
          ``(2) evaluate and make revisions to security criteria 
        pursuant to subsections (c) and (d) of section 213;
          ``(3) ensure that participants receive a tangible and 
        measurable benefit for participation; and
          ``(4) carry out other duties and powers prescribed by the 
        Executive Assistant Commissioner.

``SEC. 212. ELIGIBLE ENTITIES AND NOTICE OF BENEFITS.

  ``(a) Eligible Entities.--Importers, exporters, customs brokers, 
forwarders, air, sea, and land carriers, contract logistics providers, 
and other entities in the international supply chain and intermodal 
transportation system are eligible to apply for participation in the C-
TPAT program.
  ``(b) Tiered Participation.--
          ``(1) In general.--Applicants may be eligible to participate 
        as Tier 1 or Tier 2 participants.
          ``(2) Importers.--Importers may be eligible to participate as 
        Tier 3 participants.
          ``(3) Extension.--The Executive Assistant Commissioner may, 
        in his or her discretion, extend Tier 3 participation to other 
        entity types, if appropriate.
  ``(c) Notice of Benefits.--
          ``(1) In general.--The Commissioner of U.S. Customs and 
        Border Protection shall publish, on the U.S. Customs and Border 
        Protection website and through other appropriate online 
        publication, information about benefits to C-TPAT program 
        participants.
          ``(2) Changes.--The Commissioner of U.S. Customs and Border 
        Protection shall publish, on the U.S. Customs and Border 
        Protection website and through other appropriate online 
        publication, notice of any changes to benefits to C-TPAT 
        program participants not later than 30 days before any such 
        changes take effect.

``SEC. 213. PARTICIPATION ELIGIBILITY.

  ``(a) In General.--The Executive Assistant Commissioner shall review 
all documentation submitted by an applicant pursuant to subsection 
(b)(2), conduct a background investigation of such applicant, and vet 
such applicant.
  ``(b) General Requirements.--To be eligible for participation in the 
C-TPAT program, an entity shall, at a minimum--
          ``(1) have a designated company employee authorized to bind 
        such entity that is a direct company employee and will serve as 
        the primary point of contact responsible for participation of 
        such entity in the C-TPAT program;
          ``(2) at the time of initial application and annually 
        thereafter, including in advance of any recertification or 
        revalidation, submit an international supply chain security 
        profile, which shall identify how such entity meets the minimum 
        security criteria of the C-TPAT program established by the 
        Commissioner of U.S. Customs and Border Protection and how such 
        entity will maintain and enhance internal policies, procedures, 
        and practices related to international supply chain security; 
        and
          ``(3) meet any specific requirements for eligible entities, 
        as established by the Commissioner.
  ``(c) Minimum Security Criteria.--The Commissioner of U.S. Customs 
and Border Protection shall establish minimum security criteria for 
participants in the C-TPAT program, review such minimum security 
criteria not less than once every two years, and update such minimum 
security criteria as necessary. Such minimum security criteria shall 
seek to address security vulnerabilities in the international supply 
chain.
  ``(d) Additional and Updated Criteria.--The Commissioner of U.S. 
Customs and Border Protection may establish additional and updated 
security criteria for individual C-TPAT program participants, 
categories of C-TPAT program participants, or particular entity types 
to meet in order to address a security vulnerability in the 
international supply chain.
  ``(e) Consultation.--When establishing or updating security criteria 
in accordance with subsection (c), and when establishing additional or 
updated security criteria in accordance subsection (d), the 
Commissioner of U.S. Customs and Border Protection shall consult with 
C-TPAT program participants and other interested parties, and shall--
          ``(1) conduct a cost benefit analysis of such proposed new, 
        additional, or updated security criteria in consultation with 
        the Commercial Customs Operations Advisory Committee 
        established under section 109 of the Trade Facilitation and 
        Trade Enforcement Act of 2015 (Public Law 114-125; 19 U.S.C. 
        4316);
          ``(2) determine operational feasibility and, where 
        appropriate, conduct a phased implementation of such proposed 
        additional or updated security criteria; and
          ``(3) provide C-TPAT program participants and other 
        interested parties a 90-day comment period to review and 
        comment on such proposed additional or updated security 
        criteria.
  ``(f) Waiver.--The Commissioner of U.S. Customs and Border Protection 
may waive the requirements of subsection (e) if the Commissioner 
determines there is a significant and imminent risk to the national 
security of the United States and such a waiver is necessary to protect 
such national security. Not later than 120 days after the issuance of 
any such waiver, the Commissioner shall announce on the U.S. Customs 
and Border Protection website and through other appropriate online 
publication the Commissioner's intent to either withdraw such waiver or 
maintain such waiver while commencing efforts to establish minimum 
security criteria or establish additional or update existing security 
criteria in accordance with subsection (c) or (d), respectively.

``SEC. 214. BENEFITS FOR C-TPAT PROGRAM PARTICIPANTS.

  ``(a) In General.--The Executive Assistant Commissioner shall extend 
certain benefits to each C-TPAT program participant. Minimum benefits 
for each such participant shall include the following:
          ``(1) Assignment of a U.S. Customs and Border Protection 
        Supply Chain Security Specialist.
          ``(2) Access to the C-TPAT program's web-based Portal system 
        and training materials.
          ``(3) A periodic and unclassified update on regional and 
        other relevant threats to the international supply chain.
  ``(b) Public Availability.--The Executive Assistant Commissioner 
shall make publicly available on the C-TPAT portal an annual assessment 
of the tangible benefits being realized by C-TPAT program participants.
  ``(c) Annual Assessment.--The Executive Assistant Commissioner shall 
conduct, on an annual basis, an assessment of the benefits conferred to 
C-TPAT program participants. The Executive Assistant Commissioner shall 
determine a process to carry out such assessments, to include projected 
milestones and completion dates for addressing data reliability issues 
and, as necessary, correcting data weaknesses, so that U.S. Customs and 
Border Protection can produce accurate and reliable annual assessments 
that can be compared year-to-year.

``SEC. 215. TIER 1 PARTICIPANTS.

  ``(a) Certification.--The Executive Assistant Commissioner shall 
certify the security measures and international supply chain security 
practices of all applicants to and participants in the C-TPAT program 
in accordance with section 213(b)(2) and the guidelines referred to in 
subsection (c) of this section. Certified participants shall be Tier 1 
participants.
  ``(b) Benefits for Tier 1 Participants.--Upon completion of the 
certification under subsection (a), a C-TPAT program participant shall 
be certified as a Tier 1 participant. The Executive Assistant 
Commissioner shall extend limited benefits to a Tier 1 participant.
  ``(c) Guidelines.--Not later than 180 days after the date of the 
enactment of this subtitle, the Commissioner of U.S. Customs and Border 
Protection shall update the guidelines and criteria for certifying a C-
TPAT program participant's security measures and supply chain security 
practices under this section. Such guidelines shall include a 
background investigation and review of appropriate documentation, as 
determined by the Commissioner.
  ``(d) Timeframe.--To the extent practicable, the Executive Assistant 
Commissioner shall complete the Tier 1 certification process within 90 
days of receipt of an application for participation in the C-TPAT 
program.

``SEC. 216. TIER 2 PARTICIPANTS.

  ``(a) Validation.--The Executive Assistant Commissioner shall 
validate the security measures and international supply chain security 
practices of a Tier 1 C-TPAT program participant in accordance with the 
guidelines referred to in subsection (c) to validate such participant 
as a Tier 2 participant. Such validation shall include on-site 
assessments at appropriate foreign and domestic locations utilized by 
such Tier 1 participant in its international supply chain.
  ``(b) Benefits for Tier 2 Participants.--The Executive Assistant 
Commissioner, shall extend benefits to each C-TPAT participant that has 
been validated as a Tier 2 participant under this section. Such 
benefits may include the following:
          ``(1) Reduced scores in U.S. Customs and Border Protection's 
        Automated Targeting System.
          ``(2) Reduced number of security examinations by U.S. Customs 
        and Border Protection.
          ``(3) Priority examinations of cargo.
          ``(4) Access to the Free and Secure Trade (FAST) Lanes at 
        United States ports of entry.
          ``(5) Recognition as a trusted trade partner by foreign 
        customs administrations that have signed Mutual Recognition 
        Arrangements with U.S. Customs and Border Protection.
          ``(6) In the case of importers, eligibility to participate in 
        the Importer Self-Assessment Program (ISA) or successor 
        compliance program.
  ``(c) Guidelines.--Not later than 180 days after the date of the 
enactment of this subtitle, the Commissioner shall develop a schedule 
and update the guidelines and criteria for validating a C-TPAT 
participant's security measures and supply chain security practices 
under this section.
  ``(d) Timeframe.--To the extent practicable, the Executive Assistant 
Commissioner shall complete the Tier 2 validation process for a C-TPAT 
program participant under this section within one year after 
certification of such participant as a Tier 1 participant.

``SEC. 217. TIER 3 PARTICIPANTS.

  ``(a) In General.--The Commissioner shall establish a third tier of 
C-TPAT program participation that offers additional benefits to C-TPAT 
program participants that are importers or other entity types, in 
accordance with section 212(b), that demonstrate a sustained commitment 
to maintaining security measures and international supply chain 
security practices that exceed the guidelines established for 
validation as a Tier 2 participant in the C-TPAT program under section 
216.
  ``(b) Best Practices.--The Executive Assistant Commissioner may 
designate a Tier 2 C-TPAT program participant as a Tier 3 participant 
based on a review of best practices in such participant's international 
supply chain that reflect a continued approach to enhanced 
international supply chain security, including--
          ``(1) compliance with any additional or updated criteria 
        established by the Commissioner of U.S. Customs and Border 
        Protection under section 213(d) that exceed the guidelines 
        established pursuant to section 216 for validating a C-TPAT 
        program participant as a Tier 2 participant; and
          ``(2) any other factors that the Executive Assistant 
        Commissioner determines appropriate.
  ``(c) Benefits for Tier 3 Participants.--The Executive Assistant 
Commissioner, in consultation with the Commercial Customs Operations 
Advisory Committee established under section 109 of the Trade 
Facilitation and Trade Enforcement Act of 2015 (Public Law 114-125; 19 
U.S.C. 4316) and the National Maritime Security Advisory Committee 
established under section 70112 of title 46, United States Code, shall 
extend benefits to each C-TPAT program participant that has been 
validated as a Tier 3 participant under this section, which may include 
the following:
          ``(1) Further reduction in the number of examinations by U.S. 
        Customs and Border Protection.
          ``(2) Front of the line inspections and examinations.
          ``(3) Exemption from Stratified Exams.
          ``(4) Shorter wait times at United States ports of entry.
          ``(5) Access to the Free and Secure Trade (FAST) Lanes at 
        United States ports of entry.
          ``(6) Recognition as a trusted trade partner by foreign 
        customs administrations that have signed Mutual Recognition 
        Arrangements with U.S. Customs and Border Protection.
          ``(7) In the case of importers, eligibility to participate in 
        the Importer Self-Assessment Program (ISA) or successor 
        compliance program.

``SEC. 218. CONSEQUENCES FOR LACK OF COMPLIANCE.

