[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]


 
       THE SAFE PORT ACT: STATUS OF IMPLEMENTATION ONE YEAR LATER

=======================================================================

                                5HEARING

                               before the

     SUBCOMMITTEE ON BORDER, MARITIME, AND GLOBAL COUNTERTERRORISM

                                 of the

                     COMMITTEE ON HOMELAND SECURITY
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED TENTH CONGRESS

                             FIRST SESSION

                               __________

                            OCTOBER 30, 2007

                               __________

                           Serial No. 110-80

                               __________

       Printed for the use of the Committee on Homeland Security
                                     
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                     COMMITTEE ON HOMELAND SECURITY

               BENNIE G. THOMPSON, Mississippi, Chairman

LORETTA SANCHEZ, California,         PETER T. KING, New York
EDWARD J. MARKEY, Massachusetts      LAMAR SMITH, Texas
NORMAN D. DICKS, Washington          CHRISTOPHER SHAYS, Connecticut
JANE HARMAN, California              MARK E. SOUDER, Indiana
PETER A. DeFAZIO, Oregon             TOM DAVIS, Virginia
NITA M. LOWEY, New York              DANIEL E. LUNGREN, California
ELEANOR HOLMES NORTON, District of   MIKE ROGERS, Alabama
Columbia                             BOBBY JINDAL, Louisiana
ZOE LOFGREN, California              DAVID G. REICHERT, Washington
SHEILA JACKSON-LEE, Texas            MICHAEL T. McCAUL, Texas
DONNA M. CHRISTENSEN, U.S. Virgin    CHARLES W. DENT, Pennsylvania
Islands                              GINNY BROWN-WAITE, Florida
BOB ETHERIDGE, North Carolina         MARSHA BLACKBURN, Tennessee
JAMES R. LANGEVIN, Rhode Island      GUS M. BILIRAKIS, Florida
HENRY CUELLAR, Texas                 DAVID DAVIS, Tennessee
CHRISTOPHER P. CARNEY, Pennsylvania
YVETTE D. CLARKE, New York
AL GREEN, Texas
ED PERLMUTTER, Colorado
VACANCY

       Jessica Herrera-Flanigan, Staff Director & General Counsel

                     Rosaline Cohen, Chief Counsel

                     Michael Twinchek, Chief Clerk

                Robert O'Connor, Minority Staff Director

                                 ______

     SUBCOMMITTEE ON BORDER, MARITIME, AND GLOBAL COUNTERTERRORISM

                LORETTA SANCHEZ, California, Chairwoman

JANE HARMAN, California              MARK E. SOUDER, Indiana
ZOE LOFGREN, California              BOBBY JINDAL, Louisiana
SHEILA JACKSON-LEE, Texas            DAVID G. REICHERT, Washington
JAMES R. LANGEVIN, Rhode Island      MICHAEL T. McCAUL, Texas
HENRY CUELLAR, Texas                 GUS M. BILIRAKIS, Florida
AL GREEN, Texas                      PETER T. KING, New York (Ex 
BENNIE G. THOMPSON, Mississippi (Ex  Officio)
Officio)

                         Alison Rosso, Director

                         Denise Krepp, Counsel

                       Carla Zamudio-Dolan, Clerk

        Mandy Bowers, Minority Senior Professional Staff Member

                                  (II)


                            C O N T E N T S

                              ----------                              
                                                                   Page

                               STATEMENTS

The Honorable Loretta Sanchez, a Representative in Congress from 
  the State of California, and Chairwoman, Subcommittee on 
  Border, Maritime, and Global Counterterrorism:
  Oral Statement.................................................     1
  Prepared Statement.............................................     2
The Honorable Mark E. Souder, a Representative in Congress from 
  the State of Indiana, a Ranking Member, Subcommittee on Border, 
  Maritime, and Global Counterterrorism..........................     3
The Honorable Bennie G. Thompson, a Representative in Congress 
  from the State of Mississippi, and Chairman, Committee on 
  Homeland Security:
  Oral Statement.................................................     4
  Prepared Statement.............................................     5
The Honorable Gus M. Bilirakis, a Representative in Congress from 
  the State of Florida...........................................    39
The Honorable Henry Cuellar, Representative in Congress from the 
  State of Texas.................................................    44
The Honorable Al Green, a Representative in Congress from the 
  State of Texas.................................................    40
The Honorable Sheila Jackson Lee, a Representative in Congress 
  from the State of Texas........................................    42
The Honorable Daniel E. Lungren, a Representative in Congress 
  from the State of California...................................     3
The Honorable Michael T. McCaul, a Representative in Congress 
  from the State of Texas........................................    83
The Honorable Bill Pascrell, Jr., a Representative in Congress 
  from the State of New Jersey...................................    45

                               Witnesses
                                Panel I

Mr. Stephen L. Caldwell, Director, Homeland Security and Justice 
  Issues, Government Accountability Office.......................    32
Ms. Maurine Fanguy, Program Director, Transportation Security 
  Administration, Department of Homeland Security:
  Oral Statement.................................................     7
  Prepared Statement.............................................     8
Mr. Vayl Oxford, Director, Domestic Nuclear Detection Office, 
  Department of Homeland Security:
  Oral Statement.................................................    28
  Prepared Statement.............................................    30
Captain Francis Sturm, U.S. Coast Guard, Department of Homeland 
  Security:
  Oral Statement.................................................    11
  Prepared Statement.............................................    13
Mr. Thomas Winkowski, Assistant Commissioner, Office of Field 
  Operations, Customs and Border Protection, Department of 
  Homeland Security:
  Oral Statement.................................................    21
  Prepared Statement.............................................    23

                                Panel II

Ms. Mary Alexander, Chair, Joint Industry Group:
  Oral Statement.................................................    67
  Prepared Statement.............................................    69
Mr. Wade Battles, Managing Director, Port of Houston Authority:
  Oral Statement.................................................    73
  Prepared Statement.............................................    74
Mr. Robert F. Blanchet, Teamster Port Representative, 
  International Brotherhood of Treamsters:
  Oral Statement.................................................    53
  Prepared Statement.............................................    55
Mr. Christopher Koch, President, World Shipping Council:
  Oral Statement.................................................    58
  Prepared Statement.............................................    59
Mr. Lindsay McLaughlin, Legislative Director, International 
  Longshore and Warehouse Union:
  Oral Statement.................................................    49
  Prepared Statement.............................................    51

                               Appendixes

A:  Executive Summary of C-TPAT Partners Cost-Benefit Survey 
  Prepared by the University of Virginia for U.S. Customs and 
  Border Protection..............................................    87
B:  Additional Questions and Responses
  Panel I
    Responses from:
      Mr. Stephen L. Caldwell....................................    91
      Ms. Maurine Fanguy.........................................    95
      Mr. Vayl Oxford............................................    97
      Captain Francis Sturm......................................   100
      Mr. Thomas Winkowski.......................................   106

  Panel II
    Responses from:
      Ms. Mary Alexander.........................................   116
      Mr. Wade Battles...........................................   120
      Mr. Robert F. Blanchet.....................................   124
      Mr. Christopher Koch Responses.............................   126


       THE SAFE PORT ACT: STATUS OF IMPLEMENTATION ONE YEAR LATER

                              ----------                              


                       Tuesday, October 30, 2007

             U.S. House of Representatives,
                    Committee on Homeland Security,
                          Subcommittee on Border, Maritime,
                               and Global Counterterrorism,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 2:17 p.m., in 
Room 311, Longworth House Office Building, Hon. Loretta Sanchez 
[chairwoman of the subcommittee] presiding.
    Present: Representatives Sanchez, Jackson Lee, Langevin, 
Green, Thompson (Ex Officio), Souder, McCaul, Bilirakis, and 
King (Ex Officio).
    Also Present: Representative Lungren.
    Ms. Sanchez. The Subcommittee on Border, Maritime and 
Global Counterterrorism will come to order. And the 
subcommittee is meeting today to receive testimony on the SAFE 
Port Act Status of Implementation One Year Later.
    I would, at this time, ask unanimous consent that Mr. 
Lungren of California be allowed to sit and question at today's 
hearing. No hearing no objection, welcome, Mr. Lungren. Always 
great to have a fellow Californian on.
    Thank you to our witnesses for joining us today, 
particularly since this hearing was postponed from earlier in 
the month. And I appreciate your flexibility in coming before 
our committee again.
    Today we will be discussing the status of the 
implementation of the SAFE Port Act, as you know, one of the 
pieces of legislation from the 109th Congress that I think is 
probably one of the most important we passed. And, of course, 
we passed it on the last day of that Congress. The legislation 
was a cumulation of years of work by many on this committee and 
other Members of Congress, and I do believe that once it is 
implemented, it will improve the security of our Nation's 
ports. And as a member of a district who lives 20 minutes away 
from the largest port system in the United States, that is Long 
Beach-Los Angeles, it is incredibly important to me personally 
and to the people that I represent.
    So, it is our intention, and certainly my intention that we 
implement this and we oversee it and we get it done as quickly 
as possible. As you know, we have already held a 6-month 
hearing on the SAFE Port Act, and here we are 6 months later 
wanting to know what has been going on.
    I hope that today's hearing will update us on many of the 
initiatives. I have several that I am particularly interested 
in. You all probably already know, but just in case, an 
explanation of the aspects of C-TPAT's third-party verification 
program, the pilot, and the update on its progress, the status 
of the empty security pilot program that was required by the 
law, the Coast Guard's long-range vessel tracking capability, 
and their ability to view that data in a usable format; and of 
course, the delayed progress on the Transportation Worker 
Identification Credential, or the TWIC.
    And I hope that our witnesses will address these items as 
well as many of the others that need to be addressed as to what 
is going on with the SAFE Port Act. And I am pleased to hear 
that the agencies within the Department are making progress on 
some of these provisions, but we want to make sure you are 
making progress as quickly, as safely as possible.
    Some of my concerns also include the establishment of the 
container security standards and improvements to CBP's risk 
targeting, a lack of the fully operational vessel tracking 
system to tell us what vessels are coming to American ports, 
and of course, the efficient rollout of the TWIC program that 
would ensure that our ports are safe without compromising 
American jobs or adding excessive costs.
    And I would like to thank my ranking member, Mr. Souder, 
for his interest in this important issue, and at this moment I 
would like to recognize the ranking member of the subcommittee, 
the gentleman from Indiana, for his opening statement.

   Prepared Statement of the Honorable Loretta Sanchez, Chairwoman, 
     Subcommittee on Border, Maritime, and Global Counterterrorism

    Good Afternoon.
    Thank you to our witnesses for joining us today, particularly since 
this hearing was postponed from earlier in the month. We appreciate 
your flexibility.
    Today we will be discussing the status of implementing the SAFE 
Port act, over one year after it became law.
    This Subcommittee held a similar hearing six months ago and I know 
my colleagues and I are eager for an update on the Government's 
progress.
    I believe that the SAFE Port Act was one of the Homeland Security 
Committee's most significant actions of the 109th Congress.
    This legislation was the culmination of years of work by numerous 
Members of Congress, and it made long overdue improvements to the 
security of our nation's ports.
    As a Member whose district is close to the Los Angeles and Long 
Beach Ports, I am very aware of the direct impact port security has on 
the lives and livelihoods of all Americans.
    I intend to make sure that the 110th Congress conducts appropriate 
oversight to ensure that the SAFE Port Act is fully implemented.
    As we all know, the SAFE Port Act covered a wide range of programs 
and invitiatives at the Department of Homeland Security.
    I hope that today's hearing will provide us with an update on these 
many initiatives.
    There are several issues that I am particularly interested in.
    These include:
         An explanation of aspects of the C-TPAT 3rd party 
        validator pilot program and an update on its progress;
         The status of the empty container security pilot 
        program required by the law;
         The Coast Guard's long range vessel tracking 
        capability and their ability to view that data in a useable 
        format;
         AND, or course the delayed progress on the 
        Transportation Work Identification Credential, or TWIC.
    I hope our witnesses will address these items among many other 
critical issues in the SAFE Port act.
    I am pleased to hear that the agencies within the Department are 
making progress on some of the provisions in the SAFE Act, but we must 
ensure that the law is fully implemented so our ports are as secure as 
possible.
    Some of my concerns include:
         The establishment of container security standards and 
        improvements to CBP's risk targeting;
         The lack of a fully operational vessel tracking system 
        to tell us what vessels are coming to American ports;
         AND the efficient roll out of a TWIC program that 
        ensures the security of our ports without compromising American 
        jobs, or adding excessive costs.
    I'd like to thank my ranking Member, Mr. Souder for his interest in 
this important issue.

    Mr. Souder. Thank you very much, Madam Chair. And we are 1 
year out from the enactment of the SAFE Port Act and 6 months 
from the implementation status. Like with other areas of 
homeland security, there is no silver bullets. Securing 
maritime transportation system from the beginning of the supply 
chain through the arrival at U.S. ports and delivery, requires 
overseas cooperation, participation from the private sector, 
technology, resources and intelligence.
    In many ways, defending against terrorists is similar to 
detecting and disrupting illegal narcotics. Step one, stop the 
terrorist activity and plans in the source country. Step two, 
prevent weapons and terrorists from exiting the source country 
for the United States. Step three, interdict the illicit 
activity en route. Step four, stop it at the port of entry or 
along the border in coastal areas. Five, detect movement within 
the United States. And, six, address the threats on the streets 
of our towns and cities.
    Addressing these steps requires a layered security 
strategy. The one absolute about terrorists is that they strive 
to be unpredictable. To counter this, we have to have some 
level of uncertainty in our security response and robust layers 
of security throughout the supply chain. Ultimately, 
intelligence is our best weapon. It is not possible to do 
everything all the time. We have to have some odds projection 
inherent in our security measures. We also have to be 
constantly changing our pattern so that terrorists are lost at 
sea when it comes to learning and exploiting our 
vulnerabilities. This enhances the deterrent factor.
    I look forward to the testimony today and to hearing what 
progress has been made implementing the SAFE Port Act and where 
we are lacking. According to the committee Republican staff 
report that reviewed the Department's efforts over the past 
year, DHS has made substantial progress in many areas. The 
secure freight initiative stands out as one where DHS is ahead 
of schedule in implementing the 100 percent inspection pilots 
in complete accordance with the laws so far.
    In other areas, there is clearly more work to do. TWIC, 
setting standards for securing containers, and enhancing the 
high-risk targeting system are several areas where I am looking 
forward to hearing from our witnesses.
    That will complete my statement, and I would like to yield 
the rest of my time to Congressman Lungren who was the sponsor 
of the SAFE Port Act and is a member of the full committee.
    Mr. Lungren. I thank the gentleman for yielding. I thank 
the Chairlady for allowing me to participate in this hearing 
today. I will have to leave at one point in time to represent 
our side in the defense authorization conference on behalf of 
the Homeland Security Committee, but I share the gentlelady's 
appreciation for the tremendous positive impact that the ports 
of Long Beach and L.A. have, not only in California, but 
throughout the country and the importance of this bill.
    There is, of course, no perfect bill, there is no perfect 
law, and there is no perfect implementation. But I think we can 
take tremendous pride in the fact that we delivered a good bill 
that was signed into law by the President and that, based on 
our staff's review of this and based on GAO's review of this, 
that by and large, this has been implemented well under all 
circumstances that would be considered.
    We can always do better. But I think it is an important 
message for us to give the American people that they are safer 
as a result of the actions that have been taken by this 
Congress in cooperation with the administration since 9/11, and 
specifically since October 13 of last year when the President 
signed H.R. 4954, the SAFE Port Act, we have moved forward. And 
I look forward to hearing the testimony here, the details, and 
also what more we might be able to do to assist in further 
implementation. And I thank the gentlelady.
    Ms. Sanchez. The Chair will now recognize the chairman of 
the full committee, the gentleman from Mississippi, Mr. 
Thompson, for an opening statement.
    Mr. Thompson. Thank you very much, Madam Chairman. I am 
happy to be here for this hearing. It has been a year since the 
SAFE Port Act was signed into law, and we are here today to 
learn about the Department of Homeland Security's 
implementation of this important Act.
    Maritime security is a paramount importance to the United 
States. 95 percent of the goods destined for the United States 
arrive in our Nation's seaports. These seaports and the men and 
women who work on these ports must be protected. Unfortunately, 
the Department of Homeland Security is not protecting these men 
and women to the extent it should. The Department of Homeland 
Security, plagued with a lack of leadership, is allowing these 
men and women to remain at risk. We owe the American people 
security. We owe them accountability. And, most importantly, we 
owe them freedom from fear.
    We are here today to find out why the Department of 
Homeland Security has failed in its mission to improve the 
maritime security. The Department of Homeland Security's 
failure to implement the Transportation Worker Identification 
Credential is a perfect example of this failure. The Department 
began rolling out the TWIC program, which was mandated 5 years 
ago. just 2 weeks ago. Already, there are glaring problems. The 
Department significantly underestimated the number of workers 
who are required to get a TWIC. The Department estimated that 
30,000 workers would need to get a TWIC card in the Port of 
Houston. According to the Port of Houston, the real number is 
closer to 350,000. At the Port of New York and New Jersey, the 
Department again underestimated the number. The Department's 
estimate was 60,256. The real number is closer to 125,000.
    The Department's inability to successfully project the 
correct number of workers is compounded by the fact that the 
TWIC readers are years away from installation. Without the 
readers, a TWIC is merely a flash pass that can be fraudulently 
duplicated and misused. This misuse has already begun. Last 
week, the Coast Guard, issued an advisory stating that criminal 
elements were trying to obtain information about the TWIC 
program at the ports of Los Angeles and Long Beach.
    Five years and millions of dollars later, this program has 
already been compromised. The potential compromise is shocking, 
considering the fact that the Department has only rolled out 
the TWIC at one port. The Department provided the list today of 
its tentative rollout schedule for the rest of the ports.
    As in the past, the list does not contain concrete 
information; it contains vague dates. Vague dates are not good 
enough. Our ports should be given specific information to 
enable them to successfully roll out the TWIC at their ports.
    Unfortunately, TWIC is not the Department's only troubled 
program. The Department has failed to develop a container 
security device regulation required by the SAFE Port Act. The 
Department claims that the technology does not exist. It does, 
and I have one that I would like to show to Customs and Border 
Protection here today. This device is made by General Electric. 
Other companies have developed their own versions. So it does 
exist. The Department's failure to develop the regulation is 
just another example of the Department's unwillingness or 
inability to follow the mandates clearly laid out by Congress. 
We established these mandates because we are committed to 
improving our Nation's maritime security. We specifically told 
the Department to develop a strategic plan to enhance the 
security of the international supply chain. The Department did 
not develop a plan; it developed yet another document that will 
sit on the shelf collecting dust.
    Philip Spayd, in an August 27, 2007 article in the Journal 
of Commerce, summed it up best: The 128-page plan would receive 
a high grade as a research project for a graduate school class 
in international logistics, but which lacks any operational 
grounding.
    It is time for the Department to develop this operational 
grounding, and it is time for the Department to meet the 
mandate set by the American public, freedom from fear.

   Prepared Statement of the Honorable Bennie G. Thompson, Chairman, 
                     Committee on Homeland Security

    ood morning and thank you for being here today.
    It has been a year since the SAFE Port Act was signed into law, and 
we are here today to learn about the Department of Homeland Security's 
implementation of this important Act.
    Maritime security is of paramount importance to the United States. 
Ninety-five percent of the goods destined for the United States arrive 
at our nation's seaports. These seaports and the men and women who work 
on these ports must be protected.
    Unfortunately, the Department of Homeland Security is not 
protecting these men and women to the extent it should. The Department 
of Homeland Security, plagued with a lack of leadership, is allowing 
these men and women to remain at risk.
    We owe the American people security. We owe them accountability. 
And most importantly, we owe them freedom from fear. We are here today 
to find out why the Department of Homeland Security has failed in its 
mission to improve the maritime security.
    The Department of Homeland Security's failure to implement the 
Transportation Worker Identification Credential (TWIC) is a perfect 
example of this failure. The Department began rolling out the TWIC 
program, which was mandated five years ago, just two weeks ago.
    Already there are glaring problems. The Department significantly 
underestimated the number of workers who are required to get a TWIC. 
The Department estimated that 30,000 workers would need to get a TWIC 
in the Port of Houston. According to the Port of Houston, the real 
number is closer to 350,000. At the Port of New York and New Jersey, 
the Department again underestimated the number. The Department's 
estimate was 60,256. The REAL number is closer to 125,000.
    The Department's inability to successfully project the correct 
number of workers is compounded by the fact that the TWIC readers are 
years away from installation. Without the readers, a TWIC is merely a 
flash pass that can be fraudulently duplicated and misused. This misuse 
has already begun. Last week, the Coast Guard released an advisory 
stating that criminal elements were trying to obtain information about 
the TWIC program at the Ports of Los Angeles and Long Beach. Five years 
and millions of dollars later, this program may already be compromised.
    The potential compromise is shocking considering the fact that the 
Department has only rolled out the TWIC at one port. The Department 
provided a list today of its tentative rollout schedule for the rest of 
the ports.
    As in the past, this list does not contain concrete information--it 
contains vague dates.
    Vague dates are not good enough--our ports should be given specific 
information to enable them to successfully roll out the TWIC at their 
ports.
    Unfortunately, TWIC is not the Department's only troubled program. 
The Department has failed to develop the container security device 
regulation required by the SAFE Port Act. The Department claims that 
the technology does not exist. It does and I have one that I would like 
to show to Customs and Border Protection today. This device is made by 
General Electric and other companies have developed their own versions. 
The Department's failure to develop the regulation is just another 
example of the Department's unwillingness or inability to follow the 
mandates clearly laid out by Congress.
    We established these mandated because we are committed to improving 
our nation's maritime security. We specifically told the Department to 
develop a Strategic Plan to Enhance the Security of the International 
Supply Chain. The Department did not develop a plan; it developed yet 
another document that will sit on the shelf collecting dust.
    Philip Spayd in an August 27, 2007 article in the Journal of 
Commerce sums it up best the ``128-page plan would receive a high grade 
as a research project for a graduate school class in international 
logistics, but which lacks any operational grounding.''
    It is time for the Department to develop this operational grounding 
and it time for the Department to meet the mandate set by the American 
public--freedom from fear.

    Ms. Sanchez. Other members of the subcommittee are reminded 
that, under the committee rules, opening statements may be 
submitted for the record.
    I welcome our first panel of witnesses. I will go through 
your backgrounds a bit, and then we will start from my left 
through the right for 5 minutes apiece, or under, if you can do 
that, to summarize your testimony.
    Our first witness, Ms. Maurine Fanguy, is director of the 
Transportation Worker Identification Credential, the TWIC 
program, at the Transportation Security Administration. And 
prior to joining TSA, she provided business and technology 
consulting services to private and public sector clients. She 
also worked on a wide range of homeland security-related 
projects there, including border management issues and the 
application of biometric technologies.
    Our second witness is Captain Francis Sturm, Deputy 
Director For Prevention Policy under the Assistant Commandant 
For Marine Safety, Security, and Stewardship at U.S. Coast 
Guard Headquarters. In this position, which he has held since 
May of 2006, Captain Sturm establishes and coordinates policies 
and priorities for inspection and compliance field missions. He 
previously served as chief office of port and facility 
activities at Coast Guard Headquarters from August of 2004.
    Our third witness is Mr. Winkowski, Assistant Commissioner 
for the Office of Field Operations at U.S. Customs and Border 
Protection. In that position, which he has held since August, 
he manages an operating budget approaching $2.5 billion, 
directs the activities of 24,000 employees, and oversees 
programs and operations at 20 major field offices, 326 ports of 
entry, 58 operational container security initiatives ports, and 
15 pre-clearance stations in Canada, Ireland, and the 
Caribbean. Thank you for making the time to be here with all 
that.
    Our fourth witness is Mr. Vayl Oxford, director of the 
Domestic Nuclear Detection Office at the Department of Homeland 
Security. Mr. Oxford was appointed director in December of 
2006. He is responsible for DNDO's jointly staffed office which 
serves as the primary entity in the United States Government to 
improve the Nation's capability to detect and report 
unauthorized attempts to import, possess, store, develop, or 
transport nuclear or radiological material for use against the 
Nation and to further enhance this capability over time. 
Welcome.
    And our final witness on the first panel is Mr. Stephen L. 
Caldwell, Director of Homeland and Justice Issues, Homeland 
Security and Justice Issues, Government Accountability Office. 
In this capacity, he provides direct support to congressional 
committees and to the individual Members of the House and 
Senate on Maritime Security and U.S. Coast Guard issues.
    Ms. Sanchez. Welcome to all of you. And, without objection, 
your full testimonies will be inserted in the record. And I 
will now ask each witness to summarize his or her statement for 
5 minutes, beginning with Mrs. Fanguy.

STATEMENT OF MAURINE FANGUY, DIRECTOR, TRANSPORTATION SECURITY 
        ADMINISTRATION, DEPARTMENT OF HOMELAND SECURITY

    Ms. Fanguy. Good afternoon, Madam Chairwoman, Ranking 
Member Souder, Chairman Thompson, and distinguished members of 
the subcommittee. My name is Maurine Fanguy, and I am the 
program director for the Transportation Worker Identification 
Credential program, also known as TWIC. Today I am here to show 
you the results of our efforts, the TWIC credential. In all of 
our previous meetings, we have talked to you about what we 
needed to do and what we are going to do. Now I would like to 
tell you what we have done.
    Since I last testified before you in April, I am proud to 
say we have completed testing and have made significant 
advances in all aspects of the program. Most importantly, we 
began enrollments in Wilmington, Delaware on October 16. 
Enrollment is going well to date. We have enrolled more than 
700 people and have more than 7,000 people pre-enrolled 
nationwide. Average enrollment time is under 15 minutes, and 
average wait time in Wilmington is about 6 minutes. These are 
real numbers that demonstrate real progress.
    As we speak, our team is preparing to begin enrollments in 
Corpus Christi this Thursday, November 1. After we verify 
successful operations in Corpus Christi on Thursday, we will 
issue the specific dates for the next 10 ports. Based on our 
progress to date, we are on track for mid November rollout in 
Baton Rouge, Beaumont, Honolulu, Oakland, and Tacoma. This 
group will be followed in late November by Chicago/Calumet, 
Houston, Port Arthur, Providence, and Savannah.
    TWIC is one of the world's most advanced interoperable 
biometric credentialing programs and is powered by state-of-
the-art technologies. As we continue to roll out across the 
Nation, TSA will vet as many workers in one day as we did in 
one year of prototype. That is over 5,000 workers a day. This 
program will impact hundreds of thousands of American workers 
who represent the backbone of global commerce. The start of 
enrollment represents a significant milestone in the program, 
and we have also taken other critical steps in our multi-
layered approach to securing our Nation's ports.
    First, we added 17 new TWIC enrollment sites based on 
stakeholder input. We understand the importance of making 
enrollment as convenient and accessible as possible. The 
additional sites bring the total number to fixed enrollment 
centers to 147 nationwide. We have also added mobile enrollment 
to take TWIC directly to the workers. Second, we reduce the 
price of a standard TWIC card to $132.50. It is very important 
to us to limit the cost to workers as much as possible. Third, 
we publish technical specifications for TWIC biometric card 
readers. This allows industry to enhance access control 
technologies used at 3,200 facilities and on 10,000 vessels.
    And, fourth, we held kickoff meetings with five card reader 
pilot participants. The Port Authorities of Long Beach, Los 
Angeles, New York and New Jersey, and Brownsville, as well as 
watermark cruises in Annapolis, were selected to represent a 
broad range of operating environments. We are continuing to 
meet with interested stakeholders to identify additional 
participants. We are pleased to have started in Wilmington, and 
look forward to the start of enrollment in Corpus Christi later 
this week. We will continue to work with our partners, the 
Coast Guard, maritime stakeholders, and this committee, to 
ensure the ongoing success of the TWIC program. We appreciate 
your support most recently in sending a staff delegation to 
Wilmington, and we look forward to hosting you at one of our 
enrollment centers soon.
    Thank you for the opportunity to appear today, and I would 
be happy to answer any questions.
    Ms. Sanchez. I thank the gentlelady.
    [The statement of Ms. Fanguy follows:]

                  Prepared Statement of Maurine Fanguy

    Good afternoon Chairwoman Sanchez, Ranking Member Souder, and 
distinguished members of the Sub-Committee. Thank you for this 
opportunity to share with you the significant progress we have made on 
the Transportation Worker Identification Credential (TWIC) program. I 
would like to acknowledge the leadership this sub-committee has 
provided in defining the vision for TWIC.
    The TWIC program is moving towards its objectives while making 
sound decisions focused on enhancing port security and a reasoned, 
phased-in program implementation approach. I am happy to inform the 
Committee that TWIC enrollments began in Wilmington, Delaware, on 
Tuesday, October 16, 2007. After successful start-up in Wilmington, we 
will now proceed to Corpus Christi in early November. By mid-November, 
enrollment will start in Baton Rouge, Beaumont, Honolulu, Oakland, and 
Tacoma. This group will be followed in late November by Chicago/
Calumet, Houston, Port Arthur, Providence, and Savannah.
    In addition to announcing the implementation of the program, we 
have made significant progress in other areas since our last appearance 
before this sub-committee:
         Implementation of the pre-enrollment capability;
         Completing test milestones on the enrollment system;
         Adding TWIC enrollment sites based on stakeholder 
        input;
         Reducing the price of a TWIC card;
         Establishing reader technical specifications; and
         Identifying card reader pilot participants and holding 
        kick-off meetings.

    Completing Test Milestones on the Enrollment System
    TWIC will impact hundreds of thousands of American workers 
essential to the smooth flow of global commerce. Once TWIC is up and 
running, TSA will vet as many workers in one day as we did during the 
entire year-long prototype. The importance and enormity of this task 
within the maritime environment, with a dynamic and mobile workforce, 
has demanded a methodical approach with rigorous testing.
    TWIC will be one of the world's most advanced, interoperable 
biometric credentialing programs and is powered by state-of-the-art 
technologies. We have completed our ``flight test'' of the full TWIC 
system, which has five main components:
         Pre-Enrollment Web Site: allows workers to schedule 
        appointments and provide information ahead of time to make 
        enrollment easier.
         Enrollment Center: captures a worker's biometric and 
        biographic information and submits the information for security 
        processing.
         TWIC Core System: routes applicant information for 
        processing, conducts data integrity checks, and manages the 
        status of TWIC cards.
         Screening Gateway: aggregates security threat 
        assessment data from the FBI, Citizenship and Immigration 
        Services, and watchlists. It is important to note that the 
        Screening Gateway is used across all of TSA's vetting programs.
         Card Production: electronically loads an applicant's 
        information onto a TWIC smart card and then physically produces 
        the card.
    All five of these parts were first tested individually. Next, these 
pieces were integrated to ensure the functionality of the end-to-end 
process of conducting accurate and timely security threat assessments 
and producing high quality credentials. In addition, security and 
privacy requirements were validated throughout the process. After our 
contractor verified system readiness, TSA completed independent 
verification before beginning final test enrollments in the field using 
live vetting on government and trusted contractor personnel.
    Today the switch has been turned on and the doors have opened with 
the commencement of enrollment in Wilmington, Delaware. After we verify 
successful enrollment operations in Wilmington, we will move forward to 
expand TWIC across the nation.

    Adding TWIC Enrollment Sites
    The TWIC final rule established a network of 130 enrollment sites 
located across the nation. Understanding the importance of making 
enrollment as convenient and accessible as possible, we have worked 
with maritime stakeholders, the Department, and our partners in the 
United States Coast Guard to add additional locations for TWIC 
enrollment centers. At this time, we will field 146 fixed enrollment 
centers. In addition, we have worked with our contractor to add a 
mobile enrollment capability to take TWIC to the workers.

    Reducing the Price of a TWIC Card
    TWIC is a fee-based program paid for by applicants. We fully 
realize that these costs are significant, and we are mindful of the 
need to identify areas for cost reduction. Recently, we announced that 
the fee for a standard TWIC will now be $132.50, a decrease from the 
price anticipated in the Final Rule. Workers with current, comparable 
threat assessments including HAZMAT, Merchant Mariner Document (MMD) or 
Free and Secure Trade (FAST)) will receive a discounted fee of $105.25. 
The cost of a lost, damaged or stolen credential is $60.

Establishing Reader Technical Specifications
    The TWIC technical architecture is compatible with the 
credentialing standards established in Federal Information Processing 
Standard (FIPS) 201-1. This alignment is critical to support card and 
reader interoperability within the maritime mode. In response to 
comments received on the initial TWIC Notice of Proposed Rulemaking 
(NPRM), TSA and the Coast Guard decided to remove the requirement for 
biometric readers from the TWIC final rule to allow time to establish 
technology specifications to support maritime operations.
    TSA and the Coast Guard sought the advice of the National Maritime 
Security Advisory Committee (NMSAC), which established a working group 
to collaboratively develop new technical specifications that complement 
FIPS 201-1 and add features that will support high-volume physical 
access in the harsh maritime environment. The working group included 
representatives from both the maritime and technology industries.
    TSA recently published the TWIC reader hardware and card 
application working technical specification. The working specification 
establishes the requirements for biometric card readers for the pilot 
projects required by the SAFE Port Act. These readers will be tested 
during the pilot program. As the card and readers are envisioned to 
operate when TWIC is fully implemented, use of a PIN will not be 
necessary to release the biometric, unless the owner/operator chooses 
to use contact readers and the contact side of the credential.

    Identifying Card Reader Pilot Participants and Holding Kick-Off 
Meetings
    As required by the SAFE Port Act, we have initiated pilot programs 
with five partners across the country to test card readers. The pilots 
will test access control technologies in real world marine 
environments. Our current list of participants includes the Port 
Authorities of Los Angeles, Long Beach, Brownsville, and New York/New 
Jersey, in addition to Watermark Cruises in Annapolis, Maryland. As 
part of the outreach efforts for the TWIC program and the Department's 
Port Security Grant Program, we continue to seek additional 
participants. Our objective is to include pilot test participants that 
are representative of a variety of facility vessels which operate in a 
variety of geographic locations and environmental conditions. There 
appears to be sufficient interest from the maritime community to 
achieve this objective.
    We are in the process of finalizing the test approach for the 
pilots. We are working with the Department of Homeland Security's 
Science and Technology component and the National Institute of 
Standards and Technology (NIST) to establish a test plan that will 
evaluate the card-reader interface under a variety of conditions and 
assess its impact on operations. Through the pilot tests, we will 
investigate the impacts of requiring biometric identity verification on 
business processes, technology, and operational impacts on facilities 
and vessels of various size, type, and location. As the program 
proceeds, the pilots will inform the TWIC reader rulemaking process and 
ultimately result in final regulations that require the deployment of 
transportation security card readers consistent with the findings of 
the pilot program.

    Lessons Learned and Future Efforts
    We are proud of the significant progress we have made in the past 
six months and are mindful of the challenges ahead. As we move forward 
in the TWIC program, we are committed to incorporating our lessons 
learned to drive sound management decisions geared at improving all 
aspects of the program, including:
         Look for efficiencies by eliminating duplicative 
        regulatory processes. TSA and Coast Guard are developing 
        procedures for the sharing of fingerprints, identity 
        verification, criminal history, and photographs for TWIC which 
        is expected to save not only money but time. In addition, 
        merchant mariners will no longer be required to visit a 
        Regional Exam Center to obtain and renew their credentials, 
        resulting in substantial time and travel savings.
         Place the highest value in stakeholder input; it is 
        time well spent. The public hearings, comments to the NPRM, 
        meeting with operators and associations, and contributions of 
        advisory councils all added great value. We came away from each 
        and every one of these efforts better informed about the 
        challenges, the unacceptable impacts, and the practicable 
        options for protecting our ports.
         Address the impact on small businesses. TSA and the 
        Coast Guard worked closely with the Small Business 
        Administration to minimize the financial and operational impact 
        on small businesses wherever possible. The rule includes 
        provisions that allow MTSA-regulated passenger vessels 
        (excluding cruise ships) to establish employee access areas for 
        crewmembers that do not require unescorted access to secure 
        areas such as the pilot house and engine room. This provision 
        reduces the impact on those employees who rarely need to use 
        spaces beyond those designated for support of passengers while 
        maintaining the integrity of vessels' secure areas. We are also 
        producing and distributing a Small Business Compliance Guide to 
        assist small businesses in their implementation of the program.
         When practical, preserve State regulatory flexibility. 
        Mariner regulations and port security plans preempt state 
        regulations. However, the TWIC regulations do not preempt 
        States from requiring background checks and badging systems for 
        non-security purposes in addition to TWIC. States may need to 
        set standards for important purposes other than terrorism 
        threats, such as theft or organized crime.
         Plan for privacy. All data collected at an enrollment 
        center will be completely deleted from the enrollment center 
        work stations after transmission to TSA. The entire enrollment 
        record (including all fingerprints collected) is stored in the 
        TSA system, which is protected through role-based entry, 
        encryption, and segmentation to prevent unauthorized use. No 
        paper records with personal identification information are 
        created in the enrollment process.
         Technical innovation requires adaptive contract 
        management. TWIC is attempting to develop a 21st century 
        technology that accommodates evolving IT standards suited to 
        emerging needs that span local, international, public, and 
        private interests. This requires continual reevaluation of the 
        scope and methods of contracting. The recent Lockheed Martin 
        performance-based contract award is a culmination of our 
        efforts to date. We will continue to look for and implement 
        adaptive program planning, contractor oversight, and metrics to 
        ensure the success of the program.
         Plan to address what issues may arise during testing. 
        Evolving technology, such as card readers, create a changing 
        environment and program control constraints. This is especially 
        the case when the technology must be deployed to a vast 
        multitude of entities with remote connectivity challenges 
        (e.g., vessels) and varying degrees of access control system 
        capabilities.

    Conclusion
    The steps we are taking will be an extremely important aspect to 
the security of our port facilities and vessels. TSA will continue to 
work with our partners, the U.S. Coast Guard and maritime stakeholders, 
to ensure that for the first time in history thousands of independent 
businesses will have one interoperable security network and workers 
will hold a common credential that can be used across that entire 
network.
    I appreciate the keen interest that this Sub-Committee has in an 
effective implementation of TWIC, and I thank you for your support. 
Madame Chairwoman, this concludes my testimony, and I would be pleased 
to answer any questions that you may have.

    Ms. Sanchez. And I now recognize Captain Sturm to summarize 
your statement in five minutes, please.

 STATEMENT OF CAPTAIN FRANCIS STURM, DEPUTY DIRECTOR, CHIEF OF 
   THE OFFICE OF PORT, VESSEL, AND FACILITY SECURITY, UNITED 
                       STATES COAST GUARD

    Captain Sturm. Good afternoon Chairwoman Sanchez, Ranking 
Member Souder, Chairman Thompson, distinguished members of the 
subcommittee. My name is Captain Frank Sturm, acting director 
of Prevention Policy for the U.S. Coast Guard. It is a pleasure 
to appear before you today to discuss the Coast Guard's efforts 
in implementing the SAFE Port Act requirements.
    The primary objective of the SAFE Port Act is to improve 
maritime and cargo security through an enhanced layered 
defense. The Coast Guard has been intimately involved in 
achieving many of the Act's requirements. In the interest of 
time, I will address the key SAFE Port Act requirements which 
involve Coast Guard action.
    The resumption of commerce and recovery of the Marine 
Transportation System, or MTS, following a significant 
disruption is a national issue of concern. The Maritime 
Transportation Security Act, or MTSA of 2002, required that the 
National Maritime Transportation Security Plan include a plan 
to restore cargo flow following a national transportation 
security incident. The Coast Guard held a national symposium in 
August of 2006 that resulted in specific recommendations on NTS 
recovery, and these are being jointly addressed within the 
Department of Homeland Security. These follow-up actions as 
required by section 101 of the Act include the development of 
salvage response plans within each area of Maritime Security 
Plan, or AMSP. The AMSP update is planned for completion by 
area maritime security committees during the summer of 2009 as 
part of the 5-year plan update cycle established by MTSA.
    Section of 104 of the SAFE Port Act includes a number of 
statutory requirements governing the implementation of the 
Transportation Worker Identification Credential, or TWIC. The 
Coast Guard and TSA met the section's first deadline with the 
posting of the TWIC final rule on January 1, 2007. The TWIC 
rule, together with the Merchant Mariner Credential Rule, which 
was published on January 25, 2007, will allow mariners to apply 
for or renew Merchant Mariner credentials through the mail 
concurrently with the TWIC enrollment process, thereby 
eliminating travel to Coast Guard regional exam centers and 
removing duplicative background checks and other application 
redundancies.
    The TWIC final rule also incorporates a background check 
process to enable newly hired workers to begin working while 
awaiting issuance of their TWIC. To enhance both the safety and 
security of vessels transiting our waters, the Act requires the 
establishment of a long-range automated vessel tracking system. 
This requirement demands a multi-faceted approach. Using the 
full range of classified and unclassified vessel tracking 
information, including some information purchased some vendors 
where appropriate, the Coast Guard currently meets or exceeds 
the tracking requirements of the Act. The Long-Range 
Identification and Tracking Notice of Proposed Rulemaking was 
published in the Federal Register on October 3, 2007.
    In accordance with section 113 the Coast Guard is 
supporting the Federal Emergency Management Agency, or FEMA, in 
implementing requirements relating to port security training. 
Collectively, progress has been made in establishing a program 
delineated in the Act. The Coast Guard and the Maritime 
Administration, or MARAD, have developed model courses for 
facility personnel to meet the requirements of 2002. These 
model courses establish a competency based standard and also 
cover the majority of the requirements of the SAFE Port Act.
    In addition, FEMA has awarded a $6.18 million cooperative 
grant to Florida State University to develop courses meeting 
requirements MTSA requirements and covering the eight port 
security related topics required under the SAFE Port Act.
    Federal funds have also been awarded to assist ports with 
security enhancements. Over $200 million in port security grand 
funding were available in fiscal year 2007. Initial reviews of 
the fiscal year 2007 grant applications were completed first by 
local captains of the port and then by a national review panel. 
Funds were awarded based on analysis of risk and the 
effectiveness of proposed investments, and results were 
announced on May 30, 2007. An additional $110 million was 
provided by Congress in supplemental port security grant 
funding earlier this calendar year. Awards for this funding 
were announced in September of 2007.
    Finally, in accordance with the Act, the Coast Guard has 
increased the pace of foreign port assessments and is on track 
to complete an initial assessment of all of our trading 
partners by March of 2008. We intend to conduct assessments on 
a two-year cycle thereafter and continue capacity building 
efforts overseas.
    In conclusion, the Coast Guard is committed to implementing 
all the various statutes within the SAFE Port Act. We continue 
to make headway on all fronts and look forward to future 
progress and partnerships with international, Federal, State, 
and local port organizations.
    Thank you for the opportunity to testify today.
    Ms. Sanchez. Thank you, Captain, for your testimony.
    [The statement of Captain Sturm follows:]

             Prepared Statement of Captain Francis J. Sturm

    Good afternoon Madame Chairwoman and distinguished members of the 
Subcommittee. I am Captain Francis J. Sturm, Acting Director for 
Prevention Policy under the Assistant Commandant for Marine Safety, 
Security and Stewardship at Coast Guard Headquarters. It is a pleasure 
to appear before you today to discuss the Coast Guard's efforts in 
implementing the Safety and Accountability for Every Port (SAFE Port) 
Act requirements one year after its implementation.
    The objective of the SAFE Port Act is ``to improve maritime and 
cargo security through enhanced layered defenses.'' The Coast Guard is 
cited as one of the primary organizations identified with specific 
responsibilities for implementing this overall objective. Several 
components within our organization have been involved in achieving the 
requirements since October 13, 2006 and I will address the SAFE Port 
Act requirements section-by-section.
    We have had many successes to date in meeting the requirements of 
the SAFE Port Act, including requirements involving the inclusion of 
Salvage Response Plans in Area Maritime Transportation Security Plans 
(Section 101); Unannounced Inspections of Maritime Facilities (Section 
103); the Port Security Training Program (Section 113); the Port 
Security Exercise Program (Section 114); and Foreign Port Assessments 
(Section 234).
    We recognize, however, that there is still work to be done. There 
are some timeline requirements in the SAFE Port Act that we have not 
met, including those related to Notice of Arrival for Foreign Vessels 
on the Outer Continental Shelf (Section 109) and Enhanced Crewmember 
Identification (Section 110). We are committed to working closely and 
diligently with our DHS partners to meet these and other requirements 
of the SAFE Port Act.

    Section 101 Area Maritime Transportation Security Plan to include 
salvage response plan
    Development of Salvage Response Plans within each Area Maritime 
Security Plan (AMSP) has been integrated into the five-year plan update 
cycle established by the Maritime Transportation Security Act (MTSA) of 
2002. The AMSP update will be performed by Federal Maritime Security 
Coordinators in consultation with their respective Area Maritime 
Security Committees and is planned for completion during early summer 
2009.
    A Salvage Response Plan will be a major element of the U.S. Marine 
Transportation System (MTS) recovery section of each AMSP and will 
provide the coordination and procedural foundation to support 
development of unified command incident action plans under the Incident 
Command System (ICS) construct when salvage response becomes necessary 
to facilitate resumption of trade. Authorities, capabilities, and other 
salvage issues are currently being coordinated with government and 
other partners. Consultation with national-level salvage industry 
representatives is continuing with the development of a Memorandum of 
Understanding (MOU) between the Coast Guard and the American Salvage 
Association. The MOU will establish a partnership with the goal of 
strengthening the communication and working relationship between the 
Coast Guard and the marine salvage and fire fighting industries to 
improve vessel and personnel safety; enhance national security 
preparedness and response; promote timely and professional salvage 
response to marine casualties; and enhance the protection of the 
environment along our nation's waterways.
    Resumption of commerce and recovery of the marine transportation 
system (MTS) following a significant disruption is a significant 
national issue of concern. The Maritime Transportation Security Act 
(MTSA) 2002 required that the National Maritime Transportation Security 
Plan include a plan to restore cargo flow following a National 
Transportation Security Incident (NTSI). The Coast Guard held a 
National Recovery Symposium at the National Maritime Institute of 
Technology and Graduate Studies on August 1st and 2nd, 2006. The 
symposium was attended by over 150 executive level participants from 
numerous branches of state and Federal government, as well as the 
private sector.
    The Coast Guard is currently developing a concept of operations and 
specific planning requirements and organizational structures to ensure 
a focus on MTS recovery following a significant disruptive incident. 
MTS recovery guidance will be harmonized with, and support 
implementation of, the Strategy to Enhance International Supply Chain 
Security recently completed by the Department of Homeland Security with 
Coast Guard and interagency input. Implementation guidance will also 
harmonize with MTS recovery principles gleaned from Hurricane Katrina 
lessons-learned that have already been published in the U.S. Coast 
Guard Incident Management Handbook.
    Review of maritime security developments since the implementation 
of MTSA, MTS recovery lessons from Hurricane Katrina, best Area 
Maritime Security practices from the field, and an update of MTSA 
implementation guidance are in progress. Review results to date have 
formed the basis for revising Navigation Vessel Inspection Circular 09-
02 which is used to guide the five-year AMSP update.
    Consistent with the overriding requirement to deter, and when 
necessary, mitigate the effects of Transportation Security Incidents 
(TSIs), the Coast Guard is working to make AMSP coordination and 
procedures ``all-hazard and transportation disruption'' compatible as 
much as practicable. This, in conjunction with oil and hazardous 
materials response coverage provided through Area Contingency Plans 
(ACP), application of Incident Command System (ICS) principles and 
structures per the National Incident Management System (NIMS), is 
intended to support an integrated and coherent preparedness approach 
across all transportation disruptions without requiring additional 
port-level plans.

