Senate Committee's FY18 DHS Spending Bill Directs Money for ACE Core and Enhancements

Fiscal year 2018 Homeland Security spending legislation released by the Senate Appropriations Committee Nov. 21, directs $38 million to support ACE core functionality and $5 million for ACE enhancements, language that wasn’t included in similar legislation that passed the House in September (see 1709150052). “It is clear that additional system development is needed to continue to facilitate interactions with vendors and importers,” the committee said in an explanatory statement of the bill. Fully automating CBP Form 214 (Application for Foreign-Trade Zone Admission and/or Status Designation) would be an example of such an enhancement, the summary says. CBP plans to roll out FTZ admission capabilities in ACE by Dec. 9 (see 1709110034).

The committee is also directing CBP to work with partner government agencies in creating a “sustainable cost-sharing process” for ACE and International Trade Data System (ITDS) enhancements “in an effort to realize savings from information technology and other related contracts to complete ACE and ITDS development.” Additionally, the language calls for CBP to establish a public list, incorporating private sector input, including through the Commercial Customs Operations Advisory Committee, of priorities for how the agency will accomplish the missions of appropriate duty application, identification of bad actors, and trade fraud prevention through completion of ACE and ITDS.

The committee also called for CBP, in consultation with the Alcohol and Tobacco Tax and Trade Bureau (TTB), to clarify requirements necessary to recover federal duties, taxes and fees on imported alcohol products when part of a drawback transaction that also involves the export of U.S.-produced alcohol classified under the same eight- or 10-digit Harmonized Tariff Schedule subheading as the import. Industry officials have speculated how CBP will address the treatment of such products in its forthcoming February ACE rulemaking to implement drawback changes (see 1708090043). The committee’s requested clarification by CBP “should make clear CBP’s treatment of alcoholic beverages exported from TTB bonded facilities, without payment of Federal excise taxes, and how these may be used as substituted merchandise to support unused merchandise drawback of Federal excise taxes imposed upon importation,” the bill summary says.

The legislation would also continue requirements for CBP to issue Jones Act waivers for oil tankers carrying oil from the U.S. Strategic Petroleum Reserve. Like previous appropriations legislation, the bill would bar funds from being put toward future such Jones Act waivers until the DHS secretary consults with the departments of Energy and Transportation, and maritime industry representatives, and has “taken adequate steps” to ensure Jones Act enforcement. The committee further urges CBP to “take more aggressive enforcement action” in this area and issue “swift, transparent, and meaningful penalties to deter violations.”

The bill would give CBP $13.5 billion total in FY18. The Senate committee recommended $33.3 million less for targeting operations in CBP’s Office of Field Operations than the House-passed legislation. CBP should “analyze and measure” benefits of expanded analytical capabilities at the National Targeting Center, yet notes that the proliferation of new tools “has shifted focus away” from “traditional trade, customs, and immigration law enforcement targeting activities,” the bill’s committee report says. “The Committee must weigh the growth of CBP ’s targeting activities against investments elsewhere within the agency and” DHS. CBP should continue work with interagency partners on the annual five-year land border port of entry construction plan, including plans to modernize northern ports of entry built before 1980, the committee said.

The committee encouraged the DHS Science and Technology (S&T) Directorate to work on developing thermoplastic composite materials for shipping containers, which can reduce costs and improve intrusion sensor integration, it said. The committee recommended $2.5 million for the effort. “The Committee understands the important role S&T can play in improving the data analytics and visualization tools available to CBP and ICE to track and inspect cargo entering and exiting the United States, particularly cargo that may contain opioids,” the report says. “The Committee is aware that, through trials performed to date, there is evidence that improvements to automated threat algorithms and visualization tools can increase analyst efficiency and better target criminal networks.”

Committee Democrats applauded some $15 million dedicated in the bill for procuring equipment to interdict illicit opioid imports, but criticized the legislation’s lack of any funds to hire more CBP officers at ports of entry, according to a statement. “When combined with the reductions in the bill and the primary focus on border security between the ports, travelers will likely experience longer wait times to cross our land borders and longer lines to enter through our airports while importers will experience longer wait lines to deliver manufactured goods and fresh vegetables,” the statement says. The committee didn’t comment on when it will vote on the legislation.