  ``(a) In General.--If at any time the Executive Assistant 
Commissioner determines that a C-TPAT program participant's security 
measures or international supply chain security practices fail to meet 
applicable requirements under this subtitle, the Executive Assistant 
Commissioner may deny such participant benefits otherwise made 
available pursuant to this subtitle, either in whole or in part. The 
Executive Assistant Commissioner shall develop procedures, in 
consultation with Commercial Customs Operations Advisory Committee, 
established under section 109 of the Trade Facilitation and Trade 
Enforcement Act of 2015 (Public Law 114-125; 19 U.S.C. 4316), that 
provide appropriate protections to C-TPAT program participants, 
including advance notice and an opportunity for such participants to 
provide additional information to U.S. Customs and Border Protection 
regarding any such alleged failure, before any of such benefits are 
withheld. Such procedures may not limit the ability of the Executive 
Assistant Commissioner to take actions to protect the national security 
of the United States.
  ``(b) False or Misleading Information; Lack of Compliance With Law.--
If a C-TPAT program participant knowingly provides false or misleading 
information to the Commissioner of U.S. Customs and Border Protection, 
the Executive Assistant Commissioner, or any other officers or 
officials of the United States Government, or if at any time the 
Executive Assistant Commissioner determines that a C-TPAT program 
participant has committed a serious violation of Federal law or customs 
regulations, or if a C-TPAT program participant has committed a 
criminal violation relating to the economic activity of such 
participant, the Executive Assistant Commissioner may suspend or expel 
such participant from the C-TPAT program for an appropriate period of 
time. The Executive Assistant Commissioner, after the completion of the 
process described in subsection (d), may publish in the Federal 
Register a list of C-TPAT program participants that have been so 
suspended or expelled from the C-TPAT program pursuant to this 
subsection.
  ``(c) National Security.--If at any time the Executive Assistant 
Commissioner determines that a C-TPAT program participant poses a 
significant and imminent risk to the national security of the United 
States or has committed a serious violation of Federal law or customs 
regulations, or if a C-TPAT program participant has committed a 
criminal violation relating to the economic activity of such 
participant, the Executive Assistant Commissioner may suspend or expel 
such participant from the C-TPAT program for an appropriate period of 
time. The Executive Assistant Commissioner, after the completion of the 
process described in subsection (d), may publish in the Federal 
Register a list of C-TPAT program participants that have been so 
suspended or expelled from the C-TPAT program pursuant to this 
subsection.
  ``(d) Right of Appeal.--
          ``(1) In general.--The Commissioner of U.S. Customs and 
        Border Protection shall establish a process for a C-TPAT 
        program participant to appeal a decision of the Executive 
        Assistant Commissioner under subsection (a). Such appeal shall 
        be filed with the Commissioner not later than 90 days after the 
        date of such decision, and the Commissioner shall issue a 
        determination not later than 90 days after such appeal is 
        filed.
          ``(2) Appeals of other decisions.--The Commissioner of U.S. 
        Customs and Border Protection shall establish a process for a 
        C-TPAT program participant to appeal a decision of the 
        Executive Assistant Commissioner under subsections (b) and (c). 
        Such appeal shall be filed with the Commissioner not later than 
        30 days after the date of such decision, and the Commissioner 
        shall issue a determination not later than 90 days after such 
        appeal is filed.

``SEC. 219. VALIDATIONS BY OTHER DHS COMPONENTS.

  ``(a) In General.--The Commissioner of U.S. Customs and Border 
Protection may recognize regulatory inspections conducted by other 
components of the Department of Homeland Security of entities as 
sufficient to constitute validation for C-TPAT program participation in 
cases in which any such component's inspection regime is harmonized 
with validation criteria for the C-TPAT program. Such regulatory 
inspections shall not limit the ability of U.S. Customs and Border 
Protection to conduct a C-TPAT program validation.
  ``(b) Revalidation.--Nothing in this section may limit the 
Commissioner of U.S. Customs and Border Protection's ability to require 
a revalidation by U.S. Customs and Border Protection.
  ``(c) Certification.--Nothing in this section may be construed to 
authorize certifications of C-TPAT applicants to be performed by any 
party other than U.S. Customs and Border Protection.

``SEC. 220. RECERTIFICATION AND REVALIDATION.

  ``(a) Recertification.--The Commissioner of U.S. Customs and Border 
Protection shall implement a recertification process for all C-TPAT 
program participants. Such process shall occur annually, and shall 
require--
          ``(1) a review of the security profile and supporting 
        documentation to ensure adherence to the minimum security 
        criteria under section 213; and
          ``(2) background checks and vetting.
  ``(b) Revalidation.--The Commissioner of U.S. Customs and Border 
Protection shall implement a revalidation process for all Tier 2 and 
Tier 3 C-TPAT program participants. Such process shall require--
          ``(1) a framework based upon objective, risk based criteria 
        for identifying participants for periodic revalidation at least 
        once every four years following the initial validation of such 
        participants;
          ``(2) on-site assessments at appropriate foreign and domestic 
        locations utilized by such a participant in its international 
        supply chain; and
          ``(3) an annual plan for revalidation that includes--
                  ``(A) performance measures;
                  ``(B) an assessment of the personnel needed to 
                perform such revalidations; and
                  ``(C) the number of participants that will be 
                revalidated during the following year.
  ``(c) Revalidation Under a Mutual Recognition Arrangement.--
          ``(1) In general.--Upon request from the Commissioner of U.S. 
        Customs and Border Protection, all Tier 2 and Tier 3 C-TPAT 
        program participants shall provide any revalidation report 
        conducted by a foreign government under a Mutual Recognition 
        Arrangement.
          ``(2) Recognition.--The Commissioner of U.S. Customs and 
        Border Protection may recognize revalidations of entities 
        conducted by foreign governments under a Mutual Recognition 
        Arrangement as sufficient to constitute a revalidation for C-
        TPAT program participation under subsection (b).
          ``(3) No limitation.--Nothing in this subsection may be 
        construed to limit the Commissioner of U.S. Customs and Border 
        Protection's ability to require a revalidation by U.S. Customs 
        and Border Protection.
  ``(d) Designated Company Employees.--Only designated company 
employees of a C-TPAT program participant under section 213(b)(1) are 
authorized to respond to a revalidation report. Third-party entities 
are not authorized to respond to a revalidation report.

``SEC. 221. NONCONTAINERIZED CARGO AND THIRD PARTY LOGISTICS PROVIDERS.

  ``The Commissioner of U.S. Customs and Border Protection shall 
consider the potential for participation in the C-TPAT program by 
importers of noncontainerized cargoes and non-asset-based third party 
logistics providers that otherwise meet the requirements under this 
subtitle.

``SEC. 222. PROGRAM MANAGEMENT.

  ``(a) In General.--The Commissioner of U.S. Customs and Border 
Protection shall establish sufficient internal quality controls and 
record management, including recordkeeping (including maintenance of a 
record management system in accordance with subsection (b)) and 
monitoring staff hours, to support the management systems of the C-TPAT 
program. In managing the C-TPAT program, the Commissioner shall ensure 
that the C-TPAT program includes the following:
          ``(1) A 5-year plan to identify outcome-based goals and 
        performance measures of the C-TPAT program.
          ``(2) An annual plan for each fiscal year designed to match 
        available resources to the projected workload.
          ``(3) A standardized work program to be used by agency 
        personnel to carry out the certifications, validations, 
        recertifications, and revalidations of C-TPAT program 
        participants.
          ``(4) In accordance with subsection (e), a standardized 
        process for the Executive Assistant Commissioner to receive 
        reports of suspicious activity, including reports regarding 
        potentially compromised cargo or other border or national 
        security concerns.
  ``(b) Documentation of Reviews.--
          ``(1) In general.--The Commissioner of U.S. Customs and 
        Border Protection shall maintain a record management system to 
        document determinations on the reviews of each C-TPAT program 
        participant, including certifications, validations, 
        recertifications, and revalidations.
          ``(2) Standardized procedures.--To ensure accuracy and 
        consistency within the record management system required under 
        this subsection, the Commissioner shall develop, disseminate, 
        and require utilization of standardized procedures for agency 
        personnel carrying out certifications, validations, 
        recertifications, and revalidations to report and track 
        information regarding the status of each C-TPAT program 
        participant.
  ``(c) Confidential Information Safeguards.--In consultation with the 
Commercial Customs Operations Advisory Committee established under 
section 109 of the Trade Facilitation and Trade Enforcement Act of 2015 
(Public Law 114-125; 19 U.S.C. 4316), the Commissioner of U.S. Customs 
and Border Protection shall develop and implement procedures to ensure 
the protection of confidential data collected, stored, or shared with 
government agencies or as part of the application, certification, 
validation, recertification, and revalidation processes.
  ``(d) Resource Management Staffing Plan.--The Commissioner of U.S. 
Customs and Border Protection shall--
          ``(1) develop a staffing plan to recruit and train staff 
        (including a formalized training program) to meet the 
        objectives identified in the 5-year strategic plan under 
        subsection (a)(1); and
          ``(2) provide cross-training in post incident trade 
        resumption for the C-TPAT Director and other relevant personnel 
        who administer the C-TPAT program.
  ``(e) Engagement.--In carrying out the standardized process required 
under subsection (a)(4), the Commissioner shall engage with and provide 
guidance to C-TPAT program participants and other appropriate 
stakeholders on submitting reports described in such subsection.
  ``(f) Report to Congress.--In connection with the President's annual 
budget submission for the Department of Homeland Security, the 
Commissioner of U.S. Customs and Border Protection shall report to the 
appropriate congressional committees on the progress made by the 
Commissioner to certify, validate, recertify, and revalidate C-TPAT 
program participants. Each such report shall be due on the same date 
that the President's budget is submitted to Congress.''.
  (b) Saving Clause.--
          (1) In general.--The amendments made by this Act shall take 
        effect and apply beginning on the date that is 30 days after 
        the date of the enactment of this Act with respect to 
        applicants for participation in the C-TPAT program.
          (2) Exception.--Paragraph (1) shall not apply in case of C-
        TPAT program participants who are such participants as of the 
        date specified in such paragraph. Such participants shall be 
        subject to the amendments made by this Act upon revalidation of 
        such participants to participate in such program. Until such 
        time, such participants shall be subject to the requirements of 
        the C-TPAT program as in existence on the day before the date 
        of the enactment of this Act.
  (c) Clerical Amendments.--The table of contents in section 1(b) of 
the Security and Accountability for Every Port Act of 2006 is amended 
by striking the items relating to subtitle B of title II and inserting 
the following new items:

       ``Subtitle B--Customs-Trade Partnership Against Terrorism

``Sec. 211. Establishment of the Customs-Trade Partnership Against 
Terrorism program.
``Sec. 212. Eligible entities and notice of benefits.
``Sec. 213. Participation eligibility.
``Sec. 214. Benefits for C-TPAT program participants.
``Sec. 215. Tier 1 participants.
``Sec. 216. Tier 2 participants.
``Sec. 217. Tier 3 participants.
``Sec. 218. Consequences for lack of compliance.
``Sec. 219. Validations by other DHS components.
``Sec. 220. Recertification and revalidation.
``Sec. 221. Noncontainerized cargo and third party logistics providers.
``Sec. 222. Program management.''.

                          Purpose and Summary

    H.R. 3551 reauthorizes the original Customs Trade 
Partnership Against Terrorism (C-TPAT) program to reflect 
current industry practices and threats to the global supply 
chain. This bill increases security partnerships with private 
industry by mandating that U.S. Customs and Border Protection 
(CBP) liaise with industry when implementing new or updated 
security criteria for participation. Moreover, this legislation 
codifies tangible and specific benefits to all participants at 
various stages of the CBP vetting and validation process, such 
as ensuring shorter wait times and fewer inspections at ports 
of entry in exchange for increasing security measures.