Section 102 Requirements relating to maritime facility security plans
    The Coast Guard recognizes that information on ownership of 
maritime facilities and the companies that operate them is vitally 
important to the management of the security posture and the clear 
delineation of security responsibilities within the port. Currently, in 
33 CFR 104.415(b)(2), 105.415(b)(2), and 106.415(b)(2), the Coast Guard 
requires a security plan audit whenever the owner or operator of a 
vessel, facility or Outer Continental Shelf (OCS) facility changes. 
Should the audit reveal that an amendment to the security plan is 
necessary, the security officer of the vessel, facility or OCS facility 
will submit the amendment to the cognizant Captain of the Port or 
District Commander for approval. Consistent with the requirement in 
Section 102 of the SAFE Port Act, the DHS Appropriations Act of 2007 
requires the Coast Guard to gather ownership information on vessel and 
facility security plans.
    In order to meet the requirements in these statutes, the Coast 
Guard has initiated a regulatory project to update 33 CFR Subchapter H 
regulations and will incorporate these new ownership reporting 
requirements.
    Implementation of the Transportation Worker Identification 
Credential (TWIC) regulations published in January 2007 will meet the 
requirement in Section 102 for a qualified individual having full 
authority to implement security actions for a facility to be a citizen 
of the United States, unless the Secretary waives the requirement after 
a determination based on a complete background check of the individual. 
These regulations, found in 33 CFR 105.205(a)(4), require facility 
security officers (the qualified individuals in the statute) to possess 
and maintain a TWIC. The security threat assessment conducted as part 
of the TWIC program involves a complete background check, including a 
criminal history records check, a legal status check, and an 
intelligence and terrorist watch list check, to satisfy the relevant 
mandate within this section. In addition, the Coast Guard is addressing 
the requirement for Facility Security Officers to be U.S. citizens in 
the regulatory project to update Subchapter H. A final fee was 
published on September 28th along with some modifications to the 
earlier rule.

Section 103 Unannounced inspections of maritime facilities
    Currently, Coast Guard policy calls for an annual inspection of 
each facility, supplemented by periodic spot checks. The fiscal year 
2007 Homeland Security Appropriations Act provided $15M to, among other 
efforts, fund additional port security inspections. With this funding, 
the Coast Guard has created 39 new field billets to add to the current 
350 facility inspectors. Thirty-seven of these new billets were filled 
during the 2007 transfer season, and the remaining two are in the 
process of being filled. The Coast Guard conducted more than 7,500 
annual inspections and spot checks of 3,200 facilities in calendar year 
2006. We have also applied additional reserve billets this year to 
increase facility visits and ensure each facility is inspected not less 
than two times this year. At least one of those inspections will be 
unannounced.

Section 104 Transportation security card
    Section 104 of the SAFE Port Act includes a number of statutory 
requirements relating to the implementation of the TWIC program. The 
effort to promulgate TWIC requirements through the rulemaking process 
met its SAFE Port Act deadline of January 1, 2007 with the posting of 
the TWIC Final Rule. This rule, together with the Merchant Mariner 
Credential Supplemental Notice of Proposed Rulemaking published on 
January 25, 2007, will allow mariners to apply for or renew merchant 
mariner credentials through the mail concurrently with the TWIC 
enrollment process, eliminating travel to Coast Guard Regional Exam 
Centers and removing duplicative background checks and other 
application redundancies which exist under each program. Also, the TWIC 
final rule incorporates a background check process to enable newly 
hired workers to begin working while awaiting issuance of their TWIC, 
in accordance with the Act.
    The Coast Guard continues to support the Transportation Security 
Administration's (TSA's) efforts to implement the TWIC program by 
providing field and industry guidance to assist with compliance and 
enforcement activities. In addition, the Coast Guard is working closely 
with DHS and TSA on the pilot program to test the implementation of 
card readers to provide critical information and lessons to inform a 
second rulemaking to address TWIC readers. As part of our support for 
this effort, the Coast Guard, jointly with TSA, charged the National 
Maritime Security Advisory Committee (NMSAC) to form a working group of 
maritime industry and biometric technology representatives to propose 
specifications for TWIC cards and card readers using a contactless (or 
proximity) interface. The NMSAC presented recommended specifications on 
February 28, 2007. A notice of availability of the specifications was 
published in the Federal Register for public comment on March 16, 2007 
and the notice of availability of the final contactless specification 
was published in the Federal Register on September 20, 2007.
    Work continues on several aspects of the TWIC Program. The Coast 
Guard intends to purchase handheld card readers in fiscal year 2008 for 
use during vessel and facility inspections and spot checks. After the 
compliance date passes in a given port, the Coast Guard will use the 
card readers to randomly check the validity of an individual's TWIC. 
Also, the provision for newly hired employees to work while they await 
issuance of a TWIC is in development and on track. The Coast Guard has 
received stakeholder comments on policy and included them in the form 
of a Navigation and Vessel Inspection Circular (NVIC) which provides 
guidance and instruction on how to implement TWIC regulatory 
requirements for access control on facilities and vessels. This NVIC 
was published in July 2007.

Section 107 Long-range vessel tracking
    The Coast Guard currently meets the intent and requirements of the 
Act, using the full range of classified and unclassified vessel 
tracking information available. However, it takes up to two years to 
develop and finalize a regulation. While the Long Range Identification 
and Tracking (LRIT) NPRM did not meet the April 1, 2007 deadline, it 
was published in the Federal Register on October 3, 2007. The Act 
requires the DHS Secretary to establish a long range automated vessel 
tracking system that meets the following:
         Tracking: Provided for all vessels in U.S. waters 
        equipped with Global Maritime Distress and Safety System 
        (GMDSS) or equivalent satellite technology; and
         International: Consistent with international treaties, 
        conventions and agreements.

    Tracking:
    The SAFE Port Act requirement demands a multi-faceted approach. 
Using the full range of classified and unclassified vessel tracking 
info available, including some information purchased from vendors where 
appropriate, the Coast Guard currently meets and exceeds the tracking 
requirement of the Act. Currently, sufficient tracking information 
exists; however more work is needed in processing, display, and 
training in the use of this information.
    International:
    Our work to establish a system through the International Maritime 
Organization (IMO) will provide an unclassified global tracking 
capability in 2008 as a part of an existing IMO convention and give the 
United States a system that is compatible and interoperable with the 
global maritime community. The Coast Guard has been working with the 
IMO since shortly after 9/11 to implement a global tracking system for 
the types of vessels described in the Act. Following considerable 
diplomatic efforts, the international agreement to implement such a 
system was reached last year, and the global tracking system will be in 
effect at the end of 2008. In the long run, this approach is more 
advantages to the United States because it applies globally to all the 
world's ships of the kind described by the Act instead of just those in 
U.S. waters or vessels intending to make ports call in the United 
States. Under this system, the U.S. will have access to information for 
U.S. Flag vessels regardless of their current location, and vessels 
bound for U.S. ports when they declare intent to arrive. Information on 
all other vessels will be available whenever a ship is within 1,000 
nautical miles of the U.S. coast. The Coast Guard is examining funding 
strategies for this important international system.
    To complement the above activities, the Coast Guard also initiated 
a rulemaking to implement in Title 33 of the Code of Federal 
Regulations rules that require ships to report identifying and position 
data electronically. These rules provide guidance to U.S. and foreign 
ships on how to comply with this new reporting requirement, as well as 
an additional enforcement mechanism for ships that fail to comply.

Section 108 Establishment of Interagency Operational Centers for Port 
Security
    Section 108 requires a budget and cost-sharing analysis for 
implementing interagency operations centers. The report required by 
this Section was submitted in July. It identified the estimated total 
acquisition cost of upgrading the 24 Coast Guard Sector Command Centers 
(SCCs), which encompass the Nation's high priority ports, as 
approximately $260 million. The major cost elements of this five-year 
project plan include an information management software suite, a sensor 
package and facility recapitalization.
    The establishment of interagency operations centers is currently 
not funded. In cooperation with the Department of Justice (DOJ), the 
U.S. Navy, and the DHS Office of Science and Technology, five prototype 
centers have been established to date. These centers are each 
configured differently as test beds for concepts, tactics, procedures 
and equipment. Cost sharing arrangements exist among the various 
participants.

----------------------------------------------------------------------------------------------------------------
          Designator                             Location                           Cost-Sharing Agencies
----------------------------------------------------------------------------------------------------------------
    Seahawk Joint Task Force   Charleston, SC                                Dept. of Justice/U. S. Coast Guard
----------------------------------------------------------------------------------------------------------------
                  SCC*-Joint   Hampton Roads, VA                                    U. S. Coast Guard/U.S. Navy
----------------------------------------------------------------------------------------------------------------
                   SCC-Joint   San Diego, CA                                         U.S. Coast Guard/U.S. Navy
----------------------------------------------------------------------------------------------------------------
                   SCC-Joint   Jacksonville, FL                                      U.S. Coast Guard/U.S. Navy
----------------------------------------------------------------------------------------------------------------
                   SCC-Joint   Seattle, WA                                           U.S. Coast Guard/U.S. Navy
----------------------------------------------------------------------------------------------------------------

*Sector Command Center
    Additionally, seven ports have been identified for short and 
medium term pilot projects to evaluate joint operations design models 
between the Coast Guard and Customs and Border Protection (CBP). These 
pilots will include examination of methods for implementation of a 
virtual command center construct using various collaboration tools for 
daily coordination and vessel inspection planning.
    Command 21, when funded, will field the capabilities necessary to 
create interagency operations centers as required by Section 108. This 
establishment of proposed interagency operational centers for port 
security is a major system acquisition tailored to each port and 
designed to close gaps in port and coastal maritime security.
    Command 21 will:
         Improve maritime port and coastal security systems to 
        complement Secure Border Initiative (SBI) Net;
         Improve unity of effort in a multi-agency operations 
        center environment;
         Accelerate deployment of a net-centric tactical system 
        that implements DHS enterprise standards for the sharing of 
        situation data and services across multiple DHS interagency 
        domains and Coast Guard systems; and
         Counter the small vessel threat in port and coastal 
        areas.
    The Coast Guard's experience with interagency operations centers 
demonstrates that many tangible benefits to improve maritime safety, 
security, and stewardship can be achieved. Some of these include:
         Cooperative targeting and coordination of intelligence 
        facilitates information sharing;
         Daily field-level coordination breaks down barriers 
        between agencies;
         Collective use of tactical sensors (radars/cameras) 
        saves time, money and effort;
         Cooperative planning improves readiness and 
        efficiency; and
         Sharing of law enforcement information helps reduce 
        criminal activity in the port and cut off potential funding to 
        terrorist groups.
    Command 21 will close a critical gap between current capabilities 
and the desired interagency end state. Future interagency operations 
will be greatly improved as all partners will be able to:
         See maritime activities using port surveillance 
        sensors;
         Understand the scene by automatically bringing 
        tactical and intelligence information together; and
         Share this tactical data with each other as they work 
        side by side in improved facilities.
    To close the gap between the current Sector Command Center (SCC) 
capabilities and the future state desired by the Act, the Coast Guard 
must field a sensor network and an information system allowing the 
centers to monitor maritime activities in critical areas. That system 
must link vital data on vessel history, crew, and cargo to the 
activities observed. The current SCC facilities must also be 
sufficiently expanded to host port partners in an interagency 
operations environment, as directed by the SAFE Port Act and the 
Maritime Transportation Safety Act.
    Command 21 will publish tactical data in an open standard that 
allows other systems across multiple DHS domains to subscribe to the 
information and use according to the individual needs of each agency. 
It provides the maritime component of the Department of Homeland 
Security's Secure Border Initiative (SBI). Good government demands that 
both programs move forward in parallel to increase deterrence 
capabilities. Moving ahead on both fronts will provide collaborative 
opportunities to leverage critical resources to broaden the impact of 
both programs toward securing our borders.

Section 109 Notice of arrival for foreign vessels on the Outer 
Continental Shelf
    The regulations for Notice of Arrival for foreign vessels on the 
Outer Continental Shelf (OCS) have been developed and incorporated into 
an existing Coast Guard rulemaking project related to OCS activities. 
This rulemaking, the updating of 33 CFR Subchapter N, ``Outer 
Continental Shelf Activities,'' already includes Notice of Arrival 
requirements for foreign vessels operating on the OCS. The Coast Guard 
has completed evaluation of the proposed regulations and public 
comments, and an interim rule will be issued to implement the 
provisions of Section 109 as expeditiously as possible. The earliest 
anticipated action would be an Interim Rule by March 2008. If an NPRM 
is required, anticipated completion time would be at least two years.

Section 110 Enhanced crewmember identification
    Historically, the Coast Guard advanced the effort to negotiate the 
international seafarer's identification initiative at the International 
Labor Organization (ILO), resulting in the ILO-185 Seafarer's 
Identification Document (SID). However, a requirement within ILO 185 
prohibiting implementing nations from requiring a visa for seafarers 
holding a SID to be eligible for shore leave has prevented the U.S. 
from ratifying ILO 185.
    In accordance with the Act, the Coast Guard has prepared a draft 
NPRM defining the identification documents necessary for all foreign 
mariners calling on U.S. ports. The proposed identification 
requirements would also apply to US mariners arriving at U.S. ports 
from a foreign port of place of departure.

Section 111 Risk assessment tool
    The Maritime Security Risk Analysis Model (MSRAM) is being used by 
Captains of the Ports/Federal Maritime Security Coordinators (FMSCs) 
and Area Maritime Security Committees (AMSC) to analyze and prioritize 
scenario-based risks within their areas of responsibility, and to 
measure risk reduction potential in the evaluation of port security 
grant program proposals. FMSC and AMSCs are required to validate the 
MSRAM data on an annual basis. This was last completed in the summer of 
2007 using MSRAM version 2.

Section 112 Port security grants
    The Coast Guard worked with the DHS Office of Grants and Training, 
who has fiduciary responsibility for the Port Security Grant Program, 
to complete the report to Congress required by this Section. The report 
was submitted to Congress on April 27, 2007.
    The Port Security Grant Program (PSGP) provides grant funding to 
port areas for the protection of critical port infrastructure from 
terrorism. fiscal year 2007 PSGP funds are primarily intended to assist 
ports in enhancing risk management capabilities; domain awareness; 
capabilities to prevent, detect, respond to and recover from attacks 
involving improvised explosive devices (IEDs) and other non-
conventional weapons; as well as training and exercises.
    $201,670,000 was available for Port Security Grants in fiscal year 
2007. These funds were divided amongst four tiers of ports. Within Tier 
I, eight of the highest risk port regions were allocated a fixed amount 
of funding based on risk. In many cases, multiple port areas were 
grouped together to reflect geographic proximity, shared risk, and a 
common waterway. Port areas submitting applications within Tier II and 
III were eligible to compete for the fiscal year 2007 PSGP but were not 
guaranteed funding. Section 112 of the SAFE Port Act also required that 
any entity addressed in an Area Maritime Security Plan also be eligible 
to apply. Tier IV was established for those new entities not within the 
port areas in Tiers I-III. This added approximately 259 ports to the 
102 highest risk ports for a total of 361 that were eligible to 
compete, but were not guaranteed funding.
    Funds were awarded based on analysis of risk and effectiveness of 
proposed investments by the applicants. Risk to port Infrastructure 
Protection Program Detail areas was assessed using a methodology 
consisting of threat, vulnerability, and consequence factors. The 
majority of port security grant funds--$120.6 million--was allocated to 
eight Tier I ports or port areas that we consider to be the highest 
risk.
    Grant applicants had 60 days from January 6, 2007 to complete this 
process for the remaining $81M. Applications were required to be 
submitted electronically via the grants.gov web site no later than 
March 6, 2007. The initial reviews were completed by the local Captain 
of the Port. These results were forwarded to a national review panel 
comprised of representatives from the Coast Guard, the Transportation 
Security Administration (TSA), DHS Infrastructure Protection (IP), 
Grants and Training (G&T), the Domestic Nuclear Detection Office 
(DNDO), and the Maritime Administration (MARAD) that convened on April 
9, 2007. The results were announced on May 30, 2007.
    The $110 million was provided by Congress in supplemental Port 
Security Grant Funding (P.L. 110-28, the U.S. Troop Readiness, 
Veterans' Care, Katrina Recovery, and Iraq Accountability 
Appropriations Act, 2007). Using the same risk-based analysis utilized 
during the initial fiscal year 2007 Port Security Grants, funds were 
allocated to Tier I and II ports to develop a Port-Wide Risk 
Management/Mitigation and Business Continuity/Resumption of Trade Plan 
which will identify a prioritized listing of items to be addressed 
within future grant applications. Tier III ports that previously 
submitted projects under the initial fiscal year 2007 PSG Program which 
were validated but unfunded, are to be funded with the Supplemental 
Grant. Tier IV ports also applied for TWIC and Training under the 
Supplemental Grant funding. The application period has closed. Both 
field and national review of the Supplemental applications have been 
completed, with announcement of all awards completed in September 2007.

Section 113 Port Security Training Program
    The Coast Guard is supporting the FEMA National Preparedness 
Directorate's National Integration Center through Training and 
Exercises Integration (formerly known as the DHS Preparedness 
Directorate, Office of Grants and Training Division). Collectively, we 
are making progress in establishing the program delineated in the Act. 
There are a number of existing initiatives and new initiatives that 
will address the requirements in this section.
    In response to Congressional mandate, the Coast Guard and MARAD 
developed model courses for the training of facility and other 
personnel to meet the requirements of the Maritime Transportation 
Security Act of 2002. These model courses establish a competence based 
standard and contain most of the requirements under this Section of the 
Act. The model courses were developed in support of the facility 
security plan requirements, and apply to all personnel working in a 
port facility or required to enter a port facility in response to an 
emergency. These model courses are available via website to Federal, 
state and local personnel from the public and private sector and they 
are undergoing a review to include lessons learned and the additional 
topics required under the Act. To ensure quality training, Coast Guard 
and MARAD developed and implemented a voluntary course acceptance and 
certification process using the model courses as the guidelines for 
acceptance. The Coast Guard is currently revising the regulations for 
security training for facility personnel to ensure all training is 
measured against a standard of competence, including the topics 
required under the SAFE Port Act.
    The FEMA National Preparedness Directorate's National Integration 
Center, through Training and Exercises Integration, has awarded a $6.18 
million Cooperative Grant to the Florida State University to develop 
courses meeting the Maritime Transportation Security Act of 2002 
requirements (model courses), and covering the eight port security-
related topics required under the Act. MARAD and the Coast Guard are 
actively assisting DHS to ensure this training will be consistent with 
existing standards and will provide the maximum possible return on 
investment. It is envisioned that these courses will be available for 
in-classroom and on-line training; and will be available both to 
Federal, state and local personnel as well as members of the private 
sector who work in the port security realm.
    In addition, the FEMA National Preparedness Directorate's National 
Integration Center, through Training and Exercises Integration, has 
made available other training courses that address individual port 
security topics required under the Act. These courses are provided to 
State and local emergency responders and other identified audiences by 
Training and Exercises Integration, and are coordinated by each State's 
governor-designated Training Point of Contact.

Section 114 Port Security Exercise Program
    Current port security exercise programs conduct live, risk-based 
exercises that are realistic and evaluate total capability by focusing 
on the port community, in order to evaluate the entire capability. 
These exercises involve State and local governments, as well as 
facilities and vessels, to ensure that consistent methodology is 
applied and that all requirements are met as a result. Although current 
programs do not mandate facility participation in these annual 
exercises, participation has been strong and continues to increase. 
Facilities, as well as vessels, are encouraged to observe and/or 
participate in these port security exercises. When they choose to 
participate, they are offered the opportunity to put forth exercise 
objectives tailored to meet their specific needs.
    Since January 2005, the Coast Guard has assisted TSA in 
implementing their Port Security Training and Exercise Program 
(PortSTEP). Similarly, since October 2005, the Coast Guard has 
sponsored its own Area Maritime Security Training and Exercise Program 
(AMStep) that exercises the port stakeholder's ability to implement the 
provisions of the Area Maritime Security Plan. The Coast Guard and TSA 
have synchronized AMStep and PortSTEP to maximize coverage across the 
U.S. and minimize duplication of effort. In fiscal year 2007, these two 
programs collectively sponsored 41 port security exercises. Exercise 
types have included basic and advanced table-top, discussion-based 
exercises to full-scale, operations-based exercises. The type of 
exercise and scenario selected are collectively decided upon by Area 
Maritime Security Committee (AMSC) members, through application of 
their most current risk-based port assessment and assessment of 
preparedness needs. The results of both these exercise programs and all 
lessons learned, best practices, and corrective actions are documented 
in a semi-annual report to Congress.
    The ``Training'' aspect of current port security exercise programs 
focuses on the National Incident Management System (NIMS) Incident 
Command System (ICS). Training, such as I-200 (Basic), I-300 
(Intermediate) and I-320 (Team training), is offered to the entire port 
community prior to each annual exercise. Security-specific training is 
provided from within the port community.
    Initial performance measures for port security exercises were 
established under Coast Guard NVIC 09-02, Change 2. These measures, 
outlined as objectives, are currently being revised by the Coast Guard 
to align with MTSA requirements to test the AMSPs and with the Homeland 
Security Exercise and Evaluation Program. All Lessons Learned, Best 
Practices, and Remedial Action Items are captured in the Coast Guard's 
Contingency Preparedness System (CPS), which can be accessed by the 
entire Coast Guard. Additionally, through the use of Homeport, the 
Coast Guard's communications and collaborations Information Technology 
application, Lessons Learned and Best Practices, can be made available 
to the entire port community (Federal, state, local, tribal and 
industry).
    Although AMStep is currently being carried out under contract 
support, the Coast Guard has begun the hiring of personnel to staff 
National-level and Regional-level exercise support teams. These teams 
will assist Coast Guard Sector Commands (port-level) and Districts with 
the following contingency exercise programs: port security, oil/
hazardous substance response, natural disaster, mass rescue, alien 
migration interdiction, civil disturbance, counterterrorism, military 
outload, combatant commander support, and physical security/force 
protection. This is an ``All Threats / All Hazards'' approach.

Section 115 Facility exercise requirements
    Current regulations in 33 CFR 105.220(c) require facilities to 
conduct an annual exercise. These exercises may include either live, 
tabletop, or participation in a non-site-specific exercise. In order to 
meet the requirement in Section 115, the Coast Guard has initiated a 
regulatory project to update 33 CFR Subchapter H regulations and will 
incorporate definition of ``high risk facility'' and the requirement 
for high risk facilities to conduct bi-annual full-scale exercises. The 
NPRM for this rulemaking is scheduled to be published in the spring of 
2008.

Section 128 Center of Excellence for Maritime, Island and Extreme/
Remote Environment Security
    The Coast Guard is assisting the DHS Science and Technology (S&T) 
Directorate to meet the requirements of Section 108. The Broad Area 
Announcement (BAA) for a Center of Excellence (COE) for Maritime, 
Island and Extreme/Remote Environment Security was announced at the 
beginning of February 2007. This BAA incorporated Maritime Domain 
Awareness (MDA) study as a central component of a broader system of 
research into maritime security. This solicitation is still open, and 
there has been good response from the academic community. DHS S&T 
expects to award the COE by the end of 2007. The Coast Guard looks 
forward to this important new research component that will support DHS.

Section 201 Strategic plan to enhance the security of the international 
supply chain
    The Coast Guard assisted the Department of Homeland Security's 
authoring team in drafting the required Strategy to Enhance 
International Supply Chain Security, providing lead authors for 
sections on response and recovery. Looking forward, the Coast Guard is 
working to structure the first required five-year update to Area 
Maritime Security Plans (AMSP) to position them to support field-level 
implementation of the strategy as it pertains to Transportation 
Security Incidents (TSI). A planning objective is to make these 
community-based coordination arrangements and procedures compatible for 
application during other forms of transportation disruption, insofar as 
practicable. We assigned the same Coast Guard subject matter experts to 
support each initiative, thereby facilitating content alignment for 
this purpose.

Section 233 International cooperation and coordination
    The Coast Guard has been working with a variety of international 
organizations including the Asia Pacific Economic Cooperation (APEC) 
Forum, the Group of Eight (G8), and the Organization of American States 
(OAS) to conduct capacity building activities to improve the port 
security regimes of developing countries. Coast Guard representatives 
serve on maritime security expert groups of these organizations and 
have been intimately involved in identifying and executing projects.
    Of particular note is our work with the OAS, an organization that 
is specifically mentioned in the SAFE Port Act for close coordination. 
Through the Inter-American Committee on Counter-Terrorism (an OAS 
body), and in conjunction with Canada, the Coast Guard is developing a 
series of exercises and best practice conferences. The first port 
security exercise was completed in Argentina in September 2007.
    ``The North Pacific Coast Guard Forum has had some notable 
successes in the area of joint operations recently, and the North 
Atlantic Coast Guard Forum will hold its first meeting late in October 
in Sweden.''

Section 234 Foreign port assessments
    The Coast Guard has increased the pace of assessments and is on 
track to complete an initial assessment of all of our trading partners 
by March 2008. The Coast Guard intends to conduct assessments on a two 
year cycle thereafter.
    This two year cycle is consistent with the guidance contained in 
the fiscal year 2007 DHS Appropriations Act, which called on the Coast 
Guard to double the rate of assessments (basically from three per month 
to six per month). This reassessment cycle actually exceeds the 
requirement of the SAFE Port Act which call for reassessments to be 
conducted on a three year cycle. Additional resources (approx. $6.7M 
and 32 FTE) provided in the fiscal year 2007 DHS Appropriations Act 
support this increase in activity.

Section 303 Research, development, test, and evaluation efforts in 
furtherance of maritime and cargo security
    DHS and the Coast Guard have current and planned efforts to support 
the furtherance of maritime and cargo security. The Coast Guard RDT&E 
efforts for fiscal year 2007 include:

------------------------------------------------------------------------
        Mission Areas                      Programs/Projects
------------------------------------------------------------------------
   Boarding Team Support and   1. Maritime Biometrics, ID at Sea
               Communications  2. Boarding Team Connectivity
                               3. Next Generation Underway Connectivity
                               4. Boarding Officer Tools and Equipment
                                Support
------------------------------------------------------------------------
           Compel Compliance   1. Anti-Personnel
                               2. Stopping Mid-Sized Vessels
------------------------------------------------------------------------
       Platforms and Sensors   1. Acoustic Buoy
                               2. Multi-Sensor Performance Prediction
                               3. Global Observer
                               4. Small UAS Evaluations
------------------------------------------------------------------------
    Sector and Port Security   1. Maritime Domain Awareness Community of
                   Operations   Interest
                               2. National Automatic Identification
                                System
------------------------------------------------------------------------
               Miscellaneous   1. Net-Centricity
                               2. Weapons of Mass D
------------------------------------------------------------------------


------------------------------------------------------------------------
                 Mission Areas                      Programs/Projects
------------------------------------------------------------------------
     Boarding Team Support and Communications   1. Boarding Team
                                                 Communications
------------------------------------------------------------------------
         Sensor, Data Fusion, & Decision Aids   1. Visualization Tools
                                    (Maritime)  2. Hawkeye Watch keeper
                                                 Prototype
                                                3. Offshore Buoys for
                                                 Vessel Detection
                                                4. Emergence Response
                                                 Blue Force Tracking
                                                5. Swimmer/Diver
                                                 Detection
                                                6. Global Observer
------------------------------------------------------------------------

    DHS S&T fiscal year 2008 funding has yet to be defined. The Coast 
Guard is planning a comparable dollar figure to support the furtherance 
of maritime and cargo security in fiscal year 2008. Through the DHS S&T 
established Capstone Integrated Product Teams (IPT), fiscal year 2009-
2013 funding has been identified for the furtherance of maritime and 
cargo security through the Maritime Security Capstone IPT and the Cargo 
Capstone IPT.

Conclusion
    The Coast Guard is committed to implementing the Security and 
Accountability for Every Port Act. We continue to make headway on all 
fronts and look forward to future progress and partnerships with 
international, Federal, state, and local port organizations. Thank you 
for the opportunity to testify before you today. I will be happy to 
answer any questions you may have.

    Ms. Sanchez. And I now recognize Mr. Winkowski to summarize 
his statement for 5 minutes.

 STATEMENT OF THOMAS WINKOWSKI, ASSISTANT COMMISSIONER, OFFICE 
    OF FIELD OPERATIONS, U.S. CUSTOMS AND BORDER PROTECTION

    Mr. Winkowski. Good afternoon, Chairwoman Sanchez, Ranking 
Member Souder, and Chairman Thompson and distinguished members 
of the committee. Thank you for this opportunity to discuss 
with you today the status of U.S. Customs and Border 
Protection's efforts since the passage of the SAFE Port Act one 
year ago.
    I would first like to thank Congress and in particular this 
committee for your continued interest in the important subject 
of maritime and supply chain security. As you know, CBP as 
developed and implemented unprecedented initiative to achieve 
our twin goals of both strengthening the security of cargo 
entering our borders and facilitating the flow of legitimate 
trade and travel. CBP uses a multi-layer approach to ensure the 
integrity of the supply chain from the point of stopping 
through vessel arrival at U.S. ports of entry. This multi-
layered approach includes a use of trained CBP officers, 
technology automation, electronic information, and partnerships 
with the trade and foreign governments.
    I would like to take a moment to highlight some of the 
important accomplishments that demonstrate how far we have come 
since September 11, and provide insight on some of the efforts 
CBP has made over the last 12 months to meet the requirements 
of the SAFE Port Act.
    CBP, through the Container Security Initiative, and in 
coordination with the Department of Energy's megaport program, 
has partnered with other countries to deploy personnel and 
technology in an effort to prevent terrorists and terrorist 
weapons from entering the United States. Today, CSI is now 
operational in 58 ports covering 86 percent of the maritime 
containerized cargo shipped to the United States. At these 58 
locations worldwide, CBP officers and ICE agents working 
alongside their host government counterparts identify the 
highest risk cargo and perform examinations before the cargo is 
laden on board a vessel destined for the United States, and CBP 
continues to enhance and improve upon this program for the 
Secure Freight Initiative.
    I am pleased to announce that on October 13, the first 
phase of SFI became fully operational at three ports, thus 
meeting the requirements of the SAFE Port Act. Through a 
successful partnership of DHS and Departments of Energy and 
State, containerized shipments from Pakistan, Honduras, and 
United Kingdom, South Hampton, now undergo 100 percent scanning 
before the containers are loaded on their vessel destined for 
the United States. Surpassing the SAFE Port Act requirements, 
DHS is also partnering with four of the world's largest 
container ports to further explore the concept of 100 percent 
scanning in the real world environment, Singapore, Busan, Oman, 
and Hong Kong.
    The size and complexity of these larger ports require 
initial limited deployment and will enhance our understanding 
of the challenges of 100 percent scanning in high volume and 
trans-shipment ports. DHS will submit a report to Congress in 
April 2008 detailing the progress made under SFI. The data 
experience and lessons learned from the initial phase of SFI 
will provide necessary insight into the practicality and 
benefits of 100 percent scanning, and will certainly guide any 
decisions regarding the potential expansion of SFI.
    One of the key components of CBP's layered defense is the 
advanced electronic cargo information required of all modes of 
transportation by the Trade Act of 2002, the SAFE Port Act 
mandated provisions of additional data elements for four 
improved high-risk targeting and the overall enhancements 
targeting system.
    Working with the advisory committee on commercial 
operations, CBP has proposed a new security filing better known 
as 10-plus-2 in an effort to obtain additional advanced cargo 
information and enhance our ability risk-based targeting. Under 
this initiative, the importer's designated agent will file 10 
new unique data elements not currently provided to CBP, while 
carriers will provide stowe-plan data and container status 
messages.
    C-TPAT. Another important layer of our strategy is a C-TPAT 
program. Under C-TPAT, CBP works in partnership with the trade 
community to better secure goods moving through the 
international supply chain. As of October 26, there were 7,800 
companies certified in the C6,100 validations in 85 countries 
today, with another 800 validations in progress which will be 
complete by year's end. CBP's goal is to meet the SAFE Ports 
Act requirement and to validate all members within one year of 
certification, and revalidate all validated members not less 
than once every 4 years.
    Working with COAC, CBP has also developed and implemented a 
pilot program using third parties to validate supply chains 
where CBP currently lacks full access.
    In May 2007, CBP selected 11 firms to act as validators in 
China. Interest in the pilot program has thus at minimum over 
300 C-TPAT importers were invited to participate in this 
voluntary program in June, and to date less than a dozen 
importers have opted to do so. Upon conclusion of the pilot in 
June 2008, we will provide a full report on the effectiveness 
of using third-party firms to perform C-TPAT validations.
    With that, I conclude my comments and look forward to your 
questions.
    Ms. Sanchez. Thank you.
    [The statement of Mr. Winkowski follows:]

               Prepared Statement of Thomas S. Winkowski

Introduction
    U.S. Customs and Border Protection (CBP) appreciates this 
opportunity to discuss with you today the Security and Accountability 
For Every Port Act (SAFE Port Act) and the efforts of CBP nearly one 
year after its passage.
    It is noteworthy that CBP worked quite closely with the House and 
Senate in the development of the SAFE Port Act and applaud the high 
level of Congressional interest in securing United States ports and the 
global supply chain. Much of what is in the SAFE Port Act codified 
initiatives that the U.S. Customs Service, now CBP, undertook 
immediately after 9/11 and has been implementing successfully ever 
since.
    Below are updates on the primary areas of activity being undertaken 
by CBP to fully implement the Act.

Container Security Initiative (CSI)
    To meet the priority mission of preventing terrorists and terrorist 
weapons from entering the United States, CBP has partnered with other 
countries through the Container Security Initiative (CSI) to deploy 
multi-disciplined teams to selected foreign seaports to identify cargo 
containers that pose a potential risk for terrorism and inspect those 
containers at the foreign ports before they are shipped to the United 
States. CSI is an example where the SAFE Port Act codified existing DHS 
programs, and CBP is in compliance with the Act's mandates.
    Almost 32,000 seagoing containers arrive and are off loaded at 
United States seaports each day. In fiscal year 2006, that equated to 
11.6 million cargo containers annually. Because of the sheer volume of 
sea container traffic and the opportunities it presents for terrorists, 
containerized shipping is uniquely vulnerable to terrorist 
exploitation. CSI's effectiveness and successes can be measured by 
several factors. At its core is the cooperation and information sharing 
between the CBP officers in the foreign seaports and the host 
government personnel. Additionally, CSI has been instrumental in 
enhancing port security. Through CSI, many foreign ports that 
previously did not utilize or possess non-intrusive inspection (NII) 
equipment now have either purchased their own or have access to NII 
equipment. Additionally, CSI has partnered with Department of Energy's 
Megaports Initiative at several CSI ports to further enhance the host 
nation's capability to screen cargo for nuclear and other radioactive 
materials that could be used by terrorists against the United States or 
a host country. This fiscal year CSI expanded to 8 additional ports, 
and reached a milestone of 58 ports worldwide covering 85% of the 
container traffic destined to the United States. This is significant 
progress.

Secure Freight Initiative (SFI) and 100% Scanning
    Building upon the success of the Container Security Initiative 
(CSI), on December 6, 2006, the Secretary of Homeland Security, in 
cooperation with the Department of Energy (DOE), Department of State 
(DOS) and with the maritime industry and foreign government partners, 
announced Phase One of the Secure Freight Initiative (SFI). SFI is an 
unprecedented effort to build upon existing port security measures by 
enhancing the United States government's ability to scan containers for 
nuclear and radiological materials in seaports worldwide and to better 
assess the risk of inbound containers.
    I am pleased to announce that the first phase of SFI became fully 
operational on October 12, 2007 at three ports meeting the requirements 
of the SAFE Port Act. Southampton, United Kingdom, Puerto Cortes, 
Honduras and Port Qasim, Pakistan are now scanning 100% of containers 
destined for the United States.
    The initial phase of the SFI involves the deployment of a 
combination of existing technology and nuclear detection devices to 
three ports as per the requirements of the SAFE Port Act. This will 
provide a more complete analysis for SFI by including different 
operational and geographic settings at each port and will provide 
exposure of different models for future 100 percent scanning. In 
addition to the first three ports, SFI Phase I will also include four 
additional ports that will conduct 100% scanning in a more limited 
capacity. Those ports are Port Salalah, Oman, Brani Terminal at Port of 
Singapore, Gamman Terminal at Port Busan, Korea, and the Modern 
Terminal in Hong Kong.
    By conducting the pilot at these four additional ports, this new, 
integrated technology can meld smoothly into the logistics, operations, 
and risk management process while complementing the flow of commerce at 
high-volume and transshipment ports. Additionally, this first phase of 
SFI will provide the partnering governments with a greater window into 
potentially dangerous shipments moving through their seaports. Secure 
Freight will provide carriers of maritime containerized cargo with 
greater confidence in the security of the shipment they are 
transporting, and it will increase the likelihood for shippers and 
terminal operators that the flow of commerce will be both uninterrupted 
and secure. SFI will use the latest scanning technology, however data 
analysis, using the Automated Targeting System, will continue to be our 
primarily method in screening containers.
    The lessons learned and experience gained from Phase One represent 
critical steps in the process of determining whether the concept of 
100% overseas scanning is technologically and economically feasible and 
the degree to which it increases the security of the international 
supply chain.
    DHS will submit reports to Congress in February and April 2008 
detailing the progress made under SFI. These reports will also outline 
the successes and challenges associated with the implementation of 100% 
scanning in foreign locations, including issues related to the 
availability, capabilities and efficiency of technology and equipment; 
the process of negotiations/discussions with host nation counterparts 
as well as foreign input and feedback; the impact on the movement of 
cargo through ports and across the global supply chain; the staffing 
and human capital requirements that will be necessary both abroad and 
domestically and numerous additional considerations.

Domestic Radiation Detection and Imaging
    The SAFE Port Act requires that a deployment strategy plan be 
developed for the placement of radiation portal monitors (RPMs) 
throughout the nation's ports of entry. That plan has been submitted to 
Congress by the Department.
    CBP began deploying RPMs in October 2002, with the first deployment 
at the Ambassador Bridge in Detroit. Since that time, CBP and the 
Domestic Nuclear Detection Office (DNDO) have deployed over 1,000 RPMs 
at mail facilities, seaports, and land border crossings and will deploy 
the first RPM in the air cargo environment by the end of calendar year 
2007. Specifically, the SAFE Port Act mandates that all containers 
entering through the top 22 seaports be scanned for radiation. 
Currently, the Department has deployed radiation detection equipment to 
each of these 22 ports. Due to unique operational considerations at 
some of these ports, not every terminal within a port is currently 
equipped with such equipment. However, to satisfy the requirements of 
the SAFE Port Act and to further enhance port security, CBP and DNDO 
continue to work with these considerations, and by the end of this 
calendar year will scan approximately 98% of all containerized cargo at 
these 22 seaports.
    With the additional deployment of radiation scanning equipment, CBP 
currently scans 91% of the cargo and 81% of the passenger vehicles 
arriving from Canada; 97% of the cargo and 92% of the passenger 
vehicles arriving from Mexico, as well as 93% of arriving sea-borne 
cargo containers. To put this in perspective, just 18 months ago CBP 
was scanning 37% of arriving sea containers.
    Additionally, CBP has deployed over 1,000 Radiation Isotope 
Identifier Devices (RIID) and over 16,000 Personal Radiation Detectors 
(PRD). These devices allow CBP to inspect 100% of all identified high-
risk cargo.
    Since CBP began scanning conveyances for radiation, over 195 
million conveyances have been scanned, and over 1.1 million alarms have 
been resolved. This is a tremendous workload, and the SAFE Port Act 
authorized 200 new CBP Officers in each of the next five years to help 
accomplish this mission. Furthermore, the Department is currently 
testing the next generation of radiation detection equipment known as 
Advanced Spectroscopic Portals at eight locations nationwide--at Piers 
A and J in Long Beach, at the APM and PNCT Terminals in Newark, at the 
Colombia and World Trade bridges in Laredo, at the Blue Water Bridge in 
Port Huron, and at the Fort Street crossing in Detroit. Future 
deployments of ASPs, pending Secretarial certification, will allow CBP 
to quickly differentiate between benign materials such as kitty litter 
or granite, while determining which shipments pose a true risk. This 
perfectly supports CBP's twin goals of increasing security while 
facilitating the flow of legitimate trade and people.
    In addition to the deployment of radiation detection equipment, CBP 
continues to deploy large scale imaging systems and has deployed 195 
large-scale gamma ray or x-ray imaging systems nationwide. NII 
technology serves as a force multiplier that allows officers to detect 
possible anomalies between the contents of the container and the 
manifest. In fact, well over 5.5 million scans using NII systems were 
conducted in FY 07.

Automated Targeting System (ATS)
    CBP requires advanced electronic cargo information as mandated in 
the Trade Act of 2002 (including the 24-hour rule for maritime cargo). 
Advanced cargo information on all inbound shipments for all modes of 
transportation is effectively evaluated using the Automated Targeting 
System (ATS) before arrival in the United States. The SAFE Port Act 
requires CBP to seek additional data elements for ATS as well as to 
evaluate the entire system. CBP is complying with both these mandates.
    As a matter of background, ATS provides decision support 
functionality for CBP officers working in Advanced Targeting Units 
(ATUs) at United States ports of entry and CSI foreign ports. The 
system provides uniform review of cargo shipments for identification of 
the highest risk shipments, and presents data in a comprehensive, 
flexible format to address specific intelligence threats and trends. 
ATS uses a rules-based program to highlight potential risk, patterns, 
and targets. Through rules, the ATS alerts the user to data that meets 
or exceeds certain predefined criteria. National targeting rule sets 
have been implemented in ATS to provide threshold targeting for 
national security risks for all modes: sea, truck, rail, and air.
    Working actively with the trade through the Departmental Advisory 
Committee on Commercial Operations (COAC), CBP has developed a new 
Security Filing in an effort to obtain additional advanced cargo 
information and enhance their ability to perform risk-based assessments 
prior to cargo being laden on a vessel overseas. The CBP proposal, 
better known as ``10 plus 2'' covers the following key areas:
         Ten unique data elements from importers not currently 
        provided to CBP 24 hours prior to the foreign loading of cargo;
         Two additional data elements provided by the carriers 
        including the Vessel Stow Plan, which is currently utilized by 
        the vessel industry to load and discharge containers, and the 
        Container Status Messaging, which is currently utilized by the 
        vessel industry to track the location of containers and provide 
        status notifications to shippers, consignees, and other related 
        parties.
    A Notice of Proposed Rulemaking (NPRM) is currently being 
developed. Obtaining additional information earlier in the process will 
increase the transparency of the global supply chain enabling the 
refinement of CBP's targeting processes and will provide additional 
information to make a more fully informed decision with respect to the 
risk of individual shipments.
    In addition to Security Filing, CBP continually monitors the 
performance of weight sets and uses data analysis to modify rules and 
weight sets in ATS. Since 2004, ATS has undergone independent audits 
from the GAO and the IG. Furthermore, CBP regularly reevaluates to 
improve the data sets in ATS. The Office of Field Operations National 
Targeting and Security (NTS) office and the Office of Information 
Technology Targeting and Analysis Systems Program Office (TASPO) have 
been working together to enhance the ATS Maritime rule set capabilities 
for ocean cargo targeting. Under the direction of the office of field 
operations (OFO), TASPO placed the updated rule sets into production on 
March 21, 2007, to conduct initial assessments. Since that time, OFO 
subject matter experts and members of the Maritime Targeting Working 
Group have provided feedback to NTS, which resulted in further 
refinements and enhancements to the maritime rule set. Currently NTS is 
modeling several versions of the new Country of Interest list to 
include iterations of different scores and scenarios to include entity 
concepts such as first time, unknown, and high volume. OFO is currently 
using the updated rule set for maritime threshold targeting.

Customs-Trade Partnership Against Terrorism (C-TPAT)
    Customs-Trade Partnership Against Terrorism (C-TPAT) is an integral 
part of the CBP multilayered strategy. CBP works in partnership with 
the trade community to better secure goods moving through the 
international supply chain. C-TPAT has enabled CBP to leverage supply 
chain security overseas where CBP has no regulatory reach. Throughout 
2007, CBP has continued to expand and strengthen the C-TPAT program and 
ensure that certified member companies are fulfilling their commitment 
to the program by securing their goods moving across the international 
supply chain to the United States. To carry-out this critical tenet of 
C-TPAT, teams of Supply Chain Security Specialists (SCSS) will conduct 
validations and begin revalidations of C-TPAT members' supply chains to 
ensure security protocols are reliable, accurate, and effective.
    The SAFE Port Act not only legislatively recognized C-TPAT, but the 
Act also added greater accountability by mandating that certain program 
activities be completed within specific time frames, and that greater 
program oversight be developed for the program. CBP began implementing 
such changes, which were first outlined in GAO reports from 2003 and 
2004, eighteen months prior to the passage of the Act and continues to 
make progress in this regard.
    Specifically, clearly defined minimum security criteria have been 
developed and implemented for the major enrollment sectors and will be 
completed for all current enrollment sectors by this fall. The SAFE 
Port Act requires CBP to work with the COAC to review and modify as 
appropriate these criteria on an annual basis, and they have done so. 
This program enhancement will be completed each year as part of the 
development of the C-TPAT annual plan, another SAFE Port Act 
requirement. CBP is finalizing revisions to the C-TPAT Strategic Plan, 
which was first published in December 2004.
    The SAFE Port Act also required CBP to review their certification 
processes for new members and make adjustments to strengthen this 
initial review if necessary. CBP has done so, and all new applications 
are being reviewed within 90 days.
    Additionally, the Act requires that all new certified members 
undergo their initial validation within 1 year of acceptance into the 
program and be revalidated every four years. In 2007, CBP's goal is to 
complete 3,000 validations. As a point of reference, CBP completed 133 
validations in 2003; 287 in 2004; 1,080 in 2005; and 2,398 in 2006. 
This is real progress, and it has been made possible by adding Supply 
Chain Security Specialists to the program.
    With current staffing levels, the C-TPAT program should fulfill its 
operational goals for both the 2007 and 2008 calendar years. With the 
projected level of validations and revalidations needed to be in 
compliance with the Act set at just less than 3,000 per year, the 
current staff of 150 SCSS's should be able to manage this workload. The 
SAFE Port Act mandates that all revalidations must occur within 4 years 
of the initial validation, while the FY07 DHS Appropriations Act called 
for revalidations to occur within 3 years of the initial validation. 
Thus, the C-TPAT program is moving forward on a 3 year revalidation 
model to ensure compliance.
    Projected revalidations alone will reach over 2,300 in 2009. The 
addition of Mexican Highway Carrier validations (done annually due to 
higher risk models) will add approximately 400. Further, required 
initial validations within 1 year of certification are being projected 
at 1,800. As a result, the final validation/revalidation totals needed 
would well exceed 4,000 for 2009 creating compliance issues with the 
current staffing numbers.
    However, an additional staffing of 50 SCSS's will be brought on 
board with the creation of two new offices, one in Buffalo, NY, to 
focus principally on Canadian membership, and an office in Houston, TX, 
to focus on Mexican enrollment. With the addition of this staff, 
expected by early calendar year 2008, the C-TPAT would again see 
compliance with SAFE Port Act mandated timelines.
    Working with COAC, CBP has also developed and implemented a pilot 
program using third parties to validate supply chains where CBP 
currently lacks full access. In May 2007, CBP selected 11 firms to act 
as validators in China as the Chinese government continues to deny 
access to CBP personnel wishing to conduct supply chain security 
validations. The Chinese Government has officially indicated that the 
matter is under review within their government, noting initially that 
the private sector in China may be reluctant to have C-TPAT validations 
conducted in-country. In an effort to show there was trade support for 
the process, CBP identified a certified C-TPAT partner that has 
significant business in China to demonstrate their willingness to 
participate in the validation process. Additionally, the CBP 
Commissioner and senior managers have traveled to China to discuss this 
matter with their counterparts in an effort to clarify the validation 
process as well as to offer a joint validation pilot involving five 
currently certified C-TPAT companies willing to participate. We have 
received no official response to this proposed project as of this date.
    Interest in the pilot program has thus far been minimal. Of the 
more than three hundred (300) C-TPAT importers that were invited to 
participate in this voluntary pilot in June, less than a dozen 
importers have opted to do so to date. The primary concerns expressed 
by C-TPAT members for not participating lie in the sharing of 
proprietary business and security data with a third party and with the 
costs associated with the validation, which, as outlined in the SAFE 
Port Act, must be incurred by the C-TPAT member.