                  Background and Need for Legislation

    Established under the SAFE Port Act of 2006 (Pub. L. 109-
347), C-TPAT is CBP's flagship global supply chain security 
program.
    When a participant joins C-TPAT, they agree to work with 
CBP to protect the supply chain, identify security gaps, and 
implement specific security measures and best practices. 
Applicants must enhance security throughout their supply chain. 
Applicants undergo vetting by CBP and then a site visit to 
validate the implementation of security criteria in order to 
receive benefits, such as shorter wait times and fewer 
inspections at ports of entry.
    This bill reauthorizes the program for the first time in 11 
years to ensure that the program is ready to meet the dynamic 
threats currently facing the global supply chain, and that C-
TPAT participants receive tangible benefits for their 
partnership with CBP working toward a more secure supply chain.

                                Hearings

    No hearings were held on H.R. 3551 in the 115th Congress.

                        Committee Consideration

    The Committee met on September 7, 2017, to consider H.R. 
3551, and ordered the measure to be reported to the House with 
a favorable recommendation, as amended, by voice vote. The 
Committee took the following actions:
    The following amendments were offered:

 An Amendment in the Nature of a Substitute offered by Ms. 
McSally (#1); was AGREED TO, as amended, by voice vote.

 An en bloc amendment to the Amendment in the Nature of a 
Substitute offered by Ms. Barragan (#1A); was AGREED TO by 
voice vote.
     Consisting of the following amendments:
     Page 9, line 17, strike ``Agreements'' and insert 
``Arrangements''.
     Page 9, line 21, insert ``, or successor compliance program'' 
before the period.
     Page 12, line 5, strike ``Agreements'' and insert 
``Arrangements''.
     Page 12, line 14, strike ``any of the'' and insert ``applicable''.
     Page 13, line 2, strike ``revoked'' and insert ``withheld''.
     Page 15, line 16, insert ``, where such component's inspection 
regime is harmonized with validation criteria for the C-TPAT program'' 
before the period.

     Page 19, beginning line 8, insert the following: ``(4) A 
standardized process for the Executive Assistant Commissioner to 
receive reports of suspicious activity, including reports regarding 
potentially compromised cargo or other border or national security 
concerns. In carrying out this process, the Commissioner shall engage 
with and provide guidance to C-TPAT program participants and other 
appropriate stakeholders on submitting such reports.''.
     Page 19, line 13, insert the following after the period: ``To 
ensure accuracy and consistency within such record management system, 
the Commissioner shall develop, disseminate, and require utilization of 
standardized procedures for agency personnel carrying out 
certifications, validations, recertifications, and revalidations to 
report and track information regarding the status of each C-TPAT 
program participant.''.

 An en bloc amendment to the Amendment in the Nature of a 
Substitute offered by Mr. Correa (#1B); was AGREED TO by voice 
vote.
     Consisting of the following amendments:
     Page 3, line 22, strike ``or'' and insert ``and''.
     Page 4, line 3, strike ``or'' and insert ``and''.
     Page 5, line 13, strike ``each year'' and insert ``every two 
years''.
     Page 6, line 13, insert ``, where appropriate,'' after ``and''.
     Page 6, line 25, insert before the period the following: ``, but 
not later than 120 days after the issuance of any such waiver, the 
Commissioner shall announce on the U.S. Customs and Border Protection 
website and through other appropriate online publication the 
Commissioner's intent to either withdraw such waiver or maintain such 
waiver while commencing efforts to establish minimum security criteria 
or establish additional or update existing security criteria in 
accordance with subsection (c) or (d), respectively''.

     Page 7, beginning line 5, strike ``all such participants'' and 
insert ``each such participant''.
     Page 7, beginning line 8, strike ``to each participant''.
     Page 7, line 13, insert ``regional and other relevant'' before 
``threats''.
     Page 7, beginning line 18, insert the fa new subsection entitled 
"(c) Annual Assessment.''

                            Committee Votes

    Clause 3(b) of Rule XIII of the Rules of the House of 
Representatives requires the Committee to list the recorded 
votes on the motion to report legislation and amendments 
thereto.
    No recorded votes were requested during consideration of 
H.R. 3559.

                      Committee Oversight Findings

    Pursuant to clause 3(c)(1) of Rule XIII of the Rules of the 
House of Representatives, the Committee has held oversight 
hearings and made findings that are reflected in this report.

   New Budget Authority, Entitlement Authority, and Tax Expenditures

    In compliance with clause 3(c)(2) of Rule XIII of the Rules 
of the House of Representatives, the Committee finds that H.R. 
3551, the C-TPAT Reauthorization Act of 2017, would result in 
no new or increased budget authority, entitlement authority, or 
tax expenditures or revenues.

                  Congressional Budget Office Estimate

    The Committee adopts as its own the cost estimate prepared 
by the Director of the Congressional Budget Office pursuant to 
section 402 of the Congressional Budget Act of 1974.

                                     U.S. Congress,
                               Congressional Budget Office,
                                Washington, DC, September 22, 2017.
Hon. Michael McCaul,
Chairman, Committee on Homeland Security,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 3551, the C-TPAT 
Reauthorization Act of 2017.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Mark 
Grabowicz.
            Sincerely,
                                                Keith Hall,
                                                          Director.
    Enclosure.

H.R. 3551--C-TPAT Reauthorization Act of 2017

    Customs and Border Protection (CBP) in the Department of 
Homeland Security administers the Customs-Trade Partnership 
Against Terrorism (C-TPAT), a voluntary program that encourages 
entities involved in international trade to cooperate with CBP 
to strengthen international supply chains, improve border 
security, and facilitate the movement of secure cargo through 
the supply chain. H.R. 3551 would make several changes to the 
C-TPAT program, mostly related to the benefits provided to 
program participants such as importers and customs brokers. The 
authorization of appropriations for the program expired in 
2010. For fiscal year 2017, the Congress provided about $39 
million to operate the program.
    Based on an analysis of information from CBP, CBO estimates 
that implementing the bill would not significantly affect the 
cost to continue C-TPAT operations in future years at the 2017 
level.
    Enacting H.R. 3551 would not affect direct spending or 
revenues; therefore, pay-as-you-go procedures do not apply.
    CBO estimates that enacting H.R. 3551 would not increase 
net direct spending or on-budget deficits in any of the four 
consecutive 10-year periods beginning in 2028.
    H.R. 3551 contains no intergovernmental mandates as defined 
in the Unfunded Mandates Reform Act and would not affect the 
budgets of state, local, or tribal governments.
    The CBO staff contact for this estimate is Mark Grabowicz. 
The estimate was approved by H. Samuel Papenfuss, Deputy 
Assistant Director for Budget Analysis.

         Statement of General Performance Goals and Objectives

    Pursuant to clause 3(c)(4) of Rule XIII of the Rules of the 
House of Representatives, H.R. 3551 contains the following 
general performance goals and objectives, including outcome 
related goals and objectives authorized.
    The general performance goals and objectives of H.R. 3551 
are to reauthorize and update the current C-TPAT program to 
meet the dynamic threats of the global supply chain by 
codifying the current processes of the matured program, while 
providing industry tangible benefits for participation.

                      Duplicative Federal Programs

    Pursuant to clause 3(c) of Rule XIII, the Committee finds 
that H.R. 3551 does not contain any provision that establishes 
or reauthorizes a program known to be duplicative of another 
Federal program.

   Congressional Earmarks, Limited Tax Benefits, and Limited Tariff 
                                Benefits

    In compliance with Rule XXI of the Rules of the House of 
Representatives, this bill, as reported, contains no 
congressional earmarks, limited tax benefits, or limited tariff 
benefits as defined in clause 9(e), 9(f), or 9(g) of the Rule 
XXI.

                       Federal Mandates Statement

    The Committee adopts as its own the estimate of Federal 
mandates prepared by the Director of the Congressional Budget 
Office pursuant to section 423 of the Unfunded Mandates Reform 
Act.

                        Preemption Clarification

    In compliance with section 423 of the Congressional Budget 
Act of 1974, requiring the report of any Committee on a bill or 
joint resolution to include a statement on the extent to which 
the bill or joint resolution is intended to preempt State, 
local, or Tribal law, the Committee finds that H.R. 3551 does 
not preempt any State, local, or Tribal law.

                  Disclosure of Directed Rule Makings

    The Committee estimates that H.R. 3551 would require no 
directed rule makings.

                      Advisory Committee Statement

    No advisory committees within the meaning of section 5(b) 
of the Federal Advisory Committee Act were created by this 
legislation.

                  Applicability to Legislative Branch

    The Committee finds that the legislation does not relate to 
the terms and conditions of employment or access to public 
services or accommodations within the meaning of section 
102(b)(3) of the Congressional Accountability Act.

             Section-by-Section Analysis of the Legislation

Section 1.   Short Title.

    This section provides that this bill may be cited as the 
``C-TPAT Reauthorization Act of 2017''.

Sec. 2.   Customs-Trade Partnership Against Terrorism.