Container Security Standards and Procedures
    CBP strongly supports and continues to seek opportunities to 
enhance supply chain security efforts, including enhancements to the 
security of the container. Indeed, securing the container is a critical 
part of a multi-layered approach to supply chain security. However, in 
order to establish minimum standards for container security, it is 
first necessary to ensure that there are available solutions that would 
significantly improve container security without significantly 
disrupting the flow of legitimate commerce. It should be noted that 
minimum security criteria for participants in the C-TPAT program do 
include a requirement that all C-TPAT importers must affix a high 
security seal to all loaded containers bound for the United States. 
These seals must meet or exceed the current ISO/PAS 17712 
specifications for high security seals. C-TPAT membership currently 
accounts for 46% of total importations into the U.S.
    Any technological solution would also need to be adopted as part of 
a broader supply chain security program. While CBP does not believe 
that, at the present time, the necessary technology exists for such 
solutions, CBP is working closely with the Department and is actively 
working with industry to test different technologies and methodologies 
that would provide economically and operationally viable enhancements 
to container security.

In-Bonds
    The SAFE Port Act also required CBP to submit a report on in-bond 
cargo no later than June 30, 2007. CBP apologizes for the lateness of 
this report, which is still undergoing review, and expects to have the 
report issued shortly.
    The final report includes a plan for closing in-bond entries at the 
port of arrival; an assessment of the personnel required to ensure 100 
percent reconciliation of in-bond entries between the port of arrival 
and the port of destination or exportation; an assessment of the status 
of investigations of overdue in-bond shipments and an evaluation of the 
resources required to ensure adequate investigation of overdue in-bond 
shipments; a plan for tracking in-bond cargo within the Automated 
Commercial Environment (ACE); an assessment of whether any particular 
technologies should be required in the transport of in-bond cargo; an 
assessment of whether ports of arrival should require any additional 
information regarding shipments of in-bond cargo; an evaluation of the 
criteria for targeting and examining in-bond cargo; and an assessment 
of the feasibility of reducing the transit time for in-bond shipments, 
including an assessment of the impact of such a change on domestic and 
international trade. In addition, CBP is in the process of utilizing 
the evaluation of in-bond criteria to assist in the creation of a 
weight set for use in ATS to further assist in the identification of 
potential in-bond diversion cargo shipments.
    CBP believes that the report is responsive to the concerns 
expressed by Congress, and a dedicated working group of experts has 
just concluded an in-depth review of the in-bond process and their 
recommendations will also address the report topics.

Office of International Trade
    The mandates of the SAFE Port Act and the actions of CBP 
intersected again when CBP formed the Office of International Trade in 
October 2006. The establishment of this office serves to strengthen 
CBP's ability to carry out our mission of facilitating the flow of 
legitimate trade across U.S. borders while securing the borders and 
protecting the American economy from unfair trade practices and illicit 
commercial enterprises. The Office of International Trade consolidates 
trade policy, program development, and compliance measurement functions 
into a single office, providing greater consistency within CBP with 
respect to its international trade programs and operations. In 
addition, CBP's close working relationship with the trade community, a 
hallmark of CBP's operations and programs, has been further enhanced. 
The new Office of International Trade is providing CBP and the Trade 
community with an organization that can effectively address the growing 
volume and complexities of international trade and is enabling us to 
successfully meet the challenges inherent in managing the balance of 
trade and security.
    In June 2007, to meet the Congressional requirements of the SAFE 
Port Act, CBP provided to Congress a resource optimization model (the 
``model'') for the commercial operations and revenue function. The 
objectives of the model are to: (1) optimally align the workforce to 
achieve management performance outcomes and goals; (2) adequately 
address risks inherent in the priority trade issues; and (3) comply 
with statutory requirements. The model has been designed to determine 
the right number and right mix of resources to facilitate legitimate 
trade while enforcing the trade laws.
    Additionally, in preparation of submitting a report on the 
reorganization into the Office of International Trade, CBP has been 
meeting regularly with the COAC subcommittee on the Office of 
International Trade. During this first year, the subcommittee has been 
working together to find mutually beneficially process improvements to 
facilitate legitimate trade, which in turn will assist CBP in its trade 
enforcement efforts.

Conclusion
    The steps that CBP is taking to implement the SAFE Port Act are and 
will be an extremely important aspect to the security of the nation. 
Through the SAFE Port Act, Congress has recognized and bolstered many 
of our aggressive programs to enhance security while assuring the 
facilitation of legitimate trade. We appreciate the close cooperative 
relationship the Department of Homeland Security and CBP had with the 
House and Senate in the development of the Act, and we look forward to 
the continued interaction to promote our mission and ensure the safety 
of American citizens and commerce.

    Ms. Sanchez. I ask unanimous consent that Mr. Pascrell be 
allowed to sit and question at today's hearing.
    Next, we will hear from Mr. Oxford to summarize his 
statement 5 minutes.

STATEMENT OF VAYL OXFORD, DIRECTOR, DOMESTIC NUCLEAR DETECTION 
            OFFICE, DEPARTMENT OF HOMELAND SECURITY

    Mr. Oxford. Chairman Sanchez, Ranking Member Souder, 
Chairman Thompson, and other members of the committee, I would 
like to thank you for the opportunity to share the progress we 
have made in improving port and cargo security.
    Keeping our Nation's ports secure is a critical layer in 
protecting our citizens against nuclear terrorism. The SAFE 
Port Act formerly authorized the establishment of DNDO, also 
identified a number of goals and reporting requirements for our 
Department.
    I am happy to share that DNDO is meeting the requirements 
outlined in the SAFE Port Act. We have made excellent progress 
in deploying radiation detection technology at our busiest 
ports and land borders, resulting in the scanning of 94 percent 
of all incoming cargo into the United States.
    Two years ago, only 40 percent of incoming containerized 
cargo was being scanned for radiological and nuclear threats. 
DNDO has worked closely with CBP to develop a joint RPM 
deployment strategy that balances risk against the measures of 
insuring the flow of commerce. RPM deployments to the Nation's 
22 busiest seaports are complete. We are scanning over 95 
percent of cargo coming through our seaports, using 374 
radiation portal monitors. At select seaports, scanning now 
covers 100 percent and vehicles. By the end of 2007, 98 percent 
of all containerized sea cargo entering the United States will 
be scanned for radiological and nuclear threats.
    Deployments to our land borders are also proceeding. There 
are 241 RPMs operating on the northern border and 353 RPMs 
operating on the southern border. This results in the scanning 
of 91 percent of containerized cargo coming across the northern 
border and 99 percent across the southern border.
    As a result of this progress, we are meeting the mandates 
set forth in the SAFE Port Act that require that all containers 
entering high-volume ports by vessel be scanned for radiation. 
Also, the SAFE Port Act outlines five reporting requirements 
for DNDO. My written testimony covers the status of those 
reports, but suffice it to say, that we have met all reporting 
and requirements.
    The SAFE Port Act also requires DNDO to establish an 
intermodal radiation detection center. There are several 
seaports that load cargo directly from ships to rail cars, 
bypassing the typical exit gates scanning operations used by 
CBP. Today we do not have a detector that can address this 
challenge. An intermodal rail test center will help develop 
additional passive detection systems that meet unique port 
requirements, thereby enabling DNDO to provide solutions that 
enable us to scan 100 percent of cargo containers entering the 
United States. The Port of Tacoma was chosen as the location of 
the rail test center because more than 70 percent of imported 
cargo through this port is handled by rail. We are working with 
the Port of Tacoma and CBP to begin operational testing 
associated with the intermodal rail concepts and evaluating 
technical solutions to fit the unique detection requirements of 
intermodal terminals.
    I would also discuss additional port security efforts 
involving DNDO. These are not outlined specifically in the SAFE 
Port Act, but contribute to security in the maritime 
environment and for our country overall.
    We are working with the Coast Guard to implement an 
acquisition plan in which DNDO develops and acquires systems 
for U.S. Coast Guard use. As a result, we will deploy radiation 
detection capabilities to every Coast Guard inspection and 
boarding team by the end of 2007. We also recently announced 
the West Coast maritime pilot that is beginning in the Puget 
Sound of Washington State and will expand into San Diego, 
California. The pilot will provide maritime radiation detection 
capabilities for State and local authorities with the goal of 
reducing risk of radiological and nuclear threats that can be 
illicitly transported on recreational or small commercial 
vessels.
    This pilot program is being worked in close cooperation 
with the U.S. Coast Guard and CBP, as well as State and local 
officials. We expect to deploy human, portable, mobile, and 
fixed radiation detection systems as part of this pilot. We 
will also be working with maritime partners to assess the 
geographic configurations of the ports to maximize detection 
and interdiction opportunities. Maritime stakeholders will also 
receive guidance from DNDO on operational protocols, training 
exercises that support small vessel radiation interdiction 
operations.
    In conclusion, port security is a critical component in 
protecting the U.S. from nuclear terrorism. The SAFE Port Act 
codified many of the requirements and strategies that will 
ensure a robust defense against threats to our Nation. The NDO 
and its partners have made significant progress over the last 2 
years and will continue to make progress in keeping this Nation 
safe. I look forward to working with all of our partners in 
DHS, other departments, State and local agencies, and the 
members of this subcommittee as well as Congress in continuing 
the pursuit of this goal.
    This concludes my prepared statements. I look forward to 
your questions.
    [The statement of Mr. Oxford follows:]

                  Prepared Statement of Vayl S. Oxford

Introduction
    Chairwoman Sanchez, Ranking Member Souder, and distinguished 
Members of the Committee, as Director of the Domestic Nuclear Detection 
Office (DNDO), I would like to thank you for the opportunity to share 
the progress we have made in improving port and cargo security. Keeping 
our Nation's ports secure is a critical layer in protecting our 
citizens against nuclear terrorism.
    One year ago, the President signed the SAFE Port Act, which 
formally authorized the establishment of the DNDO. This important piece 
of legislation also identified a number of goals and reporting 
requirements for our Department. It helped ensure that we have the 
right security strategies in place and that we maintain our momentum as 
we implement protective measures.
    I am happy to share that DNDO is meeting the requirements outlined 
in the SAFE Port Act. We have submitted a number of reports to Congress 
due earlier this year (including our comprehensive strategy for the 
deployment of radiological and nuclear detection equipment) and we 
expect to meet the deadlines for those that remain. We also have made 
excellent progress in deploying radiation detection technology at our 
busiest ports resulting in the screening of 93 percent of all incoming 
seaborne cargo into the United States.

Port Security Strategy
    Before I go into more detail about the progress we have made in 
regards to the SAFE Port Act, I would like to explain our strategy at 
DNDO for deploying detection technologies to our Ports of Entry (POEs). 
Eighteen months ago, only 37 percent of incoming seaborne containerized 
cargo was being scanned for radiological and nuclear threats. DNDO 
worked in partnership with our colleagues at Customs and Border 
Protection (CBP) to develop a joint radiation portal monitor (RPM) 
deployment strategy that incorporates an optimized mix of current--and 
next-generation technologies, balancing our need for better capability 
with a desire for increased coverage against the associated costs of 
each. This joint strategy is predicated on placing next-generation 
systems, like the Advanced Spectroscopic Portal (ASP), at the highest 
throughput ports, where reductions to secondary inspection rates will 
have the greatest benefit. Deployment of ASP systems will be dependent 
upon the Secretarial certification of the systems as required by the FY 
2007 Homeland Security Appropriations Act (P.L 109-295).
    Our strategy up to now has prioritized deployment activities based 
on risk, vulnerability, or consequence, as influenced by major 
populations, industries, importance to the economy and supply chain, or 
military bases located nearby. We also consider prior records of 
illicit activities. Finally, we consider whether locations had upcoming 
port reconfiguration.
    We have taken steps to prepare for additional deployments and are 
conducting site surveys, developing site designs, and starting 
negotiations to award construction contracts for each of the crossings. 
As a general practice, DNDO works with the port authority to 
proactively schedule construction to coincide with any other activities 
at the port. This helps prevent scheduling delays and expedites the 
deployment process overall.
    Our priority remains to finish deploying RPMs to high volume 
seaports and land border crossings. However, our future plans are 
addressing the hundreds of smaller crossings that dot the Northern and 
Southern borders, including rail crossings. We will also begin scanning 
of international air cargo.

Status of Deployments
    RPMs have been deployed to all of the Nation's 22 busiest seaports. 
We are currently scanning 93 percent of cargo coming through our 
seaports using 358 RPMs. Moreover, at select major seaports, exit 
scanning now covers 100 percent of all containers and vehicles. By the 
end of this calendar year, 98 percent of all containerized sea cargo 
entering into the United States at the 22 busiest ports will be scanned 
for radiological and nuclear threats.
    It is also important to mention deployments to our land borders. 
There are 241 RPMs operating on the Northern border and 343 RPMs 
operating on the Southern border. This results in scanning 91 percent 
of containerized cargo coming across the Northern Border and 97 percent 
coming across the Southern. In addition, a total of 60 RPMs are 
deployed to sites such as mail and express courier consignment 
facilities. By focusing on major ports of entry first, we have been 
able to dramatically boost the scanning levels of incoming cargo. We 
are also conducting scanning of privately owned vehicles (POVs). Our 
detection equipment currently scans 81 percent of POV traffic coming 
across the Northern border and 92 percent across the Southern.

Meeting the Requirements of the SAFE Port Act
    Based on the progress we have made with RPM deployments at POEs, we 
are meeting the mandates set forth in the SAFE Port Act that require 
that all containers entering high-volume ports by vessel be scanned for 
radiation. In addition, we have developed the required strategy for the 
deployment of radiation detection capabilities, and that strategy has 
been submitted for the record as an amendment to this testimony. 
However, there are a number of other requirements outlined in the Act 
that we have been asked to fulfill and I would like to give you an 
update on each.
    In total, the SAFE Port Act outlines five reporting requirements 
for DNDO. Our deployment strategy was submitted first to Congress in 
March 2007 and included information on a risk-based prioritization of 
ports, a proposed timeline for deployment, the types of equipment that 
we are proposing for each port, documentation of standard operating 
procedures for examining containers, operator training plans, and the 
Department's policy of using non-intrusive imaging equipment. As I 
mentioned earlier, one aspect of our joint deployment plan with CBP is 
how we plan on introducing next-generation technologies like ASP into 
the field. Right now, ASP is pending Secretarial certification and will 
not be fully deployed until that certification process is complete. If 
the outcome of the certification process is positive, we will submit an 
amendment to our strategy to identify the locations at which we will 
deploy ASP. The report also included a classified annex that details 
plans for covert testing of the top 22 seaports, as required by Section 
121 of the Safe Port Act. The DNDO Red Team is working with CBP to 
build and maintain documentation of these activities.
    Secondly, in April 2007, we submitted a joint report with the 
Science and Technology Directorate, CBP, and DHS Office of Policy 
Development that outlined the feasibility of and strategy for 
development of chemical, biological, radiological and nuclear (CBRN) 
detection equipment. DNDO submitted content that clearly documented 
both near- and long-term research and development efforts that will 
provide improved nuclear detection capabilities.
    The third report required that DNDO, along with CBP, complete an 
evaluation of health and safety issues related to the use of non-
intrusive imaging (NII) technology to scan containers. DHS fully 
understands the environmental health and safety impacts of NII 
technology. DHS has a comprehensive radiation risk reduction plan, and 
will continue to work closely with the Nuclear Regulatory Commission, 
Occupational Safety and Health Administration, and the National 
Institute for Occupational Safety and Health to minimize radiation 
exposure of workers and the public to levels as low as reasonably 
achievable. Additionally, DHS will continue to monitor environmental 
health and safety impacts associated with NII technology by constantly 
addressing these impacts with systems currently deployed and systems 
under development. As next-generation NII systems are developed, DNDO 
will make a constant effort to address environmental health and safety 
issues by consulting with the National Council on Radiation Protection 
and Measurements, and conducting modeling and benchmarking. This report 
was submitted in July 2007 and received no comments from Congress 
except for a request to make our findings open for distribution to the 
private sector. We complied with this request and modified the document 
so that it was no longer For Official Use Only (FOUO).
    The two remaining reports, an overall investment strategy for 
radiological and nuclear detection across the US government, and a 
report on how DNDO authorization language impacted the Homeland 
Security Act of 2002 and DHS research and development efforts to 
detect, prevent, protect, and respond to chemical, biological, 
radiological, and nuclear terrorist attacks, are scheduled to be 
delivered in October. We are working with other DHS components and 
across the interagency to ensure that these reports are comprehensive 
in nature and delivered to Congress in a timely manner.
    The SAFE Port Act also required DNDO to establish an Intermodal 
Rail Radiation Detection Test Center. This was a very forward thinking 
requirement and one that DNDO strongly supports. There are several 
seaports that load cargo directly from ships to rail cars, therefore 
bypassing typical exit gate scanning operations. Right now, we do not 
have a detector that can address this challenge. An intermodal rail 
radiation detection test center will help develop additional passive 
detection design variants that meet unique port requirements, thereby 
enabling DNDO to provide solutions that enable us to scan 100 percent 
of cargo containers entering the United States. The test center was 
announced in May of this year and was awarded to the Port of Tacoma, 
Washington. The Port of Tacoma was chosen as the location of the Rail 
Test Center because more than 70 percent of its total import cargo 
volume is handled by rail at its multiple intermodal rail terminals. We 
are working diligently with the Port of Tacoma and CBP to begin testing 
the operational needs associated with intermodal rail, as well as 
evaluating innovative technical solutions to fit the unique 
radiological and nuclear detection requirements of intermodal 
terminals.

Additional Port Security Efforts
    I wanted to take the opportunity today to also discuss additional 
port security efforts in which DNDO is involved. These are not outlined 
in the SAFE Port Act, but contribute to security in the maritime 
environment and for our country overall.
    DNDO has an excellent working relationship with our Coast Guard 
operators. We have a joint acquisition plan in place that will allow 
DNDO to both develop and acquire systems for USCG use. DNDO provided 
handheld and backpack radiation detection devices to fulfill imminent 
operational needs in fiscal year 2007. We will deploy radiation 
detection capabilities to every Coast Guard inspection and boarding 
team by the end of 2007. The Secretary stated that this is one major 
goal for this Department, and we are going to meet that goal. We are 
also developing next-generation technologies that have the 
identification capabilities, connectivity, and ruggedness required in 
the maritime environment.
    We also recently announced the West Coast Maritime pilot program 
that is beginning in the Puget Sound region of Washington State and 
will expand into San Diego, California. The three-year pilot will 
provide maritime radiation detection capabilities for State and local 
authorities with the goal of reducing the risk of radiological and 
nuclear threats that could be illicitly transported on recreational or 
small commercial vessels. We will be conducting this pilot program in 
close coordination with the U.S. Coast Guard and Customs and Border 
Protection. DNDO expects to deploy non-intrusive, passive detection 
sensors, such as human-portable radiation detection equipment, mobile 
sensors, and fixed-position detectors. We will also be working with 
maritime partners and local authorities in both areas to assess the 
geographic configurations of the ports to maximize detection and 
interdiction opportunities. Additional analyses for local partners will 
include a baseline survey of the existing radiological and nuclear 
detection architecture, a gap and risk assessment, and associated 
recommended actions to be developed in conjunction with maritime 
stakeholders. Maritime stakeholders will also receive guidance from 
DNDO on operational protocols, training, and exercises that support 
small vessel radiation detection capabilities.

Conclusion
    The mission of the DNDO reaches far beyond port security. However, 
port security is a critical component in protecting the U.S. from 
nuclear terrorism. The SAFE Port Act codified many of the requirements 
and strategies that we will ensure a robust defense against threats to 
our Nation. The DNDO and its partners have made significant progress 
over the last two years, and will continue to make progress in keeping 
this Nation safe. I look forward to working with all of our partners 
within DHS, other departments, State and local agencies, and the 
members of this subcommittee and Congress in continuing to pursue this 
goal.
    This concludes my prepared statement. Chairwoman Sanchez, Ranking 
Member Souder, and Members of the Committee, I thank you for this 
opportunity and would be happy to answer any of your questions at this 
time.

    Ms. Sanchez. I now recognize Mr. Caldwell to summarize his 
statement in five minutes.
    Mr. Caldwell. Madam Chairman, Mr. Souder, and also Chairman 
Thompson, thank you very much for inviting me back 6 months 
after your initial hearing on the SAFE Port Act. Not only has 
it been a year now since the SAFE Port Act was enacted, but now 
we are approaching the 5-year mark on the enactment of MTSA 
which, as you know, really created the framework for maritime 
security that the SAFE Port Act actually enhanced.
    Given the breadth of the SAFE Port Act, the statements of 
the other witnesses, and my already submitted lengthy 
statement, I think I am going to focus my oral comments on two 
areas. One is interagency operation centers, and the other is 
port recovery issues.
    Regarding interagency operation centers, as you know, the 
SAFE Port Act required the establishment of these centers. In 
2003, let me give you a little history, Congress appropriated 
$50 million for Project Sea hawk in Charleston Harbor. This was 
designed as a program that would take different agencies and 
different technologies and try to combine them to prevent and 
deter terrorist attacks at least in Charleston. About that same 
time, in 2003, in the wake of the U.S.S. Cole attack, as well 
as the 9/11 attack, the Navy was looking for a way to help 
protect its ships that were in homeport in the U.S.
    They partnered with the Coast Guard to develop something 
called Joint Harbor Operations Centers, or JHOCs. There is one 
of these originally in San Diego and in Hampton Roads. Then 
finally, also about that time in 2003, Coast Guard began a 
reorganization to combine some of its operational units with 
some of its marine environmental and safety units, and 
combining these into something called sectors and started 
developing sector command centers. The important difference 
between Seahawk and JHOC and the sectors was that the Seahawk 
and the JHOC centers were really focused exclusively on 
maritime security whereas the sector command centers in some 
ways leveraged resources further in focusing on the wide 
variety of Coast Guard missions that would be included, such as 
in search and rescue, protection of fisheries, all the other 
missions the Coast Guard sector would have. The Coast Guard now 
reports that it has sector command centers in all 35 of its 
sectors, and the SAFE Port Act has then required DHS to 
establish something called interagency operation centers at 
high-priority ports within three years. DHS has provided 
Congress with a plan, a five-year plan to upgrade these current 
sector command centers into interagency operation centers at 24 
ports and estimated the cost at $260 million.
    Moving forward on these operational centers, we found there 
is a couple of challenges ahead for Congress and for the 
Executive Branch. One is the obvious resource question. While 
there is an estimate of $260 million, those funds have not been 
identified or appropriated. In addition, every port is 
different and I think we have all heard that deal with ports, 
and so there needs to be clear roles and responsibilities among 
the multiple agencies. I think for the Coast Guard the roles 
and responsibilities are fairly clear, but at different ports 
you have several other important stakeholders, whether they are 
the Navy or Customs or other state and local stakeholders. And, 
finally, one of the issues we have identified in the past that 
is not completely resolved is the issue of security clearances 
for all appropriate stakeholders.
    Moving on to recovery. The SAFE Port Act asks for more 
emphasis in both plans and exercises on recovery issues. Going 
back to MTSA, MTSA required that there be security plans in 
every port, every major port at least, and the Coast Guard has 
implemented those with general guidance. However, our review of 
these plans found that the guidance was fairly vague in terms 
of recovery issues.
    While there is some national level guidance in terms of the 
national maritime infrastructure recovery plan, those plans as 
well as the exercises associated with them need to be focused 
more at the port level. And the Coast Guard has taken steps to 
do this, but I think as Captain Sturm has mentioned, some of 
these will not be in place until these individual port plans 
are revised by July 2009.
    With that, I would like to close out my statement. And be 
happy to answer any questions. GAO will continue to work with 
this committee and others in Congress to provide oversight over 
the SAFE Port Act to best practical port security for our 
Nation. Thank you.
    [The statement of Mr. Caldwell follows:] \1\
---------------------------------------------------------------------------
    \1\ See GAO, ``MARITIME SECURITY: The SAFE Port Act: Status and 
Implementation One Year Later'', Tuesday, October 30, 2007, GAO-08-
126T.
---------------------------------------------------------------------------
    Ms. Sanchez. I thank all of our witnesses for their 
testimony.
    I will remind each member that he or she will have 5 
minutes to question the panel. And I will now recognize myself 
for a couple of questions.
    On your testimony, Mr. Caldwell, you said that the Coast 
Guard had general guidance, under general guidance. From whom?
    Mr. Caldwell. The Coast Guard's guidance came out in the 
form of a NAVIC, correct me if I am wrong, Captain, but that is 
Navigation and Vessel Information Circular, providing some 
guidance on what each area maritime security plan should have. 
And this went out to the committees when they first developed 
their plans in 2004.
    Ms. Sanchez. Thank you for that clarification.
    I would like to ask Mr. Winkowski, this has to do with C-
TPAT, a program that I am particularly interested in. The pilot 
program that was included in the SAFE Port Act was to provide 
additional validation options at a time when CBP was unable to 
perform enough validations; they had gotten behind. It is 
interesting now to me, and I am pleased that we have been able 
to validate a majority of the C-TPAT members security plans, I 
think, also because we provided some additional personnel to be 
able to do that.
    So my question is, do you believe that there are still 
third-party validation processes which would be useful? In 
other words, do we still need them? Are we going to stay full 
up and continue to do these reevaluations at least once every 
four years with just the personnel? Or do you think that there 
is still room for this third-party validation process to exist?
    Mr. Winkowski. Well, first, I would like to thank the 
committee for being so generous with the C-TPAT program. We 
have a full complement of staff on. We have increased it. We 
have opened up offices in Buffalo and Houston as well, and that 
has enabled us to move along quickly to validate. I think it is 
too early to tell on the third-party validators.
    As I mentioned in my opening statement, only nine importers 
have signed up, and 11 validators were selected. To my 
knowledge, they still have not been able to do the validations. 
It has to do with pricing, it has to do with an individual's 
willingness to want to hand over sensitive trade related 
information.
    So I am optimistic, Chairwoman Sanchez, that at some point 
here in the not so distant future, that China will open its 
doors and our team will be able to go in there and do the 
validations.
    Ms. Sanchez. On the pilot, you chose as the universe for 
third-party validators to look at only members, only C-TPAT 
members with 75 percent or more of their supply chain in China. 
I think that this would result in a small number of potential 
universe for these third-party validators to actually take a 
look at. I am told something around 300 eligible. What made 
you, what made you choose that particular 75 percent figure?
    Mr. Winkowski. There was an analysis done based on threat 
and other factors, and we came up with the 75 percent figure.
    Ms. Sanchez. Because of threat factor?
    Mr. Winkowski. Threat, trade volumes, things of that 
nature. And from there we came up with that 75 percent number.
    Ms. Sanchez. Okay. I have heard also that the supply chains 
in China aren't considered very risky in the C-TPAT program. 
How do we know that if we have never actually been allowed to 
go in and look at the supply chain?
    Mr. Winkowski. C-TPAT was set up from a terrorist 
standpoint, and we have had no information that China is a 
threat from that standpoint.
    Ms. Sanchez. We have no information that China is a, has 
terrorists who would be wanting to go from there in hurting our 
commerce or our people?
    Mr. Winkowski. That is correct.
    Ms. Sanchez. Okay. What is the status of the negotiations 
for China to allow our CBP validators to go into China?
    Mr. Winkowski. We are waiting for a letter from the Chinese 
government that we anticipate getting at any time now to open 
up the doors. And we have already selected team members. Our C-
TPAT supply chain specialists have been selected. And as soon 
as we get that letter and they open the doors, we will be in 
there beginning the validation process.
    Ms. Sanchez. When we go to other countries and look at the 
C-TPAT and do the validations, is that a long-term situation 
where we put employees there, or do we just house them in 
hotels, they go and do it for a week's time?
    Mr. Winkowski. They stay in hotels. They are not 
permanently stationed there. Depending on the size of the 
supply chain, it depends on the size of the supply chain and 
determines how long they would be there.
    Ms. Sanchez. I see that my time is up. So at this moment, I 
will yield 5 minutes to the ranking member for his questions.
    Mr. Souder. Mr. Winkowski, if North Korea wanted to move 
something through the United States, would they likely use 
China?
    Mr. Winkowski. I don't know.
    Mr. Souder. Seemed a fairly broad statement to say that we 
have no concerns about China, given the amount of shipments 
that we have go through there. I think you accurately stated 
that we haven't any publicly released incidents. But I think 
there is grave concerns about even whether China can call 
Western China, as their Muslim population, where things may 
move through their ports. Malaysia clearly has people moving 
every which direction and Indonesia and the Philippines.
    Mr. Winkowski. But from the supply chain standpoint, 
China's threat is clearly more on the import safety side of it.
    Mr. Souder. I understand that, given the bulk that that is 
true, but I don't know that I agree with your underlying 
assumption. I wanted to ask you and Mr. Oxford the statement 
that the SAFE Port Act includes a list of criteria that has to 
be evaluated, and I know a lot of this is relatively new. But 
we ran into this last week on our border implementation, and so 
I want to go through the list of things that you have to give 
feedback before you roll this out. One was the ability of the 
automated targeting system to utilize the images and the data 
capture during the scanning, which is one of the problems that 
we have had in the borders, is that we get the info but we 
don't know how to handle it.
    The second is the effectiveness of the scanning equipment 
in detecting shielded and unshielded nuclear material. In other 
words, can we see actually what we are trying to see. The 
ability of the software to automatically identify potential 
anomalies in scanned containers, for years this has been a 
challenge in narcotics and other types of things and I have 
seen many variations both overseas and in the United States. 
The feasibility of expanding the pilots to other ports, 
including available infrastructure, processing speed, cost to 
install and maintain, and the number of staff required. And I 
am wondering if each of you could give us a preliminary on 
those four key points.
    Mr. Oxford. The problems that you have stated with scanning 
in the past, especially the imaging as opposed to the passive 
scannings, is something that technology will quickly advance. 
What we are working with CBP to do is to look at the various 
scanning systems that are out there and find out the 
information content that comes in each one of those scans. What 
we have been doing in the past or what CBP is doing at the 
borders, if you have visited there, is essentially doing a 
manual processing of the imaging, and then they are trying to 
make a determination integrating automatic algorithms into that 
scanning process to immediately alert the operator there is an 
anomaly, is the technology within our grasp. What we need to 
identify are the systems that we can now integrate that 
technology or that capability into to further enable the CBP 
officers as they are trying to make these targeting systems.
    So, from a technology point of view, it is within our 
grasp. We need to find the right systems to integrate the 
automated processing piece of this, which has not been a 
requirement in the past. So this is a new requirement that 
needs to be integrated in the imaging systems.
    Mr. Winkowski. And we work very closely with DNDO on that.
    Mr. Souder. Have you been able to position the images 
themselves? Is what you are bringing in, for example, being 
able to be used by the National Targeting Center?
    Mr. Winkowski. Yes, they are. As a matter of fact, I was at 
the Center yesterday. And when you look at Pakistan, the images 
are very, very clear that are being transmitted out of the SFI 
port.
    Mr. Souder. Thank you.
    Mr. Oxford, I appreciate the time that we spent earlier 
talking about a number of these issues. And one of the things 
that has been a question is how you do a cost benefit analysis 
of your new technologies. Could you explain a little bit some 
of the struggles that you have had those, the tradeoffs you 
have had and the costs and the expensiveness versus the return?
    Mr. Oxford. The trade-off boils down to two principle 
factors. First of all, is the technology providing a 
significant enough increase in performance to warrant the cost 
of that system? It also then gets back to the balance that I 
mentioned earlier where we are trying to manage the threat. 
And, again, without going into our threat basis in terms of the 
amount of material we are trying to scan for domestically, it 
is a fairly low number and I won't go into the depth on that. 
But that trade-off between that and what CBP officers have to 
do at every port of entry becomes the principle factors in our 
cost benefit analysis.
    How much time does it take to go through a current 
protocol, versus the benefit that new technology, while 
managing the threat better, also benefits the operators in 
terms of their performance.
    Mr. Souder. When you are dealing with potential 
catastrophic threat that you are dealing with, how does that 
change a normal calculation as opposed to risk of illegal 
immigration, risk of narcotics, risk of patent violation? 
Nuclear is a whole different standard.
    Mr. Oxford. When you look at traditional cost benefit 
analysis, one of the methodology factors is the cost of 
regrets. So if you factor in the prospect of allowing a nuclear 
weapon into one of our major urban areas, the associated costs 
that could run into the trillions immediately suggests that you 
would pay whatever it takes to provide enhanced security at the 
border regardless of what the technology costs.
    Mr. Souder. Okay.
    Ms. Sanchez. I thank the gentleman for that.
    And I would now like to recognize other members for 
questions that they may wish to ask the witnesses. And in 
accordance with our committee rules, I will recognize members 
who were present at the start of the hearing based on seniority 
on the subcommittee, alternating between the majority and 
minority. And those members coming in later will be recognized 
in order of their arrival, and of course, those members who are 
not traditionally on the committee will be recognized after 
that point.
    So at this point, I would like to recognize the gentleman 
from Mississippi, our chairman, Mr. Thompson, for 5 minutes.
    Mr. Thompson. Thank you very much, Madam Chairwoman, for 
this very important hearing. As has already been said, we have 
been talking about TWIC for about 5 years now. Ms. Fanguy, can 
you tell me if you are aware of the Coast Guard's advisory 
stating that criminal elements were trying to obtain the 
information about the TWIC program in the Ports of Los Angeles 
and Long Beach?
    Ms. Fanguy. Yes, I am. And we have been working very 
closely with the Coast Guard to look at that intelligence.
    Mr. Thompson. We will go into that a little more. The TWIC 
card was supposed to be the one card that provided uniformity 
and consistency. What steps has TSA taken to pre-empt state 
access cards like those issued in Florida?
    Ms. Fanguy. The TWIC regulation currently does not preempt 
States or localities from issuing their own cards. In the case 
of Florida, however, we recently participated in a roundtable 
chaired by Congressman Mica to discuss some of the concerns of 
the state of Florida and to identify ways that we can work more 
closely together so that we can have one card.
    Mr. Thompson. So are you giving us testimony that at some 
point it is the Department's hope that all these other access 
cards will go away and this TWIC card will be the single entity 
that employers, and employees will have to use?
    Ms. Fanguy. Everybody who needs unescorted access to the 
Nation's ports and vessels will require a TWIC. But currently, 
it is up to local business operators and States and local 
officials to determine if additional cards are required. But 
everybody will have a TWIC, which will provide a common and 
uniform credential across the entire maritime mode. And we feel 
that adds significant security benefits.
    Mr. Thompson. But you are aware that if each State develops 
an access card, we have created a real problem for the 
employees.
    Ms. Fanguy. We certainly have heard from a number of our 
stakeholders about the challenges that they face with multiple 
credentials. And that is why we are putting out the TWIC card, 
which is a common and consistent credential used nationally.
    Mr. Thompson. And I appreciate your comments. But if 10 
States decide to have their own access card, that means that a 
potential employee would have to have 10 access cards if they 
operate in those areas plus a TWIC card.
    Ms. Fanguy. In the example you give, that is correct. And 
we are hoping that people will embrace the TWIC credential. And 
the way that we have designed it is that you can integrate it 
within many legacy systems in a lot of different ways. So we 
are hoping that the flexibility will allow people integrate it 
easily into their existing systems.
    Mr. Thompson. Are you aware of any instances where the 
rollout at this point has produced any compromising of the TWIC 
card?
    Ms. Fanguy. Not at this point.
    Mr. Thompson. Can you tell us, according to the witness who 
will be only next panel from the Port of Houston, why the 
Department missed the estimated number of employees by more 
than 90 percent?
    Ms. Fanguy. In terms of any port in the Nation, we 
certainly have heard a number of different estimates. Let me 
assure you that no matter how many workers there are, we are 
ready to take them. We have a flexible approach to be able to 
handle whatever volume comes our way. As an example, in the 
Ports of Los Angeles and Long Beach, we can do 24 by 7 
enrollment. That is a 24 by 7 port. In places like Houston, 
where there are large populations, we are working very closely 
with field personnel to identify where some of the 
discrepancies may lie and to make sure that we have the 
resources there to be able to handle large volumes of workers.
    Mr. Thompson. So, now, did the Department come up with 
these numbers internally? Or did we hire somebody to give us 
the estimates?
    Ms. Fanguy. When TSA began developing the regulations for 
the TWIC program with the Coast Guard, we did extensive 
analysis. We worked to try to obtain numbers from trade 
associations, from labor groups. We worked with the Department 
of Labor. And we looked to all the various sources of data that 
we had available to us to identify the overall population 
estimates. But we continue to work closely with local 
stakeholders to make sure that if there is new information, 
that we take that into account and we have a flexible approach 
to be able to handle any group of workers that come our way.
    Mr. Thompson. I understand. But what I was trying to say, 
was did we pay somebody to come up with these estimates, or did 
the Department internally come up with the estimates?
    Ms. Fanguy. It was a Department-led initiative, and I am 
sure that we had contractor support. So we need to get back to 
you with some of the details if you are interested in more 
information.
    Mr. Thompson. So you are not aware of any contract that 
went out to give the Department the estimated number of people 
who will be eligible for the TWIC card?
    Ms. Fanguy. Again, it was a Department-led initiative. But 
I do know the way contractors support, but in terms of the 
statement of work specifically for that, we need to get back to 
you with those specifics.
    Mr. Thompson. So do you know about any of the contracts?
    Ms. Fanguy. Absolutely. The contract that supported the 
population estimates, I apologize it was before I was actually 
hired at the TSA, so I want to make sure to get you the right 
information, and I am sure we can get that for you as soon as 
we are done here.
    Mr. Thompson. Thank you. Will you please get us that 
information?
    Ms. Fanguy. Sure.
    Ms. Sanchez. I will now recognize Mr. Bilirakis for 5 
minutes.
    Mr. Bilirakis. Thank you. And I want to thank the chairman 
for zeroing in on the TWIC card issue. We simply cannot require 
maritime workers in Florida or any other state to obtain 
multiple cards for the same purposes.
    I want to commend you, Ms. Fanguy, for your willingness to 
work with me, my state's congressional delegation, also leaders 
from the Florida legislature on this particular issue. I hope 
by working through these issues that we can come to a mutually 
acceptable solution to improving port security in Florida and 
throughout the country.
    I have a couple questions for you, Ms. Fanguy. I understand 
that just a few hours ago TSA released a quarterly deployment 
plan which indicates that TWIC enrollment is scheduled for most 
Florida ports in the first three months of next year. Do you 
know when TSA will be announcing specific enrollment dates for 
those particular ports?
    Ms. Fanguy. As we get started on the program, we began in 
Wilmington. Once we verified that things were going 
successfully in Wilmington, we put out the date for Corpus 
Christi. So on Thursday we are looking forward to getting the 
real data back, and then we will announce a lot more dates. So 
as we go through the next couple of months here, I would 
anticipate that we would begin to put out further information 
with specific dates and locations for the upcoming ports. But 
we want do this in a measured way and we want to make sure to 
control the release of information so we don't confuse workers, 
and all of a sudden, have workers show up at an enrollment site 
only to be turned away if we have not begun enrollment in that 
location. But I would anticipate that that would be coming very 
shortly after we verify successful operations in these first 
ports.
    Mr. Bilirakis. At a roundtable discussion on the TWIC last 
week, as you mentioned, former DHS Deputy Secretary Michael 
Jackson indicated that he believed that several of the 
outstanding TWIC issues could be resolved before TWIC is 
implemented in Florida. Could you please share with us what 
steps your office is taking to address the major unresolved 
issues and whether you have established a timetable for doing 
so, especially in light of today's deployment announcement.
    Ms. Fanguy. We are working very closely within the 
Department of Homeland Security to take the feedback from that 
roundtable, and we have developed a plan. We are working very 
closely with the FBI to identify ways that we can make sure 
that at the national level, that we have access to complete 
criminal history records information that will allow us to 
complete more accurate security threat assessments. We have 
also prepared a letter to go to the FBI so that we can identify 
other ways that we can work more closely to address some of the 
issues that were brought up in the roundtable.
    Ms. Fanguy. We have been working very closely with 
officials in the State of Florida, and I anticipate that we are 
going to continue to do that as we move forward with TWIC 
rollout to make sure that we have come up with a mutually 
agreeable solution.
    Mr. Bilirakis. At the discussion, Secretary Jackson also 
said that he would also inform his successor about the 
discussions we had last week and direct him or her to make 
resolving the issue a top priority. Will you commit to me here 
today that will ensure that the Acting Deputy Secretary Snyder 
is aware of Florida's concerns and that he or she, the 
successor, will follow through on Secretary Jackson's promise 
in a timely manner?
    Ms. Fanguy. Absolutely. And, in fact, he was already 
briefed and we gave him further information when we met with 
him last week to bring him up to speed on some of the issues 
that we discussed.
    Mr. Bilirakis. This is very critical to Florida, so thank 
you for your cooperation and your willingness to continue to 
work for me. Thank you.
    Thank you, Madam Chair.
    Ms. Sanchez. The gentleman from Florida is welcome.
    I believe now we have the gentleman from Texas, Mr. Green, 
for 5 minutes.
    Mr. Green. Thank you, Madam Chair; and I thank the 
witnesses for appearing today. Because time is of the essence I 
will move as expeditiously as possible.
    Ms. Fanguy or Fangee? Help me with the pronunciation.
    Ms. Fanguy. It is Fanguy, but I will answer to almost 
anything.
    Mr. Green. Thank you. I want to be as appropriate as 
possible.
    Permit me to retrace some of the comments made. You 
indicated earlier that it would take approximately 15 minutes 
as an enrollment time and about a 6-minute wait period; is that 
correct?
    Ms. Fanguy. That is the data that we are seeing to date.
    Mr. Green. And you might be able to enroll as many as 5,000 
workers per day?
    Ms. Fanguy. That is correct, once we are rolled out 
nationwide.
    Mr. Green. At 147 sites?
    Ms. Fanguy. Correct.
    Mr. Green. Now obfuscation does not necessitate malice 
aforethought, and I do not in any way imply that there is any 
malice aforethought, but I do have to ask you, are you 
indicating to us that we now have a working paradigm that we 
can monitor and that we can review wherein the card which 
necessitates that you have two things to happen, a reader that 
can read the card and can also read some part of my body so as 
to cross-check? Are we saying that that system is operable 
today?
    Ms. Fanguy. Yes.
    Mr. Green. And it is operable at 147 sites?
    Ms. Fanguy. In terms of--there are two parts to the TWIC 
program. So, right now, we are moving forward with the rollout 
of enrollment of workers. And then the second part will be to 
require owners and operators at those ports to install readers.
    Mr. Green. I understand, but do we have the readers at 
these sites?
    Ms. Fanguy. Currently, they are not required to have 
readers.
    Mr. Green. Is your answer no?
    Ms. Fanguy. That is correct. It is no.
    Mr. Green. If we do not have readers at the sites, then we 
will have persons who will have cards who will be permitted to 
enter a facility, but we won't have the ultimate cross-check, 
which is the reader that will identify the person as the proper 
holder of the card; correct?
    Ms. Fanguy. Correct.
    Mr. Green. That would mean then today I could take someone 
else's card who looks a lot like me--not a lot of people do, 
but assuming there is someone who looks a lot like me--and I 
could enter the facility--``thank God'' someone just said. I 
could enter the facility with someone else's card if the person 
looks a lot like me; is this correct?
    Ms. Fanguy. We would hope that the security officials at 
the port----
    Mr. Green. I understand, but you don't have that crucial 
element of the cross-check with some biometric; is that 
correct?
    Ms. Fanguy. That what we are working very closely on in the 
rollout--yes, the readers.
    Mr. Green. The reason I mentioned obfuscation is because 
the way your testimony came across could cause someone to 
conclude that we have sites currently operable where this 
actual functionality is taking place and you are saying to me 
this is not true?
    Ms. Fanguy. We have enrollment sites that are open, and the 
next part of the program will be to require readers.
    Mr. Green. Which makes my statement correct then. You don't 
have the sites with the reader and the enrollment card?
    Ms. Fanguy. For the readers, you are correct.
    Mr. Green. Which means we are still at a point where we 
are--to use the vernacular of Texans--we are fixin' to do 
something. True?
    Ms. Fanguy. Well, the first part of the program needs to be 
to get cards in the hands of workers so that then when you 
implement readers that everybody has a card. So we don't want 
to put a lock on the doors until everybody has a key, and what 
we are doing now is giving everybody the key.
    Mr. Green. So you are 100 percent confident that the reader 
that you will eventually utilize will function with the card 
that you have developed?
    Ms. Fanguy. When we developed----
    Mr. Green. I might have to ask you to say yes or no, given 
that I only have 55 seconds left.
    Ms. Fanguy. Yes, I am confident that we will have the--that 
we will be able to read the cards.
    Mr. Green. One hundred percent confident?
    Ms. Fanguy. Yes.
    Mr. Green. The delay in getting the TWIC card developed and 
on line, would the vacancies in DHS have played any part in the 
implementation of the SAFE Port Act? Not just of the card but 
would these vacancies have had any impact?
    Ms. Fanguy. Since I have been at the TSA, I was actually 
hired to take things forward with TWIC about a year and a half 
ago. We have hired additional staff to be able to move forward 
with the TWIC program, and we feel that we have a good staff in 
place to carry the program forward and continue successful 
operations.
    Mr. Green. And I will take that as a nebulous answer, and I 
am not sure whether you said yes or no. Could you kindly give 
me some clarity, please? Are you saying yes or no?
    Ms. Fanguy. I am not aware of any of the vacancies 
affecting the TWIC program.
    Mr. Green. I will yield back the balance of my time with 
this comment. I am somewhat disappointed that after 5 years we 
still don't have the readers and the cards being dispatched. 
That causes me some degree of consternation, given that this is 
a key element in the SAFE Port Act.
    I yield back.
    Ms. Sanchez. I thank Mr. Green, and now we will go to Ms. 
Jackson Lee for 5 minutes.
    Ms. Jackson Lee. Let me thank the witnesses for their 
testimony and as well for their service and express the same 
kind of concern. I won't use the terminology ``frustration'' 
but ``concern.'' Because I do believe that there has been an 
effort to move forward, by the witnesses' testimony. But, at 
the same time, I think that we are long overdue in where we 
should be.
    Let me ask a pointed question to Ms. Fanguy and to the 
Commissioner. This program was supposed to be rolled out on 
January 1, 2008--I know in your testimony you have said a 
number of things--at the top 20 to 50 ports. Give me your best 
answer that you will in fact be able to roll this program out 
at the top 20 to 50 ports January 1, 2008, which is a short 
distance away from today.
    Ms. Fanguy, why don't you start?
    Ms. Fanguy. Today we put out a schedule; and by January 1, 
2008, we are currently anticipating that we will be at 39 
sites. In January to March of next year, we are currently 
anticipating 55 more sites being brought on line and quickly 
bringing on the remaining 147 sites, so that by next September 
we would anticipate that we would have the full complement of 
fixed enrollment sites.
    Ms. Jackson Lee. Let me stop you there. You will have 39, 
which is between 20 and 50. And why do you think you are not 
able to do the complete 50 by January 1, 2008? And will the 39 
that you have, will it meet the litmus test? Will you be 
comfortable that it will be a functioning process, the ones 
that you will have at that point?
    Ms. Fanguy. That is exactly why we are rolling it out the 
way that we are. We want to make sure that we roll this out in 
a measured way and a controlled way to make sure that it 
continues to work successfully, that we can handle the volumes 
and continue to turn cards around in a timely fashion.
    Ms. Jackson Lee. We have listed as one of the problems that 
the Department has not yet finalized a rollout schedule for all 
the ports. Are you suggesting that there is finalized schedule 
and it is not a problem anymore?
    Ms. Fanguy. We do have a finalized schedule that we have 
put out, and we will continue to put out more information about 
specific dates for each port as we move forward in the program.
    Ms. Jackson Lee. Let me hear that again. You said what?
    Ms. Fanguy. We have a working schedule, and today what we 
have put out is time frames for the 147 ports. So for the next 
couple of month up to the end of December we have given time 
frames, but we need to make sure that we are verifying success 
at each port before we put out the dates for the next ports, 
because we don't want to have a situation where we announce a 
date for workers at a certain port and then we have to change 
those dates.
    Ms. Jackson Lee. Mr. Commissioner, why is this taking so 
long? And the second question is, why did you choose China in 
this pilot program? Why is this whole process taking so long?
    Mr. Winkowski. Congresswoman, I have nothing to do with 
TWIC. It is not under Customs and Border Protection.
    Ms. Jackson Lee. Then answer the question. You are still a 
part of the Department. I am sure you can contribute to that. 
Why did you select China as a pilot program?
    Mr. Winkowski. I am sorry. I thought you were talking about 
TWIC. From the standpoint of the third-party validators?
    Ms. Jackson Lee. Yes.
    Mr. Winkowski. China was picked due to the fact that the 
Chinese government would not let us in China. And so going by 
the SAFE Port Act and going by the requirements of the SAFE 
Port Act China was selected, hoping that we could get some C-
TPAT validations completed.
    Ms. Jackson Lee. But you picked a nation that wouldn't let 
you in? I am trying to understand that.
    Mr. Winkowski. We had some issues from the standpoint of 
doing our validations there, and we felt that in order to help 
out the importers that wanted to be under the C-TPAT program 
that the third-party validators could perhaps move it along.
    Ms. Jackson Lee. Are you where you need to be with China 
now?
    Mr. Winkowski. No, we are not, but I am hoping in the next 
few days that we will be notified by China that our C-TPAT 
supply chain specialists will be able to go into China and 
begin the process of validations.
    Ms. Jackson Lee. I appreciate the service of everyone, but 
the question I posed to the commissioner was purposeful. It 
seems that no one at DHS knows what the other person is doing 
and has no contribution to it and can't help anyone. I will 
just make the point that coordination is lacking.
    I have some other questions, but I know that my time is 
over. Thank you.
    Ms. Sanchez. I will now recognize the gentleman from Texas, 
Mr. Cuellar, for 5 minutes.
    Mr. Cuellar. Thank you, Madam Chair.
    I want to thank the witnesses for being here.
    Commissioner Winkowski, let me ask you about the primary 
goal of the SAFE Port Act. It is the improvement of risk 
targeting for maritime cargo containers inbound to the United 
States from overseas locations. What is the status of the 10 
plus 2 initiative?
    Mr. Winkowski. The 10 plus 2 initiative, the regulations 
have been forwarded up to the Department and OMB for further 
review and approval. So I think when you look at 10 plus 2, I 
think it is really testimony to how government and industry can 
sit down, take on a very difficult issue and come up with a 
solution.
    Mr. Cuellar. So your best timetable is by when?
    Mr. Winkowski. Hopefully, sometime--I am anticipating 
sometime this calendar year.
    Mr. Cuellar. What about the global trade exchange, the GTX 
initiative? What is the status of that?
    Mr. Winkowski. We continue to work through that. It is an 
initiative that we have had a series of meetings on. It is a 
data warehouse. It is a vision that we have. Our attorneys are 
going through the legal challenges that we have with the global 
trade exchange, and we continue to move along.
    Mr. Cuellar. Have you all included the custom brokers, the 
industry? I talked to their association, and they feel quite 
strongly that they have been left out of the conversation.
    Mr. Winkowski. Not at this point, Congressman, because it 
is really something that we are trying to get our arms around. 
But I can assure you that once we get our arms around it and 
issue the RFQ that there will be very, very strong consultation 
with the trade community.
    Mr. Cuellar. Okay. So when you do get your arms around that 
you will still have flexibility to--if they would want to see 
some changes, you would have flexibility to make any changes 
from the input?
    Mr. Winkowski. Oh, yes.
    Mr. Cuellar. Let me ask you a question about the container 
security devices required under the SAFE Port Act. Have you all 
developed any container security devices required by the Act?
    Mr. Winkowski. We have been working on our requirements. We 
believe that there is a need to continue to explore the 
technology, particularly for the CSDs.
    We believe that if we are going to have a CSD it has got to 
meet our standards. We want to make sure that we don't have a 
lot of false positives where we are chasing down containers. We 
also feel that it should be used in a selective mode.
    Mr. Cuellar. Are you all asserting that the technology does 
not exist?
    Mr. Winkowski. No, the technology exists. The question 
becomes the reliability.
    Mr. Cuellar. Okay. Not promoting any particular product--I 
want to make that clear for the record--but, I mean, there is 
some technology that already exists that I think has been 
validated. Why isn't your testing or the Department's testing 
from the technology that is available out there?
    Mr. Winkowski. Well, we understand there is a technology 
out there, and we also believe that there is application out 
there. We don't believe that they should be hung on all 11.4 
million seaport containers coming into the country, number one. 
Number two, it should be used on a selective basis; and, number 
three, we have got to make sure that we are testing that 
technology. Because if you have a device that is reliable at 95 
percent or 96 percent, you are talking about many containers 
where you could have false positives on. So we are working 
through those issues. We are not dismissing the use of CSDs.
    Mr. Cuellar. Would you keep the committee advised on your 
progress on that at least?
    Mr. Winkowski. Absolutely. Absolutely.
    Mr. Cuellar. On the transportation worker identification 
credentials--I guess this is to the Coast Guard--you all sent 
out a security alert I guess just less than a week ago dealing 
with Long Beach and L.A. possibility of gang members dock 
workers, organized criminal elements trying to solicit 
information on TWIC. Any further status on that?
    Captain Sturm. Congressman, I don't have anything to add at 
this time. I would clarify that I think that was an attempt at 
our local office there to just alert local facility operators 
that there are criminal elements looking to exploit, you know, 
gather information for possible exploitation in the future. But 
there was no indication that there was any success in that 
area.
    Mr. Cuellar. Okay. All right. Well, thank you.
    I have no further questions, Madam Chair. Thank you.
    Ms. Sanchez. The Chairwoman recognizes the gentleman from 
New Jersey, Mr. Pascrell, for 5 minutes.
    Mr. Pascrell. Thank you.
    I want to thank everyone for their service to their 
country, but I still believe strongly that port security 
remains one of the biggest homeland security vulnerabilities in 
our Nation and more has to be done and a sense of urgency, I 
think, has to be part and parcel of our everyday work so that 
we can face these threats.
    The SAFE Port Act was passed by Congress as a strategic 
plan to enhance the security of all of our ports, but the many 
agencies within the Department of Homeland Security have fallen 
too far behind in implementing key provisions.
    Last year, we passed the critical legislation I authored 
with Dave Reichert from Washington, a member of this committee, 
to direct the Secretary to establish a port securities training 
program. This program was intended to enhance the capabilities 
of each of our Nation's seaports to prevent and to prepare for 
response to and to mitigate against acts of terror, to mitigate 
against natural disasters and other emergencies by providing 
validated training to all disciplines that are involved in 
operations and safety at our ports.
    So my question, Captain Sturm, is, has the Coast Guard 
established port security training and exercise programs which 
is required by the SAFE Port Act? It is our understanding that 
port workers still lack the necessary training. Could you be 
brief and to the point?
    Captain Sturm. Yes. Mr. Congressman, under MTSA 2002 there 
were some existing requirements for training and exercises. 
Model courses for facility workers as well as members on the 
shipboard community were developed. Now extra money has been 
allocated to Florida State University which has been developing 
actual courses that specific unions, employers and other groups 
can use, more or less off-the-shelf, to build their own 
training programs, making it that much easier to conduct 
training.
    So we continue to move forward on building--providing 
assistance for training to people in the maritime community.
    Mr. Pascrell. Thank you.
    Are you satisfied with the progress of not only the 
training but the exercises that were very definitive in the 
port securities bill?
    Captain Sturm. Well, with respect to exercises, that 
process continues to evolve as well. The first 2 years after 
MTSA 2002, most of our exercises focused on the prevention and 
protection nature of area maritime security plans. Last year, 
approximately 35 percent of our exercises also included 
recovery and reconstitution. This coming year, we expect 50 
percent of those exercise will. So, as maritime security 
efforts mature in ports, our exercise program will continue to 
mature as well; and we will provide additional guidance to our 
field units.
    Mr. Pascrell. Assistant Commissioner Winkowski, although it 
was recommended by the GAO and the SAFE Port Act that minimum 
technical operating standards for nonintrusive inspection 
equipment at CSI ports have yet to be established, without such 
standards, what assurances does our Nation have that this 
equipment that you have been talking about is capable of 
detecting weapons of mass destruction within these high-risk 
containers?
    Mr. Winkowski. Well, we rely on the expertise of the 
scientists from an operations standpoint, whether it is 
Department of Energy or the DNDO.
    Mr. Pascrell. Where are you with the standards? How can you 
make an evaluation or a judgment unless you have established 
the standards by which we can conclude that we are protecting 
this Nation from weapons that I have described coming into our 
ports, and what assurances can you give us if you don't have 
the standards?
    Mr. Winkowski. I don't have the answer to that question.
    Mr. Pascrell. I think that is pretty significant, don't 
you, that we get the answer?
    Mr. Winkowski. Yes, I agree.
    Mr. Pascrell. Because everything is evolving here. The 
favorite word of Homeland Security is ``evolving.'' Life is 
evolving. I believe in evolution of ideas, evolution itself, 
but we have got to get to a point where--we are never going to 
have a seamless situation. Nobody is saying that. Everybody 
understands that. But we can be doing much better in terms of 
the length of time we have had to put this together.
    The resources that everybody says we have, Madam 
Chairwoman, we have these resources. We don't need more money. 
We do not need this or we don't need that. Then why don't we 
ever get to the point where we are saying, we are satisfied, we 
have established a standard, and we have met that standard?
    And I would like to ask, if I may, one more question.
    Ms. Sanchez. I will indulge the gentleman from New Jersey 
for his question.
    Mr. Fanguy. Ms. Fanguy, how do you expect poor operators 
and trucking companies to continue operating in the face of the 
provisions that have been laid out in the SAFE Port Act and the 
TWIC program, in the face of these provisions which may mean a 
significant chunk of their workforce will now be ineligible to 
enter the ports in the first place?
    Ms. Fanguy. We have established a very robust appeals and 
waivers redress process for workers. And we certainly 
understand that some people may have some of the criminal 
disqualifiers in their past, but we want to work very closely 
with these workers.
    The process that we have laid out is the same as that that 
we use in the HAZMAT program. And I want to reassure you that 
we work closely with the drivers in the HAZMAT program today. 
Based on the most recent statistics that we have, we have 
processed approximately 700,000 drivers through the HAZMAT 
program; and in terms of waivers that have been denied, we have 
denied approximately 70.
    So for people who will work with us, we want to make sure 
that we can get the information to be able to clear their 
information. If it is an appeal and we have incorrect 
information, we want to correct that. If it is somebody who has 
something in their past and they no longer pose a security 
threat, we will work closely with them to make sure that we can 
note that and give them the credential that they need.
    So we are doing it today on HAZMAT, we will use the same 
process on TWIC, and we want to reassure you that it is 
something that is very important to us.
    Mr. Pascrell. Thank you.
    Ms. Sanchez. Let me get a clarification on that. You said 
you denied 70 under the HAZMAT?
    Ms. Fanguy. That is correct.
    Ms. Sanchez. How long has the HAZMAT program been going?
    Ms. Fanguy. The HAZMAT program has been going approximately 
2 years now.
    Ms. Sanchez. How many HAZMAT certifications have you given 
out?
    Ms. Fanguy. Seven hundred thousand.
    Ms. Sanchez. Seven hundred thousand. Good. Thank you for 
that. We wanted that on the record.
    I would thank the panel for being before us, and we will 
again thank you for your work. We will probably have some other 
questions which we will put in writing to you, and we hope that 
you will get back the information we need as quickly as 
possible.
    We will dismiss the first panel and ask the second panel to 
please approach and get ready, and I will give a 5-minute 
intermission for people to stretch their legs and get business 
done, and we will be back in 5 minutes with the second panel.
    [Recess.]
    Ms. Sanchez. I welcome the second panel of witnesses.
    Our first witness is going to be Mr. Lindsay McLaughlin, 
the chief lobbyist--that is the first time I have heard you 
called a lobbyist--chief lobbyist for the International 
Longshore and Warehouse Union. In this role, since 1991, he has 
advocated for a wide variety of issues to benefit the members 
of his union, including the process protections for longshore 
workers undergoing background checks and adequate port security 
training.
    Our second witness is Mr. Robert Blanchet, Representative 
for the Port Division of the International Brotherhood of 
Teamsters. He currently represents the Teamsters Port Division 
on the west coast, serving the ports of Oakland, Long Beach, 
Seattle-Tacoma and Portland; and in that capacity he helps 
represent over 5,500 longshoremen, clerks, truck drivers, 
tugboat deckhands, tugboat captains, port authority employees, 
guards and warehousemen who work at our Nation's ports. He has 
been a member of the Teamsters Union for 39 years. Welcome.
    Our third witness is Mr. Chris Koch, President and CEO of 
World Shipping Council, a trade association representing the 
international liner shipping industry. The Council's members 
represent over 93 percent of the international liner industry 
capacity serving U.S. international commerce. Mr. Koch was 
hired by the industry to establish this organization in August 
of 2000.
    And our fourth witness is Ms. Mary Alexander, Director of 
Government Relations at Panasonic Corporation North America. 
She has been with Panasonic for over 19 years, focusing on 
international trade, tax, and general corporate affairs issues; 
and she currently chairs the Joint Industry Group, an ad hoc 
coalition of Fortune 500 companies, carriers, customs brokers, 
trade associations, service providers and law firms with a 
common interest in global commerce.
    And our final witness is Mr. Wade Battles, Managing 
Director for the Port of Houston Authority; and as managing 
director, a position he has held since 1999, Mr. Battles is the 
equivalent of the chief operating officer, overseeing all of 
the port's administrative and operational departments. A long-
time maritime professional, he has been an active member of 
numerous industry associations and committees, including the 
American Association of Port Authorities and the National 
Maritime Security Advisory Committee.
    And without objection, the witnesses' full statements will 
be inserted into the record.
    Ms. Sanchez. I will now ask my friend, Mr. McLaughlin, to 
summarize his statement for 5 minutes.

    STATEMENT OF LINDSAY MCLAUGHLIN, LEGISLATIVE DIRECTOR, 
          INTERNATIONAL LONGSHORE AND WAREHOUSE UNION

    Mr. McLaughlin. Thank you, Chairwoman Sanchez and members 
of the subcommittee. Thank you for inviting ILWU to testify. As 
you know, the ILWU represents longshore workers on the west 
coast of the United States.
    There are a number of important provisions of the SAFE Port 
Act that I would like to talk about. First, port security 
training and exercises. To date, most of our longshore workers 
don't know what the evacuation procedures are. There haven't 
been any live exercises.
    Recently, the ILWU officers met with Rear Admiral Bone on 
the west coast to talk about a wide variety of port security 
issues, including training; and what we told him is that our 
major priority is that we have a whole cadre of people who are 
willing and able to work on recovery efforts in case there is 
an attack and that we need training for these people that would 
volunteer in HAZMAT and--somebody has got to move these 
containers out of the way in the event of an incident. We need 
to start somewhere. That is somewhere.
    On TWIC, the rollout is going to be mid-November. Our 
membership has some concerns, the loss of privacy involved in 
submitting to the background check. The fee for the card is a 
burden for some of the lower-paid workers such as security 
guards. Many of our members have expressed concerns that they 
are going to go through this process and pay money when there 
are no readers in place to read the cards.
    But our leadership has asked the union to cooperate with 
the TSA; and we are in discussions at those ports, Honolulu, 
Oakland, and Tacoma, to establish mobile units in the halls. 
That is a good thing.
    But it is instructive to look at the experience of the 
HAZMAT truck drivers in obtaining their security clearance. TSA 
claims that they processed 700,000 applications, resulting in 
the disqualification of 5,500 individuals. Ninety-five percent 
of the disqualified individuals did not respond to the initial 
letters explaining their rights to appeals and waivers, and we 
are concerned about that for a number of reasons. We are 
concerned about people not being able to understand the letters 
that are going to them, perhaps because of literacy or because 
English is the second language. And it is imperative that a 
worker understand his or her rights right up front and that 
they are able to understand this communication that they get. 
So it needs to be in different languages, and there needs to be 
interpreters or people need interpreters.
    Another concern of the ILWU is the inaccuracy and 
incompleteness of the FBI rap sheets that will be used to 
determine whether a member has passed a background check. The 
experience of workers in the hazardous materials certification 
process demonstrates this problem. TSA has reported that more 
than 3,000 people were initially found to have failed the 
criminal background check, even though they had actually had no 
disqualifying convictions and otherwise met the requirement for 
issuance of a TWIC. These incorrect initial determinations were 
caused by rap sheets that were incorrect or incomplete or that 
failed to distinguish between felonies and misdemeanors.
    Now, given the wide scale inaccuracy and incompleteness of 
the FBI rap sheets, TSA must be required to conduct a further 
investigation before making an initial determination to deny 
somebody a TWIC and workers must be allowed to continue doing 
their jobs until the appeals process is exhausted.
    Another concern of ours is on the west coast we have 
traveling longshoremen. They might be a longshoreman in a small 
port, and there is no work, so they travel up and down the 
coast. You might have a longshoreman who needs to take care of 
a sick family number, so he travels to another area. We are 
concerned about the compliance date; and the compliance date on 
the west coast we believe should be the same, given that we 
have traveling people.
    Another point I would like to make, the Federal Government 
is spending millions of dollars on a system to control access 
to port facilities for perhaps a million American workers. Yet 
the Department of Homeland Security is missing a huge, gaping 
hole, so we are going to have this access control for people 
going in and out of our gates, yet empty containers go in and 
out of our gates every day unchecked.
    And we have this example in the Port of Ashdod in Israel 
where people did get in through a container and people died 
because of it. Longshoremen were blown up because of it.
    It makes no sense to us that you are spending millions of 
dollars to control access to our Nation's ports, yet not even a 
simple pilot program, as I understand it, is going on; and we 
need to go much further than that. This is something that they 
used to do, check containers as they were going into the gates 
to ensure that they are actually empty and that there are no 
people or contraband or things in that container that shouldn't 
be.
    And another issue I would like to wrap up is the port 
security regulations. Right now, they require terminal 
operators to check seals to ensure that they have not been 
tampered with as they are going into the facility and upon 
storage, and this just is not being done. In fact, some of the 
terminal operators since 9/11 have discontinued this process 
because of the competitiveness factor, we believe. And there 
are regulations in place. We have questions as to why, 5 years 
after the regulations, there is no enforcement.
    Finally, we would like to talk a little bit about the 
preemption issue. I think several unions have brought this up, 
and it is an important--that they don't need multiple cards. 
Either we are going to have a uniform card or we are not.
    Again, I appreciate you allowing me to testify today behalf 
of the ILWU.
    Ms. Sanchez. Thank you for your testimony.
    [The statement of Mr. McLaughlin follows:]

                Prepared Statement of Lindsay McLaughlin

    Thank you Chairwoman Sanchez and Members of the Subcommittee for 
inviting the International Longshore and Warehouse Union (ILWU) to 
testify on the status of the Security and Accountability For Every 
(SAFE) Port Act.
    As you know, the ILWU represents longshore workers in the states of 
Washington, Oregon, California, Hawaii, and Alaska. We have long 
advocated the development and implementation of practices to limit the 
risk of terrorism at our work sites and to keep our ports from becoming 
conduits for unconventional weapons. To that end, it is imperative that 
the ILWU workforce be utilized as the first line of defense against 
maritime terrorist activities; law enforcement and other first 
responders should recognize us as a natural ally.
    Within each jurisdiction, key union officers are members of the 
Area Maritime Security Committee. Our relationship with the Coast Guard 
has never been better; we applaud that agency for its cooperation and 
for performing its job admirably--often with limited resources.
    There are a number of important provisions of the SAFE Port Act 
that deserve immediate attention and action from the relevant agencies. 
First, the SAFE Port Act requires the Department of Homeland Security, 
in coordination with the Coast Guard, to establish a port security 
training program to enhance the capability of each facility to prevent, 
prepare for, respond to, mitigate, and recover from acts of terrorism 
or natural disasters. Additionally, the Act requires each high-risk 
facility to conduct live or full scale exercises not less frequently 
than once every two years.
    The Act calls for training involving evacuation procedures in the 
event of an incident. Most longshore workers have no idea how to 
orderly evacuate facilities. To date, longshore workers have not been 
trained, with the exception of union-conducted initiatives. Our 
employers resist live exercises because it may temporarily disrupt 
commerce. However, without live exercises, any plan cannot be tested 
and improved in the event of unforeseen problems. The disruption to 
commerce in the event of any large-scale incident would certainly be 
much more significant with an unprepared workforce.
    Recently, ILWU officers met with Coast Guard Rear Admiral Bone in 
San Francisco for a wide-ranging discussion of port security. The ILWU 
emphasized our high priority placed on training. It is critical for our 
nation's economy that our members get back to work as soon as is 
practical and safe following an incident. Someone will have to move 
containers out of the way; commerce will have to resume. Our union 
needs to be integrated into the emergency command structures. We have 
discussed with our employers forming a voluntary cadre of longshore 
workers to train for and be prepared to work in potentially hazardous 
environments. While discussions are helpful, we must begin 
implementation as soon as possible.
    The Transportation Security Administration (TSA) began enrolling 
individuals for a Transportation Worker Identification Credential 
(TWIC) at the Port of Wilmington, Delaware on October 16. On the West 
Coast, TWIC will initially be rolled-out at the Ports of Honolulu, 
Oakland, and Tacoma in mid-November. Workers will be charged $132.50 
for a card lasting 5 years. Our membership has raised many concerns 
with TWIC, including the loss of privacy involved in submitting to a 
background check. The fee for the card is a burden for lower paid 
workers such as security guards. Our members are also concerned that 
the card will be used for purposes other than simple access control. 
There is a fear amongst longshoremen that truckers and other 
individuals who must gain access to the port will not have to be 
compliant given the industry's fear that there may be a trucker 
shortage. Longshore workers see this issue as a matter of fairness that 
every individual on the docks, regardless of occupation--management and 
labor alike--should have to go through the same process. Finally, it 
may be years before card readers are installed at our nation's ports. 
It makes little sense to issue cards to people for the purpose of 
access control without having readers for the cards.
    The ILWU leadership has urged our Locals and ILWU members to 
cooperate with TSA and Lockheed Martin to enroll our members in an 
orderly fashion. Discussions are occurring with these entities to 
establish a mobile unit at the union halls or in the vicinity of the 
union halls to accommodate our workforce.
    It is instructive to look at the experience of Hazardous Material 
truck drivers obtaining their security clearance pursuant to the USA 
PATRIOT Act. TSA claims that they processed 700,000 applications 
resulting in the disqualification of 5,500 individuals. Ninety percent 
of the disqualified individuals did not respond to the initial letters 
explaining their rights to appeals and waivers. The ILWU is concerned 
with this statistic for a number of reasons. We are concerned that 
thousands of individuals may not have understood the communication to 
them because of literacy issues or perhaps because English is the 
individual's second language. It is imperative that a worker be able to 
understand his or her rights during this process if initially denied a 
card. This means that TSA must make materials available in multiple 
languages, not merely English and Spanish, and must make interpreters 
available to ensure that the non-English-speaking members of our 
workforce are able to continue their work in the industry. It is 
equally important that all written materials be drafted using plain 
language that can be easily understood.
    Truck drivers have a choice whether to transport hazardous 
materials or not; longshore workers do not have a choice. Longshore 
workers must have a card to work unless an escort procedure is worked 
out with the terminal and approved by the Department of Homeland 
Security. Given the importance of this card to our members' 
livelihoods, we urge the TSA to revise their regulations to allow some 
initial waivers to be granted to an individual without having to apply 
for the waiver.
    Another concern of the ILWU is the inaccuracy and incompleteness of 
the FBI ``rap sheets'' that will be used to determine whether our 
members pass the background check. The experience of workers in the 
Hazardous Materials certification process demonstrates this problem. 
TSA has reported that more than 3,000 people were initially found to 
have failed the criminal background check even though they actually had 
no disqualifying convictions and otherwise met the requirements for 
issuance of a TWIC. These incorrect initial determinations were caused 
by rap sheets that were inaccurate or incomplete or that failed to 
distinguish between felonies and misdemeanors. These approximately 
3,000 workers were able to successfully utilize the appeals process to 
correct the erroneous initial determination. However, it is almost 
certain that an untold number of other workers who were erroneously 
denied certification did not appeal, perhaps because they did not 
understand their rights or could not read the information provided to 
them. Thus, in addition to these 3,000 workers who successfully 
appealed, there are almost certainly countless others who met the 
requirements for a Hazardous Materials certification, but are now 
barred from hauling Hazardous Materials because of inaccurate or 
incomplete records.
    In the ports, where workers will have to have TWICs in order to 
keep their jobs, the impact of the faulty records has the potential to 
be far more damaging. Workers who are denied a TWIC will lose their 
ability to work in the industry altogether. And even those workers who 
appeal an incorrect initial determination and ultimately prevail will 
be unable to work until the appeals process is complete. This means 
that a worker erroneously denied a TWIC, will be off work for at best 
several months while he or she appeals the incorrect determination. 
Given the wide-scale inaccuracy and incompleteness of the FBI rap 
sheets, TSA must be required to conduct a further investigation before 
making an initial determination to deny someone a TWIC and workers must 
be allowed to continue doing their jobs until the appeals process is 
exhausted.
    We would be very surprised if any members of the ILWU are terrorism 
security risks. Last year, the Coast Guard asked the union to cooperate 
in checking our members' names against the Terrorist Watch List; they 
presumably found no matches. We remain adamant that felony convictions 
for past crimes are not necessarily an indication of a terrorism 
security risk. We urge TSA to utilize the waiver procedures included in 
the Act. The Coast Guard must adequately staff independent 
Administrative Law Judges to hear appeals from individuals denied a 
waiver. And as with the appeals process, workers should be permitted to 
keep their jobs while they are exhausting the waiver process.
    At the Senate Commerce Committee hearing on port security on 
October 4, 2007, Senator Cantwell asked the TSA how they would 
accommodate longshore workers who travel to work across various port 
zones. We are concerned that the response from TSA is ambiguous. Each 
Captain of the Port will determine when their zone is ready for TWIC 
compliance. The ILWU has an established travel system whereby workers 
regularly move between ports. Workers at small ports where work is 
scarce may not yet require a TWIC card but seek work in the ports where 
the TWIC cards are indeed required. Thus, the compliance date for 
implementation of TWIC must be uniform on the West Coast.
    The federal government is spending millions of dollars on a system 
to control access to port facilities for perhaps a million American 
workers. Yet the Department of Homeland Security continues to ignore a 
gaping hole in the maritime security system. Empty containers are a 
real risk as a means to transport weapons or people. Few terminals on 
the West Coast are visually inspecting containers to ensure that they 
are indeed empty. Given that empty containers are unsealed, it is easy 
for an individual to climb into a container and gain access to secure 
areas of a port facility. The SAFE Port Act requires a pilot program 
that includes the use of visual inspections of empty containers. We are 
not aware that any pilot program has begun. We recommend that the 
Committee go much further and simply require that facilities visually 
inspect the empty containers, given the expensive investment we are 
making to control access through the TWIC program.
    There have been legitimate concerns raised by our counterpart on 
the East Coast, the International Longshoremen's Association, and the 
sea-going maritime unions over states and localities such as Florida 
implementing their own version of TWIC. Workers should only go through 
one TWIC process and the due process protections embodied in federal 
port security law must apply to all states and localities.
    On March 14, 2004, ten dock workers were killed in the Israeli Port 
of Ashdod by suicide bombers; these terrorists were able to enter the 
port facilities undetected by hiding inside a cargo container. We must 
not experience a similar tragedy before we get serious about the cargo 
and empty containers that enter our port by sea or by land.
    Existing port security regulations require that container seals be 
inspected to detect and deter any tampering when entering a port 
facility and upon storage on the docks. This is simply not being done 
at most facilities; unbelievably, some facility operators have 
discontinued this practice since September 11, 2001 in order to further 
enrich themselves. Is there some reason that these important 
regulations are not being implemented 5 years after the Maritime 
Transportation Security Act was signed into law?
    The Act requires the National Institute for Occupational Safety and 
Health and OSHA to evaluate the environmental and safety impacts of 
non-intrusive imaging technology and to develop and put into place a 
radiation risk reduction plan to minimize the risks to workers and the 
public. Such evaluation needs to proceed. We are alarmed at the lack of 
independent study of the long-term effects of this technology on the 
human body. The ILWU will continue to place the safety of our members' 
lives first.
    In conclusion, the ILWU urges that port security training and 
exercises move from discussion to action. Longshore workers should be 
trained to assist in the recovery efforts in the event of an incident. 
We urge the Committee to go beyond the pilot program on empty 
containers and mandate the visual inspection of empties, especially 
given the focus on access control at our ports. We urge that current 
regulations requiring seal inspection actually be implemented and 
enforced. An independent study on the safe use of radiation devices 
must go forward. Finally, the TWIC implementation must not jeopardize 
the livelihoods of workers who do not pose a terrorism security risk.
    Thank you for this opportunity to testify.

    Ms. Sanchez. And now we will hear for 5 minutes from Mr. 
Blanchet to summarize his statement.

STATEMENT OF ROBERT F. BLANCHET, TEAMSTER PORT REPRESENTATIVE, 
             INTERNATIONAL BROTHERHOOD OF TEAMSTERS

    Mr. Blanchet. Chairwoman Sanchez, Ranking Member Souder and 
members of the subcommittee, my name is Bob Blanchet, 
Representative of the Teamsters Port Division. I serve on the 
San Francisco Bay Area Port Commission, where I work with 
Captain Uribi of the U.S. Coast Guard.
    While the TWIC is just now being implemented in the Port of 
Wilmington, tens of thousands of port truck drivers go 
unchecked in our Nation's ports every day. Indeed, many port 
drivers show up and are issued a day pass to circumvent 
security systems that some ports like Savannah, Georgia, 
already have in place. The ports look the other way because 
moving containers trumps security.
    Today, security checks for most truck drivers consists of 
merely flashing a license, a license that could be forged or 
fraudulent. Let me tell you, that is exactly the case for the 
port of Oakland. I watch drivers every day being waved into the 
port terminals by flashing their commercial drivers' licenses 
to the security guards. The security guard has no way of 
knowing that the driver he just let through the gate has a 
forged CDL, or commercial driver's license.
    I am not talking or making up a story. I will take any 
member of this committee to a truck stop on Santa Ana Boulevard 
in Oakland, California. That is where a little white van often 
drives up as a convenient drive-in counterfeit center. You pay 
$200 up front and the friendly vendor opens up a side door and 
pulls out a blue curtain for a backdrop, takes a picture. You 
return a few hours later and you pay a second $200 for your 
almost instant license. It takes place at every port.
    Last Friday, I called and asked one of our organizers in 
Los Angeles to pick up a couple of counterfeit licenses. He got 
his at the corner of Pacific and Florence in Huntington Park. I 
have them here, one in the name of Bennie Thompson, one in the 
name of Michael Chertoff. The fake license business is so 
competitive in Southern California that they only cost him $100 
each. And I would like to submit the drivers' licenses.
    Ms. Sanchez. ``Class A'' meaning?
    Mr. Blanchet. Class A driver's license. I have mine here. 
Anybody on the committee that would like to look at one. I have 
a HAZMAT endorsement. I have every endorsement.
    Ms. Sanchez. That would be the commercial trucker's 
license.
    Mr. Blanchet. This is a valid, legal driver's license. 
Those two are fraudulent, forged.
    Don't tell us that you have the situation under control. 
When TWIC is implemented on the west coast, nothing will change 
until the readers are in place. The mob producing false CDLs, 
green cards, Social Security cards, and DLT medical 
certificates will easily produce fake look-alike TWIC cards.
    Already, before the TWIC is implemented, there is a whole 
industry in existence right now where the drivers who have 
credentials bring containers out of the port and hand them off 
to other drivers who may not have a port credential, a HAZMAT 
endorsement or even a CDL. These containers are dropped right 
on the street outside the port terminal gate and picked up by 
these drivers.
    Similarly, a terrorist without a TWIC can drop a container 
in the street outside of a port and hand it off to a TWIC 
credentialed driver and take it inside.
    I have photos we took this past weekend that shows our port 
container relay operations. Every person who drives a container 
truck or handles or repairs or stores a container inside or 
outside the port terminal should be required to have a TWIC 
identification card.
    We look forward to working with the committee and finding 
realistic ways to create a safe port. I look forward to 
answering any questions that the subcommittee members may have. 
But also I would like to say this on behalf of my family, my 
children, and grandchildren: Thank you for your hard work and 
please save this country in the future for them.
    Ms. Sanchez. Thank you, Mr. Blanchet. I thank you for your 
testimony.
    [The statement of Mr. Blanchet follows:]

                Prepared Statement of Robert F. Blanchet

    Chairwoman Sanchez, Ranking Member Souder, and Members of the 
Subcommittee:
    My name is Bob Blanchet, Representative for the Port Division of 
the International Brotherhood of Teamsters. We represent over 5,500 
longshoremen, clerks, truck drivers, tugboat deck hands, tow boat 
captains, port authority employees, guards and warehousemen who work at 
our nation's ports. I have been a member of the Teamsters Union for 39 
years, working in the freight industry as a driver before being elected 
as Vice President and then President of Local 287 in San Jose, 
California. I have served as a business agent and organizer as well, 
and currently represent the Teamsters Port Division on the West Coast--
serving the ports of Oakland, LA-Long Beach, Seattle, Tacoma and 
Portland.
    I am in and around the ports on a daily basis and have an 
opportunity to interact with port drivers and other port workers 
regularly. I have been appointed to serve on the San Francisco Bay Area 
Port Security Commission, where I work with Captain Harold Uribi of the 
Coast Guard. I have witnessed first hand the dedication and concern of 
this Captain of the Port in implementing security measures to protect 
our ports against potential terrorist attacks.
    It is a daunting task to secure both the land and seaside areas of 
a port. Are the ports more secure one year after enactment of the SAFE 
Port Act? Certainly, improvements have been made in some areas, but in 
others, security is severely lacking. And while the Transportation 
Worker Identification Credential (TWIC) is a noble effort to control 
ingress and egress into and out of the ports, the Teamsters Union has 
many concerns with the structural and planning shortcomings of the TWIC 
and how this program will work on the ground when finally implemented. 
These include driver turnover; cost of the TWIC and other forms of ID 
required by various ports; efforts already underway to circumvent 
container pickup in the ports; the lack of readers allowing for 
potential counterfeit TWICs; the possible loss of work while drivers 
apply for the TWIC and wait out the waiver and appeal process if 
needed; and the list of disqualifying offenses themselves. We are 
supposed to be weeding out potential terrorists, not denying jobs to 
hardworking port workers who may have an irrelevant transgression in 
their past.

Driver Turnover Presents Security Challenges
    As the Teamsters Union pointed out in our earlier testimony before 
the combined MARAD/Coast Guard field hearings, the assumptions of 
driver turnover are way out of whack! The port drivers are not a stable 
workforce like the dockworkers and other port employees. According to 
statistics provided by the American Trucking Association, these poor 
exploited drivers have an annual turnover rate of 120% per year. This 
figure dwarfs the 12% average turnover rate used by TSA to estimate the 
resources and cost needed to implement the TWIC. Poor and abusive 
working conditions have created these astronomic turnover rates for 
short-haul container drivers, which will make it virtually impossible 
for TSA to collect names, let alone conduct background checks and issue 
TWICs quick enough to keep commerce flowing efficiently through our 
ports. The Coast Guard recognized this problem last year, when it 
failed to include port drivers in its initial Maritime Identification 
Credentials notice issued on April 28, 2006. And it continues to 
confirm this difficulty by refusing to implement Section 125 of the 
Safe Port Act (PL 109-347) that required port drivers to undergo the 
same security protocol as every other port worker--the check against 
the terrorist watch list and the immigration status check.
    While the TWIC is just now being implemented at the Port of 
Wilmington, hundreds of thousands of port truck drivers go unchecked in 
our nation's ports every day. Why is this happening? Unlike 
longshoremen and other port employees, there is no one in the ports 
that can account for port drivers. And I have to believe that the ports 
have not pushed this requirement because they fear an immediate driver 
shortage. There is no one who can provide names of all the port drivers 
operating within any given port. Indeed, many port drivers show up and 
are issued a day pass to circumvent permanent credentialing that some 
ports already have in place. The ports look the other way because 
moving containers trumps security.
    Under the current system, most port truckers are incorrectly 
classified as independent contractors. The drivers' status as 
independent contractors has grave implications for port security. To 
begin with, because they are considered independent contractors, no 
one--not the motor carriers or brokers who utilize the drivers, nor the 
steamship lines nor the shippers--take responsibility for identifying 
who drivers are or assuring that drivers are properly credentialed. 
Second, as independent contractors, drivers are at the bottom of the 
port's economic ladder, typically netting $11 to $12 per hour for a 
working day that often stretches to 12 hours. Drivers are not entitled 
to statutory benefits, such as worker's compensation and typically do 
not have access to medical insurance or retirement programs. Under 
these conditions, it is not hard to see why the port driver turnover 
rate is so high.
    The Ports of Los Angeles and Long Beach are considering enacting a 
concession model for port trucking which could solve many security 
problems related to port trucking. The two ports are considering 
requiring all motor carriers providing drayage services at both ports 
to utilize employee drivers to operate newer, environmentally ``clean'' 
trucks. The requirement that companies utilize employee drivers means 
that motor carriers will be responsible for assuring that their drivers 
are properly screened and qualify for TWIC. The Teamsters applaud the 
Ports' efforts to improve security and urge the Committee to support 
this program.

Lack of Card Readers Allow Security Gaps
    Today, security checks for most port drivers consist of merely 
flashing a license--a license that could be forged or fraudulent. Let 
me tell you--that is exactly the case in the Port of Oakland. There is 
no main port gate at Oakland. Each terminal has its own entrance. I 
watch drivers every day being waved into the port/terminal entrance by 
flashing their Commercial Drivers License (CDL) to the security guard. 
In most cases, these current forms of identification are not even 
looked at. If a guard recognizes the driver, he waves the driver onto 
port property. And, that security guard has no way of knowing that the 
driver he just let through the gate has a forged CDL.
    I am not making up a story. I will take any Member of this 
Committee to an area near the Port of Oakland. That's where a little 
white van often appears as a convenient drive-in counterfeit center. 
You pay $200 up front and the friendly entrepreneur opens up his side 
door, pulls out a blue curtain for a backdrop and takes your picture. 
You return a few hours later, pay a second $200 and pick up your almost 
instant license.
    I would maintain that when TWIC is implemented in the Port of 
Oakland, until card readers are installed, nothing will change. Nothing 
will change because the TWIC will be forged within 48 hours. It won't 
have a fancy chip or biometric identifier in it, but on its face, it 
will be good enough to fool the security guard, especially the ones who 
don't even bother to closely examine it. And it won't present itself as 
any layer of security if guards continue to wave drivers through 
without even looking at the credential.

Off-Port Facilities Create Security Gaps
    Already, before the TWIC is implemented, there are ways that 
drivers without proper credentials are circumventing the system. 
There's a cottage industry in existence now where drivers, who have 
credentials, bring containers out of the port and hand them off to 
other drivers who may not have a port credential, a hazmat endorsement, 
or even a CDL. These containers are dropped right on the street outside 
the port terminal gate and picked up by these other drivers. The same 
thing happens when the containers come back to the port. With very few 
empty containers checked on return, we don't know who has brought that 
container from where and what he has put in it.
    In previous testimony before the Senate Committee on Homeland 
Security and Government Affairs, the Teamsters Union testified about 
the issue of containers sitting in the ports for days without being 
screened for radiation. Radiation detection equipment should be 
positioned so that containers coming off the ships are screened 
immediately. In many instances, containers are moved to on-site rail 
yards and other holding yards and may sit for days before they are 
screened--and only when they eventually leave the port.
    This raises further questions about security as containers move 
through the entire chain of custody from the port and are returned to 
the port. While all local port truck drivers who actually perform work 
inside the port terminal will be background checked to obtain the TWIC, 
what about those drivers who fail to secure the proper TWIC or who 
avoid the background checks altogether because of known legal problems 
or worse. They can continue to take part in the off-port drayage 
business by either rail, distribution work, or trans-load facility work 
or by batching boxes with someone who has TWIC credentials and can do 
the interchange in or out of the port gates.
    Every day, hundreds of intermodal boxes turn up missing, loaded 
with everything from tennis shoes to hazardous material. Sometimes 
these loads are not missed for days or even longer because of a broken 
system that invites disaster. What about rail workers, off-port lift 
operators, cross dock employees, marine chassis, box, or refer 
maintenance mechanics who have full access to every part of critical 
intermodal equipment outside the port gates, or intermodal trucking 
company employees who handle the assignment of container loading and 
unloading? Also, containers sit on rail sidings for hours and days 
without any security at all, or on vacant lots, at shopping malls, or 
on neighborhood streets or at fuel stops. ``Batching'' takes place 
outside along side streets near the port or at rail gates. This 
practice involves taking care of paper work during normal hours of port 
operation and then moving loads or empties outside the gate and 
dropping containers along the street or in unsecured vacant lots for 
later delivery by others or possibly by the same trucker. This is done 
to move as many boxes as possible during normal port business hours 
into or just out of the port gates. It is also used by drivers who 
don't want to come into the port because of congestion, waiting times, 
or who may have legal issues keeping them from taking a chance of being 
checked by security. Some of these drivers have no hazmat credentials 
stamped on their CDL license to haul this type of material or are 
possibly driving under revocation or suspension, maybe without 
insurance, current tags, or maybe even worse.
    Here's a perfect example. The Port of Savannah in conjunction with 
the county & state of Georgia supported a surprise action of checking 
workers for outstanding warrants. This led to dozens being arrested on 
child support violations among other issues. However, in a matter of a 
few days the majority of trucking companies managed to get their boxes 
into & out of the port by increasing the batching. Other trucking 
companies, worried about a shortage of drivers, were willing to go into 
the port to make special arrangements for those drivers who refused to 
pass their boxes off to a clean local driver. These drivers pick up a 
container at a rail yard, distribution center, or customer warehouse 
and bring it not to a port terminal but to an ``outside drop location'' 
or container yard. Workers at that off-dock container yard do not 
undergo background checks or have to obtain the TWIC. For that matter, 
the managers and owners of those yards are not checked either. A closer 
examination of off-port storage yards, rail yards, near dock container 
yards and warehouses is necessary to ensure that security is not 
compromised in an effort to avoid the TWIC and other security 
credentialing.

Credentialing Fees Create a Financial Hardship
    The Teamsters Union has testified in the past about its concern for 
port drivers making $10--12 per hour having to pay $132.50 for the 
TWIC. We are also concerned about the lost time truckers may experience 
in visiting the enrollment center and waiting for their TWIC, 
especially where waivers or appeals may be involved. If drivers are 
forced to pay this fee, they should not have to pay additional fees at 
every port they enter or, as in the Port of Miami, each time a driver 
switches companies, he must pay for a new credential.
    There should be one federal credential--the TWIC. It should allow 
access to all U.S. terminals, and there should not be an additional 
terminal ID card issued for each maritime operator with an extra fee 
for port truck drivers and other maritime workers. The card should 
follow the worker and not be able to be removed by the employer, the 
terminal operator, nor the terminal operator's private police force. 
Only official federal government agencies such as the TSA or the U.S. 
Coast Guard should have the authority to revoke the TWIC. The port 
terminal operator should not have the right to discriminate or ban 
union workers, organizers or any individual on any basis other than 
being a security threat to the terminal as determined under the TWIC 
program. To vest authority to revoke the card to employers, port 
authorities and others, gives extraordinary power to intimidate, 
harass, and threaten workers into possibly ignoring safety and health 
rules, work rules and other protections for workers. Imagine having the 
power to decide unilaterally if a driver can work in a port. Taking 
away his TWIC denies him his livelihood. That should remain the 
function of the TSA and the Coast Guard.

The Florida Uniform Access Credential
    The Teamsters Union strongly questions the need for the State of 
Florida's FUPAC--the Florida Uniform Port Access Credential, once the 
TWIC is implemented. While every port has the right to determine who 
can enter its facility on official business, each state should not be 
able to layer additional security requirements on its maritime workers. 
To do so will defeat the purpose of the TWIC--that is allowing workers 
to move from port to port, and will essentially create 50 different 
requirements for entrance to a state's ports. It is our understanding 
that the State of Florida wants to vet workers who have been granted a 
waiver under the TWIC, to separately determine their suitability for 
working in the Florida ports. It is inconceivable that a worker who has 
been background checked under the TSA protocol and then undergoes 
further examination by TSA through the waiver process, which in itself 
is a multi-layer review process, would pose a security threat that the 
state of Florida must further examine. This is not an acceptable 
practice and TSA should not enter into any agreement or Memorandum of 
Understanding with the state of Florida to allow this to move forward.