    This section amends Subtitle B of title II of the Security 
and Accountability for Every Port Act of 2006 to include the 
following:
            Sec. 211.   Establishment of the Customs-Trade Partnership 
                    Against Terrorism Program.
    This section establishes C-TPAT to strengthen and improve 
the overall security of the international supply chain and 
United States border security while expediting the flow of 
secure cargo through the international supply chain.
    Additionally, this section establishes the formal duties of 
the Director and makes C-TPAT the Authorized Economic Operator 
(AEO) for the United States. The Director shall report to the 
Executive Assistant Commissioner (EAC) of the Office of Field 
Operations and oversee the activities of the C-TPAT program. 
The Director is also responsible for establishing the minimum-
security criteria necessary for participation and ensure that 
participants receive tangible benefits for participation in the 
program.
    The Committee believes that the C-TPAT program should have 
a formal Director who is given appropriate authority to 
effectively manage the program, establish and implement 
necessary security criteria, conduct oversight of participants, 
and ensure that participants are receiving tangible benefits. 
The Committee strongly believes that C-TPAT must be a true 
security partnership between private industry and CBP. 
Additionally, it is critical that C-TPAT be designated as the 
AEO for the United States to give CBP the ability to grow their 
trusted trader program with both a security and customs 
compliance element, similar to other international programs.
            Sec. 212.   Eligible Entities and Notice of Benefits.
    This section lists the entities that are eligible for C-
TPAT participation. Those entities are importers, exporters, 
customs brokers, forwarders, air, sea, and land carriers, and 
contract logistics providers.
    Additionally, this section establishes the tiered system of 
benefits into which C-TPAT participants fall based on their 
adherence to security requirements, and directs the 
Commissioner of CBP to publish the benefits available to C-TPAT 
participants on the CBP website as well as notice any changes 
to benefits not later than 30 days after they take effect.
    The Committee believes that C-TPAT is a highly effective 
and widely recognized cargo security program that greatly 
increases both the security and efficiency of the international 
supply chain. As such, as many entities as possible should be 
eligible for participation in C-TPAT so long as they can make 
valuable contributions to the security of the international 
supply chain.
    In exchange for implementing security criteria, the 
Committee believes that participants must receive a measurable 
reduction in wait times, inspections, or other benefits and 
that CBP be as transparent as possible about any changes to 
benefits.
            Sec. 213.   Participation Eligibility.
    In order to participate in C-TPAT, each eligible entity 
must have a designated company employee who will serve as the 
liaison between CBP and the entity and act as the primary cargo 
security officer. Each entity must also submit an international 
supply chain security profile at the time of the initial 
application to C-TPAT, and annually thereafter, to be vetted by 
CBP.
    This section also directs the Commissioner to establish 
minimum security criteria that each C-TPAT participant will 
have to implement to receive benefits. The criteria must be 
reviewed at least once every 2 years by CBP, and prior to 
establishing, updating, or adding minimum-security criteria, 
CBP must:
       Conduct a cost-benefit analysis with the Commercial 
        Customs Operations Advisory Committee;
       Determine operational feasibility and conduct a phased 
        implementation; and
       Provide C-TPAT participants a 90-day comment period.
    The Committee is concerned that under prior law, third-
party security consultants could sign a certification, 
validation, recertification, or revalidation report from CBP 
and manage a company's participation in the program. The 
Committee believes that a participant must be held solely 
accountable for implementing their security criteria and 
managing their participation in the C-TPAT program. In order to 
accomplish this, the Committee believes that it is critical 
that each participant have a designated employee that is not a 
third-party consultant or contractor, to bind the company in 
any agreement with CBP and hold the participant directly 
accountable for the management of their C-TPAT participation. 
Such employee need not be an officer of a participating 
company, only an employee empowered to act on the company's 
behalf for the purposes of the CTPAT program.
    Additionally, the Committee believes that when implementing 
new, additional, or updated security criteria, CBP must do so 
judiciously and have an open dialog with private industry given 
the potential economic cost for participants when implementing 
various security measures mandated by CBP.
    The Committee believes that the waiver provided in section 
213 is limited both temporally and in scope, and may only be 
used under extraordinary circumstances that constitute, ``a 
significant and imminent risk to national security of the 
United States.'' Further, the Committee included the 
requirement that, not later than 120 days after the issuance of 
such a waiver, the Commissioner must inform stakeholders on 
whether conditions have changed and the waiver is no longer 
necessary or maintain the waiver and begin the process of 
engaging with stakeholders about revisions to security 
criteria. This notification requirement seeks to maintain CBP's 
flexibility to address urgent threats while preserving the 
integrity of the consultation process that is at the heart of 
this public-private program.
            Sec. 214.   Benefits for C-TPAT Program Participants.
    This section directs the Commissioner to extend a minimum 
set of tangible benefits to those who choose to participate in 
C-TPAT by providing all participants access to a CBP Supply 
Chain Security Specialist, access to the C-TPAT web based 
portal, and a periodic update on threats to the global supply 
chain.
    The Committee believes that certain benefits must confer to 
all C-TPAT participants regardless of tier status in order to 
effectively manage the program and foster the security 
partnership between private industry and CBP.
    Moreover, because the Committee believes that private 
entities that voluntarily participate in this program, in 
particular those that opt to exceed minimum security 
requirements, should realize tangible benefits, the Committee 
also believes that CBP must develop a process to maintain 
reliable data about the benefits conferred to participants. 
Early in 2017, the Government Accountability Office found that 
CBP's data was not sufficiently consistent or reliable to track 
and measure participant benefits. For this reason, this section 
requires CBP to address data reliability issues and assess on 
an annual basis the benefits conferred to C-TPAT participants.
            Sec. 215.   Tier 1 Participants.
    This section establishes the first of three tiers of 
benefits for C-TPAT participants. Tier 1 participants are those 
who have completed the application process for C-TPAT and have 
passed the CBP vetting process and background checks, but have 
not had a site visit from CBP. This is known as 
``certification.'' Tier 1 participants receive limited benefits 
since CBP has not had the opportunity to conduct a thorough 
site visit. The Commissioner is directed to complete the 
vetting process and background checks within 90 days of 
receiving an application to participate in C-TPAT.
    The Committee believes that those participants who have not 
yet had a site visit from CBP should be given limited benefits 
until a site visit validation is conducted. Further, the 
Committee believes that CBP must move expeditiously to complete 
such site visits so that participants can be eligible for more 
substantial benefits outlined in the subsequent provisions.
            Sec. 216.   Tier 2 Participants.
    This section establishes the process for becoming a Tier 2 
participant and the associated benefits. A participant becomes 
Tier 2 after completing the Tier 1 ``certification'' process of 
being vetted and after successfully passing a site visit 
conducted by CBP on all domestic and international locations 
utilized by the participant. This site visit process is known 
as ``validation.''
    Tier 2 benefits include:
       Reduced scores in CBP's Automated Targeting System;
       Reduced number of examinations of cargo;
       Priority examinations of cargo;
       Access to the Free and Secure Trade (FAST) lanes at 
        United States ports of entry;
       Recognition as a trusted trade partner by foreign 
        customs administrations that have signed Mutual 
        Recognition Arrangements with CBP; and
       Eligibility to participate in the Importer Self-
        Assessment Program (ISA) or future compliance programs.
    The Commissioner is directed to complete the Tier 2 site 
visit known as ``validation'' no later than 1 year after the 
initial ``certification'' as a Tier 1 participant.
    The Committee believes that participants who have had a 
site visit validation from CBP have been thoroughly vetted by 
CBP and should be eligible for tangible and measurable benefits 
that have a positive impact on their ability to move cargo more 
expeditiously through the international supply chain.
            Sec. 217.   Tier 3 Participants.
    This section establishes the highest tier of C-TPAT 
participation for entities who have demonstrated a consistent, 
and innovative approach to upholding the highest levels of 
security in their international supply chain. Benefits for Tier 
3 participants include:
       Further reduction in the number of examinations by CBP;
       Front of the line secondary inspections and 
        examinations;
       Exemption from Stratified Exams;
       Shorter wait times at United States ports of entry;
       Access to the Free and Secure Trade (FAST) Lanes at 
        United States ports of entry;
       Recognition as a trusted trade partner by foreign 
        customs administrations that have signed Mutual 
        Recognition Arrangements with CBP;
       Eligibility for other U.S. Government pilot programs, 
        such as the Food and Drug Administration's Secure 
        Supply Chain program; and
       Eligibility to participate in the Importer Self-
        Assessment Program (ISA), or future compliance program.
    The Committee believes that the most generous set of 
benefits, outlined in this section, should be reserved for 
those participants who have demonstrated a sustained commitment 
to the security of their supply chain and seek innovative ways 
to continually improve their security posture.
            Sec. 218.   Consequences For Lack of Compliance.
    This section allows the EAC to deny benefits to a 
participant for failing to uphold the integrity of the security 
of their international supply chain or meet the minimum-
security criteria. Prior to denying benefits, the EAC must 
develop procedures in consultation with the Commercial Customs 
Advisory Committee that provide appropriate protections to 
participants, give advance notice to the participant, and allow 
the participant to submit additional or mitigating information 
to CBP.
    Additionally, if a participant knowingly submits false or 
misleading information to CBP or fails to comply with the law, 
the EAC may expel or suspend the participant from C-TPAT for as 
long as deemed necessary. The EAC may also suspend or expel a 
participant from C-TPAT if the EAC determines that the 
participant poses an imminent threat to the national security 
of the United States.
    Participants have the right to appeal the decision of the 
EAC to the Commissioner not later than 90 days after a decision 
and the Commissioner must issue a determination on the appeal 
no later than 90 days after the appeal is filed.
    The Committee believes that C-TPAT participation is a 
privilege and that if a participant fails to comply with an 
agreement pursuant to this Act, that CBP retains the right to 
withhold benefits or expel a participant until they meet the 
standards of the program. Additionally, expulsion from the 
program should generally be reserved for participants who 
knowingly attempt to mislead or provide false information to 
CBP in order to gain, or continue to enjoy, C-TPAT benefits. 
However, the withholding of benefits or expulsion from the 
program carry real economic consequences for participants, 
therefore, participants must also be afforded adequate due 
process. This includes the ability to repeal the decision of 
the EAC in a timely manner and provide mitigating or 
information to CBP in the course of the proceedings.
    The Committee recognizes that C-TPAT is a voluntary program 
and appreciates those partners willing to be certified and 
validated in order to help secure the global supply chain. 
However, the Committee strongly believes that expulsion from 
the program should only take place for ``serious violations,'' 
or other criminal activity. The publication of the names of 
companies that are suspended or expelled from the program in 
the Federal Register, as is CBP's current practice, may have 
economic and reputational ramifications. The Committee strongly 
believes that CBP should not publish suspended participants 
until the 90-day process outlined in subsection (d) has been 
completed. As such, the Committee encourages CBP to be 
judicious in its use of the authority provided in this section.
            Sec. 219.   Validations By Other DHS Components.
    This section allows other components of DHS to complete the 
validation site visits but gives CBP the authority to conduct 
its own validation site visit if deemed necessary. Other 
components of DHS are not permitted to conduct the 
certification vetting and background checks associated with an 
initial application to C-TPAT.
    The Committee believes that other DHS components who 
conduct inspections based on a similar security regimes to C-
TPAT should be leveraged to decrease the workload of CBP 
validation site visits if another component is already 
conducting a site visit inspection for a similar regulatory 
program. For example, the Committee believes that the Maritime 
Transportation Security Act (MTSA) facility inspection 
conducted by the United States Coast Guard could be sufficient 
to constitute a validation for C-TPAT participation as both a 
C-TPAT validation by CBP and a MSTA inspection conducted by the 
Coast Guard assess the security measures implemented by a 
facility.
    Although the Committee intends this provision as a means to 
reduce duplicative inspections of the same facility, the 
Committee strongly believes that CBP retains the responsibility 
for conducting the initial background checks and vetting 
associated with C-TPAT certification. Moreover, CBP can and 
should continue to validate program participants, if for any 
reason, another inspection regime with the Department is not 
harmonized with the requirements of the C-TPAT program.
            Sec. 220.   Recertification and Revalidation.
    This section establishes procedures for the recertification 
and revalidation of C-TPAT participants. Participants must be 
recertified annually by having their security profile reviewed 
by CBP and undergoing recurring background checks and vetting.
    Participants must be revalidated every 4 years. 
Revalidation must include an onsite assessment at appropriate 
foreign and domestic locations in a participant's international 
supply chain. These site visits should be prioritized by risk 
based factors such as volume of trade, origin, route, and 
commodity The Commissioner must develop an annual plan for 
revalidation that includes an assessment of the number of CBP 
personnel needed to complete the revalidations, performance 
measures, and the number of participants that will be 
revalidated during the following year.
    Revalidations conducted by a foreign government under a 
Mutual Recognition Arrangement may satisfy the requirement for 
a CBP revalidation every 4 years.
    The Committee believes that regular follow-up site visits 
are critical to ensuring that participants are implementing 
security measures correctly and that CBP must establish a 
viable plan to complete revalidations for thousands of 
participants with supply chain locations around the globe. 
Additionally, the Committee believes that CBP can reduce this 
workload by leveraging site visits conducted by foreign 
governments who are already partnering with the United States 
under comparable supply chain security programs.
            Sec. 221.   Noncontainerized Cargo and Third Party 
                    Logistics Providers.
    This section directs the Commissioner to consider the 
participation of importers of noncontainerized cargo and non-
asset-based third party logistic providers in C-TPAT.
    The Committee believes that C-TPAT participation should be 
available to as many supply chain entities as possible, 
provided they can contribute to the security of the 
international supply chain and meet the requirements of the 
program. As such, the Committee intends for CBP to consider the 
participation of noncontainerized cargo and non-asset based, 
third-party logistics providers as eligible entities if they 
demonstrate that they can make valuable contributions to the 
security of the international supply chain and comply with the 
requirements of this Act. The Committee expects such 
consideration will result in the addition of participants in 
these categories.
            Sec. 222.   Program Management.
    This section directs the Commissioner to establish 
sufficient internal quality controls and records management for 
the C-TPAT program. The program must include:
       A 5-year plan to identify outcome-based goals and 
        performance measures of the C-TPAT program;
       An annual plan for each Fiscal Year designed to match 
        available resources to the projected workload;
       A standardized work program to be used by agency 
        personnel to carry out the certifications, validations, 
        recertifications, and revalidations of C-TPAT program 
        participants;
       Additionally, the Commissioner must develop a staffing 
        plan to recruit and train staff to meet the needs of 
        the 5-year plan and provide cross-training in post-
        incident trade resumption for the C-TPAT director and 
        other staff who administer the C-TPAT program;
       The Commissioner must report to the appropriate 
        congressional Committees on the progress made to 
        certify, validate, recertify, and revalidate 
        participants. This report is due the same date the 
        President submits the budget to Congress; and
       A standardized process for the EAC to receive reports 
        of suspicious activity, to include reports of 
        potentially compromised cargo or other national 
        security concerns, as well as the requisite outreach 
        and guidance to program participants and stakeholder on 
        how to submit these types of reports.
    The Committee believes that the management of the C-TPAT 
program is incredibly complex given the variety of 
international supply chain locations, entity types, and sheer 
number of participants. Given the national security 
ramifications of program mismanagement, CBP must have a viable 
plan to sustain the C-TPAT program and ensure its employees are 
well trained and that the security standards of the program are 
being upheld by participants in accordance with this Act. The 
Committee believes that the broad latitude given to CBP to 
manage the program must be accompanied by an appropriate level 
of congressional oversight.