Disqualifying Offenses
    Despite recent actions by Congress to codify disqualifying felony 
convictions, the Teamsters Union still strongly believes that the list 
of disqualifying offenses, in several instances, is not indicative of 
crimes that would make one a terrorist threat. We encourage the TSA to 
continue to outreach and communicate with potential applicants for the 
TWIC to make sure that those applicants understand the ability to 
request a waiver or appeal. More importantly, we encourage the TSA to 
act judiciously in reviewing waivers and appeals, understanding that 
they alone may determine the ability of these applicants to continue to 
make a living and provide for their families. Security is of utmost 
concern to everyone. No one wants to see another terrorist attack in 
this country, but we also must be cognizant of the rights and privacies 
of our citizens.
    Security at the ports has improved somewhat as a result of 
enactment of the SAFE Port Act. But much more needs to be done to 
address the gaps that still exist. We look forward to working with the 
Committee to achieve this objective. I look forward to answering any 
questions the Subcommittee Members may have.

    Ms. Sanchez. And I now recognize Mr. Koch to summarize has 
statement for 5 minutes.

   STATEMENT OF CHRIS KOCH, PRESIDENT, WORLD SHIPPING COUNCIL

    Mr. Koch. Chairwoman Sanchez, members of the committee, 
thank you for the opportunity to be here on the oversight 
hearing on the SAFE Port Act.
    As has been discussed here today, the SAFE Port Act is a 
multifaceted strategy for how to deal with this challenge; and 
DHS is proceeding hopefully in close coordination with this 
committee as it develops the various initiatives.
    Today, I would like to point on that the Coast Guard is 
proceeding with the long-range tracking initiative mandated by 
the SAFE Port Act. It has a proposed rulemaking out allowing 
comments by the end of the year. We are fully supportive of 
that initiative.
    Much has been said on the TWIC already here today, and many 
experts are here. I will not spend time on the TWIC. But 
certainly the objective of the TWIC is to address the very 
problems Mr. Blanchet just identified, and we are hopeful that 
it will be able to do that in as expeditious a fashion as 
possible, recognizing, as DHS is trying to do, they do not want 
to stumble as they implement it.
    I want to spend a minute talking about supply chain 
security or container security aspects of the SAFE Port Act.
    The government strategy right now makes a lot of sense, 
which is do 100 percent screening of all containers before 
vessel loading. What they do is perform stop, and any box they 
have a serious question on before it is put on a ship for the 
U.S., when it gets to the U.S., do 100 percent radiation 
screening of all boxes coming into the U.S. and then 100 
percent inspection of any container they have a question about. 
We think that is a reasoned approach, and we think it is 
working.
    In order to do that, the SAFE Port Act mandated that risk 
assessment to be improved should get better data, better data 
to perform this risk assessment. That is the 10 plus 2 
initiative that Assistant Commissioner Winkowski spoke about. 
That MPRN is not yet published. We are hopeful it will be 
published soon, and from a strategic perspective we think that 
the CBP is doing exactly the right thing. There will be some 
controversy in the trade about it because getting more data is 
not easy, but we think they are doing exactly the right thing.
    As to CSDs which were discussed briefly--several times here 
today, I would point out that there is no definition or set of 
proposed requirements for CSD yet at this point. There is no 
common agreement of what a CSD must be, what it must 
accomplish. There is no definition yet of what frequency it 
should operate in, what the requirements should be, what false 
positives should be, what permissible false negatives would be, 
what the reading infrastructure would be, how that reading 
infrastructure would interface with CBP and how it would be 
acted on. All of those issues will have to be addressed, and 
DHS is going through them at the present time.
    I would point out that the one device that several members 
put up in the air today is not interoperable with other 
vendors' devices. So it would make no sense not to have 
requirements out there that all had the opportunity to comment 
on and understand, and we hope that what CBP will do is put out 
a pilot program to test these devices so we can all learn from 
them.
    Finally, I would like to speak on the issue of 100 percent 
container inspection. As you know, that was not part of the 
SAFE Port Act, but it was recently added to our statutory 
framework by H.R. 1 or the implementing 9/11 Commission 
recommendation act.
    We would urge the committee to recognize that what has 
happened as a result of that provision is that a substantial 
part of the world, the governments, our trading partners, are 
confused about what the strategy is of the U.S. Government 
toward container inspection; and I would hope that this 
committee, working with DHS, could help try to address those 
questions of where really are we going on this, who is it that 
is actually expected to do the container inspection if we are 
going to go to 100 percent?
    There are certainly terminal operators out there who might 
be willing to invest in it if the government of the United 
States would recognize them as legitimate people to do it. But 
it is people like Dubai Ports World who in the past have had 
issues that the Congress did not regard them as appropriate to 
do this. So we are asking foreign governments to do it.
    Also, the question of what is to be done with the images 
generated by the equipment that is mandated, that is a huge 
issue. Recognizing that they are very complicated, recognizing 
that this mandate is out there, we would encourage the 
committee to work closely with the Department to try to bring 
some understanding. Because this is truly an issue that has 
terminal operators and governments around the world scratching 
their head trying to figure out exactly what the intention of 
the U.S. Government is.
    We would be happy to work with the committee in trying to 
answer some of those questions, and I thank you for your time.
    Ms. Sanchez. Thank you, Mr. Koch.
    [The statement of Mr. Koch follows:]

                 Prepared Statement of Christopher Koch

    I. Introduction
    Good afternoon and thank you for the invitation to testify before 
the Subcommittee today. My name is Christopher Koch. I am President and 
CEO of the World Shipping Council (WSC or the Council), a trade 
association that represents the international liner shipping industry. 
I also serve as the Chairman of the National Maritime Security Advisory 
Committee (NMSAC), a Federal Advisory Committee Act committee providing 
advice to the Coast Guard and the Department of Homeland Security (DHS) 
on maritime security issues, and as a member of the Commercial 
Operations Advisory Committee (COAC) that advises the Departments of 
the Treasury and Homeland Security on commercial and Customs matters.
    Liner shipping is the sector of the maritime shipping industry that 
offers service based on fixed schedules and itineraries. The World 
Shipping Council's liner shipping member companies provide an 
extensive, network of services that connect American businesses and 
households to the rest of the world. WSC member lines carry roughly 95% 
of America's containerized international cargo.\1\
---------------------------------------------------------------------------
    \1\ A listing of the Council's member companies and additional 
information about the Council can be found at www.worldshipping.org.
---------------------------------------------------------------------------
    Approximately 1,000 ocean-going liner vessels, mostly 
containerships, make more than 22,000 U.S. port calls each year. More 
than 50,000 container loads of imports and exports are handled at U.S. 
ports each day, providing American importers and exporters with 
efficient transportation services to and from roughly 175 countries. 
Today, U.S. commerce is served by more than 125 weekly container 
services, an increase of over 60% since 1999.
    In addition to containerships, liner shipping offers services 
operated by roll-on/roll-off or ``ro-ro'' vessels that are especially 
designed to handle a wide variety of vehicles, including everything 
from passenger cars to construction equipment. In 2006, these ro-ro 
ships brought almost four million passenger vehicles and light trucks 
valued at $83.6 billion into the U.S. and transported nearly one 
million of these units valued at $18 billion to U.S. trading partners 
in other countries.
    Liner shipping is the heart of a global transportation system that 
connects American companies and consumers with the world. More than 70 
percent of the $700 billion in U.S. ocean-borne commerce is transported 
via liner shipping companies.
    The international liner shipping industry has been determined by 
the Department of Homeland Security to be one of the elements of the 
nation's ``critical infrastructure''.
    Liner shipping generates more than one million American jobs and 
$38 billion in annual wages. This combined with other industry 
expenditures in the U.S. results in an industry contribution to U.S. 
GDP that exceeds $100 billion per year.

    II. The Focus on Maritime Security
    For the past six years, the WSC and its member companies have 
strongly supported the various efforts of the U.S. Coast Guard and U.S. 
Customs and Border Protection (CBP) to enhance maritime and cargo 
security. The multi-faceted and risk-based strategies and programs of 
the government have been able to make substantial progress toward 
meeting this challenge, and they continue to evolve.
    At the same time, the Coast Guard and CBP recognize the fact that 
the industry is transporting on average roughly 50,000 containers, 
holding roughly $1.3 billion worth of cargo owned by U.S. importers and 
exporters, each day through U.S. ports. Significant delays to this flow 
of legitimate commerce could have substantial adverse effects on the 
American economy.
    The multi-layered maritime security strategy has a number of parts 
on which I will briefly comment today. The basic architecture of U.S. 
maritime security is well known and understandable. First, there is 
vessel and port security, overseen by the Coast Guard and guided in 
large measure by the International Ship and Port Facility Security Code 
(ISPS). Second, there is personnel security, overseen by various 
Department of Homeland Security agencies and the State Department. 
Third, is cargo security, which with regard to containerized cargo, is 
addressed through Customs and Border Protection's advance cargo 
screening initiative, C-TPAT, and the Container Security Initiative--
all of which are reinforced and made more effective by the increased 
deployment of container inspection technology at U.S. and foreign 
ports.

    A. Vessel and Port Security Plans
    Every commercial vessel arriving at a U.S. port and every port 
facility needs to have an approved security plan overseen by the Coast 
Guard. Each arriving vessel must provide the Coast Guard with and an 
advance notice of arrival 96 hours prior to arriving at a U.S. port, 
including a list of all crew members aboard--each of whom must have a 
U.S. visa in order to get off the ship in a U.S. port.
    The liner shipping industry's operations are consistent and 
repetitive--its vessel services and crews call at the same ports every 
week. So long as there is consistent and professional implementation of 
the security rules, which is usually a hallmark of the Coast Guard, 
liner shipping has found no problem in operating in the new vessel or 
port security environment.
    We also appreciate the Coast Guard Commandant's admonition that the 
``concept of maritime security cannot be reduced to a single threat 
vector''. There are numerous potential vectors for terrorists attack on 
the maritime environment that don't involve cargo containers. For 
example, merchant vessels are in fact defenseless against small boat 
attacks. We fully support the Coast Guard in its efforts to secure an 
enormous Maritime Domain against a variety of risks.
    Long Range Information and Tracking (LRIT) of Vessels: On October 
3, the Coast Guard published a Notice of Proposed Rulemaking (NPRM) on 
Long Range Information and Tracking (LRIT) in the Federal Register. The 
Council supports the LRIT objective and the enhanced visibility of 
vessels offshore that it will give to the Coast Guard and other 
governments.
    The Coast Guard expects existing maritime satellite communications 
equipment to be able to meet these tracking requirements. Assuming this 
is correct, the Council does not foresee major problems complying with 
these regulations.
    The LRIT system is based on a network of data centers sharing 
information. A vessel will transmit its data to the data center 
selected by its flag administration. This data center could be a 
national center, like in the U.S., a regional or cooperative center, 
perhaps like the European Union, or an international center, open to 
any country to join. Coordinating the sharing of information between 
the data centers is an International LRIT Data Exchange (IDE). The IDE 
is the body that is connected to all other LRIT data centers and routes 
information between LRIT data centers. The IDE shares information in 
accordance with the LRIT Data Distribution Plan.
    There may be concern, however, regarding how the Coast Guard 
intends to implement LRIT if the International Data Center (IDC) is not 
in place. The IDC is where a vessel whose country of registration has 
not established its own data center is to send its position reports. 
Many smaller nations were expected to use the IDC and how their vessels 
will comply with the LRIT requirements is in question. An agreement has 
been reached to allow the Coast Guard to host the International Data 
Exchange (IDE) on an interim basis until January 1, 2010. It is unclear 
what happens with the IDE after that date. A uniform, global operating 
system is the desired objective. The Coast Guard has invited comments 
on these issues in its recent NPRM, and we expect that the industry and 
other governments will be considering these issues closely.
    Small Vessels: The attacks on the U.S.S. Cole and M/V Lindbergh 
demonstrated that large vessels can be the objects of terrorist attack 
from small boats. The U.S. Coast Guard Commandant, Admiral Allen, has 
on numerous occasions noted this and other small boat vulnerabilities 
and the difficulty in devising effective ways to address the threat 
without significantly inconveniencing recreational and small boat 
movements. The Council notes that DHS has recently undertaken some 
pilot efforts on the West Coast to test technologies that may 
contribute to addressing this issue, and while we recognize the 
difficulty of the challenge, we believe that such DHS effort are 
focusing on a legitimate concern. We also appreciate that the U.S. 
Coast Guard is playing a lead role in having put this on the 
International Maritime Organization's agenda in order to develop 
international principles and criteria for addressing this issue.

    B. Transport Worker Identification Credential
    The Council supports the credentialing of maritime workers 
requiring unescorted access to secure maritime facilities. The National 
Maritime Security Advisory Committee (NMSAC), with the advice and input 
of a wide range of U.S. maritime interests, has spent considerable 
effort to provide comments to the Coast Guard and the Transportation 
Security Administration on the development of the TWIC regime. The 
industry's primary concern is that the security enhancement envisioned 
in this new system not have undue impacts on those personnel who work 
in port terminals servicing vessels or on port operations.
    The SAFE Port Act requires TWIC reader pilot projects to be run in 
at least five locations. NMSAC has recommended that the final TWIC 
regulations should not be published until the results of these pilot 
projects are known.
    The Coast Guard has indicated its intention to issue two sets of 
proposed rules on the TWIC regulations: the initial set to give some 
shape to the pilots and the second, supplemental proposal which is 
intended to finalize the proposed regulations when the pilots' results 
are known. We support this measured approach.
    The Coast Guard also recently announced the biometric standard to 
be placed on the TWIC card. This standard contains two items that were 
not supported by the industry: encryption and a Personal Identification 
Number (PIN). The industry's concern has been that encryption will 
create operational complexities which have the potential to severely 
impede the flow of maritime commerce. Further, the NMSAC does not 
believe the significant additional costs associated with encrypting the 
fingerprint template are warranted given the minimal risk involved 
without such encryption. How these two items will work with readers 
remains to be seen, but the industry is hopeful that the good 
consultative process that the Coast Guard has established with NMSAC 
will allow for these issues to be addressed satisfactorily.
    Lastly, DHS has begun to enroll workers in Wilmington, Delaware, 
and has also listed the next eleven follow-on locations for enrollment. 
The industry strongly supports a measured implementation of this 
challenging new regime so that any unanticipated issues that may arise 
can be addressed as the system is rolled out in stages.

    C. Containerized Cargo Security
    The WSC fully supports the U.S. government's strategy in addressing 
containerized cargo security. Specifically, the Council supports CBP's 
risk assessment and screening of 100% of all containers prior to their 
being loaded onto vessels destined for the U.S., and the pre-vessel 
loading inspection of 100% of those containers that CBP's cargo risk 
assessment system determines to present a significant security risk or 
question.
    The Council does not support recent legislation's call for 
inspection of 100% of all import containers before vessel loading, 
because the concept has not been clearly considered and remains 
presently impractical.

                1. Container Security Initiative (CSI)
    The network of bilateral Customs-to-Customs agreements forming the 
``Container Security Initiative'' (CSI) continues to grow. There are 
now 58 foreign ports participating with the U.S. in this initiative, 
covering 85% of U.S. containerized import trade. CSI is a keystone to 
the effective international implementation of the advanced screening 
and inspection of U.S. containerized cargo that presents security 
questions. It is only through these cooperative CSI Customs-to-Customs 
data sharing and container inspection cooperative efforts that overseas 
container inspection can occur.
    The United States' approach to supply chain security up until now 
has been dominated by an interest in inbound or imported cargo. This is 
understandable, but as supply chain security regimes become more 
globalized, and as our trading partners call for ``reciprocity'' and 
``mutual recognition'' of security improvements, it is very important 
that the Department of Homeland Security plan for and implement a 
coordinated strategy for dealing with the nation's international import 
and export maritime commerce.
    When CBP calls for a foreign Customs authority's assistance to 
check a container it has a question about before vessel loading, so 
must it plan and be able to act on that same foreign Customs' 
authorities request for assistance on checking a U.S. export container 
that may raise a question. When discussing with foreign governments 
``mutual recognition'' of supply chain security protection programs, 
the U.S. government will be called on to address what programs enhance 
the security confidence of U.S. exports to the same extent that other 
governments' programs enhance the security confidence of their exports. 
We believe that Customs and Border Protection is the right agency for 
establishing and ensuring a consistent and coordinated U.S. approach to 
such issues, and that additional planning should be undertaken in this 
regard.
    It is for this reason that the Council recently wrote to CBP to 
recommend that the agency plan for how to expand its CSI Customs-to-
Customs cooperative partnerships with European customs authorities to 
prepare for the planned 2009 implementation of the European 24 Hour 
Rule under Commission Regulation 1875. The purpose of such planning 
would be to ensure that American export commerce receives the same kind 
of cooperative and expedited consideration when European authorities 
raise security questions, as European export containers receive today 
when CBP raises such a question.
    We also note that, five years after Congress passed the supply 
chain security amendments to the Trade Act, disagreement between the 
U.S. Departments of Homeland Security and Commerce still prevent 
regulations from being issued to implement Section 343(b) of that Act 
(19 U.S.C. 2071(b)), which calls for rules regarding the advance 
documentation of U.S. export waterborne commerce.
                2. Containerized Cargo Screening and Risk Assessment
    CBP employs a multi-faceted containerized cargo risk assessment and 
screening system, so that it can identify those cargo shipments that 
warrant further review, rather than those that are low risk and should 
be allowed to be transported without delay.
    C-TPAT: One element of that system is the Customs' Trade 
Partnership Against Terrorism (C-TPAT) pursuant to which various 
entities in the supply chain voluntarily undertake security enhancing 
measures. CBP then validates participants' compliance, and compliant 
supply chains are accordingly afforded lower risk assessments.
    24 Hour Rule: Another important element of the risk assessment 
system is CBP's receipt and analysis of pertinent advance information 
about cargo shipments before vessel loading. This program began soon 
after September 11th, under which carriers provide CBP with the advance 
shipment information they possess 24 hours before vessel loading in a 
foreign port for risk screening (the ``24 Hour Rule''). The Council has 
fully supported this regulation and this strategy, which allows the CSI 
program to perform advance container risk assessment.
    Better Security Screening Data: ``10 plus 2'' Initiative: While the 
24 Hour Rule has been in the Council's view a logical and sound effort, 
the Council has for several years noted that more effective advance 
cargo security screening will require more data than the information 
provided by carriers via the 24 Hour Rule.
    Recognizing both this need for enhanced container security 
targeting and the existing limits of information provided in carriers' 
bills of lading, the SAFE Port Act sets forth the following requirement 
to enhance the capability of CBP's Automated Targeting System:
        ``Section 203(b): Requirement. The Secretary, acting through 
        the Commissioner, shall require the electronic transmission to 
        the Department of additional data elements for improved high-
        risk targeting, including appropriate elements of entry data. . 
        .to be provided as advanced information with respect to cargo 
        destined for importation into the United States prior to 
        loading of such cargo on vessels at foreign ports.''
    Customs and Border Protection (CBP) is developing a regulatory 
proposal that would require U.S. importers or cargo owners to file ten 
additional data elements \2\ with CBP 24 hours prior to vessel loading, 
and to require ocean carriers to provide two additional sources of 
data--vessel stowage plans prior to arrival in the U.S., as well copies 
of electronic container status messages. This is referred to as the 
``10 plus 2'' initiative.
---------------------------------------------------------------------------
    \2\ The ten cargo data elements of the new Security Filing have 
been identified by CBP as: (1) Manufacturer (or Supplier) Name and 
Address, (2) Seller (or Owner) Name and Address, (3) Buyer (or Owner) 
Name and Address, (4) Ship To Name and Address, (5) Container Stuffing 
Location(s), (6) Consolidator (or Stuffer) Name and Address, (7) 
Importer of Record Number, (8) Consignee Number, (9) Country of Origin, 
and (10) Commodity 6-Digit HTS Code.
---------------------------------------------------------------------------
    CBP has undertaken extensive, transparent, and open consultation 
with the trade and carrier community in developing this proposal. It is 
our understanding that the proposed regulation to implement this new 
requirement should be published in the Federal Register for public 
comment in the near future, with implementation beginning sometime in 
2008.
    While the private sector obviously needs to await the actual 
proposed regulation before providing comments in the expected 
rulemaking, we would note that CBP's efforts in developing this 
initiative have been transparent, professional and cooperative, and are 
in pursuit of a strategic objective that is not only mandated by the 
SAFE Port Act, but is highly logical in order to enhance containerized 
cargo risk screening.
    Global Trade Exchange (GTX): Other pending efforts within DHS 
regarding the acquisition of additional cargo shipment information for 
enhanced risk screening are less understood by the trade. 
Notwithstanding the fact that CBP has not yet published, let alone 
implemented, its proposed ``10 plus 2'' regulations requiring 
additional information for cargo risk assessment, DHS officials have 
indicated that the Department will be proceeding with efforts to 
commence an additional trade data gathering and analysis effort under 
the name of the ``Global Trade Exchange'' or GTX. This initiative has 
not yet been clearly explained to the industry.
    What we understand at the present time is that DHS is considering 
awarding funding for an initial phase of this initiative. It is our 
understanding that participation by members of the trade providing such 
additional data is expected to be voluntary, that the party to collect 
the data would be drawn from a restricted number of commercial entities 
acting as a third party data clearinghouse, and that secure and 
confidential treatment of any data provided is recognized to be needed.
    What services, analysis or risk assessment competence would be 
required of such vendors is unclear. What the specific data to be 
gathered would be has not been explained. The extent to which such 
shipment data would be shared with other governments is not clear. How 
this system would be integrated into CBP's existing Automated Targeting 
System is unclear. How such a commercial third party data manager would 
make money off this program is unclear, and who would bear what costs 
for participating in such a system is unclear. What the uses of the 
data, other than assisting Customs with supply chain risk assessment, 
would be are unclear. How the data in the system would be protected is 
unclear. Whether ocean carriers would be expected or invited to 
participate in the provision of information is unclear. What benefit 
would result from participating in such an effort is unclear.
    DHS has indicated that the intent is to proceed under a ``request 
for quotation'' solicitation process, which is restricted to a limited 
number of vendors now established in the DHS ``EAGLE'' procurement 
program.
    In short, the GTX effort has not yet been explained by the 
government and is not yet understood by the trade. U.S. importers with 
whom the Council has discussed this initiative are confused by this 
process. There is some concern within the trade community over the 
apparent development of such an initiative without the government's 
usual transparency and process of consultation. COAC has written to the 
Secretary of DHS requesting consultation on this initiative.

                3. Container Inspection
    DHS has a well established strategy to undertake radiation scanning 
of all containers entering the U.S. before they leave a U.S. port. CBP 
recently deployed its 1000th container radiation portal monitor as it 
gets closer to its objective of performing radiation scanning on 100% 
of all inbound containers at U.S. ports of discharge.
    CBP also undertakes non-intrusive inspection technology (NII) or 
physical inspection of 100% of all arriving containers that are 
determined to pose a significant security question. CBP has no plans 
and no capability, however, to inspect every arriving container. 
Because that is not practical, the agency is utilizing, and soon will 
be enhancing, its cargo risk assessment system and the CSI program to 
identify which containers do warrant inspection.
    In order to further consider the issues involved in the application 
of additional container inspection at overseas ports of loading, DHS 
has undertaken the ``Secure Freight Initiative'', under which pilot 
projects are being established at several foreign ports testing more 
complete pre-vessel loading scanning, generating possible lessons to be 
learned for broader application of pre-vessel loading container 
inspection efforts.\3\
---------------------------------------------------------------------------
    \3\ DHS has established three full scale container scanning pilots 
in co-operation with host governments at Southampton, U.K.; Puerto 
Cortes, Honduras and Port Qasim, Pakistan. Three other smaller scale 
pilots are under development at port facilities in Busan, South Korea 
(Gamman Terminal); Salalah, Oman, and Singapore.
---------------------------------------------------------------------------
    The ``Implementing the 9/11 Commission Recommendations Act'', which 
was signed into law in August, includes the well known provision 
requiring that by 2012 100% of the containers imported into the United 
States be ``scanned'' before being loaded aboard vessels destined for 
the United States, meaning that the container would have be run through 
radiation detection equipment and non-intrusive imaging equipment 
before vessel loading. What, if anything, would be done with the images 
or data produced by those scannings was not addressed by the law, nor 
were a host of other highly relevant questions, including who was to 
perform this task, and whether the U.S. would perform such scanning of 
its own export containerized cargo. The WSC issued a six page statement 
on this legislation on July 30th, which is available on the Council's 
website.
    Many foreign governments are obviously and justifiably concerned 
about the implications and meaning of this new U.S. law. We expect that 
they will continue to inform the U.S. government of their concerns, 
including their view that this statutory provision expects foreign 
governments to undertake measures for their exports that the U.S. 
government has no intention to undertake for its exports.
    The shipping industry's customers--the hundreds of thousands of 
U.S. importers and exporters who use containers to transport their 
cargo--are also concerned about the meaning and potential effects of 
this law. The port terminal operators around the world that service the 
industry's vessels are also concerned but unsure about the intent or 
effect of this statute.
    Several things seem clear. First, implementation of this law's 
stated objective would require addressing many serious issues that the 
statute does not address, including the fact that implementation of 
overseas container inspection requires the cooperation of foreign 
governments. Second, the U.S. government has no current plans to scan 
100% of its outbound export cargo containers, and thus foreign 
governments' predictable inquiries about reciprocity will likely be 
unanswerable. And, if the United States' trading partners do not 
implement 100% container scanning, there is nothing that the U.S. 
government can realistically do about it other than cease trading with 
the rest of the world. We therefore see the obvious need for further 
international dialogue on this matter.
    At this time, this provision of the ``9/11 Commission 
Recommendations Act'' is an indecipherable riddle. The world has no 
idea what to make of it and does not know if it expresses the real 
strategy of the United States or not.
    If the Congress intends to pursue any kind of meaningful dialogue 
or progress on determining what would need to be addressed in order to 
pursue this statute's stated vision of 100% container screening at 
foreign ports, then we respectfully submit that it should begin to 
consider and address a number of critical questions, including the 
following:
        1. Whom Does the Law Intend To Perform the Container Scanning? 
        The legislation pointedly fails to address the issue of who is 
        to perform this activity. It does not require U.S. Customs to 
        do this, as it is clearly impossible for the Congress to 
        require U.S. Customs to undertake such activities within the 
        jurisdiction of other sovereign nations. It does not require 
        foreign governments to do so, as it has no such authority. The 
        legislation simply says that containers shall be scanned. By 
        whom? Who is to purchase, operate and maintain the equipment?
        Is this a sovereign function to be handled by governments? Is 
        this a private sector function? Before private marine terminal 
        operators could seriously consider such an investment and 
        activity, the Congress would need to provide clarity on this 
        point and who would be trusted to perform the task and under 
        what circumstances.
        Does Congress intend that non-government foreign port facility 
        operators would perform this task? The 109th Congress took the 
        position that one of the largest port facility operators in the 
        world, Dubai Ports World, was an unacceptable security risk to 
        buy a U.S. marine terminal operating company and hire U.S. 
        workers, working under U.S. management, to service vessels in 
        U.S. ports. Would Congress consider that company acceptable to 
        perform this task in foreign ports? The largest terminal 
        operating company in the world, Hutchison Whampoa, is owned and 
        controlled by the Chinese. Would Congress consider that company 
        acceptable to perform this task?
        Even if the Congress were to determine that such terminal 
        operating companies were appropriate entities to install and 
        operate the necessary scanning equipment, and even if these 
        companies were willing to make the capital investments 
        necessary to install and operate this equipment, the law fails 
        to answer who will review, interpret and analyze the readings 
        produced by the technology. It is extremely unlikely that these 
        terminal operating companies would accept the responsibility or 
        the liability for the actual analysis and assessment of the 
        scanning technology.

        2. Failure to Define the Scanning Requirement: Recognizing that 
        100% container ``inspection'' is impractical, the statute 
        requires instead that every container be ``scanned by 
        nonintrusive imaging equipment and radiation detection 
        equipment at a foreign port before it was loaded on a vessel.'' 
        This by itself would be pointless.
        The law fails to address whether the scanning data actually has 
        to be reviewed and analyzed, and if so, under what 
        circumstance, when and by whom? The law fails to address 
        whether or when the data from the scanning equipment is 
        transmitted to the U.S. government and at whose cost. There are 
        many complexities and costs involved in addressing these 
        issues.
        Is every container radiation scan to be reviewed before vessel 
        loading, with mandatory secondary inspection if there is an 
        unusual radiation reading?
        Is every NII scan to be reviewed before vessel loading? Or, is 
        it only those containers that trigger a certain threshold in 
        CBP's Automated Targeting System that require review of NII 
        scans? If only a few percent of the containers would have their 
        NII images reviewed before vessel loading, what is the point of 
        requiring 100% of all containers to have NII images? Why not 
        just perform NII inspections on the containers that present 
        security questions?

        3. No Reciprocity: The statute purports to require 600 ports 
        around the world to approve, implement, and utilize such 
        technology, systems and processes for all cargo destined for 
        the U.S. or effectively face an embargo on their exports, when 
        the U.S. government does try or plan to perform this function 
        on its export cargo, and scans virtually no U.S. export 
        containers. If implementation of this law were actually 
        pursued, it is entirely possible, if not highly likely, that 
        foreign governments would establish ``mirror image'' 
        requirements on the U.S., forcing all American export 
        containers to undergo radiation and NII scanning before vessel 
        loading at U.S. ports--requirements which the U.S. government 
        and U.S. port facility operators are presently and for the 
        foreseeable future incapable of meeting. Is the Congress 
        prepared to fund such a system for U.S. exports?

        4. Threshold Technology Question: The statute provides that DHS 
        may ``extend'' or waive the scanning requirement, if: ``(F) 
        Systems to scan containers in accordance with paragraph (1) do 
        not adequately provide an automated notification of 
        questionable or high-risk cargo as a trigger for further 
        inspection by appropriately trained personnel.'' NII container 
        inspection technology does not have any government or 
        commercially accepted software that enables ``automatic 
        notification of questionable or high-risk cargo'', putting 
        aside the relevant question of defining what would constitute 
        ``questionable or high-risk cargo'' that the technology would 
        need to identify. Does this mean that until NII equipment can 
        meet such a standard that has yet to be defined and agreed 
        upon, that this statutory mandate is not applicable?
    The ``9/11 Commission Recommendations Act'' provisions calling for 
100% overseas container scanning has raised more questions than it has 
answered.

    4. Seals and Container Security Devices
    The SAFE Port Act included the following directive: ``Not later 
than 90 days after the date of enactment of this Act, the Secretary 
shall initiate a rulemaking proceeding to establish minimum standards 
and procedures for securing containers in transit to the United 
States.'' (Section 204(a)) It was not evident what this provision meant 
or how it might be interpreted, and the section's time deadlines were 
not going to be met.
    Accordingly, the ``9/11 Commission Recommendations Act'', Congress 
amended this section by providing that: ``(B) Interim Requirement.--If 
the interim final rule described. . .is not issued by April 1, 2008, 
then. . . . effective not later than October 15, 2008, all containers 
in transit to the United States shall be required to meet the 
requirements of International Organization for Standardization Publicly 
Available Specification 17712 standard for sealing containers. . . .'' 
Thus by next October, all U.S. inbound containers will be required at a 
minimum to have ISO standard security seals. This provides helpful 
clarity.
    As to the government's view of ``container security devices'' 
(CSDs), things are less clear. First, CSD is not a defined term. For 
example, some say that a seal is a CSD; some say a seal is not a CSD. 
The Council has understood that DHS was planning to issue proposed 
draft technical requirements for container security devices and the 
operating protocols associated with such devices by the end of this 
year for public review and comment. We understand that the DHS Science 
and Technology directorate prepared a draft of such requirements that 
is undergoing further review and amendment within the Department.
    The Council and other members of the trade have requested that CBP/
DHS allow for full transparency into the development of this effort and 
solicit public comments on the draft requirements, after they have 
completed internal government review.
    There are at present many unanswered questions about CSD 
requirements, including what specifically the device would be required 
to do and its security value, what acceptable false positive and false 
negative reading rates would be, what radio frequency would be used, 
the requirements for the installation and operation of the necessary 
device reader infrastructure, the requirements applicable to the 
necessary communications interface and protocols with CBP, the security 
vulnerabilities of such devices, the necessity of interoperability of 
various vendors' devices and systems, the data to be captured and 
transmitted by the device, identification of who will have access to 
the data in the device, survivability and vulnerability of the device, 
power or battery life requirements, the probability that the device can 
be detected or removed without detection, required data messaging 
formats, event logs, and data encryption.
    These questions are even more complicated in the environment of 
international maritime commerce than they would be in a more controlled 
environment of U.S. border stations where CSD reading infrastructure 
would be under the sole control of CBP.
    The Council believes it is essential, if an interest in CSDs is to 
be pursued, for the government to undertake a fully transparent and 
very clear articulation of its draft views on the requirements for such 
technology and the related operating systems and protocols, and to 
provide the public with a meaningful opportunity to comment upon such 
draft requirements, before they are advanced as an element of the 
government's container security strategy.

III. Conclusion
    Vigilance against terrorist risks requires the development and 
implementation of prudent security measures, and the continuing 
enhancement of such measures as the risks change and take new forms. 
The international trading system is too valuable and important to be 
left unattended.
    The liner shipping industry fully understands this and has 
cooperated with national governments and international organizations 
trying to construct meaningful security regimes. The industry will 
always be concerned that these measures not unduly delay or restrict 
commerce or impose costs that produce little added security; however, 
it has supported and will continue to support measures that are well 
designed and provide real security value with as little impact as 
possible on legitimate trade.
    This is clearly difficult work, but there are clearly some success 
stories. The International Maritime Organization's development of the 
International Ship and Port Facility Security (ISPS) Code, the 
Proliferation Security Initiative, the Container Security Initiative, 
the ``24 Hour Rule'' advance cargo screening strategy and its imminent 
enhancement, the C-TPAT program--all have enhanced supply chain and 
maritime security. The government's expanded use of container 
inspection technologies is another example of sound strategy and 
implementation.
    If we are to continue to make progress in enhancing maritime and 
supply chain security, progress is more likely to occur if:
        1. There is a clear and specific definition and agreement on 
        what should be done to improve security.
        2. There is a clear and thoughtful prioritization of 
        initiatives.
        3. There is sufficient certainty and clarity in purpose to do 
        it right. In the absence of that, time and resources are poorly 
        used and the efforts are less likely to improve security.
    We appreciate the Subcommittee's continued interest and oversight 
of these issues, and would be pleased to provide additional information 
that may be of assistance to the government in addressing these issues. 
Thank you again for the opportunity to testify.

    Ms. Sanchez. And I will now recognize Ms. Alexander to 
summarize her statement for 5 minutes.

    STATEMENT OF MARY ALEXANDER, CHAIR, JOINT INDUSTRY GROUP

    Ms. Alexander. Madam Chairlady, Mr. Souder and other 
members of the subcommittee, my name is Mary Alexander, Chair 
of the Joint Industry Group, a coalition of trade community 
members engaged in global commerce. I also am representing my 
own company, Panasonic of North America, headquartered in New 
Jersey, with sales, research and manufacturing in 24 states and 
the third largest U.S. electronics importer, bringing in over 
20,000 containers per year. I will comment on the views of JIG 
members regarding government programs that provide security to 
our Nation's ports and affect businesses, their supply chains, 
and their efforts to provide products to the consumer safely, 
quickly and at affordable prices.
    To remain competitive, U.S. companies face pressures from 
customers to deliver products fast and affordably. Shipping a 
container of products to numerous consignees is complicated. 
Any disruption to the supply chain can affect the efficient 
business process, increasing costs and wait times for retailers 
and consumers. Therefore, as the Federal Government proposes 
new security programs, consultation with the business community 
is critical.
    JIG strongly supports the multi-layered, risk-based 
approach to supply chain security developed by DHS and 
strengthened by Congress with the SAFE Port Act and other 
initiatives. These programs will strengthen our Nation's 
security, once properly implemented.
    Just as the need to strengthen border security is critical, 
so is the need to safeguard the smooth flow of legitimate 
international commerce. As more security programs are created, 
the business community faces increased burdens in their 
operations that can add debilitating costs and delay to 
business approximate. JIG therefore urges Congress and the 
administration to remain engaged in dialogue with industry on 
security initiatives to develop programs that are truly 
effective and minimize disruptions to the supply chain.
    Four specific comments: C-TPAT represents the core of CDP's 
cargo security program, a government and private sector 
partnership. This voluntary program has more than 7,500 
participants, including Panasonic. While membership levels 
continue to climb, real benefits remain elusive. Land border 
crossings have fast lanes, but tangible benefits for ocean 
cargo, such as reduced inspections, are not apparent and hard 
to verify. While the investment in C-TPAT membership is real 
and substantial, members increasingly feel that the promised 
returns have not been materialized.
    The introduction of 100 percent scanning at several foreign 
ports is an excellent opportunity to assess the viability of 
the secure freight initiative. We are pleased that Congress in 
its oversight role will have an opportunity to review a report 
from CBP due in April on the results of this pilot project. We 
encourage to you review these results before considering 
widespread implementation of the program.
    The trade community has spent considerable time working 
with CBP on its 10 plus 2 initiative. Unfortunately, nearly a 
year after it was presented, we are still waiting for the 
proposed rules for the initiative. We understand that 
rulemaking process takes time, but we are concerned that the 
trade community will have sufficient time to comment and 
implement the MPRM after its release.
    This past August, JIG raised several concerns with DHS 
about the proposed global trade exchange, including questions 
on security, confidentiality and cost. Until we have enough 
information, JIG neither supports nor opposes this program. CBP 
has been responsive to the trade community in developing other 
trade security initiatives, but so far development of the GTX 
appears to be behind closed doors.
    JIG appreciates the openness and availability of CBP and 
DHS staff to consult with the trade on the roughly 30 Homeland 
Security programs to which businesses are asked to comply. 
However, the lack of real information on proposed new programs, 
growing concern that increased costs far outweigh promised 
benefits, emerging skepticism that the programs are necessary 
to protect our country, and compliance concerns from our 
trading partners all need more serious consideration.
    Congress' help in getting responses from the administration 
through public hearings like today's is greatly appreciated. 
Madam Chairwoman, on behalf of JIG, thank you for this 
opportunity to testify. I will be happy to answer any 
questions.
    Ms. Sanchez. Thank you, Ms. Alexander. I would like to 
thank you for your testimony.
    [The statement of Ms. Alexander follows:]

                  Prepared Statement of Mary Alexander

Introduction
    Madame Chairwoman Sanchez, Ranking Member Souder and other members 
of the subcommittee, thank you for the opportunity to testify on the 
one-year anniversary and implementation of the SAFE Port Act. My name 
is Mary Alexander, and I serve as the chair of the Joint Industry Group 
(JIG). JIG is a broad coalition of Fortune 500 importers and exporters, 
shippers and carriers, customs brokers and forwarders, trade 
associations, service providers, and law firms with a common interest 
in global commerce. In fact, a number of our members including Hewlett 
Packard, Intel and Panasonic Avionics are headquartered in California.
    JIG frequently engages Congress and the Administration on a variety 
of international trade-related issues, often focusing on issues 
involving port and border security and customs. In particular, we work 
closely with U.S. Customs and Border Protection (CBP), the Department 
of Homeland Security (DHS), the Department of Commerce (DOC), USTR, and 
Congress to promote international trade policies that reflect the needs 
of both government and the private sector to secure the supply chain 
while facilitating legitimate commerce.
    While I am here to articulate JIG positions, I also am here to 
represent my own company, Panasonic Corporation of North America, 
headquartered in Secaucus, NJ and employing more than 6,000 workers in 
the U.S. The company sells consumer electronics, industrial products 
and professional equipment to the American consumer and is the American 
subsidiary of Matsushita Electric Industrial, headquartered in Osaka, 
Japan. Panasonic North America is the third largest electronics 
importer, bringing more than 20,000 containers into the U.S. annually. 
While worldwide the company has over 300 factories, Panasonic ships 
products from Matsushita factories in nine countries, with nearly 90 
percent of imports coming from ports in Singapore, China, Malaysia, and 
Japan and to Seattle/Tacoma or LA/Long Beach on the west coast.
    In my testimony today, I will provide the views of JIG members 
regarding the implementation of government programs to provide needed 
security to our nation's seaports one year after the enactment of the 
SAFE Port Act. I will also offer real life examples of how government 
policies affect businesses like Panasonic, their supply chains, and 
their efforts to provide products to the consumer safely, quickly and 
at affordable prices.
    In order to remain competitive in today's global economy, Panasonic 
and other U.S. businesses face constantly increasing pressure from our 
customers to deliver high-quality products faster and more affordably. 
Unfortunately, shipping a container of multiple products to numerous 
consignees is a complicated business, and any disruption to the supply 
chain can adversely impact the efficient business process. For example, 
Panasonic's supply chain cycle for the Blu-ray disc player is now only 
six weeks, from the time the order is placed and transmitted to the 
factory in Japan, to the time the players arrive at the Best Buy 
distribution centers. This includes an ocean transit time of two weeks 
and an inland transit time to our distribution center of nine days. Our 
Lumix cameras, which are shipped by air, have only a four-week supply 
chain. The timeliness of these supply chains remains critical to the 
success of our company. Any delays create hardship for our company and 
increase costs and wait times for retailers and consumers. It is 
imperative to the viability of Panasonic and other U.S. businesses to 
guarantee the smooth flow of products for delivery to our customers.
    JIG strongly supports the multi-layered risk based approach to 
supply chain security that has been developed by DHS and strengthened 
by Congress through the SAFE Port Act and other initiatives. The 
programs that have been enacted will strengthen our nation's security 
once they are properly implemented. JIG is concerned, however, that 
just as the need to strengthen border security is critical, so is the 
need to safeguard the smooth flow of legitimate international commerce. 
As more security-focused programs are created, the business community 
faces increasing burdens in their operations that can add debilitating 
costs and delays to doing business.
    JIG therefore urges Congress and DHS to remain engaged in dialogue 
with industry on security initiatives in order to develop programs that 
are truly effective and minimize disruptions to the supply chain. JIG 
also urges the U.S. Government to propose incentives for companies to 
encourage participation in these costly and extensive new security 
regimes.
    These issues come to light through JIG's comments on the programs 
created or affected under the SAFE Port Act noted below:

Customs-Trade Partnership against Terrorism (C-TPAT)
    C-TPAT represents the core of CBP's cargo security program. This is 
a true government and private sector partnership program, based on 
industry self-policing and self-assessment with verification by 
government. In sheer numbers, this voluntary program is working well, 
as evidenced by the more than 7,500 participants, including Panasonic, 
which was one of the first to join the program. Participants, who 
attest to the integrity of their security practices and communicate 
their security guidelines to their vendors and business partners, have 
been promised a number of benefits, including fewer inspections on 
their shipments and speedier processing through customs. Real strides 
have been made on both the certification and validation/revalidation 
front.
    While the membership numbers of C-TPAT continue to climb, the 
benefits being offered to participants continue to be more elusive. 
Presently, one real benefit at land-border crossings is evident through 
the use of FAST lanes, but tangible benefits for ocean cargo, such as 
reduced inspections, are not readily apparent and are hard to verify. 
While the investment in C-TPAT membership is real and substantial, 
members of the trade community increasingly feel as though they made 
these investments for promises that have not been fulfilled. Even 
today, five years after the program's inception, C-TPAT participants 
continue to seek solid benefits in order to justify the numerous costs 
they incur as a result of the program.
    CBP has recently published a C-TPAT Cost--Benefit Survey (Executive 
Summary included as Appendix A). Based on the reported results, less 
than one-third of the respondents replied that the benefits of C-TPAT 
equaled or exceeded the costs from the program. These numbers argue for 
more tangible benefits. Benefits cannot be just about score reductions, 
especially as trade and security requirements converge. Suggested new 
trade compliance benefits, particularly for C-TPAT Tier II and Tier III 
partners, could include:
     An annual security fee off-set refund based on the number 
of import shipments and/or
     An expanded use of account-based principles within the C-
TPAT program, such as an option for Tier II & Tier III participants to 
pre-file account-based commercial data in the aggregate.
    Finally, in a global economy, programs similar to C-TPAT need to be 
adopted and recognized among all countries, such as proposed in the 
World Customs Organization SAFE Framework. A central component of the 
Framework is mutual recognition among countries, and, in the near term, 
mutual recognition between the USA and significant trading partners is 
the key to the success of the SAFE Framework and C-TPAT. Without this, 
the benefit of remaining in C-TPAT is substantially reduced. We 
strongly encourage CBP and DHS to continue working with our trading 
partners to ensure that mutual recognition is accorded to those 
programs implemented under the SAFE Framework.

Secure Freight Initiative
    The introduction of a 100 percent scanning pilot program at 
isolated locations within several foreign ports serves as an excellent 
opportunity to assess the viability of implementing the Secure Freight 
Initiative program unilaterally. Such testing at these ports should be 
completed before rolling out the program to other ports. This would 
help to address the biggest concern to JIG members, which is the 
possibility of delays in inspection and processing containers if the 
technology has not been sufficiently tested before being implemented. 
We recommend that Congress, in its oversight role, carefully review the 
report from DHS, due to this committee in April, on the results of the 
pilot program. JIG continues to believe that the DHS should implement a 
pilot program to test scanning technology and only deploy such 
technology more broadly when it is proven effective and practicable. In 
addition, Congress should be aware that some of our trading partners 
have expressed concern about the imposition of requirements such as 100 
percent scanning of cargo exported to the U.S.

Advanced Trade Data (``10+2'') Initiative
    The trade community has spent considerable time working with CBP on 
developing the requirements for the additional data elements required 
under Section 203 of the SAFE Port Act to improve CBP's Automated 
Targeting System (ATS). While the trade was pleased to work with CBP on 
these requirements, we remain concerned about compliance issues, which 
could result in an extra two or three days of inventory to meet the 
reporting requirements. In addition, businesses continue to wait to 
make any adjustments or rewriting of their own data collection systems 
until DHS puts out the Notice of Proposed Rulemaking (NPRM) and 
completes an economic analysis.
    Industry has provided input into the development of the NPRM 
through a ``strawman'' proposal that was released at the November 2006 
CBP Trade Symposium. In addition, the trade continued to provide input 
through the Trade Support Network and the COAC. The NPRM will provide 
an additional opportunity for input from the trade and certainly will 
clarify the many questions and concerns already raised. Unfortunately, 
nearly a year later, we still are waiting for the release of the NPRM. 
In addition, a JIG letter of February 5, 2007 requested CBP, when it 
publishes its NPRM, to give the trade community sufficient time to 
prepare for the changes. At a COAC meeting in August, the trade 
community was assured it would be released soon. It is now the end of 
October and the NPRM still has not been released. We understand it 
takes time for rulemaking to make its way through the government, but 
we urge that this NPRM be expedited and released as quickly as 
possible.
    Per the SAFE Port Act, we also understand that CBP is required to 
complete a cost/benefit analysis and feasibility study in connection 
with any additional advance trade data initiative. We are not aware 
that this report has been completed or has been discussed with the 
trade. It is important that this report be completed and shared with 
the trade as soon as possible, as the feasibility and value of ``10+2'' 
should be demonstrated before implementing this costly initiative.
    It is frustrating that almost a year later we still have no 
guidance on how this program will be implemented or even what the 
phase-in period will be. I would like to underscore that the trade 
community wants to ``do the right thing'' regarding the intent of 
``10+2.'' However, unlike the advanced manifest requirements which 
merely drew from pre-existing data, the ``10+2'' initiative will 
require shippers to develop a brand new process. Panasonic's logistics 
company says it cannot even begin to redesign its own customs and 
logistics management system and make other IT changes, let alone alert 
the factories of additional demands that will be put on them, until it 
has seen the proposed regulations. All current processes must be 
reviewed and analyzed to determine how best to have this information 
supplied from overseas and how to transmit the information. 
Reprogramming of IT systems can be a long and difficult process and 
complete information needs to be given at least a year and a half in 
advance to make sure everything is tested properly. So we need 
information. We urge the Subcommittee to help move the NPRM process 
along.