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italics, and existing law in which no 
change is proposed is shown in roman):

         SECURITY AND ACCOUNTABILITY FOR EVERY PORT ACT OF 2006

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

  (a) Short Title.--This Act may be cited as the ``Security and 
Accountability For Every Port Act of 2006'' or the ``SAFE Port 
Act''.
  (b) Table of Contents.--The table of contents for this Act is 
as follows:

Sec. 1. Short title; table of contents.
Sec. 2. Definitions.

               TITLE I--SECURITY OF UNITED STATES SEAPORTS

                     Subtitle A--General Provisions

Sec. 101. Area Maritime Transportation Security Plan to include salvage 
          response plan.
Sec. 102. Requirements relating to maritime facility security plans.
Sec. 103. Unannounced inspections of maritime facilities.
Sec. 104. Transportation security card.
Sec. 105. Study to identify redundant background records checks.
Sec. 106. Prohibition of issuance of transportation security cards to 
          persons convicted of certain felonies.
Sec. 107. Long-range vessel tracking.
Sec. 108. Establishment of interagency operational centers for port 
          security.
Sec. 109. Notice of arrival for foreign vessels on the Outer Continental 
          Shelf.
Sec. 110. Enhanced crewmember identification.

    Subtitle B--Port Security Grants; Training and Exercise Programs

Sec. 111. Risk assessment tool.
Sec. 112. Port security grants.
Sec. 113. Port Security Training Program.
Sec. 114. Port Security Exercise Program.
Sec. 115. Facility exercise requirements.

                       Subtitle C--Port Operations

Sec. 121. Domestic radiation detection and imaging.
Sec. 122. Inspection of car ferries entering from abroad.
Sec. 123. Random searches of containers.
Sec. 124. Work stoppages and employee-employer disputes.
Sec. 125. Threat assessment screening of port truck drivers.
Sec. 126. Border Patrol unit for United States Virgin Islands.
Sec. 127. Report on arrival and departure manifests for certain 
          commercial vessels in the United States Virgin Islands.
Sec. 128. Center of Excellence for Maritime Domain Awareness.

          TITLE II--SECURITY OF THE INTERNATIONAL SUPPLY CHAIN

                     Subtitle A--General Provisions

Sec. 201. Strategic plan to enhance the security of the international 
          supply chain.
Sec. 202. Post-incident resumption of trade.
Sec. 203. Automated Targeting System.
Sec. 204. Container security standards and procedures.
Sec. 205. Container Security Initiative.

        [Subtitle B--Customs-Trade Partnership Against Terrorism

[Sec. 211. Establishment.
[Sec. 212. Eligible entities.
[Sec. 213. Minimum requirements.
[Sec. 214. Tier 1 participants in C-TPAT.
[Sec. 215. Tier 2 participants in C-TPAT.
[Sec. 216. Tier 3 participants in C-TPAT.
[Sec. 217. Consequences for lack of compliance.
[Sec. 218. Third party validations.
[Sec. 219. Revalidation.
[Sec. 220. Noncontainerized cargo.
[Sec. 221. C-TPAT program management.
[Sec. 222. Additional personnel.
[Sec. 223. Authorization of appropriations.]

         Subtitle B--Customs-Trade Partnership Against Terrorism

Sec. 211. Establishment of the Customs-Trade Partnership Against 
          Terrorism program.
Sec. 212. Eligible entities and notice of benefits.
Sec. 213. Participation eligibility.
Sec. 214. Benefits for C-TPAT program participants.
Sec. 215. Tier 1 participants.
Sec. 216. Tier 2 participants.
Sec. 217. Tier 3 participants.
Sec. 218. Consequences for lack of compliance.
Sec. 219. Validations by other DHS components.
Sec. 220. Recertification and revalidation.
Sec. 221. Noncontainerized cargo and third party logistics providers.
Sec. 222. Program management.

                  Subtitle C--Miscellaneous Provisions

Sec. 231. Pilot integrated scanning system.
Sec. 232. Screening and scanning of cargo containers.
Sec. 233. International cooperation and coordination.
Sec. 234. Foreign port assessments.
Sec. 235. Pilot program to improve the security of empty containers.
Sec. 236. Information sharing relating to supply chain security 
          cooperation.

                        TITLE III--ADMINISTRATION

Sec. 301. Office of Cargo Security Policy.
Sec. 302. Reauthorization of Homeland Security Science and Technology 
          Advisory Committee.
Sec. 303. Research, development, test, and evaluation efforts in 
          furtherance of maritime and cargo security.

                TITLE IV--AGENCY RESOURCES AND OVERSIGHT

Sec. 401. Trade and customs revenue functions of the department.
Sec. 402. Office of international trade; oversight.
Sec. 403. Resources.
Sec. 404. Negotiations.
Sec. 405. International Trade Data System.
Sec. 406. In-bond cargo.
Sec. 407. Sense of the Senate.

               TITLE V--DOMESTIC NUCLEAR DETECTION OFFICE

Sec. 501. Establishment of Domestic Nuclear Detection Office.
Sec. 502. Technology research and development investment strategy for 
          nuclear and radiological detection.

               TITLE VI--COMMERCIAL MOBILE SERVICE ALERTS

Sec. 601. Short title.
Sec. 602. Federal Communications Commission duties.
Sec. 603. Commercial Mobile Service Alert Advisory Committee.
Sec. 604. Research and development.
Sec. 605. Grant program for remote community alert systems.
Sec. 606. Funding.
Sec. 607. Essential services disaster assistance.
Sec. 608. Community disaster loans.
Sec. 609. Public facilities.
Sec. 610. Expedited payments.
Sec. 611. Use of local contracting.
Sec. 612. FEMA programs.
Sec. 613. Homeland security definition.

                        TITLE VII--OTHER MATTERS

Sec. 701. Security plan for essential air service and small community 
          airports.
Sec. 702. Disclosures regarding homeland security grants.
Sec. 703. Trucking security.
Sec. 704. Air and Marine Operations of the Northern Border Air Wing.
Sec. 705. Phaseout of vessels supporting oil and gas development.
Sec. 706. Coast Guard property in Portland, Maine.
Sec. 707. Methamphetamine and methamphetamine precursor chemicals.
Sec. 708. Aircraft charter customer and lessee prescreening program.
Sec. 709. Protection of health and safety during disasters.

           TITLE VIII--UNLAWFUL INTERNET GAMBLING ENFORCEMENT

Sec. 801. Short title.
Sec. 802. Prohibition on acceptance of any payment instrument for 
          unlawful Internet gambling.
Sec. 803. Internet gambling in or through foreign jurisdictions.

           *       *       *       *       *       *       *

TITLE II--SECURITY OF THE INTERNATIONAL SUPPLY CHAIN

           *       *       *       *       *       *       *

        [Subtitle B--Customs-Trade Partnership Against Terrorism

[SEC. 211. ESTABLISHMENT.

  [(a) Establishment.--The Secretary, acting through the 
Commissioner, is authorized to establish a voluntary 
government-private sector program (to be known as the 
``Customs-Trade Partnership Against Terrorism'' or ``C-TPAT'') 
to strengthen and improve the overall security of the 
international supply chain and United States border security, 
and to facilitate the movement of secure cargo through the 
international supply chain, by providing benefits to 
participants meeting or exceeding the program requirements. 
Participants in C-TPAT shall include Tier 1 participants, Tier 
2 participants, and Tier 3 participants.
  [(b) Minimum Security Requirements.--The Secretary, acting 
through the Commissioner, shall review the minimum security 
requirements of C-TPAT at least once every year and update such 
requirements as necessary.

[SEC. 212. ELIGIBLE ENTITIES.

  [Importers, customs brokers, forwarders, air, sea, land 
carriers, contract logistics providers, and other entities in 
the international supply chain and intermodal transportation 
system are eligible to apply to voluntarily enter into 
partnerships with the Department under C-TPAT.

[SEC. 213. MINIMUM REQUIREMENTS.

  [An applicant seeking to participate in C-TPAT shall--
          [(1) demonstrate a history of moving cargo in the 
        international supply chain;
          [(2) conduct an assessment of its supply chain based 
        upon security criteria established by the Secretary, 
        acting through the Commissioner, including--
                  [(A) business partner requirements;
                  [(B) container security;
                  [(C) physical security and access controls;
                  [(D) personnel security;
                  [(E) procedural security;
                  [(F) security training and threat awareness; 
                and
                  [(G) information technology security;
          [(3) implement and maintain security measures and 
        supply chain security practices meeting security 
        criteria established by the Commissioner; and
          [(4) meet all other requirements established by the 
        Commissioner, in consultation with the Commercial 
        Operations Advisory Committee.

[SEC. 214. TIER 1 PARTICIPANTS IN C-TPAT.

  [(a) Benefits.--The Secretary, acting through the 
Commissioner, shall offer limited benefits to a Tier 1 
participant who has been certified in accordance with the 
guidelines referred to in subsection (b). Such benefits may 
include a reduction in the score assigned pursuant to the 
Automated Targeting System of not greater than 20 percent of 
the high-risk threshold established by the Secretary.
  [(b) Guidelines.--Not later than 180 days after the date of 
the enactment of this Act, the Secretary, acting through the 
Commissioner, shall update the guidelines for certifying a C-
TPAT participant's security measures and supply chain security 
practices under this section. Such guidelines shall include a 
background investigation and extensive documentation review.
  [(c) Timeframe.--To the extent practicable, the Secretary, 
acting through the Commissioner, shall complete the Tier 1 
certification process within 90 days of receipt of an 
application for participation in C-TPAT.

[SEC. 215. TIER 2 PARTICIPANTS IN C-TPAT.

  [(a) Validation.--The Secretary, acting through the 
Commissioner, shall validate the security measures and supply 
chain security practices of a Tier 1 participant in accordance 
with the guidelines referred to in subsection (c). Such 
validation shall include on-site assessments at appropriate 
foreign locations utilized by the Tier 1 participant in its 
supply chain and shall, to the extent practicable, be completed 
not later than 1 year after certification as a Tier 1 
participant.
  [(b) Benefits.--The Secretary, acting through the 
Commissioner, shall extend benefits to each C-TPAT participant 
that has been validated as a Tier 2 participant under this 
section, which may include--
          [(1) reduced scores in the Automated Targeting 
        System;
          [(2) reduced examinations of cargo; and
          [(3) priority searches of cargo.
  [(c) Guidelines.--Not later than 180 days after the date of 
the enactment of this Act, the Secretary, acting through the 
Commissioner, shall develop a schedule and update the 
guidelines for validating a participant's security measures and 
supply chain security practices under this section.

[SEC. 216. TIER 3 PARTICIPANTS IN C-TPAT.

  [(a) In general.--The Secretary, acting through the 
Commissioner, shall establish a third tier of C-TPAT 
participation that offers additional benefits to participants 
who demonstrate a sustained commitment to maintaining security 
measures and supply chain security practices that exceed the 
guidelines established for validation as a Tier 2 participant 
in C-TPAT under section 215.
  [(b) Criteria.--The Secretary, acting through the 
Commissioner, shall designate criteria for validating a C-TPAT 
participant as a Tier 3 participant under this section. Such 
criteria may include--
          [(1) compliance with any additional guidelines 
        established by the Secretary that exceed the guidelines 
        established pursuant to section 215 of this Act for 
        validating a C-TPAT participant as a Tier 2 
        participant, particularly with respect to controls over 
        access to cargo throughout the supply chain;
          [(2) submission of additional information regarding 
        cargo prior to loading, as determined by the Secretary;
          [(3) utilization of container security devices, 
        technologies, policies, or practices that meet 
        standards and criteria established by the Secretary; 
        and
          [(4) compliance with any other cargo requirements 
        established by the Secretary.
  [(c) Benefits.--The Secretary, acting through the 
Commissioner, in consultation with the Commercial Operations 
Advisory Committee and the National Maritime Security Advisory 
Committee, shall extend benefits to each C-TPAT participant 
that has been validated as a Tier 3 participant under this 
section, which may include--
          [(1) the expedited release of a Tier 3 participant's 
        cargo in destination ports within the United States 
        during all threat levels designated by the Secretary;
          [(2) further reduction in examinations of cargo;
          [(3) priority for examinations of cargo; and
          [(4) further reduction in the risk score assigned 
        pursuant to the Automated Targeting System; and
          [(5) inclusion in joint incident management 
        exercises, as appropriate.
  [(d) Deadline.--Not later than 2 years after the date of the 
enactment of this Act, the Secretary, acting through the 
Commissioner, shall designate appropriate criteria pursuant to 
subsection (b) and provide benefits to validated Tier 3 
participants pursuant to subsection (c).

[SEC. 217. CONSEQUENCES FOR LACK OF COMPLIANCE.

  [(a) In general.--If at any time a C-TPAT participant's 
security measures and supply chain security practices fail to 
meet any of the requirements under this subtitle, the 
Commissioner may deny the participant benefits otherwise 
available under this subtitle, in whole or in part. The 
Commissioner shall develop procedures that provide appropriate 
protections to C-TPAT participants before benefits are revoked. 
Such procedures may not limit the ability of the Commissioner 
to take actions to protect the national security of the United 
States.
  [(b) False or Misleading Information.--If a C-TPAT 
participant knowingly provides false or misleading information 
to the Commissioner during the validation process provided for 
under this subtitle, the Commissioner shall suspend or expel 
the participant from C-TPAT for an appropriate period of time. 
The Commissioner, after the completion of the process under 
subsection (c), may publish in the Federal Register a list of 
participants who have been suspended or expelled from C-TPAT 
pursuant to this subsection, and may make such list available 
to C-TPAT participants.
  [(c) Right of Appeal.--
          [(1) In general.--A C-TPAT participant may appeal a 
        decision of the Commissioner pursuant to subsection 
        (a). Such appeal shall be filed with the Secretary not 
        later than 90 days after the date of the decision, and 
        the Secretary shall issue a determination not later 
        than 180 days after the appeal is filed.
          [(2) Appeals of other decisions.--A C-TPAT 
        participant may appeal a decision of the Commissioner 
        pursuant to subsection (b). Such appeal shall be filed 
        with the Secretary not later than 30 days after the 
        date of the decision, and the Secretary shall issue a 
        determination not later than 180 days after the appeal 
        is filed.

[SEC. 218. THIRD PARTY VALIDATIONS.

  [(a) Plan.--The Secretary, acting through the Commissioner, 
shall develop a plan to implement a 1-year voluntary pilot 
program to test and assess the feasibility, costs, and benefits 
of using third party entities to conduct validations of C-TPAT 
participants.
  [(b) Consultations.--Not later than 120 days after the date 
of the enactment of this Act, after consulting with private 
sector stakeholders, including the Commercial Operations 
Advisory Committee, the Secretary shall submit a report to the 
appropriate congressional committees on the plan described in 
subsection (a).
  [(c) Pilot program.--
          [(1) In general.--Not later than 1 year after the 
        consultations described in subsection (b), the 
        Secretary shall carry out the 1-year pilot program to 
        conduct validations of C-TPAT participants using third 
        party entities described in subsection (a).
          [(2) Authority of the secretary.--The decision to 
        validate a C-TPAT participant is solely within the 
        discretion of the Secretary, or the Secretary's 
        designee.
  [(d) Certification of Third Party Entities.--The Secretary 
shall certify a third party entity to conduct validations under 
subsection (c) if the entity--
          [(1) demonstrates to the satisfaction of the 
        Secretary that the entity has the ability to perform 
        validations in accordance with standard operating 
        procedures and requirements designated by the 
        Secretary; and
          [(2) agrees--
                  [(A) to perform validations in accordance 
                with such standard operating procedures and 
                requirements (and updates to such procedures 
                and requirements); and
                  [(B) to maintain liability insurance coverage 
                at policy limits and in accordance with 
                conditions to be established by the Secretary; 
                and
          [(3) signs an agreement to protect all proprietary 
        information of C-TPAT participants with respect to 
        which the entity will conduct validations.
  [(e) Information for Establishing Limits of Liability 
Insurance.--A third party entity seeking a certificate under 
subsection (d) shall submit to the Secretary necessary 
information for establishing the limits of liability insurance 
required to be maintained by the entity under this Act.
  [(f) Additional Requirements.--The Secretary shall ensure 
that--
          [(1) any third party entity certified under this 
        section does not have--
                  [(A) any beneficial interest in or any direct 
                or indirect control over the C-TPAT participant 
                for which the validation services are 
                performed; or
                  [(B) any other conflict of interest with 
                respect to the C-TPAT participant; and
          [(2) the C-TPAT participant has entered into a 
        contract with the third party entity under which the C-
        TPAT participant agrees to pay all costs associated 
        with the validation.
  [(g) Monitoring.--
          [(1) In general.--The Secretary shall regularly 
        monitor and inspect the operations of a third party 
        entity conducting validations under subsection (c) to 
        ensure that the entity is meeting the minimum standard 
        operating procedures and requirements for the 
        validation of C-TPAT participants established by the 
        Secretary and all other applicable requirements for 
        validation services.
          [(2) Revocation.--If the Secretary determines that a 
        third party entity is not meeting the minimum standard 
        operating procedures and requirements designated by the 
        Secretary under subsection (d)(1), the Secretary 
        shall--
                  [(A) revoke the entity's certificate of 
                conformance issued under subsection (d)(1); and
                  [(B) review any validations conducted by the 
                entity.
  [(h) Limitation on authority.--The Secretary may only grant a 
C-TPAT validation by a third party entity pursuant to 
subsection (c) if the C-TPAT participant voluntarily submits to 
validation by such third party entity.
  [(i) Report.--Not later than 30 days after the completion of 
the pilot program conducted pursuant to subsection (c), the 
Secretary shall submit a report to the appropriate 
congressional committees that contains--
          [(1) the results of the pilot program, including the 
        extent to which the pilot program ensured sufficient 
        protection for proprietary commercial information;
          [(2) the cost and efficiency associated with 
        validations under the pilot program;
          [(3) the impact of the pilot program on the rate of 
        validations conducted under C-TPAT;
          [(4) any impact on national security of the pilot 
        program; and
          [(5) any recommendations by the Secretary based upon 
        the results of the pilot program.

[SEC. 219. REVALIDATION.

  [The Secretary, acting through the Commissioner, shall 
develop and implement--
          [(1) a revalidation process for Tier 2 and Tier 3 
        participants;
          [(2) a framework based upon objective criteria for 
        identifying participants for periodic revalidation not 
        less frequently than once during each 4-year period 
        following the initial validation; and
          [(3) an annual plan for revalidation that includes--
                  [(A) performance measures;
                  [(B) an assessment of the personnel needed to 
                perform the revalidations; and
                  [(C) the number of participants that will be 
                revalidated during the following year.

[SEC. 220. NONCONTAINERIZED CARGO.

  [The Secretary, acting through the Commissioner, shall 
consider the potential for participation in C-TPAT by importers 
of noncontainerized cargoes that otherwise meet the 
requirements under this subtitle.

[SEC. 221. C-TPAT PROGRAM MANAGEMENT.

  [(a) In general.--The Secretary, acting through the 
Commissioner, shall establish sufficient internal quality 
controls and record management to support the management 
systems of C-TPAT. In managing the program, the Secretary shall 
ensure that the program includes:
          [(1) Strategic Plan.--A 5-year plan to identify 
        outcome-based goals and performance measures of the 
        program.
          [(2) Annual plan.--An annual plan for each fiscal 
        year designed to match available resources to the 
        projected workload.
          [(3) Standardized work program.--A standardized work 
        program to be used by agency personnel to carry out the 
        certifications, validations, and revalidations of 
        participants. The Secretary shall keep records and 
        monitor staff hours associated with the completion of 
        each such review.
  [(b) Documentation of Reviews.--The Secretary, acting through 
the Commissioner, shall maintain a record management system to 
document determinations on the reviews of each C-TPAT 
paricipant, including certifications, validations, and 
revalidations.
  [(c) Confidential Information Safeguards.--In consultation 
with the Commercial Operations Advisory Committee, the 
Secretary, acting through the Commissioner, shall develop and 
implement procedures to ensure the protection of confidential 
data collected, stored, or shared with government agencies or 
as part of the application, certification, validation, and 
revalidation processes.
  [(d) Resource Management Staffing Plan.--The Secretary, 
acting through the Commissioner, shall--
          [(1) develop a staffing plan to recruit and train 
        staff (including a formalized training program) to meet 
        the objectives identified in the strategic plan of the 
        C-TPAT program; and
          [(2) provide cross-training in postincident trade 
        resumption for personnel who administer the C-TPAT 
        program.
  [(e) Report to Congress.--In connection with the President's 
annual budget submission for the Department, the Secretary 
shall report to the appropriate congressional committees on the 
progress made by the Commissioner to certify, validate, and 
revalidate C-TPAT participants. Such report shall be due on the 
same date that the President's budget is submitted to the 
Congress.

[SEC. 222. ADDITIONAL PERSONNEL.