Global Trade Exchange (GTX)
    In August of this year, JIG sent a letter to DHS Deputy Secretary 
Michael Jackson that raised several concerns about the proposed Global 
Trade Exchange. We understand that DHS envisions this program as the 
third leg of the Secure Freight Initiative, along with CSI and the 
``10+2'' initiative. JIG circulated this letter widely within DHS and 
to a number of other government department s. Since then, we have met 
with government representatives seeking more information, but JIG still 
has not received any further clarification on the program.
    Our questions and concerns remain largely unchanged and include:
         What is the incentive to participate, especially when 
        companies traditionally are extremely reluctant to share 
        confidential information with outside parties?
         What will be the cost of providing data to the 
        exchange?
         How will security and confidentiality concerns be 
        addressed regarding access by third parties and foreign 
        entities?
         What is the added security value beyond what is 
        accomplished by other on-going and proposed security 
        enhancement programs?
         Will redundant programs such as advance security 
        filings be eliminated?
    JIG has neither supported nor opposed this program to date, and 
that is simply because we have never received enough information to 
develop a position one way or the other. CBP has been responsive to the 
trade community throughout most of the development of its various trade 
security initiatives. As a result of these discussions, numerous 
adjustments have been made to the proposed programs. This is exactly 
the manner in which the trade community seeks to work with Congress and 
the government. Unfortunately, however, development of the GTX has thus 
far taken place behind closed doors. The trade community has been 
offered little or no real information, and this is creating widespread 
concern within our membership.

Container Security Devices
    Much of the focus on improving maritime container security has 
centered on technology in the form of electronic container security 
devices (CSDs). Considerable improvement in these devices has taken 
place since emphasis was placed on their development in the post 9/11 
trade environment. JIG supports the continued development and voluntary 
use of CSDs, although we believe the current state of this technology 
does not yet warrant widespread use.
    General acceptance by the trade community will not be achieved 
until CSDs demonstrate improved performance in several key areas:
    Effectiveness: CSDs must be able to consistently detect container 
breaches and communicate this data to responsible agencies in a timely 
fashion.
    Reliability: The single greatest hurdle CSD technology must 
overcome is false alarms. Former CBP Commissioner Robert C. Bonner 
suggested a minimum one percent false alarm standard for electronic 
container security devices. Even assuming such a standard is 
achievable, universal usage would hold the potential for false alarms 
in excess of 100,000 annually. Excessive false alarm rates will 
undermine confidence in CSDs and lead to costly delays to resolve 
anomalies. Compliance with minimum false alarm standards must be 
certified through independent testing by government approved 
laboratories.
    Cost: CSDs must be affordable in order to be commercially viable. 
Costs range from a few dollars for a simple RFID device to hundreds and 
even thousands of dollars for sophisticated devices with multiple 
sensors and GPS, cellular and satellite communications capabilities. 
Expensive devices add to the cost of business and are thus a 
competitive disincentive. Incentives need to exist for industry to 
incur this expense, over the current use of cheaper but still ISO-
approved bolt seals.
    Response Protocols: Technology aside, there remains a significant 
need to develop standardized response protocols on how alarms are 
managed and responded to. Currently, when a CSD registers a container 
breach, who receives the data generated by the device, and even more 
importantly, who is responsible for resolving the alarm? Is it CBP, the 
port authority, the terminal operator, the carrier, the shipper, or the 
importer? If the CSD alarms overseas, is it the foreign customs 
administration that must respond? Such procedures are not yet in place 
for breach alarms generated by CSDs. Since there is no agreement as to 
who is responsible for resolving container breach alerts, such data now 
typically goes only to the shipper or the consignee. This may be useful 
for theft and pilferage analysis, but has no value for national 
security purposes.
    International Customs Treatment of CSDs: The customs agencies of 
numerous countries have attempted to assess duties and tariffs on 
devices as they enter or leave the national customs territory. CSDs 
must be treated as instruments of international trade in language 
similar to that provided in the UN Convention on Containers. 
Appropriate HTS classifications must be established through the World 
Customs Organization and duty-free treatment assured by the World Trade 
Organization.
    To summarize, electronic container security devices hold potential 
for enhancing the security of our maritime supply chains. To realize 
this potential, however, much work remains to increase their 
effectiveness and reliability, provide them at an affordable cost, and 
develop standardized response protocols to deal with the alarms they 
generate.

Conclusion
    Since 9/11, several government programs have been developed to 
lower supply chain security risk, including C-TPAT, CSI, Secure 
Freight, etc. Roughly 30 homeland security programs in the U.S. have 
been identified to which businesses are asked to comply. JIG members 
need assurance from federal agencies and Congress that the numerous 
security-related programs already in place, especially the older 
programs, are necessary, not duplicative, and remain essential to 
protecting our country from terrorism.
    JIG and its members appreciate the openness and availability of CBP 
and DHS staff to consult with the trade on efforts to secure our 
nation's seaports. We are fully supportive of the DHS mandate. However, 
the lack of real information on proposed new federal security programs, 
the growing concern that increased costs far outweigh promised benefits 
from participating in these security programs, the growing skepticism 
that the panoply of supply chain security programs are all necessary, 
the added program costs and delays that affect the bottom line of 
American companies, and the concerns expressed by our trading partners, 
all need to be more seriously considered. Given these issues, the help 
of Congress to seek answers to these questions, through public hearings 
like today's, is greatly appreciated. Madame Chairwoman, on behalf of 
JIG, thank you for your help and support, and thank you again for the 
opportunity to present our comments to this subcommittee. I will be 
happy to answer any questions from you or anyone else on the 
subcommittee.

    Ms. Sanchez. I now recognize Mr. Battles to summarize his 
statement for 5 minutes.

 STATEMENT OF WADE BATTLES, MANAGING DIRECTOR, PORT OF HOUSTON 
                           AUTHORITY

    Mr. Battles. Chairwoman Sanchez and the honorable members 
of the subcommittee, I am Wade Battles, the Managing Director 
for the Port of Houston Authority. On behalf of the port 
authority and U.S. seaports in general, thank you for this 
opportunity to address the subcommittee on important port 
security matters, including my thoughts on the 1-year 
anniversary of the SAFE Port Act.
    Mr. Battles. As you have heard today, the TWIC program 
faces some daunting challenges and hurdles that must be crossed 
in a very short period of time.
    The Port of Houston Authority supports the concept of a 
national identification system with background checks for 
transportation workers and has closely monitored the 
development of this program. We have had numerous meetings with 
the Coast Guard and with TSA officials on how we can best 
facilitate the rollout and the implementation of the TWIC 
program in our ports.
    Our concern is that TSA and their contractor continues to 
greatly underestimate the number of TWIC cards that will be 
required and consequently have not allocated sufficient 
resources in facilities or personnel to efficiently and 
effectively issue the TWIC card within the timeline mandated by 
SAFE Port. For example, the whole Houston Port area will have 
only one permanent facility and four mobile centers. 
Implementation will start in Houston next month, but critical 
issues still exist, such as what will be the required 
credentials, where to pick up completed TWIC cards, payment 
processes, and other similar issues.
    Our other main TWIC concern has to do with the readers. We 
implore that the readers be fully tested in actual maritime 
environments, as required by SAFE Port, before any 
specifications are mandated.
    Next, I would like to briefly discuss the 100 percent 
container scanning provision. First, the Port of Houston 
Authority joins other U.S. ports in supporting the Federal 
Government's layered security approach and urges adequate 
resources be provided to Federal agencies to continue to carry 
out and improve their security programs. The CSI policy of 
pushing our borders overseas to inspect cargo before it is 
actually loaded on U.S. bound vessels has worked well for U.S. 
ports.
    The SAFE Port Act requires DHS to start pilot programs 
looking at scanning all containers in four selected foreign 
ports to more fully evaluate the effectiveness and practicality 
of 100 percent scanning. There is great concern that if U.S. 
ports require foreign ports to perform 100 percent scanning of 
all containers destined for the United States, foreign 
governments could require the same from U.S. ports due to 
reciprocity. This would have a huge impact on Houston due to a 
large volume of export cargo that is equal to or greater than 
our imports. The Port Authority does not have the space nor 
does CBP have the personnel to scan all export containers. I 
would encourage this committee to review the findings of the 
pilot projects and carefully study full ramifications before 
requiring 100 percent scanning in foreign ports.
    Congress has assisted ports with the funding of important 
security infrastructure. To date, the Port of Houston Authority 
has been awarded $38.6 million in port security grant program 
funds and urban area security initiative fundings. I would like 
to compliment DHS on their new structure of the latest 
supplemental round of funding. By pushing the funding down to 
the area maritime security committees, the people closest to 
the port are deciding the priorities for port security. This is 
an improvement and one that I believe will benefit port 
security.
    I have several other recommendations.
    First of all, ports are struggling with the cost for 
maintenance and operation of the security projects. It would be 
improper to expect the Federal Government to pick up all M&O 
costs for the life of the project, but some maintenance and 
operational costs should be included in the grant application.
    Second, the port security grant program should fund the 
replacement and upgrade of security infrastructure that is 
already in place. Additionally, the program should allow for 
upgrading of previously funded security infrastructure as new 
technology is introduced to maximize the security at our ports.
    Before I move on from port security grants, I would like to 
express our gratitude to this committee for authorizing $400 
million per year in port security grants for the coming fiscal 
years through 2011 in the SAFE Port Act. DHS has been a good 
partner with the Port of Houston, and we look forward to 
working with Congress and DHS to make changes in the program 
that will improve the overall security of our ports.
    In conclusion, I appreciate the opportunity to express my 
thoughts in SAFE Port at its 1-year anniversary. We believe 
that this was a good piece of legislation that can be improved 
with a few adjustments. We in the port industry are dedicated 
to continue to work with Congress in identifying and providing 
practical solutions for port security issues.
    Thank you very much. I would be happy to answer any 
questions you might have.
    Ms. Sanchez. Thank you, Mr. Battles.
    [The statement of Mr. Battles follows:]

                   Prepared Statement of Wade Battles

Introduction
    Madam Chairwoman Sanchez and the Honorable Members of the 
Subcommittee:
    Thank you for this opportunity to address the U.S. House of 
Representatives Committee on
    Homeland Security, Subcommittee on Border, Maritime and Global 
Counterterrorism.
    I am Wade Battles, Managing Director of the Port of Houston 
Authority.
    I am pleased to present my thoughts on the one-year anniversary of 
the SAFE Ports Act.

Port of Houston
    The Port of Houston is a collection of public and private terminals 
along more than 25 miles of the 53-mile-long Houston Ship Channel. The 
Port of Houston is the largest foreign tonnage port in the nation, 
second largest in total tonnage and 10th largest tonnage port in the 
world.
    Most of its cargo is petrochemicals, with more than 150 private 
refineries, chemical plants and related terminals lining the Port of 
Houston, the port is home to the world's second largest petrochemical 
complex.
    The Port of Houston, as a whole, is the catalyst for 785,000 
statewide jobs, generating more than $39 billion in personal income 
annually. Many Texans and other Americans owe their livelihoods to 
activity tied to the Port of Houston. In addition to jobs, the Port of 
Houston annually contributes to more than $117 billion of statewide 
economic value. As you can see from these numbers, the Port of Houston 
is a large piston of the nation's economic engine.

Port of Houston Authority
    The Port of Houston Authority is the local sponsor of the Houston 
Ship Channel and owns the public terminals of the Port of Houston. The 
port authority is an independent political subdivision of the State of 
Texas and is governed by a seven-member board appointed by local 
entities in Harris County. While the private sector terminals along the 
channel primarily handle oil, chemicals and other bulk materials; the 
port authority primarily handles commodities like steel and grain, 
project cargo, including oil exploration equipment, and its biggest 
growth area--containers.
    The Port of Houston has a long history with containers. In 1956, 
the first container ship departed New Jersey and arrived in Houston to 
deliver 58 containers that were secured topside on a retrofitted tanker 
ship, the IDEAL X. In 1977, the port authority opened the Fentress 
Bracewell Barbours Cut Container Terminal. The terminal was designed to 
handle approximately one million twenty-foot equivalent units or TEUs. 
Barbours Cut handled 1.6 million TEUs last year. The Port of Houston 
now handles more than 73 percent of the container cargo market in the 
U.S. Gulf of Mexico. To keep up with the demand for container capacity, 
the port authority opened its Bayport Container Terminal in February 
this year. The Bayport Terminal is designed to handle 2.3 million TEUs 
at buildout.
    An interesting indicator of container capacity demand at our port: 
in February 2007, we opened the first phase of our Bayport facility, 
devoting exclusive service to one of our largest customers. We expected 
the move to relieve some of the pressure from an overburdened Barbours 
Cut terminal. However, demand is such that Barbours Cut Terminal is on 
pace to break last year's record for container volume.
    In 2008, we will open the first of up to three cruise terminals at 
Bayport. The port authority was the first gulf port outside of Florida 
to experiment with homeport cruising. Now, several ports have followed 
suit after witnessing the success of our Barbours Cut cruise terminal

Comments
    There is no greater responsibility to the Port of Houston Authority 
than the safety and security of its employees, its visitors and its 
neighbors. I would like to briefly address the Subcommittee today on 
the following topics:
        1. General comments on SAFE Port Act
        2. Comments pertaining specifically to TWIC
        3. Port Security Grant Program and suggested modifications
        4. The innovative Ship Channel Security District
        5. 100 percent Scanning in Foreign Ports and the impact of 
        reciprocity
        6. C-TPAT, CSI and other aspects of the security of the 
        international supply chain and
        7. CBP Staffing

General comments on the SAFE Port Act
    The SAFE Port Act of 2006 is Congress' strongest effort to secure 
our nation's ports. Among many provisions under the Act, we commend the 
attention given to improving the ability of the maritime community to 
respond to transportation security incidents. Particularly helpful are 
the requirements for area maritime security committees to include 
business continuity plans as part of their overall plan and the 
required development of protocols for post-incident resumption of 
trade.
    The Port of Houston is familiar with resumption of trade protocols 
stemming from near-miss hurricanes, major storm events and fog. The 
Coast Guard, port authority private facilities and maritime sector 
along the channel have learned how to cooperatively prioritize vessel 
movements through practice. It is vital that ports reopen following an 
incident in an organized and methodical manner.
    One of the strengths of the Port of Houston is its close working 
relationship with the local Coast Guard and Customs and Border Patrol 
as well as with all other agencies, federal, state and local, that have 
a role in security.
    There is an old saying in maritime circles that says: ``When you've 
seen one port, you've seen one port.''
    There is a great deal of truth in this, and it is important that 
our leaders in here in Washington, D.C., who work hard to secure our 
maritime commerce, both lawmakers and regulators, recognize that each 
port is unique. The best security follows from the ability of local 
authorities, such as the Coast Guard Captain of the Port, to work with 
the port members in their district and tailor security requirements to 
the unique needs and configurations of each local port. Certainly, 
there must be national security standards, but they must not unduly tie 
the hands of local authorities, who have the greatest knowledge of 
unique local conditions and know how to best secure against their 
vulnerabilities without unduly impacting critical operational 
efficiency.
    As an example of cooperation at our port, we have been working with 
local customs officials for several years now to install radiation 
portal monitors at each of our container facilities. As a result of 
this cooperation, the port authority is presently in full compliance 
with regulations requiring that all incoming containers be scanned for 
radiation by December 31, 2007.
    The port authority has signed an agreement with our Coast Guard 
district, under which we are able to monitor the security cameras of 
the other in many areas of the Houston Ship Channel and our terminals. 
Additionally, we have similar camera network-sharing agreements with 
the City of Houston, Harris County and the Texas Department of 
Transportation. And, thanks to the substantial help of the Port 
Security Grant Program, we have a state-of-the-art Emergency Command 
Center at the Port of Houston Authority, in which we have access to the 
camera feeds from these regional government bodies. These sharing 
agreements, along with the emergency command centers that have been 
constructed in the region are now being linked by sophisticated 
communication systems that allow each center to be a backup for each 
other will assist in making the Interagency Operational Center required 
under the Act truly functional.
    We are also working with the United States Coast Guard to amend our 
Facility Security Plan for one of our primary port terminals to make 
certain the appropriate areas are covered by the TWIC while minimizing 
the impact on day-to-day operations but not jeopardize port security. 
This is an important example, I think, of how Congress and 
participating agencies all recognize the importance of providing the 
right balance between security and operating efficiency.
    I should mention that there has been concern that Facility Security 
Officers, Port Police Chiefs and others who take the lead in port 
security have found that the goal of information-sharing is often 
impeded by the inability to obtain necessary security clearances, 
particularly on the federal level, and I would ask the Committee to 
take up this important issue with the Department of Homeland Security 
and its maritime-related agencies so that those responsible for port 
security are not prevented from carrying out their job because they are 
the last to know of important threat and other security information. We 
have spoken with a number of ports on this matter, and although there 
may have been some attempts to address this issue, the concern still 
remains.

Transportation Worker Identification Credential (TWIC)
    A major provision of the SAFE Port Act addresses the Transportation 
Worker Identification Credential program, commonly called ``TWIC.'' The 
Port of Houston Authority generally supports the concept of a national 
identification system with background checks for transportation workers 
and has closely monitored development of this program. In fact, I am a 
member of NMSAC--the National Maritime Security Advisory Council--that 
has studied and advised on many of the issues relating to TWIC. We have 
a multi-disciplinary security committee at the Port of Houston 
Authority that has kept abreast of developments in the TWIC program as 
well as all laws and regulations governing security at our facilities. 
We have had numerous meetings with Coast Guard officials on how we can 
best facilitate the rollout and implementation of the TWIC program at 
our port.
    The TWIC program must be implemented without substantial impacts to 
the operations of the port. We are now working with our Captain of the 
Port to re-define our secure areas. Our ports have been historically 
created with many areas functionally and geographically separate from 
the cargo loading and unloading along the ship channel. The regulations 
wisely provide an opportunity to place these areas outside the ``secure 
areas'' of our port facilities that will require presentation of a TWIC 
for unescorted access. We anticipate that we will come to agreement on 
this issue in a manner that will allow important public non-operational 
functions to continue outside of the secured areas subject to TWIC 
compliance.
    Last spring, we met with representatives of the Transportation 
Security Administration and its contractors on the TWIC program. We 
were surprised that the representatives dramatically underestimated the 
number of transportation workers at the Port of Houston who would 
require a TWIC card. Their initial estimate called for 30,000 TWIC 
cards to be issued in the Houston area. The port authority reviewed the 
TWIC needs for the Port of Houston with the West Gulf Maritime 
Association, the East Harris County Manufacturers Association and other 
groups. The study concluded that we will have approximately 350,000 
potential TWIC users in the Houston area.
    This information was given to the TSA, which has responsibility for 
enrollment in the TWIC program. However, we have not seen evidence that 
TSA has moved very far off of its original estimate. Nor have we seen 
substantial efforts yet by the TSA to notify and educate port 
stakeholders about TWIC.
    The port authority was recently informed that TSA would only have a 
single permanent enrollment center for the Houston area and just four 
mobile centers. We were also advised by TSA that they are pushing for 
enrollment sufficient to allow Coast Guard to set September 25, 2008, 
as the enforcement commencement date. Although we certainly will 
continue to actively cooperate and do our part in this process, we are 
concerned that TSA has substantially underestimated the number of TWIC 
applicants who need to be enrolled in the program in order to achieve 
timely compliance and while keeping our ports operating efficiently.
    Recently, the Department of Homeland Security selected the Port of 
Houston to be part of the continued rollout for the TWIC next month, 
November 2007. The port authority is ready to assist the TSA in setting 
up mobile enrollment centers and otherwise assist the TWIC enrollment 
process. Our main objective is to improve security through the TWIC 
process without substantially interfering with efficient operations at 
our port facilities.
    Some modifications to the program that I would suggest are:
         First and foremost that our stakeholders--truck 
        drivers, contractors, stevedores, tenants and others--all get 
        adequate and timely notice of this program and a convenient 
        enrollment center to go to in order to apply for a TWIC and an 
        efficient method to receive their TWIC.
         The TSA should bring the TWIC cards, when ready, to 
        the same mobile enrollment centers that applicants enrolled at 
        or allow the applicant to designate the ``pick-up'' center in 
        the applicant's region, rather than forcing the applicants to 
        go to a distant and different enrollment center to pick up 
        their cards.
         The TSA and its contractors need to clarify the 
        identification credentials to be accepted for TWIC enrollment. 
        I believe a driver's license and a port-issued ID or another 
        second form of government issued identification should be 
        sufficient since that is identification that is reasonable and 
        that a port employee would possess. If a TWIC applicant does 
        not have a passport, requiring an original birth certificate 
        will cause significant problems. The cost and time for 
        obtaining these forms of ID may severely hamper the timeliness 
        and success of the TWIC enrollment program.
         The TSA needs to ensure timely delivery of TWIC cards 
        to new employees. The maritime industry cannot have long delays 
        in credentialing a new port worker. The TSA should work to 
        limit the time it takes to issue a card.

Port Security Grant Program and suggested improvements
    Congress has assisted ports with the funding of important security 
infrastructure since 9-11. The Port of Houston Authority has been 
successful seeking these funds based on the economic and energy 
significance of the port. To date, the Port of Houston Authority has 
been awarded $38.6 million in Port Security Grant Program funds and 
Urban Area Security Initiative funding.
    I would like to compliment the Department of Homeland Security on 
the new structure of the latest supplemental round of funding. By 
pushing the funding down to the Area Maritime Security Committees, the 
people closest to the port are deciding the priorities of port 
security. This is an improvement and one that I believe will benefit 
port security. The Houston AMSC is using the funding to first update 
its area security assessment. This will give us an opportunity to 
revaluate our progress in port security six years after the 9-11 
attacks.
    Remaining funds will be allocated to projects based on the results 
of the area security assessment. This is a more regional approach than 
prior port security grants that were given directly to MTSA-regulated 
facilities based on criteria established in DC.
    Even with the compliments, I do have several recommendations for 
improving the Port Security Grant Program:
    First, the Port Security Grant Program should fund replacement of 
and upgrades to security infrastructure. As an example, CCTV cameras 
have about a five--to seven-year life span in the maritime environment. 
These cameras will need to be replaced. The PSGP does not allow for 
replacement funding of security infrastructure.
    Additionally, the PSGP should allow for upgrading of previously 
funded security infrastructure as new technology is introduced to 
maximize the security at ports. This common sense provision will keep 
port security technology on the cutting edge to prevent and deter 
possible attacks.
    Second, ports are struggling with the costs of maintenance and 
operation of many of these security projects. However, it would be 
unfair to ask the federal government to pick up all M&O costs for the 
life of the project. I believe that if the projects are rolled into a 
port's budget, it can adjust its cash flow and other priorities to 
accommodate the new budget item.
    Some of the maintenance and operations costs should be included in 
grant applications for the PSGP. Currently, the only M&O costs allowed 
in the PSGP grants are the first year, including during construction/
implementation. There is limited need for M&O before the project is 
completed. I would suggest a 5-year M&O program with a declining 
percentage each year funded by the grant. For instance:
         Year One, the Grant would cover 100 percent of the M&O 
        costs
         Year Two, the Grant would cover 80 percent of the M&O 
        costs
         Year Three, the Grant would cover 60 percent of the 
        M&O costs, etc.
         After the 5th year of the grant, the port would pick 
        up all M&O costs.
    I believe this would allow ports to fund more projects while 
determining the budgetary impacts of the M&O costs and adjusting 
accordingly.
    Thirdly, under present grant procedures (e.g. Round 7A of the Port 
Security Grant Program that was announced in a press release on May 10, 
2007), a port is given a maximum of three years in which to complete a 
grant project. That three-year period started on June 1, 2007 for the 
Port Authority and ends May 31, 2010.
    However, even though ports had to submit a budget and the scope 
with their grant applications last spring, the grant administrators in 
Washington, D.C. have not given approval to these budgets, and a port 
cannot commit to a contractor to go ahead with the project until the 
port receives Washington's approval of this information without risking 
reimbursement of the funds. In essence, the clock is ticking on our 
port grants, but we are unable to start on them until we get final 
approval. It is anticipated that the effect of this is that ports will 
only have approximately a two-year window (rather than three years as 
intended) in which to complete their projects because of the inability 
of the grant administrators in Washington to cut through this review 
process and approve information that they have now had for some seven 
months.
    I would recommend that the DHS trust its review of the budget and 
scope at the time of the award and not duplicate efforts by reviewing 
the same information again.
    Before I move on from Port Security Grants, I would like to express 
our gratitude to Congress for authorizing $400 million per year in port 
security grants for the coming fiscal years through 2011 in the SAFE 
Port Act. This is the funding level supported by the American 
Association of Port Authorities and its ports.
    While I may have a few suggestions for improving the Port Security 
Grant Program, I must state that DHS has been a good partner with the 
Port of Houston. We look forward to working with
    Congress and the DHS to make changes in the program that will 
improve the overall safety and security of ports.

Ship Channel Security District
    Several years ago, in a series of meetings with the Department of 
Homeland Security arranged with assistance of Congressman Gene Green, 
DHS officials detailed the need for a regional approach to security to 
reduce security risks along the Houston Ship Channel. From those 
meetings, a new public-private group was created that included Harris 
County, the Port of Houston Authority, the cities along the Channel as 
well as the private petrochemical, chemical and refinery facilities 
along the Houston Ship Channel, including members of the East Harris 
County Manufacturers' Association.
    The public-private group, called the Port Strategic Security 
Council (PSSC), recognized that the best security for the region would 
be achieved by a system-wide, layered security approach along with the 
employment of modern technology and techniques of each individual 
facility. The PSSC, working with experts in port security, developed a 
list of projects, regional in focus, to systematically improve security 
along the Houston Ship Channel. Harris County has sponsored the PSSC's 
Homeland Security Department Port Security Grants utilizing $31 million 
in federal grants for PSSC projects to increase maritime domain 
awareness, improve interoperability, provide patrol boats and reduce 
the risk of a terror attack.
    The PSSC soon recognized that a mechanism was needed to allow the 
county, the private facilities, the port authority and others to 
equitably pay for the local share of the grants and the operation and 
maintenance of these new security projects. The public-private partners 
of the PSSC decided the best method to collect these funds could be 
modeled after assessments collected by state-created municipal 
management districts.
    This year, the Texas Legislature authorized the creation of the 
Ship Channel Security District. The Department of Homeland Security 
showed an interest in the legislation as it moved through the process. 
U.S. Department of Homeland Security Secretary Michael Chertoff even 
sent a letter to the Texas Legislature generally supporting the concept 
of the security district.
    The district will be a public-private partnership with the board 
primarily made up of representatives from private industry. This board 
will determine the amount and methodology to assess the facilities 
along the Houston Ship Channel.
    Let me point out that the private companies along the channel, and 
you would recognize their names if I listed some of them, supported 
legislation that would assess their businesses to pay for improved 
security infrastructure for the Houston Ship Channel. Instead of 
waiting for the government to do it, they have stepped up as good 
corporate citizens to meet the challenge head on. This is another in a 
long series of examples where federal, state, and local governments, 
the port authority and the private sector have come together to benefit 
the Port of Houston.
    We have several more hurdles to clear before the district is 
created. Those include getting more than half of the companies in the 
proposed district and property owners of more than half the appraised 
property value of facilities in the proposed district to sign a 
petition asking for Harris County to create the district.
    Once established, this district could be the public-private model 
for port security nationwide. I would invite the Subcommittee to visit 
Houston to see first-hand Houston's cooperative spirit in action.

Requiring 100% Container Scanning at Overseas Ports
    I would like to briefly discuss the 100 percent container scanning 
provision in the SAFE Port Act.
    First, the Port of Houston Authority joins many other U.S. ports in 
supporting the federal government's layered security approach and urges 
adequate resources be provided for federal agencies to continue to 
carry out and improve their security programs.
    The layered, risk-based screening, scanning and inspection policy 
of cargo containers and the ``pushing of the border oversees'' to 
inspect cargo before it is loaded onto U.S.-bound ships has worked well 
for U.S. ports as well as our foreign partners.
    The SAFE Port Act requires the DHS to start a pilot program to scan 
all containers in four selected foreign ports to more fully evaluate 
the effectiveness and practicality of this new technology.
    I strongly believe that pilot ports are important and the 
information gleaned from them should be used to help craft any new 
system. Quick implementation of 100 percent scanning, without 
incorporating the lessons from the pilot projects, could be both costly 
and play havoc with our maritime transportation system.
Reciprocity in Scanning
    This would be especially true for the Port of Houston Authority, 
which is one of the few U.S. container ports with balanced import and 
export container trade. Our strong manufacturing sector in Houston, 
especially in the petrochemical and machinery sectors, provides us the 
opportunity to ship many American-made products worldwide. There is 
great concern that if the US requires foreign ports to perform 100 % 
scanning of all containers destined for the US, foreign governments 
could require the same from U.S. ports through reciprocity. The Port 
authority does not have the space nor does CBP have the personnel to 
scan all export containers from the Port of Houston Authority.
    I would encourage this committee to review the findings of the 
pilot projects and study carefully the full ramifications of 100 
percent scanning in foreign ports.

    C-TPAT, CSI and other aspects of the security of the International 
Supply Chain
    The Department's existing programs, many of which were codified in 
the SAFE Port Act, have been models for enhancing the security of the 
international supply chain. In 2006, prior to passage of the Act, the 
Port of Houston Authority signed an Agreement with U.S. Customs and 
Border Patrol to become a partner with CBP in the Customs Trade--
Partners Against Terrorism (CT-PAT) program.
    Another successful program codified in the SAFE Port Act is the 
Container Security Initiative. This program identifies containers that 
pose a security risk before they are loaded in foreign ports. The port 
authority supports this program as it provides a voluntary, incentive-
based layer of security and enhancement to our port security here in 
the United States.

Customs and Border Protection Staffing
    The Port of Houston and the Houston Airport System had a 
significant issue a few years ago where the two entities had to share 
CBP officers. In the morning, the officers were at the port inspecting 
cargo, but in the afternoons, they were at the airports assisting in 
processing passengers coming from foreign countries.
    This was not an acceptable use of manpower for either the airport 
or the seaport. Congress rightly came to the rescue by adding new 
positions for CBP officers over the next six years. Texas Senator Kay 
Bailey Hutchison even added another 275 CBP officers to the amount 
approved by the House. I urge you to fund these positions. We can have 
all of the technology and rules to protect the ports laid out in this 
law, but if we do not have people to man those positions, it will not 
do much good.

Conclusion
    I appreciate the opportunity to express my thoughts on the SAFE 
Ports Act of 2006 on its one-year anniversary. I believe this was a 
good piece of legislation that can be improved with a few adjustments. 
I am available for any questions you may have.
    Thank you.

    Ms. Sanchez. I thank all the witnesses for their testimony.
    I will remind each member that he or she will have 5 
minutes to question the panel, and I will recognize myself for 
questions. I would like to start with Mr. McLaughlin.
    In the earlier panel, we had Ms. Fanguy testify that there 
were only 70 denials on HAZMAT. You mentioned 5,500.
    Mr. McLaughlin. She said 70? I think she must have 
misspoke. The number I had was 5,500, and I met with TSA 
recently and they said 5,500.
    Ms. Sanchez. Okay. My question for you is, you mentioned 
some of the problems that your membership has with the TWIC 
process, including loss of privacy. Can you sort of just give 
us an indication of what that means to them?
    Mr. McLaughlin. Well, I think that this committee held a 
hearing on the HAZMAT truck drivers, and one of the issues that 
was brought forward were some of the truck drivers were not 
applying because of that issue. They may have something in 
their past that is not a disqualifying offense, but they don't 
want somebody else to look at it, and therein lies--and I get 
calls from individuals that may have a background and it does 
not--those crimes do not fall into these categories, but they 
are still concerned. And they are concerned about the loss of 
privacy, they are concerned about where this information is 
going, who is looking at it, where it is being stored, all 
those questions that I get.
    And there is just a concern out there that they are the 
ones that are losing their privacy, and you may have a 
longshoreman that does have a criminal background that comes to 
work every day with a big American flag on the back of his 
truck. And so you are saying that this person is a risk to the 
United States. And so the connection between a criminal 
background and a terrorism security risk, which is what MTSA--
it is really difficult to look at the two and to make a 
determination, I think.
    And, furthermore, we have taken a lot of, particularly in 
L.A.-Long Beach, a lot of young people recently that have come 
into the union that were from tough neighborhoods; and I worry 
about so easily taking away their livelihoods. Because they 
have a good job and a good chance to build a future with this 
union and with this job, and it should not be taken lightly.
    It is a good job for women as well. I don't know if you 
knew this, but probably about 25 percent of the longshore 
workers in L.A.-Long Beach are women. So it is a good job for 
both men and women.
    Ms. Sanchez. Thank you for clarifying that and putting that 
on the record. Because I think that these are jobs that pay 
well over the long run and people do get a second start in many 
cases towards working things out and providing for their 
families. We wanted to get that on the record.
    Mr. Blanchet, according to your written testimony, a TWIC 
can be forged within 48 hours. What steps do you think TSA 
should be taking to prevent this from occurring? And should the 
readers be rolled out at the same time that the cards are?
    Mr. Blanchet. That is correct. The readers should already 
have been established. The system that is going to be in place 
is going to be status quo to the system you have today; and 
that is, go through the gate and show a driver's license. A 
majority of the trucks that enter the gates today are not 
physically examined by the guard. And what I mean by that, the 
guard is supposed to take the driver's license, look at the 
picture, and try to match it with the driver. That is not being 
done.
    If you have a TWIC, you will have the same cosmetic issue 
as the driver's license. So until you have the biometric reader 
to read the information from the fingerprints to the face, to 
the card, you are not going to have anything which is secure. 
Homeland Security should be Homeland Scary.
    Ms. Sanchez. Thank you.
    I yield back. I will give 5 minutes to the ranking member.
    Mr. Souder. I will try not to use my 5 minutes.
    I had a question for Mr. McLaughlin first. Does the union 
get notified when someone is turned down? If they are a 
member--you said a lot of people get letters. They don't know 
how to do that?
    Mr. McLaughlin. We haven't gotten any letters so far, but 
we don't have the rollout until mid-November. But, as far as I 
know, the union does not get notification that the individual 
is disqualified.
    Mr. Souder. That will be something interesting to pursue. 
Because that would be another fallback protection for 
individuals. I mean, we want to keep people who are high risk 
out. I am a hard-liner on that question.
    The question is, however, if folks are misidentified and we 
are having confusion at the grass roots and don't understand 
it, I would think that would be one additional union benefit, 
would be if the union also knew whether one of the members had 
been turned down.
    Mr. McLaughlin. I will have to think about that, because I 
don't know an individual who would want the union to know what 
it is they got.
    But I think one thing the union can do is educate them, 
expect within a certain amount of days you are going to get 
your card or please go to the union so we can help you. That is 
something that we are talking about doing now.
    Mr. Souder. One of the things is I would assume that the 
union would know they were turned down because they will no 
longer be able to keep their job. So, to some degree, privacy--
being turned down, if you can't show up to work is kind of 
non--you may not know the reason, and that is a legitimate 
concern with privacy laws.
    Mr. McLaughlin. No. Because you are going to have the 
rollout, but the compliant date may be a year from now. So it 
may be up the road. So they may lose their window of 
opportunity to apply for a waiver. So they may lose that window 
of opportunity but still be allowed to work because the port is 
not compliant with TWIC card.
    Mr. Souder. Mr. Koch and Ms. Alexander, in the 10 plus 2 
initiative, which I take it you have serious concerns about 
because of it is being done in a room where you are not able to 
input and then all of a sudden it is there, I don't understand 
why things aren't floated and worked in a more cooperative way. 
But are there specific elements of the data that you are afraid 
of that aren't going to be necessarily important for targeting 
but you feel put additional paperwork? Where are your major 
concerns there?
    Mr. Koch. At this point, Congressman, we are not sure we 
have any concerns. We think the strategy is sound. We think the 
10 plus 2 data elements that CBP has identified makes sense.
    And, frankly, we commend CBP. They have been very open. 
They have reached out to the trade community, carriers, 
brokers, forwarders, importers for a year to get input and 
feedback. So I would expect that this proposed rulemaking, when 
it comes out, should surprise very few people.
    Obviously, we need to wait and see what is in the NPRM, but 
our expectation is that it will be exactly as they have 
advertised and an important supplement and improvement to the 
risk targeting system that they presently use.
    Mr. Souder. Do you agree with that, Ms. Alexander? You 
mentioned a closed room.
    Ms. Alexander. Well, the closed room I was talking about 
more for the GTX issue. On the 10 plus 2, there are various 
elements that have been requested that we do not collect data 
on right now or that we do not have ready access to. So what 
our big concern is that when this rolls out we will have time 
to establish the new processes within our company to be able to 
collect that data. That is our big concern. We assume that 
might take 1 year, 1-1/2 years to be able to collect all that 
data in the proper process.
    Mr. Souder. Madam Chairwoman, I will yield back.
    Ms. Sanchez. The members present have agreed to each ask 
one question so we can get through this process and close off 
this hearing so we can go over and vote since we have a vote on 
the floor.
    At this time, I will acknowledge Mr. Green for his 
question.
    Mr. Green. Thank you, Madam Chair.
    And I want to thank all of the persons who are here to 
testify today, especially Mr. Battles. He happens to be from 
Houston, Texas, where we happen to have our port. I, along with 
Congressman Gene Green, had an opportunity to tour the port. We 
were impressed--I was--with the coordination center, the 
communications abilities that you have; and, also, I was 
impressed to find out that you have a public-private 
partnership called the Ship Channel Security District. And I 
would just ask if you would enlighten us as to how this public-
private initiative is functioning.
    Mr. Battles. Thank you, Congressman Green.
    As we move forward in port security, what has happened is 
we first started looking at the individual security facilities. 
We have moved on now to a regional basis. Because each facility 
is interrelated with the facility next to us, so the challenge 
became how do we have projects that include various facilities 
over a regional basis in addressing such issues as on-water 
security interoperability.
    So we formed a partnership between Harris County and the 
Port Authority and the private sector, mostly the chemical 
plants that align the Houston Ship Channel; and we moved 
forward and we applied for security grants in both rounds five 
and six and were awarded, combined, about just under $30 
million. The challenge has been now that, once we have those 
funds, where do you get the operational and the maintenance 
funds to be able to operate those projects?
    For example, one of the projects was on the water police 
capabilities for security on the water. Operating those boats 
becomes very expensive. So this past legislative session in 
Austin we had legislation passed that allowed us to form a 
security district. This is a self-taxing district where the 
members in the geographic boundaries of the security district 
come together, vote. They have to have 50 percent of their 
members vote for it, and then they will move forward and 
establish an equitable relationship to tax themselves to pay 
for O&M and also to move forward on providing the seed money 
that is necessary, the matching money for funds.
    It also provides the vehicle to be able to evaluate 
projects on a much greater regional basis for the holistic good 
of the community, not only for business--I mean, not only for 
prevention and response but also now new focus on business 
continuity and on business continuing.
    Ms. Sanchez. Thank you, Mr. Green.
    I will now recognize Mr. McCaul for his question.
    Mr. McCaul. I thank you, Madam Chair.
    I had a specific question. I will be brief, given the time 
constraints.
    Mr. Koch and Mr. Battles, the 100 percent screening 
restriction or the provision that was put in the 9/11 bill, I 
was one of the conferees. We had a very healthy debate over 
this whole issue. But I am concerned about how it works in the 
real world as a practical matter, and if I could raise just a 
couple points that I heard that I think raise some concerns.
    One is, who does the screening and in what foreign country 
are you doing the screening? Will China, for instance, allow us 
to do with screening with Customs or does China want to 
contract? Or you mentioned Dubai Ports. How feasible is this by 
2012?
    And then, secondly, if the reciprocity requirement is 
placed on the United States to inspect all of our exports, do 
we have the capability and the resources to do that, in your 
judgment?
    Mr. Koch. I think the questions you have raised are some of 
the same questions we have raised. We don't know how this would 
work in reality. We don't know that the governments abroad know 
how this is supposed to work in reality. The port operators 
abroad do know not how this is going to work in reality. There 
are simply too many fundamental issues that have not been 
raised or tackled or addressed either by the Congress in 
passing this or by DHS trying to digest what this means at the 
present time.
    To some extent, a lot of people look at this and say, well, 
because the effective date is 2012, maybe we don't have to 
worry about it. I don't think that is the way other governments 
and the port community is looking at this. The United States is 
a leader on maritime security and port security issues, and it 
is important for the government to speak clearly so that we 
understand what the rules are going to be going forward.
    As to resources, if we had to inspect 100 percent of our 
outbound containers similarly to what is talked about for 
inbound, there are not the resources to do it. As Mr. Battles 
said, the Port of Houston couldn't do it. It would be a severe 
problem for American exporters. The vision of a 100 percent 
container inspection is certainly an attractive vision, but I 
think a lot of work needs to be put into this to confront what 
are real-world problems that up to this point have not been 
addressed.
    Mr. McCaul. I think it is an attractive vision, but I think 
we are going to have to work hard with you to determine we are 
going to do this.
    Mr. Battles, just real quickly.
    Mr. Battles. Yes, I concur. It is a huge challenge. And 
what we are trying to bring to light is a rationalization of 
let's not get lost on the methodology of how we are going to 
achieve our goal. Let's achieve our goal and use all of the 
resources that we have available to us, not necessarily get 
hung up on one particular issue where we want to have every 
container inspected overseas.
    I think if we have a multitude of programs that layered on 
top of each other we will be able to achieve the goal of secure 
and safe ports but at the same time not put handcuffs on 
commerce and slow commerce down.
    Mr. McCaul. Thank you, Madam Chair.
    Ms. Sanchez. Ms. Jackson Lee, you are recognized for one 
question. We have a vote on the floor with less than 5 minutes 
to go.
    Ms. Jackson Lee. Let me spend time saying to Mr. Battles we 
thank you for your presence here today and to acknowledge my 
concern about some of the issues that you have raised.
    We thank the witnesses for their presence.
    Let me indicate to both unions that you will find very a 
very strong advocate for training. We will respond to your 
concern about the FBI list that may be inaccurate and, as well, 
we will respond to your concern about the communication 
process. That is very, very important; and I look forward to 
working with you specifically on that.
    Mr. Battle, I would like you to comment on the lack of the 
reader, which I don't think most people understand that you are 
going to be in this program and you don't have a tested reader 
of the program for the TWIC card. And as you answer that, the 
question is embellished by the fact of you telling us how your 
unions in the Houston port are going to be involved in this 
security process.
    Thank you for your presence here and the great work of the 
port that I have enjoyed working with.
    Mr. Battles. As far as the reader is concerned, our concern 
is basically, number one, that we have a reader that works. It 
is going to be very, very challenging to be able to process the 
longshoremen as they are standing in front of the turnstyle to 
go to work every day. We don't want to hold them up. We have to 
come up with an efficient product.
    If you look at the specifications as required in FIPS 201, 
it calls for a contact reader. And our concern is that in a 
marine environment, a contact reader will not last very long, 
that it will get misreads and it will slow down the process. So 
we are trying to move forward on a contactless reader that will 
incorporate the biometric requirement that the TWIC card is 
going to have.
    As far as working with the union, we have always had a very 
strong working relationship with the union. The concern about a 
longshoreman being denied a TWIC card is a very, very serious 
issue. Denying a man or woman their livelihood should not be in 
any way taken so easily. So we are dedicated to work with the 
union, find solutions for it. But we have found that with 
proper processes and having the ability to appeal it that we 
hopefully feel that we will have a fair and equitable rollout 
of the TWIC card.
    Ms. Sanchez. I thank the witnesses for their valuable 
testimony and the members for their questions. And the members 
of the subcommittee may have additional questions for the 
witnesses, and we will ask you to respond quickly to those 
questions.
    Hearing no further business, this subcommittee stands 
adjourned.
    .[Whereupon, at 4:37 p.m., the subcommittee was adjourned.]


 Appendix A:  Executive Summary of C-TPAT Partners Cost-Benefit Survey 
  Prepared by the University of Virginia for U.S. Customs and Border 
                               Protection

                              ----------                              

II Executive Summary
C-TPAT Survey
     Of the 6,000 C-TPAT certified companies that were sent an 
invitation to participate in the survey, a total of 1,756 completed the 
survey (29.3%). Of the 1,756 responses received, 54.3% were received 
from importers, 20.6% from carriers, 17.8 % from service providers, and 
7.3% from foreign manufacturers. The percentage of responses received 
by enrollment sector closely mirrors the size of each enrollment sector 
relative to total program membership
     The Center for Survey Research (CSR) at the University of 
Virginia conducted the 2007 C-TPAT Benefit Cost Survey from January to 
April 2007.

C-TPAT Partners Profile
     Nearly three-quarters of these businesses are privately 
owned (74.0%), while another quarter are publicly owned (24.0%). The 
participating companies have been C-TPAT certified for 2.6 years on 
average.
     Six out of ten (62.1%) companies that participated in the 
C-TPAT survey indicated that their company's headquarters were located 
in the United States. The remaining companies reported that their 
headquarters were located in Canada (25.0%), in Mexico (3.2%), or in 
other countries (9.7%).
     Of the 953 importers who responded to the survey, 64% have 
been validated. Of the validated importers, 21.7% were classified as 
Tier 3, receiving the maximum level of benefits provided under the 
program.
Prior to joining C-TPAT
     Prior to joining C-TPAT, survey respondents in more than 
half (54.8%) of the businesses surveyed did not know about the 
protection programs or initiatives their companies have put in place. 
In addition, nearly half of the businesses (46.6%) did not have a 
formal system in place for assessing and managing supply risk.
     Slightly more than one-third (35.7%) of businesses had a 
formal system in place for assessing and managing supply chain risk. 
Furthermore, about 4 out of 10 businesses had no formal supply chain 
continuity and contingency plans.
     However, because of their participation in previous 
Customs and Border Protection programs, or due to their company's risk 
management processes, half (50.3%) of the businesses had implemented 
most or nearly all the C-TPAT program criteria prior to applying for 
membership.

Motivations for Joining C-TPAT
     For all businesses, ``reducing the time and cost of 
getting cargo released by CBP'' is the most important potential 
benefit, followed by ``reduced time and cost in CBP secondary cargo 
inspection lines.'' Of all the potential benefits presented to 
businesses, ``reducing insurance rates'' was the lowest rated item.
     According to Importers, the most important motivation for 
them to join C-TPAT is to ``to reduce the disruptions to the supply 
chain''. For non-importers, 62% indicated that their principle reason 
for joining the program was that their business partners required them 
to be C-TPAT certified.

Potential C-TPAT Implementation and Maintenance Costs
     Of all the potential C-TPAT implementation costs, 
``improving or implementing physical security costs (doors, windows, 
electronic access, cameras, fences, gates, lighting, etc.)'' received 
the most mentions. It was also the highest among all the potential 
implementation costs with an average of $38,471.
     Of all the maintenance cost items, ``maintaining physical 
security'' and ``maintaining in-house education, training, and 
awareness'' received the most mentions by all the businesses.
     With respect to the average amount of money spent, 
``maintaining the use of security personnel'' ($40,441) and ``salaries 
and expenses of personnel'' ($28,454) were the highest costs to 
maintain the C-TPAT program.
     The results of the survey also indicated that the ease of 
implementing the C-TPAT program criteria was found across all business 
types. Overall, 59.3% of Importers, 59.1% of Carriers, 62.0% of service 
providers, and 59.2% of manufacturers found that it was somewhat or 
very easy to implement the C-TPAT program criteria.
     During the last full year before they joined C-TPAT, 
Importers' total annual expenditures on supply chain security averaged 
an amount of $35,006. The estimated annual expenditures on supply chain 
averaged $66,353 in 2005 and were projected to be $77,997 and $69,905 
in 2006 and 2007.
     For Non-Importers, total annual expenditures on supply 
chain security follow a similar pattern as that of Importers, with the 
total annual expenditures on supply chain security averaging $57,406 
prior to joining C-TPAT. However, the 2007 projected expenditures 
($100,025) were higher than the 2006 projected expenditures ($61,964).

Benefits of C-TPAT Participation
     Almost one-third (32.6%) of businesses said that the 
benefits outweighed the costs, while nearly one-quarter (24.2%) of 
businesses said that the C-TPAT benefits and the affiliated costs were 
about the same.
     For all businesses, the major impacts of their C-TPAT 
participation have been in the field of workforce security, time to 
release cargo by CBP, time in CBP inspection lines, and predictability 
in moving goods.
     More than one third (35.4%) of Importers reported that 
their participation in C-TPAT has decreased their number of U.S. 
Customs and Border Protection (CBP) inspections. In a follow-up 
question, these importers indicated that their number of CBP 
inspections decreased by more than half (51.7%).
     Importers that have been C-TPAT certified for a period of 
more than 3 years were more likely to say that their number of 
inspections have decreased (42.8%) because of the C-TPAT participation 
than were those Importers which have been C-TPAT certified for a period 
of 2 to 3 years (33.8%) or less than 2 years (27.1%).
     Importers said that their participation in C-TPAT has 
increased their supply chain visibility and nearly one quarter (24.3%) 
indicated that their participation in C-TPAT has increased their 
ability to predict lead-time. Nearly 3 out 10 Importers (28.9%) 
reported that their participation in C-TPAT has decreased the 
disruptions in their supply chain.
     Of highway carriers, 41.5% reported that their 
participation in C-TPAT has decreased their wait times at the borders, 
while 44.4% said their wait times at the borders have stayed the same.
     More than two-thirds (68.7%) of non-Importers said that 
their number of customers has stayed the same, while 17.0% have 
reported that their participation in C-TPAT has increased their number 
of customers. About the same proportion of non-Importers (17.4%) also 
indicated their participation in C-TPAT has increased their sales 
revenues.
     Overall, since becoming C-TPAT certified, non-Importers 
who reported an increase in customers have gained 35.2% new customers. 
Non-Importers who reported an increase in sales indicated that their 
company's sales have increased by 24.1%.

C-TPAT Impact on Risk Management
     The vast majority (81.3%) of businesses that had a formal 
system in place for assessing and managing supply risk agreed or 
somewhat agreed that their businesses' ability to assess and manage 
supply risk has been strengthened as a result of joining C-TPAT.
     Three quarters (75.2%) of businesses that had formal 
supply continuity and contingency plans before joining C-TPAT reported 
that their supply continuity and contingency plans have been 
strengthened as a result of joining C-TPAT.

C-TPAT Supply Chain Security Conferences
     Nearly thirty percent of businesses (29.3%) said they have 
participated in Supply Chain Security conferences. The vast majority of 
the conferences' participants (98.4%) reported that the conferences 
were valuable, with 37.2 percent rating them as extremely valuable and 
42.2 percent rating them as valuable. About half (50.2%) of the 
businesses would like to have these C-TPAT Supply Chain Security 
conferences presented once a year.
     Nine out of ten (92.6%) businesses have contacted the C-
TPAT program personnel and 81.5% of these businesses said that they 
have not experienced difficulties in obtaining responses to their 
questions or concerns. In addition, 83.8% of these businesses indicated 
that C-TPAT responses to their questions or concerns were provided in a 
timely fashion.
     Businesses also had a positive evaluation of their Supply 
Chain Security Specialist (SCSS). An overwhelming majority (98.3%) of 
businesses reported that their Supply Chain Security Specialist was 
very knowledgeable (54.1%), knowledgeable (34.4%), or somewhat 
knowledgeable (9.8%). Interestingly, this appreciation of the knowledge 
of the Supply Chain Security Specialist was across all businesses 
regardless of their type, size, or the number of years they have been 
C-TPAT certified.

Overall C-TPAT Evaluation
     More than half (56.8%) of businesses indicated that C-TPAT 
benefits outweighed the costs (32.6%) or the benefits and the costs 
were are about the same (24.2%). Slightly more than one quarter (26.4%) 
reported that it was too early to compare the benefits and the costs.
     While more than one-third (38.4%) of businesses indicated 
that their management was concerned about the potential impact on cost 
when their companies were considering joining C-TPAT, the vast majority 
of businesses indicated they have never considered leaving the C-TPAT 
program (91.5%) and that they would definitely (78.1%) or probably 
(18.1%) stay in the program.


            Appendix B:  Additional Questions and Responses

                              ----------                              


Questions from the Honorable Bennie G. Thompson, Chairman, Committee on 
                           Homeland Security

                   Responses from Stephen L. Caldwell

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Questions from the Honorable Bennie G. Thompson, Chairman, Committee 
                          on Homeland Security

                     Responses from Maurine Fanguy

    Question 1.: According to Mr. Battles, TSA underestimated the TWIC 
numbers at the Port of Houston by 320,000. Similar problems occurred at 
the Ports of New York and New Jersey and Savannah). Who came up with 
the original numbers and how much did you pay them?
    Response: The Transportation Security Administration (TSA) Office 
of Finance and Administration led the effort to develop the original 
population estimates, with contractor support from International 
Business Machines Corporation (IBM). The estimated cost for this 
support is $48,000. In developing this estimate, TSA consulted with the 
following government and industry authorities: United States (US) 
Department of Transportation/US Maritime Administration, Army Corps of 
Engineers (Waterborne Commerce), Journal of Commerce, American 
Association of Port Authorities, Bureau of Transportation Statistics, 
A. Strauss-Wieder Inc., Martin Associates, Economic Research 
Associates, International Longshoremen's Association, International 
Longshore and Warehouse Union, United States Maritime Alliance, Pacific 
Maritime Association, American Waterways Operators, Maersk, Wallenius-
Wilhemsen, American Trucking Association, Owner-Operator Independent 
Drivers Association, International Brotherhood of Teamsters (Port 
Division), US Census (Vehicle Information), University of Michigan, 
University of Minnesota, California State University at Long Beach, 
University of Central Florida, American Shipbuilding Association, 
Shipbuilders Council of America, Cruise Industry News, International 
Council of Cruise Lines, Minerals Management Service, National Ocean 
Industries Association, Independent Petroleum Association of America, 
American Petroleum Institute, and the National Petrochemical and 
Refiners Association.
    TSA is continually working with the United States Coast Guard and 
industry stakeholders to gather additional data on the maritime 
population. However, there is sufficient flexibility and capacity in 
the system to accommodate unforeseen fluctuations in the population.

    Question 2.: The TWIC was supposed to be the one card that provided 
uniformity and consistency. What steps has TSA taken to pre-empt state 
access cards like those issued in Florida?
    Response: Under the final rule published on January 25, 2007, 
States are not preempted from instituting their own background checks 
or badging systems in addition to the Transportation Worker 
Identification Credential. We note that a State may be the proprietor 
of ports or port facilities, and, as the proprietor, is free to set 
standards for who may enter onto their facilities, as does any other 
proprietor. In addition, States may have set standards for reasons 
other than guarding against the threat of terrorism, such as to combat 
drug smuggling or organized crime. As such they are not regulating in 
the areas that DHS is regulating.

    Question 3.: TSA contractors have already lost two computers 
containing personal information. Are you confident that TSA has taken 
the proper steps to secure the TWIC computers?
    Response: Transportation Security Administration (TSA) takes data 
security very seriously. TSA and its contractors are committed to 
maintaining the privacy of personal information and take many 
precautions to protect it. The Transportation Worker Identification 
Credential (TWIC) system incorporates a 256-bit Advanced Encryption 
Standard for whole disk encryption on all enrollment workstations, 
encryption of the enrollment package during transmission through a 
virtual private network, and encryption of the data in the TWIC system, 
which is located at a secure government facility. This standard is a 
National Institute of Standards and Technology standard that is 
approved by the National Security Agency for the transmission of Top 
Secret information and reflects Federal Information Processing Standard 
197. TSA recognizes that data security is an ongoing process, and will 
continue to monitor our systems and practices to enhance the security 
of personal information.

    Question 4.: We have been told repeatedly that TSA has failed to 
notify and educate port stakeholders about TWIC. What steps are you 
going to take to fix this problem?
    Response: The Transportation Worker Identification Credential 
(TWIC) Stakeholder Communications Committee is comprised of 
approximately 35 industry and labor representatives and has held 6 
meetings to date. These meetings are well attended, useful information 
is presented and distributed to the membership and valuable feedback is 
received from the membership. To illustrate the effectiveness of this 
committee, membership requests continue to be received from 
stakeholders interested in participating. We are very pleased with the 
workings of this committee, the two way flow of information it fosters, 
and participation from industry.
    Additionally, as cited in recent Government Accountability Office 
(GAO) testimony (October 31, 2007 to the Committee on Homeland 
Security, House of Representatives), the Transportation Security 
Administration (TSA) has taken steps to address previous GAO 
recommendations regarding improving communications and coordination 
with maritime stakeholders, including posting frequently asked 
questions, participating in numerous conferences and briefings, 
conducting outreach with maritime facility operators and port 
authorities, and disseminating informational bulletins and fliers. The 
testimony states that stakeholders from the Ports of Wilmington, 
Delaware, Los Angeles, California and the Maritime Exchange of the 
Delaware River and Bay Authority, with whom GAO spoke in October 2007, 
stated that TSA and its enrollment contractor have placed a greater 
emphasis on communicating and coordinating with stakeholders and on 
correcting past problems. An official from the Port of Wilmington 
stated that, thus far, communication, coordination, and outreach by TSA 
and its enrollment contractor have been excellent and far better than 
during TWIC testing.

    Question 5.: When is TSA going to implement the reader pilot?
    Response: Vendors are currently developing contactless readers to 
operate with the Transportation Worker Identification Credential. After 
independently testing the readers for compliance with the 
specification, we plan to deploy readers at test sites early in 
calendar year 2008 and begin gathering test data. Delivery of the final 
pilot test report is scheduled for December 2008. The test will extend 
through 2008 to achieve all test objectives. However, the test is 
structured to provide data early in the pilot and throughout the test.

    Question: The SAFE Port Act required a pilot program on the TWIC 
readers. The Department has decided to fund this program through the 
Port Security Grant program, although this was not required in the law. 
The pilot participants recently sent Mr. Chertoff a letter asking him 
to waive the 25% cost-share requirement for the pilots since all other 
TWIC pilots were fully funded by the government and he has the 
authority under MTSA to waive the cost-share. What is Mr. Chertoff's 
position on waiving the 25% cost-share on TWIC reader pilots?
    Response: Currently DHS is reviewing the wavier request for the 
TWIC readers and a decision will be made in the near future.

    Question 7.: The Port Security Grant program is already providing 
funds for TWIC implementation. A key problem in determining costs are 
some policy decisions that DHS has yet to make. Three key ones are: (1) 
will all facilities be required to have use TWIC card reader; (2) At 
what MARSEC level and rates will facilities be required to have 
biometric checks, and (3) Will facilities be required to conduct PIN 
verifications and at what MARSEC levels? What is DHS' timeframe for 
making some of these policy decisions in light of the funding from the 
Port Security Grant program?
    Response: The specific policy decisions discussed in the question 
will be promulgated in a notice and comment rulemaking addressing 
Transportation Worker Identification Credential (TWIC) reader 
requirements for regulated vessels and facilities. The policy decision 
will be proposed in a Notice of Proposed Rulemaking, which will give 
regulated industry an indication of Department of Homeland Security 
(DHS) direction. However, decisions will not be finalized in a rule 
until a public comment period and TWIC pilot test of the business 
processes, technology, and impacts is completed. DHS intends to address 
these policy decisions by the SAFE Port Act deadline of April, 2009.
    Regarding TWIC funding from the Port Security Grant program, 
approved applicants have up to 30 months from the grant award date to 
obligate their funds, providing sufficient time to implement TWIC 
reader projects given regulatory requirements.

Questions from the Honorable Bennie G. Thompson, Chairman, Committee on 
                           Homeland Security

                       Responses from Vayl Oxford

    Question 1.: Section 121 of the SAFE Port Act states that DHS will 
produce a strategy for deployment of domestic radiation detection and 
imaging systems. When radiation portal monitors were first employed at 
ports, their installation was slowed by a failure of DHS/DOE and their 
contractors to work up front with ports to make sure the operating 
procedures and footprints would be complementary to port operations.
    (Director Oxford, DNDO) Please explain if and how you included 
ports in the development of the strategy on domestic radiation 
detection and imaging systems required under Section 121 of the SAFE 
Port Act.
    Response: CBP and DNDO have continued to work directly with all 
affected stakeholders to ensure that current business models are not 
negatively impacted by deployments of radiation portal monitor (RPM) or 
non-intrusive inspection (NII) equipment at field locations. 
Additionally, as a general practice, CBP and DNDO work with the port 
authority and other affected stakeholders to proactively schedule 
construction to coincide with any other activities at the port. This 
helps prevent scheduling delays and expedites the deployment process 
overall.

    Question 2.: (Director Oxford, DNDO) How are the Departments of 
Homeland Security and Energy and their vendors working with ports to 
ensure that the next generation of scanning technology will be 
complementary to port operations, including those being tested overseas 
as part of the Secure Freight Initiative?
    Response: Due to sovereignty concerns, CSI cannot set standards in 
a foreign country for the purchase and deployment of NII systems. 
However, it is recommended that host nation counterparts purchase NII 
systems that follow the guidelines of the World Customs Organization 
(WCO) Customs Compendium, Container Scanning Equipment, Guidelines to 
Members on Administrative Considerations of Purchase and Operation. 
Moreover, this language has been included in all Declarations of 
Principles signed from May 2005 and beyond. It should be noted that as 
a requirement for participating in CSI, foreign governments must 
purchase their own NII equipment and that equipment must either meet or 
exceed the capability of NII equipment used by CBP domestically.
    CBP, DOE, and DNDO continue to work with terminal/port operators to 
determine if NII and radiation detection equipment deployments are 
impacting trade and the flow of cargo at foreign ports. DHS and DOE 
also routinely meet with Secure Freight Initiative (SFI) partners to 
discuss SFI deployments and their effects on the flow of cargo. As 
discussions with stakeholders continue, these metrics will be expanded, 
readjusted, and supplemented.
    Prior to deploying NII or radiation detection equipment, a complete 
site survey is conducted at the proposed site. During this survey port 
/terminal operators and other affected stakeholders are encouraged to 
participate and provide input. All stakeholders are given the 
opportunity to provide input into final designs. Deployment activities 
do not commence until all stakeholder concerns and input have been 
addressed and satisfied.

    Question 3.: (Director Oxford, DNDO) The SAFE Port act also states 
that Department shall publish technical capability standards and 
recommend standard operating procedures for the use of non-intrusive 
imaging and radiation detection equipment in the U.S. Can you give us 
the status of that requirement and how have you involved ports?
    Response: In accordance with Section 121 (f) of the SAFE Port Act, 
DNDO, in collaboration with the National Institute of Standards and 
Technology (NIST), shall publish technical capability standards for the 
use of NII and radiation detection equipment in the United States. 
Because Section 121 (f) requires such standards to take into account 
relevant standards and procedures utilized by other Federal department 
or agencies as well as those developed by international bodies, NIST is 
presently conducting a study of the detection capabilities required by 
existing national and international consensus standards for 
radiological and nuclear detection. NIST is scheduled to complete this 
study of the current standards baseline and provide DNDO a written 
report by the end of January 2008. NIST will then assist DNDO in 
convening an inter-agency working group of radiological, nuclear, and 
NII detection experts to develop threat-based government unique 
technical capability standards. DNDO plans to involve ports through CBP 
participation in this interagency working group.

    Question 4.: (Director Oxford, DNDO) One concern is that Department 
has spent a lot of time and energy on the detection side, but not as 
much on remediation when an alarm goes off. Often the suspect container 
is taken to an off-site location, sometimes through a busy 
neighborhood, or it sits on the port without any protection or shield. 
Can you give yourself a grade on your reaction to an alarm both in 
terms of immediate protection of the port and response if a problem was 
real?
    Response: The U.S. Department of Homeland Security has indeed 
focused significant attention upon the detection challenge because this 
is technically the more difficult element. But the Department 
recognizes that establishing and maintaining a systematic, 
comprehensive screening, interdiction and response capability requires 
that:
     The domestic program must be integrated with the Container 
Security or Secure Freight Initiatives elements which provide for 
intelligence collection, advanced screening, and timely notification.
     All points of potential entry must be covered using 
comprehensive, layered enforcement measures implemented by trained, 
qualified personnel.
     State-of-the-art equipment that is capable of detecting 
small quantities of threat material must be provided and used 
correctly.
     Detection equipment that is deployed is always accompanied 
by training on technical adjudication of alarms and associated response 
protocols.
     Systematic, effective measures must be in place to 
identify and secure threat materials.
     Appropriate and timely notifications must be made using an 
established system to allow effective command decisions and responses.
     The system must be probed and evaluated to assure 
continued readiness.
    The Department has established U.S. Customs and Border Protection 
(CBP), along with the U.S. Coast Guard and the Transportation and 
Safety Administration (TSA), as the three agencies within DHS 
responsible for operational activities. These agencies integrate their 
interdiction activities, and work closely with other key agencies such 
as the Federal Bureau of Investigation on intelligence and the Federal 
Emergency Management Agency on emergency response.
    Inspection and interdiction at ports of entry falls under the 
primary jurisdiction of the CBP. CBP has the immediate lead on reaction 
to an alarm both in terms of immediate protection of the port and 
initial response if a problem were real (i.e., if a nuclear or 
radiological device or materials were to enter a U.S. port). It is 
probable that CBP will identify the conveyance/container with the 
threat material as high risk before arrival (i.e., at the point of 
embarkation or while offshore). If so, it may be screened or imaged at 
the port of embarkation through cooperative programs with CBP (e.g., 
Container Security or Secure Freight Initiatives) or while on shipboard 
by the Coast Guard.
    For threat materials not identified and interdicted offshore, the 
next line of defense is detection in America's ports. All high-risk 
containers/conveyances are physically examined or scanned using imaging 
equipment and all are scanned for radiological materials using 
radiation detection equipment such as a radiation portal monitor (RPM) 
or the radiation isotope identification device (RIID). Scanning is done 
as early in the process as reasonable, in some cases on the dock 
shortly after the container is grounded, but is always done before the 
container leaves the port of entry.
    When a CBP Officer identifies potential threat materials in a 
conveyance or container using radiation detection equipment, the 
officer contacts Laboratories and Scientific Services (LSS) via the 
National Law Enforcement Communications Center (NLECC). In the majority 
of cases, LSS has immediate access to the same data which the field CBP 
Officer sees by use of the Port Radiation Inspection, Detection and 
Evaluation (PRIDE) system; otherwise, the data is transferred 
electronically to LSS.
    CBP has initial tactical responsibility in responding to potential 
threats at a port of entry. CBP will immediately isolate the container 
in an on-port secondary hold area, following the guidance of the CBP 
Standard Operating Procedure (SOP) for that port of entry. The 
container and area are secured; other conveyances are moved away from 
the isolated conveyance and additional conveyances/persons are not 
allowed to approach.
    LSS provides recommendations on further diagnosis to confirm the 
existence of a threat. Measures may include additional imaging, 
additional spectra acquisition or other responses appropriate to the 
specific characteristics of the potential threat.
    If LSS determines that there is potential threat material, they 
will contact the DNDO's Secondary Reachback team, comprised of national 
laboratory scientists, for additional expert advice and verification of 
threat. If appropriate, LSS scientists are dispatched from the regional 
office or a Radiological Assistance Program (RAP) team, comprised of 
regionally located national laboratory experts, may also be dispatched 
to the port to assist in confirming the diagnosis and to provide 
recommendations on remediation.
    Upon reaching a consensus of a threat being present, LSS notifies 
the CBP Situation Room (SR) of the event, which escalates the event to 
appropriate DHS managers and entities (e.g., upper CBP managers, the 
CBP Office of Anti-Terrorism, the Domestic Nuclear Detection Office 
(DNDO) Joint Analysis Center (JAC), etc.). The SR and the JAC will 
notify the DHS National Operations Center (NOC) of the incident. 
Tactical command is elevated. The NOC activates the Federal Bureau of 
Investigation (FBI). Tactical command is transferred to the FBI once 
FBI Agents arrive at the port.
    If warranted and in consultation with the FBI, various emergency 
measures can be put into effect or Port Emergency Preparedness Plan can 
be activated and/or Continuity of Operations Plans can be implemented, 
providing for notifications following contact procedures such that 
local emergency response authorities can initiate appropriate measures 
such as port closure, evacuation and stabilization.
    With over 195,000,000 conveyances screened and 1,100,000 alarms 
resolved, DHS has proven operational experience which has provided 
feedback to refine the current system. The system is routinely tested. 
`Red teams' challenge it by attempting to smuggle threat materials. 
Large scale drills, such as the recent TOPOFF4 exercise held in October 
of 2007 in Portland, test the effectiveness of the command and control 
systems for a radiological emergency. Based on the results of the 
various tests and exercise the Department judges that substantial 
measures are in place, and that continued efforts are appropriately 
focused on deploying detection equipment, on improving detection 
technology, and on continuing to train and test to refine the command 
and control structure.
    As to assigning a grade, protection against use of weapons of mass 
destruction by terrorists on American soil has only one acceptable 
grade, A+. Although a great deal has been accomplished and the risk 
dramatically reduced, much remains to be accomplished. The Department 
continues to strive to attain the disciplined, comprehensive, 
systematic command and control structure needed to assure America is 
protected.

Questions from the Honorable Bennie G. Thompson, Chairman, Committee on 
                           Homeland Security

                  Responses from Captain Francis Sturm

    Question 1.: What is the status of Coast Guard's progress 
monitoring compliance of facility security plans? What deficiencies 
have been found and what do they say about the status of our maritime 
security?
    Are there enough facility inspectors and are they trained well 
enough to conduct facility inspections? Are there still going to be 
enough with the more stringent requirements under the SAFE Port Act-two 
inspections a year including one unannounced inspection?
    Response: To date for 2007, the Coast Guard has performed in excess 
of 9,000 compliance checks of regulated facilities, thereby meeting the 
SAFE Port Act mandates. This number includes scheduled annual 
inspections and unannounced spot checks. Deficiencies generally relate 
to facility access control, monitoring and training.
    Yes, the Coast Guard has the personnel resources in place needed to 
meet SAFE Port Act requirements. Additional funding provided in the 
2007 DHS Appropriations Act allowed the Coast Guard to deploy an 
additional 39 facility inspectors to the field. The Coast Guard is also 
reviewing its training program for the inspector qualification to 
efficacy with position responsibilities.

    Question 2.: Information sharing at the ports is a large 
undertaking, as well as an expensive undertaking. Given limited 
resources available, what are the next steps and should these be 
prioritized to ensure information is shared quickly and effectively, 
while also meeting concerns regarding rights of privacy and proprietary 
information?
    Response: The Coast Guard is committed to sharing information in 
ports and views this functionality as a critical issue. To this end, 
beyond structural initiatives such as Area Maritime Security 
Committees, we have developed the web-based Homeport portal (http://
Homeport.uscg.mil).
    Homeport currently meets numerous Coast Guard needs for making 
information available via the internet. Homeport is the only CG 
Internet System certified for Sensitive But Unclassified (SBU) 
information, including Sensitive Security Information (SSI) as directed 
by 49 CFR 1520. Its functionality consists of four major areas 
(categories) of communication needs. The first is static web pages for 
all Coast Guard Sector commands and all components/departments at each 
Sector, similar to www.uscg.mil, as well as a web presence for numerous 
Headquarters Offices and Headquarters Units responsible for 
accomplishing a variety of Marine Safety and Security missions. This 
information is available to anyone with Internet access and does not 
require a Homeport user account for access.
    Second, Homeport provides a web presence for providing information 
targeted for specific users or groups of users based on their role in 
both the public and private sectors of the global maritime industry and 
interests within each Sector Command's Area of Responsibilities (AOR). 
A Homeport user account is needed for access to this type of 
information. Requests for Homeport user accounts are reviewed and 
vetted locally at each Coast Guard Sector Command. The primary audience 
for this type of information is the Area Maritime Security Committees 
(AMSC), which are headed by the USCG Sector Commanders under their role 
as the Federal Maritime Security Coordinator (FMSC) for their AMSC. 
Other groups of users include a variety of both safety and security 
related committees, with members from both the public and private 
sectors.
    Third, Homeport provides a collaboration feature in the form of 
Collaboration Communities that are organized by specific functional 
areas and types of content. Access to each Collaboration Community is 
controlled by the owner of that community. While , a Homeport user 
account is not needed to gain access, the Community owner has the 
ability to determine who has access to the information and can also set 
the access level (no-access, read-only, read-publish).
    Finally, the Alert Warning System (AWS) application enables the 
Coast Guard to rapidly and reliably transmit targeted messages in bulk 
to maritime security partners and stakeholders. The system leverages 
the Homeport account management system to centralize user accounts and 
minimize account management requirements. AWS is the Coast Guard's 
official system for disseminating alerts, threat warnings, and other 
critical information to key partners and stakeholders primarily in 
support of maritime security related activities. It provides an 
efficient means of meeting the requirements of Title 33, Code of 
Federal Regulations (CFR), Subchapter H (requires Captains of the Port 
(COTP) to communicate MARSEC level changes through local Broadcast 
Notice to Mariners, and electronic means, if available, or as detailed 
in the Area Maritime Security Plan). AWS is a powerful communications 
tool capable of supporting and authorized for use to support a broad 
range of Coast Guard missions beyond maritime security such as 
hurricane preparedness and response, natural disasters and other 
critical and non-critical events necessitating timely port-wide 
notification.

    Question 3.: Granting security clearances to those with a need to 
know is a long-standing issue. Does a ship operator or chemical plant 
manager having a clearance or not having a clearance really affect our 
nation's ability to use intelligence and tell port stakeholders to 
increase their security?
    Response: The need for such individuals to possess security 
clearances (i.e. Secret, Top Secret etc) would only become necessary if 
the information to be released was classified. In exigent 
circumstances, the Federal Maritime Security Coordinator (FMSC) may 
need to provide direction or share information with targeted industry 
stakeholders to prevent or mitigate threats.
    The FMSC is not restricted from notifying port stakeholders of a 
need to increase their facility or vessel's security due to an 
individual not having a security clearance. If the Maritime Security 
(MARSEC) level of a port is raised, the change in MARSEC can be 
announced publicly. The specific security measures implemented by the 
facility or vessel operator would be dependent upon the approved vessel 
or facility security plan in place at that time.
    However, if the FMSC has specific, targeted intelligence or is 
requiring a specific security procedure to be implemented (i.e. 
increase passenger screenings to 50%) then that information would only 
be released on a need to know basis. In accordance with Transportation 
Security Administration (TSA) rules, the individual to whom the FMSC is 
disclosing Sensitive Security Information would need to have completed 
a ``Non-Disclosure Agreement'' prior to the information being released.

    Question 4.: What will the Coast Guard having interagency 
operational centers do to increase our nation's security that isn't 
already occurring at our ports? What specific gaps in port security 
will these centers address?
    Response: While there is currently a great deal of coordination and 
interaction between the Coast Guard and our port partners through the 
various Area Committees and Area Maritime Security Committees, the 
level of visibility and ability to monitor the wide range of port 
activities must be improved to elevate the level of maritime domain 
awareness in seaports. Interagency Operations Center (IOC) capability 
will address these gaps by establishing integrated operational 
protocols and business practices, and facilitating greater information-
sharing among state, local and Federal port partners. The robust 
information-sharing, increased maritime domain awareness and 
operational coordination capability provided by IOCs will allow more 
effective all-hazards preparedness and response through efficient 
allocation and coordination of resources across the entire spectrum of 
port partner capabilities.

    Question 5.: While Operation SeaHawk in Charleston is one of the 
most advanced of interagency operations centers, the Department of 
Justice does not have plans to continue funding it. What are the plans 
for the future of Operation SeaHawk
    Response: The Department of Homeland Security and the Department of 
Justice are working on transition options including identification of 
resource requirements, port partner participation and a projected 
timeline. Although no specific transition details have been developed 
at this time, the Department of Justice is not requesting funding for 
Seahawk. However, sufficient funds remain from the original 
appropriation of $27 million to continue the project through FY 2009.

    Question 6: Per Section 108 of the Safe Port Act, the Secretary was 
directed to establish interagency operational centers for port security 
within three years of enactment of the Act. What progress has been made 
towards identifying relevant capabilities and solutions, many of which 
exist today within industry, to meet this requirement?
    Response: The Coast Guard has partnered with DHS Science and 
Technology (S&T) to conduct several pilots designed to inform operating 
requirements development and identify commercially-available 
technologies that will close critical capability gaps in Command and 
Control (C2), Information Management (IM) and Situational Awareness 
(SA). Pilot programs currently underway include the Visualization Tools 
pilot which is contracted to Mariner Group and installed in Sector 
Miami; Automated Scene Understanding (ASU) which is contracted to BAE 
Systems and installed at Sector Hampton Roads; and the Hawkeye System 
which is contracted to Northrop Grumman and installed in six Coast 
Guard Sector Command Centers.

    Question 7.: While additional funding has yet to be provided for 
joint operation centers, it is important for the U.S. Coast Guard to 
work closely with ports to design these centers in a way that is 
compatible with port authority operation centers. How does Coast Guard 
plan to coordinate and evaluate the design and operational requirements 
of these design centers once funding is made available?
    Response: The Coast Guard has a close working relationship with our 
port partners through the Area Maritime Security Committee (AMSC). 
Using input from the AMSC and informed by daily interactions with other 
port authorities, the Coast Guard will identify functional 
requirements, and through the Coast Guard's Facilities Design and 
Construction Center (FDCC), will develop design specifications that 
meet the unique needs of each port.

    Question 8.: Given available resources, to what extent will CG 
perform inspections at each ISPS regulated facility? How will the Coast 
Guard determine which facilities are inspected?
    Response: The Maritime Transportation Security Act of 2002 (MTSA) 
required the Secretary to ``assess the effectiveness of the 
antiterrorism measures maintained. . .at a foreign port [that trades 
with the United States].'' To implement this requirement, the Coast 
Guard has created the International Port Security Program. Because it 
is not practical to visit every facility of every country that trades 
with the United States, the program is designed to evaluate the 
country's implementation of the International Ship and Port Facility 
Security (ISPS) Code by visiting a representative sample of large, 
medium, and small ISPS-Code regulated facilities that reflect trading 
patterns of the country with the U.S. Government. The size of the 
sample varies with the country's size, results of the first assessment 
conducted, and risk factors such as the presence or absence of good 
governance indicators. In drafting the list of facilities to be 
visited, the Coast Guard places an emphasis on visiting those 
facilities that have direct trade with the U.S. Government.

    Question 9.: Does the Coast Guard have enough fully trained and 
experienced personnel to effectively complete visits to facilities in 
approximately 150 countries by March 2008?
    Response: Yes. The FY 2007 Department of Homeland Security 
Appropriations Act funded an additional 32 billets for the 
International Port Security (IPS) Program. The IPS Program is 
incorporating additional training opportunities for these new personnel 
to help bridge the initial training and experience gap. The increase in 
personnel will allow the IPS Program to complete visits to all of the 
United States' trading partners (approximately 150 countries) by March 
2008.

    Question 10.: Based on visiting countries (in most cases) only once 
every two years, how confident is the Coast Guard that facilities in 
ISPS-signatories are maintaining compliance with ISPS?
    Response: In addition to the formal country visits, the 
International Port Security (IPS) Program's International Port Security 
Liaison Officers (IPSLOs) make annual visits to the countries in their 
respective portfolios and serve as the point of contact to maintain a 
continuous dialogue on port security issues. The IPS Program also culls 
information from other sources and continues to seek out additional 
information to provide an awareness of the International Ship and Port 
Facility Security (ISPS) Code implementation at facilities in ISPS Code 
signatory countries. These additional actions to monitor and engage 
with countries outside of the formal country visits equip the IPS 
Program to evaluate whether countries are maintaining compliance with 
the ISPS Code.

    Question 11.: What are Coast Guard personnel finding during visits 
to facilities in other countries?
    Response: Most countries and ports are eager to showcase their port 
security practices and International Ship and Port Facility Security 
(ISPS) Code implementation. In many countries, the Coast Guard finds 
physical security is usually adequate. The most frequent areas of major 
non-compliance observed are access control measures, drills and 
exercises, and training programs. Additionally, maintaining compliance 
with the ISPS Code can be a challenge for some countries due to 
associated implementation expenses or not having an adequate auditing 
capability at the national level.

    Question 12.: What has Coast Guard determined will be the impact of 
rotation length for International Port Security Program personnel, 
given the training and experience needed for effective observations of 
facility security during country visits
    Response: There is no particularly unique challenge being faced 
beyond training issues that affect the Coast Guard in general during 
the normal rotation process. There are sufficient program personnel to 
accommodate regular rotations while maintaining appropriate competency 
levels. Additionally, the International Port Security Program has 
increased the number of its civil service personnel to maintain 
continuity and experience during military rotations.

    Question 13.: Has the Coast Guard established the Port Security 
Training and Exercise Programs required by the SAFE Port Act? It is our 
understanding that port workers still lack the necessary training.
    Response: The Coast Guard sponsors the Area Maritime Security 
Training and Exercise Program, and assists the Transportation Security 
Agency (TSA) with their port security exercise program. In 2006, the CG 
and TSA collectively sponsored 53 port security exercises.
    The Coast Guard is also supporting the Federal Emergency Management 
Agency (FEMA) National Preparedness Directorate's National Integration 
Center (formerly known as the Office of Grants and Training Division), 
through training and exercise integration, to implement additional SAFE 
Port Act training requirements. Notably, the Office of Grants and 
Training has awarded a $6.18 million Cooperative grant to Florida State 
University to develop courses meeting Maritime Transportation Security 
Act (MTSA) of 2002 requirements, and covering the eight port security-
related topics required under the SAFE Port Act.
    Additionally, the Coast Guard is currently working on a regulatory 
project that would propose to revise the security training regulations 
for facility personnel to ensure all training is measured against a 
standard of competence, including the topics required under the SAFE 
Port Act. The Coast Guard is also working with the Maritime 
Administration to revise the existing model courses for facility 
personnel in order to meet the requirements in Section 109 of the MTSA 
and SAFE Port Act.

    Question 14.: What steps has the Coast Guard taken to ensure that 
port workers are active participants in the Area Maritime Security 
Exercises?
    Response: All of the Area Maritime Security Exercises include 
members of the Area Maritime Security Committee (AMSC), which typically 
include the security officers from private industry. These security 
officers participate in the planning of exercises, which increases 
awareness and participation, and take the lessons-learned from the 
exercises back to educate their respective organizations. Additionally, 
the exercise sponsor sends out letters of invitation to the port 
community to further enhance participation.

    Question 15.: Please provide us with information on the number of 
live port security exercises as opposed to tabletop port security 
exercises conducted every year.
    Response: The table below outlines the number of live port security 
exercises as compared with tabletop port security exercises in recent 
fiscal years:


----------------------------------------------------------------------------------------------------------------
                                                                         Exercise Credit given for real world
       Fiscal Year                Tabletop                Live                        operation
----------------------------------------------------------------------------------------------------------------
            FY 2005                        34               18                                            0
----------------------------------------------------------------------------------------------------------------
            FY 2006                        44               13                                            4
----------------------------------------------------------------------------------------------------------------
            FY 2007                        37                8                                            3
----------------------------------------------------------------------------------------------------------------
              TOTAL                       115               39                                            7
----------------------------------------------------------------------------------------------------------------

    * Notes: Tabletop category includes Tabletop and Functional 
(Command Post) exercises. Source of data is the Coast Guard's 
Congressional Biannual Report on Port Security Exercises.

    Question 16.: Recently, the Department changed the way funds are 
distributed for Tier I and Tier II ports. While the Committee 
understands the interest in regional collaboration, explain why much of 
the financial oversight and paperwork requirements for distribution of 
these funds was moved from the Department to the fiduciary agent. What 
are the advantages and disadvantages of a fiduciary agent for this 
program and will it continue in the future?
    Response: The oversight and paperwork requirements have not been 
moved from the Department to the Fiduciary Agent (FA). The oversight 
and paperwork requirements of the FA are the same as any grant award 
recipient. The difference is that the FA represents the interest of the 
entire port area, through the Area Maritime Security Committee, rather 
than an individual entity's interest.
    In order to support strategic, regional port-wide risk management 
and business continuity planning processes and then have funds applied 
against the highest priority requirements based on the plan, the 
Department opted to award Port Security Grant Program funds to a FA to 
provide funding to a single point of contact for the grant award. The 
process allows for individual entities in a port area to cooperate with 
each other for funding rather than compete against each other.
    The choice of the FA was left up to the Area Maritime Security 
Committee and had to be verified by the Coast Guard.

    Question 17.: FEMA's guidance on grants is that they cannot benefit 
a federal agency. Many ports would like to share their camera feeds 
with Coast Guard. Can ports share their information gained through 
equipment purchased through the Port Security Grant program with Coast 
Guard on an ongoing basis in order to promote interoperative 
communications? What limits are placed on this cooperation?
    Response: The guidance stipulates that ``projects in which federal 
agencies are the primary beneficiary or that enhance federal property'' 
are ineligible for award consideration. Another federal agency cannot 
be the recipient of another federal agency's grants, since this would 
be an augmentation of appropriations by the receiving agency. However, 
information sharing and interoperable communications are allowable with 
equipment purchased through the Port Security Grant Programs.

    Question 18.: The largest port security costs to ports in the 
coming years relates to personnel costs and operation and maintenance 
of equipment, much of which was installed with the help of the Port 
Security Grant program. The Maritime Transportation Security Act allows 
grants to pay for operations and maintenance. Will the Department allow 
for projects that relate to the operation and maintenance costs of 
already installed equipment? What are the limitations? What about 
replacement equipment?
    Response: The Port Security Grant Program guidance allows for 
limited operations and maintenance costs, specifically the cost of 
acquisition, operation, and maintenance of security equipment or 
facilities to be used for security monitoring and recording, security 
gates and fencing, marine barriers for designated security zones, 
security-related lighting systems remote surveillance, concealed video 
systems, security vessels, and other security-related infrastructure or 
equipment that contributes to the overall security of passengers, 
cargo, or crewmembers. In addition, routine maintenance costs for 
security monitoring, such as the cost of tapes for recording, are 
allowable. However, business operations and maintenance costs, such as 
personnel costs and items generally characterized as indirect or 
``overhead'' costs, are unallowable.
    (While personnel costs are allowable under MTSA, subsequent 
congressional actions--FY 2007 DHS Appropriations Act - have 
specifically excluded personnel costs as allowable.)

    Question 19.: Given the uncertainties of whether a man-made or 
natural disaster might strike next, what should be the current focus of 
efforts to ensure ports are prepared to respond and recover from a 
terrorist attack or natural disaster?
    Response: Ports should be preparing for both man-made and natural 
disasters. To prepare for both types of events the Port Security Grant 
Program has evolved from a program primarily focused on the security of 
individual facilities within ports, to a port-wide risk management/
mitigation and continuity-of-operations/resumption-of-trade program 
that is fully integrated into the broader regional planning construct, 
which forms the core of the Urban Area Security Initiative, as well as 
applicable statewide initiatives.

    Question 20.: The Department recently conducted TOPOFF IV in 
Portland, including some maritime venues. What is being learned from 
recently conducted exercises at our ports, and how can one be sure 
these lessons are incorporated in planning and response efforts?
    Response: Results of the Coast Guard's Port Security Exercises have 
been reported to Congress biannually since October 2005. The latest 
report was signed and forwarded on July 26, 2007. The report outlines 
the following themes:
         The linkage and coordination of Area Maritime Security 
        Plans (AMSP) to other relevant plans, along with updating plans 
        with current information, continues to challenge efficient 
        AMSPs implementation.
         The need for improved interoperable communications and 
        situational awareness tools.
         Some lack of familiarity with the National Incident 
        Management (NIMS)/ Incident Command System (ICS), AMSPs, and 
        the associated roles and responsibilities of port partners.
    In May 2006, the Coast Guard implemented the Remedial Action 
Management Program (RAMP) as a module in the Coast Guard Contingency 
Preparedness System (CPS). This program established procedures and 
processes for identifying, validating, assigning remediation 
responsibilities and monitoring the remediation of challenges 
identified during exercises. Additionally, results of the Biannual Port 
Security Report have been forwarded to the Coast Guard's AMSP program 
manager for review and consideration by its AMSP working group during 
AMSP revisions.

    Question 21.: What has Coast Guard determined will be the impact of 
reducing the rotation length for facility inspectors, given the 
training and experience needed for effective facility oversight? What 
information was this assessment based on?
    Response: The Coast Guard anticipates no impact from the change in 
rotation length. There are currently 389 qualified facility security 
inspectors in billets and more than 80 members with the qualification 
but not working in inspector positions who can be rotated into units as 
other members are rotated out. Additionally, the training for the 
facility security inspector qualification is being refined and will be 
provided to more members, further increasing the pool of qualified 
individuals to be rotated through the security inspector positions.

    Question 22.: To what degree is the Coast Guard confident that 
resources would be available to handle heightened MARSEC level 
requirements if the level were raised for (a) a single sector, (b) 
several sectors, or (c) nationwide?
    Response: The Coast Guard is confident that resources would be 
available to handle heightened MARSEC level requirements whether the 
level is raised for a single Sector, several Sectors, or nationwide. 
The Coast Guard's confidence is based on the combination of several 
measures and/or provisions that are already in place within the 
Operation Neptune Shield (ONS) Operations Order (OPORD), which 
promulgates Coast Guard-wide guidance and standards for conducting 
maritime security and response operations.
    It is important to note that from the Coast Guard's planning 
perspective; only MARSEC 1 is expected to be sustained indefinitely. 
The Coast Guard has always envisioned that elevated MARSEC levels (2 
and 3) would be sustained for relatively short periods of time (the 
specific sustainment requirements contained in the ONS OPORD are 
classified), and that MARSEC 3 would be focused on one or a few 
specific Sectors or geographic areas (MARSEC 3 is set only when an 
attack is deemed imminent or has already occurred).
    In responding to a maritime security threat, the Coast Guard 
employs threat-based, risk-managed principles, matching protective/
preventative efforts to the threat's nature (i.e., attack method, 
target, etc.). By using these principles, the Coast Guard implements 
MARSEC level increases that are focused on a single or few Sectors or, 
if nationwide, only on the targeted type of maritime critical 
infrastructure and key resources (e.g., maritime mass transit--ferries 
or vessels carrying Certain Dangerous Cargoes). The Coast Guard 
leverages the support of other government agencies and ensures that 
maritime industry stakeholders have increased their security efforts in 
accordance with their Coast Guard-approved facility and vessel security 
plans. Coast Guard Sector Commanders carrying out the operational 
security measures dictated by increased MARSEC levels may request 
additional resources, i.e., deployable specialized forces, from the 
Deployable Operations Group via their Area Commander. Boarding teams, 
vessel escort assets, and other resources may be dispatched from 
Maritime Safety and Security Teams or at the high end level from the 
Maritime Security Response Team. Finally, when MARSEC 2 or 3 is 
imposed, the ONS OPORD pre-authorizes Area Commanders to temporarily 
adjust the level of effort in other Coast Guard missions, as necessary 
in order to make additional resources available to the Ports, 
Waterways, and Coastal Security missions.

    Question 23.: With the supplemental funding to the USCG providing 
for additional facility inspectors, will the USCG have enough fully 
trained and experienced inspectors for effective facility oversight?
    Response: Yes, the Coast Guard has sufficient personnel with the 
necessary qualifications to exercise effective oversight of the 
regulated facilities in the United States. We currently have 389 
facility security inspectors in place to meet the compliance check 
requirements with an approximately 80 more to rotate into those billets 
as others rotate out. During calendar year 2007, the complement of 
facility security inspectors performed in excess of 9,000 compliance 
checks, including both annual inspections and spot checks, of our 
approximately 3,200 regulated maritime facilities.

    Question 24.: Given available resources, to what extent will Coast 
Guard perform 2 inspections (at least 1 unannounced) at each MTSA-
regulated facility? If resources do not allow CG to perform unannounced 
inspections at all facilities, how will CG determine which facilities 
to inspect?
    Response: The Coast Guard currently has 389 facility security 
inspectors in place and has performed in excess of 9,000 facility 
inspections, both announced annual exams and unannounced spot checks, 
of our 3,200 regulated facilities during calendar year 2007. As such, 
there has been no need to make determinations of which maritime 
facilities to leave out of the inspection cycle.

    Question 25.: Based on one announced annual exam and one 
unannounced spot check, how confident is the US Coast Guard that MTSA-
regulated facilities are maintaining compliance with MTSA?
    What are Coast Guard facility inspectors finding during facility 
inspections?
    Are Coast Guard facility inspectors finding greater non-compliance 
during unannounced vs. announced inspections? If so, why aren't all 
inspections unannounced?
    Response: The Coast Guard is confident that U.S. maritime 
facilities are maintaining substantial compliance with the regulations 
and their approved Facility Security Plans based on one announced 
annual exam and one unannounced spot check each year.
    Inspectors are finding the majority of non-compliance issues center 
on access control, monitoring, and training of facility personnel. In 
general, these tend to be easily corrected.
    The Coast Guard finds more instances of non-compliance through the 
announced annual exam than through unannounced spot checks. The reason 
being the annual exam is much more thorough, covering all facets of the 
Facility Security Plan, and provides greater opportunity to closely 
review records, etc. The unannounced spot check, while useful, is more 
limited in scope and intensity.

    Question 26.: When is the Coast Guard going to finalize the 
International Seafarer Identification regulation? This regulation was 
originally required five years ago and I do not understand why it has 
taken so long for the Department to complete it.
    Response: Prior to the enactment of the SAFE Port Act of 2006, 
Coast Guard action on the rulemaking project to implement crewmember ID 
requirements of 46 USC 70111(a)(b) was suspended awaiting the results 
of the Tripartite Advisory Panel on International Labor Standards 
(TAPILS) consideration of the International Labor Organi section 110 of 
the SAFE Port Act independently of whether the United States Government 
zation ``Seafarers Identify Document Convention'' (ILO 185) as well as 
a decision on whether the United States Government would ratify the 
Convention. The Coast Guard is now proceeding with a rulemaking titled 
``Crewmember Identification Documents'' to fulfill the requirements of 
section 110 of the SAFE Port Act independently of whether the United 
States Government ultimately ratifies ILO 185, and will complete it as 
expeditiously as possible.