  [For fiscal years 2008 and 2009, the Commissioner shall 
increase by not less than 50 the number of full-time personnel 
engaged in the validation and revalidation of C-TPAT 
participants (over the number of such personnel on the last day 
of the previous fiscal year), and shall provide appropriate 
training and support to such additional personnel.

[SEC. 223. AUTHORIZATION OF APPROPRIATIONS.

  [(a) C-TPAT.--There are authorized to be appropriated to the 
United States Customs and Border Protection to carry out the 
provisions of sections 211 through 221 to remain available 
until expended--
          [(1) $65,000,000 for fiscal year 2008;
          [(2) $72,000,000 for fiscal year 2009; and
          [(3) $75,600,000 for fiscal year 2010.
  [(b) Additional Personnel.--In addition to any amounts 
otherwise appropriated to the United States Customs and Border 
Protection, there are authorized to be appropriated for the 
purpose of meeting the staffing requirement provided for in 
section 222, to remain available until expended--
          [(1) $8,500,000 for fiscal year 2008;
          [(2) $17,600,000 for fiscal year 2009;
          [(3) $19,000,000 for fiscal year 2010;
          [(4) $20,000,000 for fiscal year 2011; and
          [(5) $21,000,000 for fiscal year 2012.]

        Subtitle B--Customs-Trade Partnership Against Terrorism

SEC. 211. ESTABLISHMENT OF THE CUSTOMS-TRADE PARTNERSHIP AGAINST 
                    TERRORISM PROGRAM.

  (a) In General.--There is established within U.S. Customs and 
Border Protection a voluntary government-private sector 
partnership program to be known as the Customs-Trade 
Partnership Against Terrorism (C-TPAT).
  (b) Purpose.--The purposes of the C-TPAT program are to--
          (1) strengthen and improve the overall security of 
        the international supply chain and United States border 
        security;
          (2) facilitate the movement of secure cargo through 
        the international supply chain;
          (3) ensure compliance with applicable law; and
          (4) serve as the Authorized Economic Operator program 
        for the United States.
  (c) Director.--There shall be at the head of the C-TPAT 
program a Director, who shall report to the Executive Assistant 
Commissioner of the Office of Field Operations (in this 
subtitle referred to as the ``Executive Assistant 
Commissioner'') of U.S. Customs and Border Protection.
  (d) Duties.--The Director of the C-TPAT program shall--
          (1) oversee the activities of the C-TPAT program, 
        including certification of C-TPAT participants;
          (2) evaluate and make revisions to security criteria 
        pursuant to subsections (c) and (d) of section 213;
          (3) ensure that participants receive a tangible and 
        measurable benefit for participation; and
          (4) carry out other duties and powers prescribed by 
        the Executive Assistant Commissioner.

SEC. 212. ELIGIBLE ENTITIES AND NOTICE OF BENEFITS.

  (a) Eligible Entities.--Importers, exporters, customs 
brokers, forwarders, air, sea, and land carriers, contract 
logistics providers, and other entities in the international 
supply chain and intermodal transportation system are eligible 
to apply for participation in the C-TPAT program.
  (b) Tiered Participation.--
          (1) In general.--Applicants may be eligible to 
        participate as Tier 1 or Tier 2 participants.
          (2) Importers.--Importers may be eligible to 
        participate as Tier 3 participants.
          (3) Extension.--The Executive Assistant Commissioner 
        may, in his or her discretion, extend Tier 3 
        participation to other entity types, if appropriate.
  (c) Notice of Benefits.--
          (1) In general.--The Commissioner of U.S. Customs and 
        Border Protection shall publish, on the U.S. Customs 
        and Border Protection website and through other 
        appropriate online publication, information about 
        benefits to C-TPAT program participants.
          (2) Changes.--The Commissioner of U.S. Customs and 
        Border Protection shall publish, on the U.S. Customs 
        and Border Protection website and through other 
        appropriate online publication, notice of any changes 
        to benefits to C-TPAT program participants not later 
        than 30 days before any such changes take effect.

SEC. 213. PARTICIPATION ELIGIBILITY.

  (a) In General.--The Executive Assistant Commissioner shall 
review all documentation submitted by an applicant pursuant to 
subsection (b)(2), conduct a background investigation of such 
applicant, and vet such applicant.
  (b) General Requirements.--To be eligible for participation 
in the C-TPAT program, an entity shall, at a minimum--
          (1) have a designated company employee authorized to 
        bind such entity that is a direct company employee and 
        will serve as the primary point of contact responsible 
        for participation of such entity in the C-TPAT program;
          (2) at the time of initial application and annually 
        thereafter, including in advance of any recertification 
        or revalidation, submit an international supply chain 
        security profile, which shall identify how such entity 
        meets the minimum security criteria of the C-TPAT 
        program established by the Commissioner of U.S. Customs 
        and Border Protection and how such entity will maintain 
        and enhance internal policies, procedures, and 
        practices related to international supply chain 
        security; and
          (3) meet any specific requirements for eligible 
        entities, as established by the Commissioner.
  (c) Minimum Security Criteria.--The Commissioner of U.S. 
Customs and Border Protection shall establish minimum security 
criteria for participants in the C-TPAT program, review such 
minimum security criteria not less than once every two years, 
and update such minimum security criteria as necessary. Such 
minimum security criteria shall seek to address security 
vulnerabilities in the international supply chain.
  (d) Additional and Updated Criteria.--The Commissioner of 
U.S. Customs and Border Protection may establish additional and 
updated security criteria for individual C-TPAT program 
participants, categories of C-TPAT program participants, or 
particular entity types to meet in order to address a security 
vulnerability in the international supply chain.
  (e) Consultation.--When establishing or updating security 
criteria in accordance with subsection (c), and when 
establishing additional or updated security criteria in 
accordance subsection (d), the Commissioner of U.S. Customs and 
Border Protection shall consult with C-TPAT program 
participants and other interested parties, and shall--
          (1) conduct a cost benefit analysis of such proposed 
        new, additional, or updated security criteria in 
        consultation with the Commercial Customs Operations 
        Advisory Committee established under section 109 of the 
        Trade Facilitation and Trade Enforcement Act of 2015 
        (Public Law 114-125; 19 U.S.C. 4316);
          (2) determine operational feasibility and, where 
        appropriate, conduct a phased implementation of such 
        proposed additional or updated security criteria; and
          (3) provide C-TPAT program participants and other 
        interested parties a 90-day comment period to review 
        and comment on such proposed additional or updated 
        security criteria.
  (f) Waiver.--The Commissioner of U.S. Customs and Border 
Protection may waive the requirements of subsection (e) if the 
Commissioner determines there is a significant and imminent 
risk to the national security of the United States and such a 
waiver is necessary to protect such national security. Not 
later than 120 days after the issuance of any such waiver, the 
Commissioner shall announce on the U.S. Customs and Border 
Protection website and through other appropriate online 
publication the Commissioner's intent to either withdraw such 
waiver or maintain such waiver while commencing efforts to 
establish minimum security criteria or establish additional or 
update existing security criteria in accordance with subsection 
(c) or (d), respectively.

SEC. 214. BENEFITS FOR C-TPAT PROGRAM PARTICIPANTS.

  (a) In General.--The Executive Assistant Commissioner shall 
extend certain benefits to each C-TPAT program participant. 
Minimum benefits for each such participant shall include the 
following:
          (1) Assignment of a U.S. Customs and Border 
        Protection Supply Chain Security Specialist.
          (2) Access to the C-TPAT program's web-based Portal 
        system and training materials.
          (3) A periodic and unclassified update on regional 
        and other relevant threats to the international supply 
        chain.
  (b) Public Availability.--The Executive Assistant 
Commissioner shall make publicly available on the C-TPAT portal 
an annual assessment of the tangible benefits being realized by 
C-TPAT program participants.
  (c) Annual Assessment.--The Executive Assistant Commissioner 
shall conduct, on an annual basis, an assessment of the 
benefits conferred to C-TPAT program participants. The 
Executive Assistant Commissioner shall determine a process to 
carry out such assessments, to include projected milestones and 
completion dates for addressing data reliability issues and, as 
necessary, correcting data weaknesses, so that U.S. Customs and 
Border Protection can produce accurate and reliable annual 
assessments that can be compared year-to-year.

SEC. 215. TIER 1 PARTICIPANTS.

  (a) Certification.--The Executive Assistant Commissioner 
shall certify the security measures and international supply 
chain security practices of all applicants to and participants 
in the C-TPAT program in accordance with section 213(b)(2) and 
the guidelines referred to in subsection (c) of this section. 
Certified participants shall be Tier 1 participants.
  (b) Benefits for Tier 1 Participants.--Upon completion of the 
certification under subsection (a), a C-TPAT program 
participant shall be certified as a Tier 1 participant. The 
Executive Assistant Commissioner shall extend limited benefits 
to a Tier 1 participant.
  (c) Guidelines.--Not later than 180 days after the date of 
the enactment of this subtitle, the Commissioner of U.S. 
Customs and Border Protection shall update the guidelines and 
criteria for certifying a C-TPAT program participant's security 
measures and supply chain security practices under this 
section. Such guidelines shall include a background 
investigation and review of appropriate documentation, as 
determined by the Commissioner.
  (d) Timeframe.--To the extent practicable, the Executive 
Assistant Commissioner shall complete the Tier 1 certification 
process within 90 days of receipt of an application for 
participation in the C-TPAT program.

SEC. 216. TIER 2 PARTICIPANTS.

  (a) Validation.--The Executive Assistant Commissioner shall 
validate the security measures and international supply chain 
security practices of a Tier 1 C-TPAT program participant in 
accordance with the guidelines referred to in subsection (c) to 
validate such participant as a Tier 2 participant. Such 
validation shall include on-site assessments at appropriate 
foreign and domestic locations utilized by such Tier 1 
participant in its international supply chain.
  (b) Benefits for Tier 2 Participants.--The Executive 
Assistant Commissioner, shall extend benefits to each C-TPAT 
participant that has been validated as a Tier 2 participant 
under this section. Such benefits may include the following:
          (1) Reduced scores in U.S. Customs and Border 
        Protection's Automated Targeting System.
          (2) Reduced number of security examinations by U.S. 
        Customs and Border Protection.
          (3) Priority examinations of cargo.
          (4) Access to the Free and Secure Trade (FAST) Lanes 
        at United States ports of entry.
          (5) Recognition as a trusted trade partner by foreign 
        customs administrations that have signed Mutual 
        Recognition Arrangements with U.S. Customs and Border 
        Protection.
          (6) In the case of importers, eligibility to 
        participate in the Importer Self-Assessment Program 
        (ISA) or successor compliance program.
  (c) Guidelines.--Not later than 180 days after the date of 
the enactment of this subtitle, the Commissioner shall develop 
a schedule and update the guidelines and criteria for 
validating a C-TPAT participant's security measures and supply 
chain security practices under this section.
  (d) Timeframe.--To the extent practicable, the Executive 
Assistant Commissioner shall complete the Tier 2 validation 
process for a C-TPAT program participant under this section 
within one year after certification of such participant as a 
Tier 1 participant.

SEC. 217. TIER 3 PARTICIPANTS.