Questions From the Honorable Bennie G. Thompson, Chairman, Committee on 
                           Homeland Security

                    Responses from Thomas Winkowski

    Question 1.: One of the primary goals of the Safe Port Act is the 
improvement of risk targeting for maritime cargo containers inbound to 
U.S. ports from overseas locations. Sec 203 of the Act provides the 
authority for enhancing data for risk targeting to provide this layer 
of security to address the maritime cargo security vulnerability that 
we continue to face as a Nation. I understand that the Department is 
has been developing an initiative for the past year known as 10+2 which 
will meet this requirement.
    What is the status of the initiative?
    When is it going to be finalized?
    Why has it taken over a year to develop?
    Response: The Security Filing (10+2) Notice of Proposed Rule Making 
(NPRM) was published in the Federal Register on January 2,2008, at 73 
FR 90. The 60-day public comment period for the proposed rule ends on 
March 3,2008. During this comment period, any and all interested 
parties are invited to submit comments on the proposal. CBP will 
consider all comments received during the comment period in development 
of the Final Rule. The Final Rule is subject to review by the Office of 
Management and Budget and must be approved by the Secretary, DHS.
    CBP worked in close concert with the trade community, and the 
Commercial Operations Advisory Committee (COAC) in particular, to 
develop the current targeting enhancement proposal known as the 
``10+2'' initiative. While preliminary discussions had been ongoing 
prior to enactment of the SAFE Port Act in October 2006, CBP commenced 
its formal discussions with COAC in November 2006, and completed the 
consultation process in February 2007. This joint effort produced over 
30 recommendations for consideration as it refined the initial ``10+2'' 
proposal that forms the basis for the draft Notice of Proposed Rule-
Making (NPRM).
    The ability of CBP and the trade community to produce such an 
important proposal in a short time is a tribute to the cooperative 
relationship between the agency and its stakeholders. It is especially 
remarkable, given the complexity of the issues under consideration and 
the variety of interests (carriers, customs brokers, freight 
forwarders, and importers) represented.

    Question 2.: I also understand that the Department has developed a 
Global Trade Exchange (GTX) initiative to provide deeper risk 
assessment on containers for importers who volunteer to share data on 
inbound maritime cargo containers.
    What is the status of GTX?
    What role has industry played in developing this new initiative? 
It's my understanding that Department has deliberately limited industry 
input and that industry representatives do not support it.
    Response: On December 11,2007, CBP issued a Request for Quotation 
(RFQ) soliciting bid proposals from the vendor/contractor community for 
the development and implementation of the Global Trade Exchange (GTX). 
Specifically, the RFQ outlined the requirements for the development of 
a privately operated, self-sustaining trade information system that 
will collect commercial transaction data not currently available to CBP 
from parties in the supply chain who have contracted or provided 
services for the of international shipments. The system, furthermore, 
will allow government and trade community participants to input and 
access trade data through an information broker. When combined with 
existing CBP tools, GTX will allow CBP to identify and target suspect 
shipments/transactions well in advance of a shipment's entry into a 
supply chain.
    Vendor proposals (due by January 22,2008) have been received by CBP 
and are currently under review by a Technical Evaluation Working Group. 
The review process will be completed within the next 30 to 45 days. 
Advancement of GTX will be based on the review results and 
recommendations produced by the Technical Evaluation Working Group.
    It is important to note that the issuance of the is the first step 
in a process that will culminate in the implementation of a GTX pilot 
program specifically designed to test the GTX concept, establish 
requirements, and identify issues. Therefore, we believe that GTX 
should be viewed as a developmental process through which CBP, private 
sector vendors, and the trade community will develop an advanced, 
forward-thinking cargo data warehouse.

    Question 3.: How has CBP fostered cooperation with international 
organizations and foreign governments to maximize the benefit of the 
CSI program?
    How has CBP worked with international organizations and foreign 
governments implementing CSI related initiatives regarding global 
security standards and practices to improve maritime and container 
security?
    Response: CBP has utilized the CSI annual Global Targeting 
Conference and the activity of the World Customs Organization's 
Framework of Standards to maximize the benefits of the CSI Program.
    The annual CSI Global Targeting Conference held in Washington, DC, 
sponsored by CBP, brings together several hundred customs 
representatives from over 30 countries that participate in the CSI 
program to discuss ``best practices'' and the development of 
significant security protocols used in their respective countries and 
the deployment of large scale imaging devices. For, this year's 
conference, which was held in August 2007, CBP hosted 200 foreign 
customs and embassy officials as well as officials the Department of 
Energy, Department of State and Department of Homeland Security 
(including United States Coast Guard, CBP Representatives and 
Immigration and Customs Enforcement stationed in over 25 countries). 
During the conference, CBP Senior officials met with 34 Directors 
Delegates to discuss key issues and program concerns and identify 
opportunities for continued improvement.
    Because of these two forums, the utilization and capacity of non-
intrusive inspection (NII) equipment has increased globally.
    CBP's Office of International Affairs and Trade Relations (INATR) 
has taken a leading role in improving cargo security through the 
creation of the World Customs Organization (WCO) SAFE Framework of 
Standards. Guided by the SAFE Framework, CBP works with foreign 
governments to improve risk management procedures, increase use of 
intrusive inspection (NII) equipment, and encourage countries to 
exchange advance electronic information. This international cooperation 
ensures the security of cargo at every link in the supply chain, the 
SAFE Framework supports the CSI program. Related work has also been 
carried out with other international organizations such as the 
International Maritime Organization (IMO), the International 
Organization on Standardization (ISO) and the Organization for Security 
and Co-operation in Europe (OSCE).
    Through CBP's Capacity Building Branch within INATR, CBP is 
providing training and technical assistance to the customs 
administrations of a number of countries that currently participate in 
CSI, including Brazil, Honduras, the Dominican Republic, and South 
Africa. This training and technical assistance forms a long-term 
capacity building program to support implementation of the World 
Customs Organization Framework of Standards to Secure and Facilitate 
Global Trade. The standards incorporated in the Framework incorporate 
many of the key elements that support CSI, including: the advance 
electronic presentation of cargo information; the screening of cargo 
containers using non-intrusive inspection equipment; the use of 
automated risk management systems; the standardization of targeting 
criteria to identify high-risk cargo and containers; an emphasis on 
employee integrity programs; and the inspection of cargo in the country 
of origin, transit and destination.
    CBP's Training and Assistance Division of INATR currently provides 
a number of assistance and training programs to foreign customs and 
border security agencies to facilitate implementation of port security 
antiterrorism measures. Through its Capacity Building program in 
support of the World Customs Organization Framework of Standards to 
Secure and Facilitate Global Trade, CBP provides a long-term training 
and technical assistance program to partner with customs 
administrations that includes an depth assessment of its seaport 
security practices.

    Question 4.: How does CBP ensure that the number of staff located 
at CSI ports is appropriate and how has it systematically looked for 
efficiencies that may result from moving targeting operations to the 
U.S. so that resources are not kept at CSI seaports in perpetuity?
    Response: As part of CBP's evaluation process, CBP conducts annual 
evaluations of its CSI ports, concentrating in part on workload 
increases or decreases. CBP uses these findings to adjust resources at 
the U.S. National Targeting Center, Cargo (NTCC) and at overseas CSI 
ports, as appropriate.
    CBP has also reviewed General Accountability Office (GAO) reports 
that have identified shortages in human resources at some CSI ports and 
have agreed with and implemented the recommendation to augment CBP 
personnel at the NTCC to perform remote targeting for CSI in high 
volume ports.
    CBP will also use ``lessons learned'' from the Secure Freight 
Initiative (SFI) to determine the feasibility of remote targeting from 
the NTCC. CBP is considering technological solutions to possibly reduce 
CSI human resources deployed abroad while still ensuring that 
containers destined for the U.S. are examined for weapons of mass 
destruction.

    Question 5.: How does CBP ensure that all high risk containers 
identified at CSI seaports are inspected and that the inspections 
processes and equipment are sound and used effectively?
    Response: Host government officials have provided CBP with all 
relevant information about the equipment used for the inspection of 
containers. Based on this information, CBP has determined that the 
equipment used by host governments at CSI seaports is equal to or in 
some instances, more technologically advanced than the equipment used 
by CBP at its domestic ports. CBP officers are fully trained in the 
equipment being used by the host government and in the cases where CBP 
has provided NII equipment to the host government, the host government 
customs officers have been trained in the use of that equipment.
    Since its inception more than six years ago, the success of the CSI 
program can be attributed largely to the cooperation and collaboration 
the program fosters between the U.S. and its host government 
counterparts in examining high-risk containers that are referred to 
host government for inspection. To date, there has been no Weapon of 
Mass Destruction detected at a CSI port or on U.S. destined containers 
once they arrive in the U.S. CBP reexamines containers in the U.S. a 
result of its own Compliance Measurement program and sometimes as the 
result of policies that the local port authorities establish.

    Question 6.: How has CBP ensured that the seaports that it has 
selected for the CSI program--those receiving staff, equipment, and 
other U.S. resources-provide the greatest benefit for the program, and 
what are plans for managing future program participation, including how 
ports may be phased out of the program and others brought in?
    Response: CBP conducts yearly evaluations of its CSI ports and, as 
part of that evaluation process, reviews the workload and whether it 
has increased or decreased. The evaluation process also examines the 
CSI team's interaction with the host government counterparts and how 
that relationship is working. Since the CSI program is essentially a 
partnership between the U.S. and the host government, effective 
communication is very important to its success. With each evaluation of 
a CSI port, CBP will continue to use these CSI port evaluations and the 
increase in port efficiency in jointly targeting high-risk containers 
with host government counterparts to determine if any shift of 
resources to either the NTCC or another CSI port needing additional 
resources, is required. For those CSI ports that were provided with 
loaner NII equipment, CBP receives daily reports on usage of the NII 
equipment and the usage and downtime is tracked on a daily basis.

    Question 7.: Should CSI be expanded beyond the 58 ports currently 
planned for the program? If so, to what extent is planning underway to 
account for this, such as redeployment of staff to additional ports?
    Response: The focus is currently on determining the feasibility of 
100% scanning required by the SAFE Port Act. Therefore, CBP is holding 
off on future expansion of CSI until after the agency reports to 
Congress in April on the feasibility of 100% scanning based on the 
results of the Secured Freight Initiative (SFI) pilot.
    However, it should be noted that CSI was never intended to cover 
100% of maritime cargo destined to the U.S. CBP relies on a risk 
management approach with a continued focus on identifying and 
inspecting 100 percent of those shipments that have been designated as 
high-risk, and increasing DHS' ability to scan cargo for the presence 
of nuclear or radiological material. CBP's goal is to continue to 
inspect 100 percent of all high-risk shipments. As part of this risk 
management strategy, CBP uses a multi-layered approach to ensure the 
integrity of the supply chain from the point of stuffing through 
arrival at a U.S. port of entry. CBP's multi-layered defense includes:
         24-Hour Rule: Under this requirement, manifest 
        information must be provided to CBP 24 hours prior to a U.S. 
        destined sea container being loaded onto a vessel at a foreign 
        port.
         Screening and Inspection: CBP screens 100 percent of 
        all cargo before it arrives in the U.S. using intelligence and 
        cutting edge technologies, and inspects all high-risk cargo. 
        CBP may deny the loading of high-risk cargo while the vessel is 
        still overseas.
         CSI: Enables CBP, in working with host government 
        customs services, to examine high-risk maritime containerized 
        cargo at foreign seaports, before they are loaded on board 
        vessels destined for the U.S. CSI ports are operational in 58 
        ports covering 86 percent of maritime containerized cargo 
        shipped to the U.S.
         C-TPAT (Customs Trade Partnership Against Terrorism): 
        CBP created a public-private and international partnership 
        businesses know as the Trade Partnership Against Terrorism (C-
        TPAT),'' that includes most of the largest U.S. importers. 
        Through C-TPAT, CBP and partner companies are working together 
        to improve baseline security standards for supply chain and 
        container security.

    Question 8.: According to GAO, CBP faces difficulties in recruiting 
qualified staff for CSI and in some instances has deployed personnel 
overseas without the requisite training. How does the agency plan to 
address these challenges?
    Response: As with any expanding program, CBP has had challenges in 
recruiting staff for CSI. However, CBP has followed recommendation lead 
is in addressing these challenges by moving some of the targeting 
duties to NTCC and establishing minimum staffing levels at hard to fill 
ports, thus not impacting CSI operations of screening and targeting 
high-risk shipments for terrorism. CBP Officers that did not receive 
the requisite formalized training prior to being deployed were placed 
in a location that had a highly experienced officer that provided on-
the-job training. This lack of formalized training did not have a 
negative impact on port operations as reported by the CSID team that 
conducted the port evaluation. It should be noted that once the office 
was fully staffed, those individuals were returned for formalized 
training.

    Question 9.: Legal restrictions in several host countries bar CSI 
teams from viewing examinations conducted by host customs authorities 
and these containers are rarely re-examined upon arrival in the U.S. 
Does it make sense to have CSI teams in such countries when we do not 
participate in the inspections?
    Response: Of the 32 countries where CSI is operational, there is 
only one country that does not allow CBP personnel inside the x-ray 
examination vehicle. However, this country provides CBP with a copy of 
the x-ray image and, together with the information obtained through our 
own targeting analysis and information provided our host government 
counterpart, we are able to make a sound determination of whether a 
container poses a risk for terrorism. What is important here is that 
face-to-face communication goes very far. By having CBP Officers 
stationed in-country, we are able to build and establish clear 
communication channels that were not in existence prior to this 
initiative. CBP has placed experienced officers that have been trained 
in targeting analysis and image interpretation. If these officers are 
not comfortable with the examination process, there are protocols in 
place. The CBP Officer can request a ``hold'' for domestic examination 
or call the NTCC to issue a ``Do Not Load'' order.
    CSI is now operational in 58 foreign seaports covering 
approximately 86% of maritime containerized cargo destined to the U.S. 
The success of this program is attributed to the cooperation and 
collaboration of our foreign partners. To date, there have been no 
Weapons of Mass Destruction detected at the CSI ports or on containers 
that have been reexamined when arriving in the U.S. because of own 
Compliance Measurement program and local port policies.

    Question 10.: Although recommended by GAO and the SAFE Port Act, 
minimum technical operating standards for non-intrusive inspection 
equipment at CSI ports have yet to be established. Without such 
standards, what assurances does our nation have that this equipment is 
capable of detecting weapons of mass destruction within high-risk 
containers?
    Response: CBP has taken steps of achieving uniform standards 
through the World Customs Organization (WCO). The CSI program has been 
in operation for over five years, and can attribute its largely to the 
cooperation and collaboration that the program fosters between the U.S. 
and its host government counterparts in examining high-risk containers 
that the U.S. refers to the host government for inspection. To date, 
there has been no Weapon of Mass Destruction detected at a CSI port or 
on containers that have been reexamined when arriving in the U.S. 
Reexamination occurs at a U.S. port due to own Compliance Measurement 
program and as a result of local port policies. Additionally, CBP the 
installation of Non-Intrusive Inspection equipment in 13 CSI ports; all 
such equipment meets the established standard for U.S. deployed NII in 
at domestic ports.
    Recognizing that a nation's sovereignty is critical and that CBP is 
not a standard setting agency, we will continue to work with the World 
Customs Organization (WCO) through its Safe Framework of Standards to 
address a uniform customs process and technical standards for equipment 
to ensure that the examination process of cargo and equipment used as 
part of the process is one that is uniform throughout the world.

    Question 11.: CSI has entered into an arrangement with New Zealand 
whereby containers bound for the U.S. are scanned and the resultant 
images beamed directly to National Targeting Center for review. Does 
this system constitute a model that could be expanded to other 
countries?
    Response: The New Zealand project is unique in many ways. The 
similarity with CSI partners is that New Zealand must meet the 
requirements established under CSI. The uniqueness is that like the 
U.S., New Zealand has a national targeting center with 24x7 operations. 
New Zealand also has a 48-hour rule (the U.S. has a 24-hour rule) that 
requires shippers to provide all of the data requested by CBP. New 
Zealand is also a trusted partner and the majority of the shipments 
arriving into the U.S. are low-risk for terrorism. Moreover, New 
Zealand has similar NII equipment which, through the use of special 
software, allows CBP Officers at the NTCC to manipulate the image. This 
software can only interpret Smiths HCV units. Along with the software, 
there is a special key (aka dongles) which allows only certain 
workstations to view the images. We currently have 3 workstations at 
the NTCC with these special keys.
    Also crucial to this operation is that New Zealand the limited 
amount of time (20 minutes) that each country has to respond to the 
other's request to determine the potential risk of a shipment. This is 
a mutually agreed upon time limit that was established with the 
objective of ensuring the expeditious movement of low risk cargo 
through the international supply chain.
    This pilot program did not come without challenges. As the file 
size of the images average about 11MB, which is too large for any CBP 
mail account (images were previously sent via the Office of Information 
Technology (OIT) had to create a special mailbox that is capable of 
receiving files of this size.
    CBP has also tried to test the same concept with another trusted 
partner with shipments that are low-risk to terrorism. Unlike New 
Zealand the other trusted partner being considered does not have a 
national targeting center, has no 24 or 48-hour rule and, does not have 
NII equipment that will allow the NTCC to manipulate the x-ray image. 
For this particular NII equipment, CBP is unable to obtain a license 
for the special software that is required to view and manipulate the x-
ray image. Also, the other trusted partner's customs service has had 
difficulty providing timely information on specific containers, which 
has resulted in required information being delayed for 16 hours. With 
such a delay, often times a container of interest would have already 
been laden upon the vessel and unavailable for examination.

    Question 12.: Provisions in Sec 216 of the SAFE Port Act call for 
benefits to participants in the C-TPAT program who demonstrate a 
sustained commitment to cargo container security. Among the criteria 
for Tier 3 C-TPAT recognition is submission of additional cargo 
information prior to loading of the container. What does CBP plan to do 
to more fully define the incentives that would encourage private sector 
provision of this data that in turnwould permit more targeted and 
accurate risk assessment of inbound cargo containers?
    What's the status of additional benefits for C-TPAT members, 
especially Tier III participants?
    Response: The C-TPAT program continues to evolve with respect to 
providing facilitation benefits to importer partners in return for 
proof of strong supply chains. C-TPAT believes that the current Tiered 
benefit structure that includes Tier 3 and the criteria determine such 
benefits provides importer partners with appropriate benefits for their 
level of supply chain security.
    As part of its layered enforcement strategy, CBP requires the 
submission of advanced manifest data for purposes of targeting high 
risk shipments. The trade benefits from the submission of advanced data 
in that, if entries are filed timely, the. goods can be cleared in 
advance of arrival as well as allow for more efficient shipping and 
inventory data.
    C-TPAT will continue to examine the Tier benefit structure in an 
effort to ensure that the program is addressing the needs of its 
current and future membership as well as the needs of CBP.
    As of December 14,2007,232 C-TPAT importer partners were receiving 
TIER benefits.

    Question 13.: How does CBP assess effectiveness--in terms of 
outcome-based performance measures--and that the tax resources expended 
are providing the level of security promised by the program?
    Response: C-TPAT has updated its five-year strategic plan and 
developed several performance indicators, which will be used to measure 
the effectiveness of the program. For example, C-TPAT measures program 
performance based on SAFE Port Act mandated goals such as reviewing 
newly submitted security profiles within 90 days, ensuring that initial 
validations occur within 1 year, and that revalidations occur within 3 
years.
    The program also measures its success against internal goals such 
as completing a specific number of validations and revalidations each 
year, as defined by the C-TPAT annual plan. The C-TPAT program also 
ensures that all expenditures, including travel, equipment, and 
salaries are properly monitored by supervision and adhere to normal 
budgetary controls.
    The success of the C-TPAT program was validated by recent a study 
conducted on behalf of CBP by the University of Virginia. More than 
1,700 member companies chose to participate, with over half being U.S. 
importers and some of the nation's largest retailers. The study 
demonstrates the effectiveness of C-TPAT in causing thousands of 
companies to give closer scrutiny to the security of the goods they 
handle and ensuring that their overseas suppliers have implemented 
sound security practices. C-TPAT will undertake future studies of this 
sort to continue to assess the program's effectiveness.

    Question 14.: After initial validation of the security measures in 
member companies' security profiles, how are security changes monitored 
and validated for continued adherence to C-TPAT security requirements?
    Response: C-TPAT utilizes a variety of strategies to monitor 
compliance with the program. As mandated by the SAFE Port Act, all C-
TPAT participants must be revalidated within 3 years of their original 
validation. Due to risk, the C-TPAT program has determined that it is 
prudent to validate all Mexican Highway Carriers on an annual basis. C-
TPAT constantly reviews CBP seizure reports and where a member is 
involved in a security breech, C-TPAT immediately undertakes a Post 
Incident Analysis to determine if there was a systemic breakdown in the 
member's security procedures. Finally, all C-TPAT participants are 
required to conduct an annual self-assessment in which the member is 
asked to review, correct update its previously submitted security 
profile.

    Question 15.: What did it cost to develop the Validation Security 
Assessment Tool (VSAT), how is CBP using the VSAT in performing foreign 
supply chain validations, and what benefit is the C-TPAT program 
deriving from using VSAT? What reviews and analysis of VSAT is done by 
CBP supervisors and management to ensure it is being used right and 
producing results?
    Response: The final cost to develop the Validation Security 
Assessment Tool (VSAT) was included within the original C-TPAT IT 
operational budget and the specific cost is therefore estimated at 
around $5,000 USD.
    The Supply Chain Security Specialists (SCSS) are required to use 
the VSAT tool as part of the validation visits. The VSAT ensures that 
validations are uniform by using standard questions. The use of the 
VSAT does not preclude the SCSS from asking additional questions during 
the course of a validation, which allows the SCSS to get a complete and 
detailed snap shot of a company's overall supply chain security. Field 
Office Supervisors are required to perform random, quarterly audits of 
the VSAT data collected by SCSS to ensure information is complete, 
timely, and accurate.
    C-TPAT will consider ways to systematically analyze VSAT data 
moving forward.

    Question 16.: What other steps, if any, has CBP taken to reduce the 
risks that C-TPAT shipments that originate in or move through high risk 
countries will be tampered with on their journey to the U.S.? How would 
we even detect such tampering today? Are Tier 3 shipments from 
countries subject to a higher inspection rate than other Tier 3 
shipments? How much higher? Is that rate adequate to offset the risk of 
tampering en route?
    Response: CBP will continue to target and examine shipments based 
on risk. Shipments unknown or less established entities, and from 
higher risk countries, receive higher scrutiny from CBP. C-TPAT 
recognizes the complexity of international supply chains and requires 
C-TPAT members to implement security measures based upon risk. C-TPAT 
membership is one of several factors taken into account by CBP when 
determining which shipments will be referred for security inspection.
    C-TPAT's minimum security criteria require that all C-TPAT partners 
conduct business with enterprises that comply with that criteria 
resulting in less potential for tampering. C-TPAT importer partners 
commit to strengthen their entire supply chains and adopt appropriate 
security measures based on risk, and cannot exclude a particular 
segment of their supply chain from this commitment. Importers must 
ensure business partners develop security processes and procedures 
consistent with the CTPAT criteria to enhance the integrity of the 
shipment at point of origin, and throughout the supply chain. C-TPAT 
members periodically review their business partners' processes and 
facilities.
    One of the requirements for C-TPAT importers and sea carriers is 
that all containerized cargo must have a high security seal affixed to 
all loaded containers bound for the U.S. All seals used or distributed 
by the sea carrier must meet or exceed the current PAS 17712 standards 
for high security seals, and the seal number must be on all shipping 
documents.

    Question 17.: In the past, GAO has identified weaknesses C-TPAT's 
in validation process. What efforts has CBP made to correct these 
deficiencies? Is the current validation rocess rigorous enough to meet 
the intended purpose to ensure that companies are actually implementing 
their supply chain security plans?
    Response: C-TPAT has undertaken a pro-active approach to address 
potential weaknesses in the validation process that may have occurred 
since first implementation, by ensuring that the validation process is 
as complete and as rigorous as possible.
        1. As mandated by the SAFE Port Act, all C-TPAT participants 
        must be revalidated within 3 years of their original 
        validation. Due to risk, the C-TPAT program has determined that 
        it is prudent to validate all Mexican Highway Carriers on an 
        annual basis. Revalidations ensure companies are continuing to 
        assess their supply chain and addressing changing risk factors.
        2. The Validation Security Assessment Tool (VSAT) was 
        specifically designed to ensure uniformity in the validation 
        process. The VSAT is required to be used by all SCSS that 
        perform a foreign validation visit. The VSAT ensures that 
        validations are uniform by using standard questions; critical 
        security related questions are asked by all SCSS. The use of 
        the VSAT does not preclude the SCSS from asking additional 
        questions during the course of a validation, which allows the 
        SCSS to get a complete and detailed snap shot of a company's 
        overall supply chain security. Field Office Supervisors are 
        required to perform random, quarterly audits of the VSAT data 
        collected by SCSS to ensure information is complete, timely, 
        and accurate.
        3. Each SCSS receives initial training on the validation 
        process. In addition, C-TPAT conducts semi-annual training for 
        all SCSS and includes updated information on the validation 
        process.
        4. In ensuring its continued viability, effectiveness, and 
        relevance, the C-TPAT program continues to evolve as the 
        terrorist threat and the nature of global trade evolves. C-TPAT 
        implemented new security criteria to most trade sectors to 
        ensure companies are compliant with minimum security standards. 
        The impetus for strengthening security ``guidelines'' into 
        security ``criteria'' was to provide more detail to C-TPAT 
        members regarding the expectations of the program. The new 
        security criteria were also issued to assist CBP in defining a 
        more consistent baseline for minimal program requirements and 
        better-defined TPAT benefits.
        All validation reports outline the manner in which the 
        validated company is meeting the criteria, or failing to do so. 
        C-TPAT companies that fail to adhere to the C-TPAT standards, 
        as defined by the minimum security criteria, are either 
        suspended or removed from the program.
        5. C-TPAT recently issued a new Memorandum of Understanding 
        (MOU) for all members. The new MOU addresses the validation 
        process to ensure greater uniformity throughout all 
        validations.
        6. C-TPAT participants are reminded that part of their program 
        membership includes the need to perform an annual self-
        assessment. Participants are asked to review, correct update 
        their previously submitted security profile. Failure to do so 
        results in suspension or removal from the program.

    Question 18.: Despite the huge volume of Chinese imports entering 
the U.S. everyday, the Chinese government does not permit CBP to 
perform validations within its borders. How does the agency plan to 
adapt the C-TPAT program to capture this vital section of the supply 
chain?
    Response: Congress, through the SAFE Port Act, required C-TPAT to 
develop a third party validation pilot program to assess the 
feasibility of having non-government entities conduct validations on 
behalf of the program. As a result of this congressional mandate, CBP 
implemented a pilot program to use third parties to validate C-TPAT 
members operating in China. The Commercial Operations Advisory 
Committee officially approved the plan in February of 2007.
    C-TPAT identified 304 importer partners that have 75 percent or 
more of their supply chain in China and which are in Tier 1 status 
(certified), and invited each individually to participate in this pilot 
program. To date, 14 certified importer partners have elected to 
participate in the pilot. A third party China validation visit was 
completed in late November. At the conclusion of the pilot on May 1, 
2008, C-TPAT will prepare a report to Congress, which will include 
lessons learned.
    In an effort to allow SCSS to conduct validations in China, CBP and 
the Government of China (GOC) are currently developing a statement of 
cooperation regarding a joint validation pilot. A joint validation 
project is tentatively scheduled for March 10--21, 2008.

    Question 19.: Why has CBP not developed the container security 
device required by the SAFE Port Act? I have been briefed by numerous 
vendors and I know that the technology exists.
    What technology has CBP tested to validate its assertion that the 
technology does not exist?
    Response: On December 12,2007, CBP published A ``Request For 
Information, (RFI) Regarding Conveyance Security Devices'' on the 
FedBizOppa website. The announcement will be open for a sixty day 
period (from December 12,2007 to February 8,2008). The goal of this RFI 
is to identify currently available Conveyance Security Device (CSD) 
Systems. Once and CSD systems are provided to CBP by the vendor, they 
will be tested to determine whether the technology meets the minimum 
technical requirements outlined in the RFI. The testing will first be 
conducted in the laboratory, followed by operational testing.

    Question 20.: The SAFE Port Act called on the Department to conduct 
a one-year pilot program to assess the risk posed by, and improve the 
security of, empty containers at U.S. seaports. This pilot has not yet 
begun. When are you planning on starting it?
    Response: The 12-month empty sea container pilot program will 
commence on February 1,2008 and continue through January 31,2009.
    Question 21.: According to Philip Spayd in an August 27,2007 
article in the Journal of Commerce regarding the Recovery Plan mandated 
in the SAFE Port Act: ``many in the trade community anticipated an 
operational plan that would clearly set out the roles and 
responsibilities of government officials who would manage a trade 
security incident. What they received was a 128-page plan that would 
receive a high grade as a research project for a graduate school class 
in international logistics, but which lacks any operational 
grounding.'' What is your response to this critique?
    Response: The 128-page report referenced by Mr. Spayd is the 
Strategy to Enhance International Supply Chain Security (July 2007)--a 
strategic document. Operational planning is ongoing between CBP and the 
U.S. Coast Guard (USCG) to publish the CBP/USCG Joint Protocols for the 
Expeditious Recovery of Trade (Recovery Protocols). This operational-
level document would memorialize CBP and USCG roles and 
responsibilities for communicating and coordinating with government 
agencies and the trade community during a Maritime Transportation 
Security Incident. The Recovery Protocols is currently undergoing final 
review within both agencies. As part of the Recovery Protocols, two 
advisory groups will be formed with members of industry, the Carrier 
Support Group and the Trade Support Group, to ensure close coordination 
occurs on all trade recovery efforts.

    Question 22.: Section 201 of the SAFE Port Act required a Strategic 
Plan to Enhance the Security of the International Supply Chain. This 
plan was supposed to include protocols for the expeditious resumption 
of the flow of trade in the event of a transportation disruption or a 
transportation security incident. According to GAO, the Department did 
not achieve success with this plan. Secretary admitted this fact at an 
August 16, 2007 meeting of the Advisory Committee on Commercial 
Operations for U.S. Customs and Border Protection. He told COAC members 
that day that the final product ``not a detailed plan.''
    When is the Department going to produce a detailed plan?
    How much money did the Department spend on this less-than-
successful document?
    Response: The Strategic Plan provides overarching protocols for the 
prioritization of vessels and cargo, identifies incident management 
practices specific to trade resumption in support of the National 
Response Framework, and describes guidance for the redeployment of 
government resources and personnel. In doing so, the strategy 
recognizes that there exist many different types of incidents which 
might impact the supply chain, but that resumption itself is an ``all 
hazards'' requirement.
    The USCG and CBP are part of a joint Senior Guidance Team that is 
developing both tactical protocols for communications with the trade, 
and agency-specific plans for resumption activities. Further, in 
keeping with the Maritime Transportation and Security Act of 2002 
(MTSA), the Area Maritime Security Committees are in the process of 
developing resumption annexes to each of the Area Maritime Security 
Plans. These revisions to the area plans are being conducted within the 
timelines of the mandated review and update cycle, with completion 
scheduled for mid-2009.
    The Department expenses associated with this plan were principally 
in the area of staff resources. A writing team of approximately 30 
individuals from across the components and agencies worked on the 
document over the 270 days of its development. Some individuals 
contributed greater amounts of time, depending upon their 
organizational involvement in the subject matter. At the Department 
headquarters level, the project lead, who conducted the majority of the 
review, consolidation, and drafting work, was a U. S. Coast Guard 0--5 
detailee. An estimated 40% of his time over the development cycle was 
devoted to the project.

    Question 23.: It's my understanding the Customs and Border 
Protection advised the countries on what technology to purchase. How 
did CBP determine which technology to use?
    Response: CBP partners with the Department of Energy (DOE) to 
provide and procure the scanning equipment in most of the ports. DOE, 
through its Megaports Initiative, contributes the radiation detection 
equipment, optical character recognition (OCR) technology, and the 
communications system, as well as training and maintenance while CBP is 
responsible for the Non-Intrusive Imaging (NII) equipment. Both DOE and 
CBP work with host governments and terminal operators to ensure that 
the best available equipment is used to scan containers for radiation 
and capture images for analysis. Many factors affect what technology 
will be used including container volume, port operations, physical 
characteristics of the port, among other factors.

    Question 24.: CBP is currently testing advanced spectroscopic 
portals in New York. The testing on this testing won't be completed for 
several months. Despite this fact, the Department of Energy decided to 
purchase 12 of the portals--several of which will be placed in 
Southampton, England, one of the ports. Why did the US government 
purchase equipment that has not yet been vetted--isn't this a waste of 
money?
    Response: DOE is confident that Advanced Spectroscopic Portal (ASP) 
monitors will work effectively as a secondary inspection tool. DOE is 
currently evaluating an ASP at the Port of Southampton in the United 
Kingdom to help better define the most effective operational scenarios 
for secondary inspection. DOE will conduct additional operational 
evaluations at the Los Alamos National Laboratory in early 2008. At 
this time, DOE has no plans to deploy as a primary inspection tool, and 
has made no commitment to purchase any more units at this time.
    DOE believes that the ASP will improve secondary inspections for 
several reasons. First, the ASP is essentially a larger, stationary 
version of the handheld Radioactive Isotope Identification Device 
(RIID) currently used for secondary inspections. In contrast to the 
RIID, whose effectiveness is affected by the motivation and training of 
the user, the ASP makes the same scan every time. Second, the ASP 
detector array surrounds the cargo container, allowing it to view a 
radioactive source from multiple angles. The larger detector area also 
achieves statistical accuracy in the spectrum more quickly. Finally, 
the ASP uses air conditioning for temperature stabilization. The 
``gain'' of Sodium Iodine instruments, which is important to accurate 
identification, is temperature dependent. In contrast, the handheld 
RIID must be recalibrated when the temperature changes.

    Question 25.: The SAFE Port Act required CBP develop an evaluation 
plan to assess the results of the pilot program. What factors should be 
considered in this evaluation plan?
    Response: The SAFE Port Act requires the Department of Homeland 
Security (DHS), in conjunction with the Departments of Energy (DOE) and 
State (DOS), to submit a report to Congress six months after the first 
three pilot ports became fully operational. Southampton, United 
Kingdom; Qasim, Pakistan; and Cortes, Honduras, became operational on 
October 12,2007. In April 2008, DHS will submit a report to Congress on 
the lessons in these three ports as well as four additional, limited 
capacity ports: Korea, Hong Kong, Singapore, and Salalah, Oman. As data 
for the report is collected, the metrics for evaluation continues to be 
refined. Some examples of factors to be considered are: the effect on 
port operations; the reliability and performance of the equipment; and 
lessons learned during the negotiations with host governments.

                                Panel II

Questions from the Honorable Bennie G. Thompson, Chairman, Committee on 
                           Homeland Security

                    Responses from Mary K. Alexander

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January 3, 2008

The Honorable Bennie G. Thompson
Chairman, Homeland Security Committee
U.S. House of Representatives
Washington, DC 20515-6480

Dear Chairman Thompson:

    Thank you for granting me the opportunity to testify at the October 
30, 2007 hearing on the ``SAFE Port Act: Status of Implementation One 
Year Later.'' I appreciated the chance to provide the views of the 
Joint Industry Group (JIG), and I am happy to answer the follow-up 
questions you have posed. For ease of reference, the responses offered 
from JIG are listed directly after each of the questions asked below.

Cargo Security
    1. It is my understanding that the Department has been developing 
the 10+2 initiative for over a year. What has the Department told you 
about when it is going to be finalized?
    Response: The JIG membership was never given a specific date 
regarding publication of the ``10+2'' notice of proposed rulemaking 
(NPRM), but we were told DHS hoped to release it by the end of the 
year. The NPRM was finally published in the January 2, 2008 Federal 
Register. Industry has until March 3, 2008 to file comments. We do not 
know how long it will take DHS to finalize the rule after all of the 
comments are received.

    2. According to your written testimony, the Department has 
developed GTX behind closed doors. Why do you think they have limited 
industry input?
    Response: We simply do not know why industry input was so limited 
during the development of the RFQ for the Global Trade Exchange (GTX) 
initiative. DHS was extremely inclusive during the development of the 
``10+2'' initiative, and the trade community repeatedly expressed our 
gratitude for this collaboration. We do not understand why a similar 
course was not followed for GTX.
    3. Please provide us with information about the concerns you have 
with the GTX initiative.
    Response: Please see Attachment 1, which lists some of our primary 
concerns about GTX. These are comments we submitted to the Department 
of Homeland Security in August, and yet none of those issues were 
addressed prior to release of the RFQ.

Customs-Trade Partnership Against Terrorism

    4. What, if any, difference in inspection levels have JIG members 
experienced as a result of C-TPAT enrollment?
    Response: JIG members have slightly different viewpoints on the 
inspection levels they have experienced as a result of C-TPAT 
enrollment. Panasonic, for instance, has seen slightly fewer 
inspections with C-TPAT enrollment, but as a ``low risk'' customer, 
exam rates were low before September 11, 2001. As a group, however, our 
members have not reported significant decreases in inspection levels as 
a result of participating in C-TPAT. The only other tangible benefit 
has been access to FAST lanes for truckers on the northern and southern 
borders.
    In addition, we have been informed that inspections as a whole have 
increased in the last six years (which would explain why C-TPAT members 
have not observed a noticeable decline in inspection rates), but we 
have not heard of any significant rises in inspection levels for non-C-
TPAT members. In any case, it is hard to say whether security 
inspections have increased or decreased as a result of C-PTAT 
membership since many types of examinations exist and numerous factors 
contribute to the selection process. For instance, there are more 
contraband-enforcement exams along southern land borders. With this in 
mind, it is difficult to determine whether shifting inspection rates 
are related to security issues and C-TPAT membership.

    5. In your testimony, you state the benefits being offered to C-
TPAT participants continue to be elusive. What steps should CBP take to 
fix this problem?
    Response: CBP should work with the trade community, and 
specifically its C-TPAT partners, to identify additional benefits for 
C-TPAT participants. Similar to how CBP worked with C-TPAT participants 
in updating the minimum security requirements for each enrollment 
sector, it should do the same to identify new benefits as well. In 
terms of specific recommendations, JIG strongly endorses the 
negotiation of mutual recognition agreements for international security 
programs such as C-TPAT, as well as expanded recognition domestically 
between various government agencies. Additionally, C-TPAT needs to be 
seen as a viable, cost-effective program. CBP's own Cost-Benefit Survey 
showed that less than one-third of the respondents found benefits of C-
TPAT to equal or exceed the costs from the program. As security 
requirements continue to intersect with facilitation issues, CBP must 
work with its C-TPAT partners to develop tangible commercial benefits 
to C-TPAT membership.
Resumption of Trade 

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Attachment 1: JIG Letter to DHS Voicing Concerns about GTX 

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August 2, 2007

The Honorable Michael Chertoff
Secretary for Homeland Security
US Department of Homeland Security
Washington, DC 20528

Dear Secretary Chertoff:

    Over the past several years, the trade community has been pleased 
to be included as a partner in discussing, developing, and implementing 
numerous policies designed to improve homeland security. Including the 
private sector in policy development has produced programs that have 
been integrated into business practice without overly adverse effect.

    Today we note our serious reservations about the possible 
development of a third-party data warehouse, or what is referred to as 
the ``Global Trade Exchange.'' The development of this program, which 
is a highly complicated concept, will undoubtedly raise a number of 
issues related to commercial competitiveness and global security. For 
this reason, the international trade community must be consulted in the 
program's development before it or a pilot is instituted.

    The Joint Industry Group (JIG) is a coalition of importers, 
exporters, shippers, carriers, customhouse brokers, trade associations, 
service providers and law firms with an active involvement in global 
commerce. JIG frequently engages Congress and the Administration on a 
variety of international trade-related issues. We work particularly 
closely with Congress to promote international trade policy that 
reflects the needs of both government and the private sector.

    Some of our immediate concerns about the adoption of the Global 
Exchange concept include:

         The vast amount of information stored within an 
        enormous data warehouse, managed by a private entity, will be 
        difficult to protect. Given the sheer volume of the data and 
        complexity of the electronic protocols, there is a significant 
        potential for leaks. The ability of unauthorized parties to 
        surreptitiously obtain information from the system will 
        inevitably result in harm to both homeland security and the 
        competitiveness of US business.

         International trade is a highly complex area. 
        Companies are constantly searching for new business 
        opportunities and markets. Companies are extremely hesitant to 
        share confidential information with outside parties, including 
        foreign governments, because it will almost always be shared 
        with competitors. The inability of companies to protect their 
        own confidential data is a recipe for commercial disaster.

         Sharing confidential business data with foreign 
        governments must be carefully considered, especially since the 
        US will have little or no control over how the information will 
        be used or disseminated. At this time, we are unaware of any 
        means to ensure that information shared by CBP with a foreign 
        government will be protected or secured against distribution to 
        a business competitor. Will extraterritoriality of US law be 
        enforced? Will data be protected through the WTO and would 
        action through the WTO be sufficient? This must be addressed. 
        If any foreign government acts in a manner that undermines the 
        integrity of the Global Trade Exchange, the effects on US 
        industry would be disastrous.

         In addition to the numerous commercial concerns the 
        Global Trade Initiative creates, it also establishes security 
        concerns. By trusting a large amount of data to the care of the 
        private sector and sharing it with foreign governments, a 
        number of uncontrollable elements will be introduced to the 
        system. A breach of any of these levels could carry significant 
        consequences for the security of our border.
         In light of other data-oriented programs already 
        implemented or under development, such as the ``10+2'' program, 
        we question the necessity of the Global Trade Exchange. While 
        we understand the importance of collecting data elements to 
        develop more accurate risk profiles, at what point do the 
        expanded requirements become unnecessary or duplicative?
         The implementation of the Global Trade Exchange may 
        violate current US laws, such as the Trade Secrets Act (18 USC 
        Sec. 1905).
    This proposal has very serious ramifications to the competitiveness 
of US companies engaged in global trade. Unlike previous rulemaking by 
DHS, FDA, USDA, USCG, and CBP, there does not appear to be a plan for 
input from the commercial stakeholders on the data warehouse concept. 
We strongly urge you to consult with the trade before moving ahead with 
the proposal. Failure to do so could result in the loss of trade 
stability and a significant erosion of confidence in CBP and DHS.
    Thank you for the opportunity to provide these comments. We remain 
available to you and your staff for any clarification.
Sincerely yours,

Mary K. Alexander
Mary Alexander
Chair, Joint Industry Group

CC:    Michael Jackson, Deputy Secretary of Homeland Security, DHS
                Stewart Baker, Assistant Secretary for Policy, DHS
                Alfonso Martinez-Fonts, Assistant Secretary for Private 
                Sector, DHS
                W. Ralph Basham, Commissioner, US Customs and Border 
                Protection
                Bennie G. Thompson, Chairman, House of Representatives 
                Committee on Homeland Security
                Joseph Lieberman, Chairman, Senate Committee on 
                Homeland Security & Governmental Affairs
                Carlos M. Gutierrez, Secretary, US Department of 
                Commerce
                Susan C. Schwab, Ambassador, US Trade Representative

                              ------------

                Responses from Wade M. Battles follows:
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Questions from the Honorable Bennie G. Thompson, Chairman, Committee 
                          on Homeland Security

                   Responses from Robert F. Blanchet

    Question 1.: As with the TWIC program, TSA has underestimated the 
annual turnover rate of truckers. Please provide us with more 
information about this turnover and can you explain how TSA came up 
with such flawed numbers?
    Response: The TSA lumps truck drivers in with all port workers. 
Most port workers are represented by one of several port unions and 
have good, family sustaining jobs with good benefits and pensions. It 
is not surprising that these workers have a relatively low turnover 
rate. Unionized truck drivers have a turnover rate of only 3% per year.
    But according to figures compiled by the American Trucking 
Association, the turnover rate for owner-operators (who are not 
represented by unions) is 120% per year. The ATA has never provided 
figures that break out port drivers fiom other owner-operators, but 
everyone involved in port (except the ATA which is justifiably feeling 
defensive that their member companies have such an appalling retention 
of drivers) estimates that the figure is HIGHER for port drivers than 
for the over-all class of owner-operators.
    It is easy to see how the TSA came up with such flawed numbers. 
What is inexcusable is that after we informed them of this problem and 
their bad numbers some 18 months ago, they did nothing to correct the 
numbers or justify them.

    TWIC
    Question 2.: According to your written testimony, a TWIC can be 
forged with in 498 hours. What steps should TSA be to prevent this fiom 
occurring?
    Response: There is no way to keep a TWIC card from being forged to 
the extent that Commercial Drivers Licenses are being forged, a 
thriving industry in many port cities. The only way to foil this is to 
install the electronic readers concurrent to the roll-out of mandatory 
use of TWIC cards. The problem comes from the system of having guards, 
clerks and other officials take a quick look at the cards of CDL 
holders as the truck rolls through the gates of marine terminals. No 
electronic readers: No port security. It's that simple.

    Question 3.: Please tell us more about the appalling security 
loophole that TSA has created which allows credentialed drivers to 
containers out of the port and hand them off to other drivers which are 
not credentialed.
    Response: Tank haulers and hazardous waste haulers all need 
endorsements on their licenses (with FBI background checks) regardless 
of where they are working. For some reason, TSA only requires port 
workers and truck drivers who haul containers to have TWIC credentials 
when they are in a port. Yet the problem of containers possibly 
carrying into a port is discounted to concern only the driver who hauls 
the container the last few feet through the gate.
    We have talked about this with lower level TSA and Coast Guard 
officials who all see the problem and, if it was up to them, would like 
to see a requirement that anyone hauling an intermodal container of 
having access to it either at a seaport of an off-dock facility, 
including rail yards and container yards and repair facilities, should 
be required to be TWIC credentialed. We can take you to any port city 
in the United States and show you hundreds, if not thousands, of 
containers parked overnight outside the port gates in streets and off-
dock yards waiting to be brought into the port or to some inland 
destination, possibly for transshipment through another port.

    Question 4.: Do think that there are enough enrollment centers and 
if not, what more should TSA do to minimize the impact on port workers?
    Response: It is too early to tell if there are enough enrollment 
centers. The TSA has just begun to open centers at the larger ports 
with deadlines for applying for the TWIC cards still months away. Time 
will tell.

    Question 5.: How would it be for me to get a fake TWIC card?
    Response: We will check to see if the underground ``document 
industry'' has begun providing these yet or if they are waiting until 
closer to the time when the TWIC card is mandatory.

    Question 6.: The State of Florida has a requirement for a State 
access card. This seems duplicative to me as I thought the TWIC program 
was to create uniformity throughout the system. Should the federal TWIC 
program pre-empt the state program and if so, why?
    Response: The idea of a Florida State access card was to avoid 
having port truck drivers pay for purchasing ID cards at each of the 
Florida ports. Under the TWIC system, individual ports as well as 
states are allowed to have a parallel credential system. We believe 
this is partly a hidden tax for truck drivers and partly a gift to the 
low paying motor carriers who employ the drivers who haul containers.
    Here is an example: If a port truck driver in Miami, Florida loses 
his Port of Miami credential he is required to pay $25 for a 
replacement. But if he doesn't lose it, and simply changes jobs to go 
to work for a different motor carrier, he is required to pay $70 to get 
a new card.

Questions from the Honorable Bennie G. Thompson, Chairman, Committee on 
                           Homeland Security

                    Responses from Christopher Koch
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