  (a) In General.--The Commissioner shall establish a third 
tier of C-TPAT program participation that offers additional 
benefits to C-TPAT program participants that are importers or 
other entity types, in accordance with section 212(b), that 
demonstrate a sustained commitment to maintaining security 
measures and international supply chain security practices that 
exceed the guidelines established for validation as a Tier 2 
participant in the C-TPAT program under section 216.
  (b) Best Practices.--The Executive Assistant Commissioner may 
designate a Tier 2 C-TPAT program participant as a Tier 3 
participant based on a review of best practices in such 
participant's international supply chain that reflect a 
continued approach to enhanced international supply chain 
security, including--
          (1) compliance with any additional or updated 
        criteria established by the Commissioner of U.S. 
        Customs and Border Protection under section 213(d) that 
        exceed the guidelines established pursuant to section 
        216 for validating a C-TPAT program participant as a 
        Tier 2 participant; and
          (2) any other factors that the Executive Assistant 
        Commissioner determines appropriate.
  (c) Benefits for Tier 3 Participants.--The Executive 
Assistant Commissioner, in consultation with the Commercial 
Customs Operations Advisory Committee established under section 
109 of the Trade Facilitation and Trade Enforcement Act of 2015 
(Public Law 114-125; 19 U.S.C. 4316) and the National Maritime 
Security Advisory Committee established under section 70112 of 
title 46, United States Code, shall extend benefits to each C-
TPAT program participant that has been validated as a Tier 3 
participant under this section, which may include the 
following:
          (1) Further reduction in the number of examinations 
        by U.S. Customs and Border Protection.
          (2) Front of the line inspections and examinations.
          (3) Exemption from Stratified Exams.
          (4) Shorter wait times at United States ports of 
        entry.
          (5) Access to the Free and Secure Trade (FAST) Lanes 
        at United States ports of entry.
          (6) Recognition as a trusted trade partner by foreign 
        customs administrations that have signed Mutual 
        Recognition Arrangements with U.S. Customs and Border 
        Protection.
          (7) In the case of importers, eligibility to 
        participate in the Importer Self-Assessment Program 
        (ISA) or successor compliance program.

SEC. 218. CONSEQUENCES FOR LACK OF COMPLIANCE.

  (a) In General.--If at any time the Executive Assistant 
Commissioner determines that a C-TPAT program participant's 
security measures or international supply chain security 
practices fail to meet applicable requirements under this 
subtitle, the Executive Assistant Commissioner may deny such 
participant benefits otherwise made available pursuant to this 
subtitle, either in whole or in part. The Executive Assistant 
Commissioner shall develop procedures, in consultation with 
Commercial Customs Operations Advisory Committee, established 
under section 109 of the Trade Facilitation and Trade 
Enforcement Act of 2015 (Public Law 114-125; 19 U.S.C. 4316), 
that provide appropriate protections to C-TPAT program 
participants, including advance notice and an opportunity for 
such participants to provide additional information to U.S. 
Customs and Border Protection regarding any such alleged 
failure, before any of such benefits are withheld. Such 
procedures may not limit the ability of the Executive Assistant 
Commissioner to take actions to protect the national security 
of the United States.
  (b) False or Misleading Information; Lack of Compliance With 
Law.--If a C-TPAT program participant knowingly provides false 
or misleading information to the Commissioner of U.S. Customs 
and Border Protection, the Executive Assistant Commissioner, or 
any other officers or officials of the United States 
Government, or if at any time the Executive Assistant 
Commissioner determines that a C-TPAT program participant has 
committed a serious violation of Federal law or customs 
regulations, or if a C-TPAT program participant has committed a 
criminal violation relating to the economic activity of such 
participant, the Executive Assistant Commissioner may suspend 
or expel such participant from the C-TPAT program for an 
appropriate period of time. The Executive Assistant 
Commissioner, after the completion of the process described in 
subsection (d), may publish in the Federal Register a list of 
C-TPAT program participants that have been so suspended or 
expelled from the C-TPAT program pursuant to this subsection.
  (c) National Security.--If at any time the Executive 
Assistant Commissioner determines that a C-TPAT program 
participant poses a significant and imminent risk to the 
national security of the United States or has committed a 
serious violation of Federal law or customs regulations, or if 
a C-TPAT program participant has committed a criminal violation 
relating to the economic activity of such participant, the 
Executive Assistant Commissioner may suspend or expel such 
participant from the C-TPAT program for an appropriate period 
of time. The Executive Assistant Commissioner, after the 
completion of the process described in subsection (d), may 
publish in the Federal Register a list of C-TPAT program 
participants that have been so suspended or expelled from the 
C-TPAT program pursuant to this subsection.
  (d) Right of Appeal.--
          (1) In general.--The Commissioner of U.S. Customs and 
        Border Protection shall establish a process for a C-
        TPAT program participant to appeal a decision of the 
        Executive Assistant Commissioner under subsection (a). 
        Such appeal shall be filed with the Commissioner not 
        later than 90 days after the date of such decision, and 
        the Commissioner shall issue a determination not later 
        than 90 days after such appeal is filed.
          (2) Appeals of other decisions.--The Commissioner of 
        U.S. Customs and Border Protection shall establish a 
        process for a C-TPAT program participant to appeal a 
        decision of the Executive Assistant Commissioner under 
        subsections (b) and (c). Such appeal shall be filed 
        with the Commissioner not later than 30 days after the 
        date of such decision, and the Commissioner shall issue 
        a determination not later than 90 days after such 
        appeal is filed.

SEC. 219. VALIDATIONS BY OTHER DHS COMPONENTS.

  (a) In General.--The Commissioner of U.S. Customs and Border 
Protection may recognize regulatory inspections conducted by 
other components of the Department of Homeland Security of 
entities as sufficient to constitute validation for C-TPAT 
program participation in cases in which any such component's 
inspection regime is harmonized with validation criteria for 
the C-TPAT program. Such regulatory inspections shall not limit 
the ability of U.S. Customs and Border Protection to conduct a 
C-TPAT program validation.
  (b) Revalidation.--Nothing in this section may limit the 
Commissioner of U.S. Customs and Border Protection's ability to 
require a revalidation by U.S. Customs and Border Protection.
  (c) Certification.--Nothing in this section may be construed 
to authorize certifications of C-TPAT applicants to be 
performed by any party other than U.S. Customs and Border 
Protection.

SEC. 220. RECERTIFICATION AND REVALIDATION.

  (a) Recertification.--The Commissioner of U.S. Customs and 
Border Protection shall implement a recertification process for 
all C-TPAT program participants. Such process shall occur 
annually, and shall require--
          (1) a review of the security profile and supporting 
        documentation to ensure adherence to the minimum 
        security criteria under section 213; and
          (2) background checks and vetting.
  (b) Revalidation.--The Commissioner of U.S. Customs and 
Border Protection shall implement a revalidation process for 
all Tier 2 and Tier 3 C-TPAT program participants. Such process 
shall require--
          (1) a framework based upon objective, risk based 
        criteria for identifying participants for periodic 
        revalidation at least once every four years following 
        the initial validation of such participants;
          (2) on-site assessments at appropriate foreign and 
        domestic locations utilized by such a participant in 
        its international supply chain; and
          (3) an annual plan for revalidation that includes--
                  (A) performance measures;
                  (B) an assessment of the personnel needed to 
                perform such revalidations; and
                  (C) the number of participants that will be 
                revalidated during the following year.
  (c) Revalidation Under a Mutual Recognition Arrangement.--
          (1) In general.--Upon request from the Commissioner 
        of U.S. Customs and Border Protection, all Tier 2 and 
        Tier 3 C-TPAT program participants shall provide any 
        revalidation report conducted by a foreign government 
        under a Mutual Recognition Arrangement.
          (2) Recognition.--The Commissioner of U.S. Customs 
        and Border Protection may recognize revalidations of 
        entities conducted by foreign governments under a 
        Mutual Recognition Arrangement as sufficient to 
        constitute a revalidation for C-TPAT program 
        participation under subsection (b).
          (3) No limitation.--Nothing in this subsection may be 
        construed to limit the Commissioner of U.S. Customs and 
        Border Protection's ability to require a revalidation 
        by U.S. Customs and Border Protection.
  (d) Designated Company Employees.--Only designated company 
employees of a C-TPAT program participant under section 
213(b)(1) are authorized to respond to a revalidation report. 
Third-party entities are not authorized to respond to a 
revalidation report.

SEC. 221. NONCONTAINERIZED CARGO AND THIRD PARTY LOGISTICS PROVIDERS.

  The Commissioner of U.S. Customs and Border Protection shall 
consider the potential for participation in the C-TPAT program 
by importers of noncontainerized cargoes and non-asset-based 
third party logistics providers that otherwise meet the 
requirements under this subtitle.

SEC. 222. PROGRAM MANAGEMENT.

  (a) In General.--The Commissioner of U.S. Customs and Border 
Protection shall establish sufficient internal quality controls 
and record management, including recordkeeping (including 
maintenance of a record management system in accordance with 
subsection (b)) and monitoring staff hours, to support the 
management systems of the C-TPAT program. In managing the C-
TPAT program, the Commissioner shall ensure that the C-TPAT 
program includes the following:
          (1) A 5-year plan to identify outcome-based goals and 
        performance measures of the C-TPAT program.
          (2) An annual plan for each fiscal year designed to 
        match available resources to the projected workload.
          (3) A standardized work program to be used by agency 
        personnel to carry out the certifications, validations, 
        recertifications, and revalidations of C-TPAT program 
        participants.
          (4) In accordance with subsection (e), a standardized 
        process for the Executive Assistant Commissioner to 
        receive reports of suspicious activity, including 
        reports regarding potentially compromised cargo or 
        other border or national security concerns.
  (b) Documentation of Reviews.--
          (1) In general.--The Commissioner of U.S. Customs and 
        Border Protection shall maintain a record management 
        system to document determinations on the reviews of 
        each C-TPAT program participant, including 
        certifications, validations, recertifications, and 
        revalidations.
          (2) Standardized procedures.--To ensure accuracy and 
        consistency within the record management system 
        required under this subsection, the Commissioner shall 
        develop, disseminate, and require utilization of 
        standardized procedures for agency personnel carrying 
        out certifications, validations, recertifications, and 
        revalidations to report and track information regarding 
        the status of each C-TPAT program participant.
  (c) Confidential Information Safeguards.--In consultation 
with the Commercial Customs Operations Advisory Committee 
established under section 109 of the Trade Facilitation and 
Trade Enforcement Act of 2015 (Public Law 114-125; 19 U.S.C. 
4316), the Commissioner of U.S. Customs and Border Protection 
shall develop and implement procedures to ensure the protection 
of confidential data collected, stored, or shared with 
government agencies or as part of the application, 
certification, validation, recertification, and revalidation 
processes.
  (d) Resource Management Staffing Plan.--The Commissioner of 
U.S. Customs and Border Protection shall--
          (1) develop a staffing plan to recruit and train 
        staff (including a formalized training program) to meet 
        the objectives identified in the 5-year strategic plan 
        under subsection (a)(1); and
          (2) provide cross-training in post incident trade 
        resumption for the C-TPAT Director and other relevant 
        personnel who administer the C-TPAT program.
  (e) Engagement.--In carrying out the standardized process 
required under subsection (a)(4), the Commissioner shall engage 
with and provide guidance to C-TPAT program participants and 
other appropriate stakeholders on submitting reports described 
in such subsection.
  (f) Report to Congress.--In connection with the President's 
annual budget submission for the Department of Homeland 
Security, the Commissioner of U.S. Customs and Border 
Protection shall report to the appropriate congressional 
committees on the progress made by the Commissioner to certify, 
validate, recertify, and revalidate C-TPAT program 
participants. Each such report shall be due on the same date 
that the President's budget is submitted to Congress.

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