[Senate Hearing 110-1227]
[From the U.S. Government Publishing Office]



                                                       S. Hrg. 110-1227

 
                 SUPPLY CHAIN SECURITY: SECURE FREIGHT
                  INITIATIVE AND THE IMPLEMENTATION OF
                          100 PERCENT SCANNING

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

                                HEARING

                               before the

                 SUBCOMMITTEE ON SURFACE TRANSPORTATION
                  AND MERCHANT MARINE INFRASTRUCTURE,
                          SAFETY, AND SECURITY

                                 OF THE

                         COMMITTEE ON COMMERCE,
                      SCIENCE, AND TRANSPORTATION
                          UNITED STATES SENATE

                       ONE HUNDRED TENTH CONGRESS

                             SECOND SESSION

                               __________

                             JUNE 12, 2008

                               __________

    Printed for the use of the Committee on Commerce, Science, and 
                             Transportation



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       SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION

                       ONE HUNDRED TENTH CONGRESS

                             SECOND SESSION

                   DANIEL K. INOUYE, Hawaii, Chairman
JOHN D. ROCKEFELLER IV, West         TED STEVENS, Alaska, Vice Chairman
    Virginia                         JOHN McCAIN, Arizona
JOHN F. KERRY, Massachusetts         KAY BAILEY HUTCHISON, Texas
BYRON L. DORGAN, North Dakota        OLYMPIA J. SNOWE, Maine
BARBARA BOXER, California            GORDON H. SMITH, Oregon
BILL NELSON, Florida                 JOHN ENSIGN, Nevada
MARIA CANTWELL, Washington           JOHN E. SUNUNU, New Hampshire
FRANK R. LAUTENBERG, New Jersey      JIM DeMINT, South Carolina
MARK PRYOR, Arkansas                 DAVID VITTER, Louisiana
THOMAS R. CARPER, Delaware           JOHN THUNE, South Dakota
CLAIRE McCASKILL, Missouri           ROGER F. WICKER, Mississippi
AMY KLOBUCHAR, Minnesota
   Margaret L. Cummisky, Democratic Staff Director and Chief Counsel
Lila Harper Helms, Democratic Deputy Staff Director and Policy Director
   Christine D. Kurth, Republican Staff Director and General Counsel
                  Paul Nagle, Republican Chief Counsel
                                 ------                                

      SUBCOMMITTEE ON SURFACE TRANSPORTATION AND MERCHANT MARINE 
                  INFRASTRUCTURE, SAFETY, AND SECURITY

FRANK R. LAUTENBERG, New Jersey,     GORDON H. SMITH, Oregon, Ranking
    Chairman                         JOHN McCAIN, Arizona
JOHN D. ROCKEFELLER IV, West         KAY BAILEY HUTCHISON, Texas
    Virginia                         OLYMPIA J. SNOWE, Maine
JOHN F. KERRY, Massachusetts         JIM DeMINT, South Carolina
BYRON L. DORGAN, North Dakota        DAVID VITTER, Louisiana
MARIA CANTWELL, Washington           JOHN THUNE, South Dakota
MARK PRYOR, Arkansas                 ROGER F. WICKER, Mississippi
THOMAS R. CARPER, Delaware
CLAIRE McCASKILL, Missouri
AMY KLOBUCHAR, Minnesota
                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on June 12, 2008....................................     1
Statement of Senator Lautenberg..................................     1

                               Witnesses

Ahern, Jayson, Deputy Commissioner, U.S. Customs and Border 
  Protection, U.S. Department of Homeland Security...............     2
    Prepared statement...........................................     5
Caldwell, Stephen L., Director, Homeland Security and Justice 
  Issues, U.S. Government Accountability Office (GAO)............    16
    Prepared statement...........................................    18
Huizenga, David, Assistant Deputy Administrator, Office of 
  International Material Protection and Cooperation, Defense 
  Nuclear Nonproliferation, National Nuclear Security 
  Administration, U.S. Department of Energy......................     9
    Prepared statement...........................................    11

                                Appendix

American Association of Exporters and Importers, prepared 
  statement......................................................    41
Response to written questions submitted by Hon. Maria Cantwell 
  to:
    Stephen L. Caldwell..........................................    55
Response to written questions submitted by Hon. Frank. R. 
  Lautenberg to:
    Jayson Ahern.................................................    48
    David Huizenga...............................................    52
Robinson, Catherine, Associate Director, High Technology Trade 
  Policy on behalf of the National Association of Manufacturers 
  (NAM), prepared statement......................................    46
Stein, Renee, Chair, and Richard M. Belanger, Counsel, Business 
  Alliance for Customs Modernization, prepared statement.........    45


                 SUPPLY CHAIN SECURITY: SECURE FREIGHT
                  INITIATIVE AND THE IMPLEMENTATION OF
                          100 PERCENT SCANNING

                              ----------                              


                        THURSDAY, JUNE 12, 2008

                               U.S. Senate,
         Subcommittee on Surface Transportation and
            Merchant Marine Infrastructure, Safety, and Security,  
        Committee on Commerce, Science, and Transportation,
                                                    Washington, DC.
    The Subcommittee met, pursuant to notice, at 10:05 a.m., in 
room SR-253, Russell Senate Office Building, Hon. Frank R. 
Lautenberg, Chairman of the Subcommittee, presiding.

        OPENING STATEMENT OF HON. FRANK R. LAUTENBERG, 
                  U.S. SENATOR FROM NEW JERSEY

    Senator Lautenberg. Good morning. I call the Surface 
Transportation and Merchant Marine Infrastructure, Safety, and 
Security Subcommittee to order.
    Welcome. We thank the witnesses for being here and all of 
you for your attention to this very serious problem. I want to 
welcome everyone to today's hearing as we continue America's 
work to protect our families, protect our communities, protect 
our economy by securing our ports and those containers that 
arrive there.
    Now, my home state of New Jersey knows about the importance 
of ports. The Port of New York and New Jersey is the largest 
port on the east coast and the second busiest container port in 
the country. It supports some 250,000 jobs and is responsible 
for generating $20 billion in economic activity.
    The 40-foot metal shipping containers, which have become 
standard for industry, were first used in the United States at 
Port Newark, New Jersey, and today these containers have 
transformed global commerce. They save manufacturers and 
shippers time by moving goods more efficiently and with less 
expense.
    But after 9/11, we were forced to see these containers in a 
different light, as a way for terrorists to smuggle weapons or 
themselves into our country. An attack on a U.S. port or even a 
foreign port would affect our economy, not to mention the 
safety of surrounding communities. To prevent that from 
happening and to keep our country safe, we need to know what is 
in these containers.
    The Bush Administration has long believed that a layered 
approach is adequate for securing our ports. I would consider 
it a modular approach, but in practice, this layered approach 
has been more like a piecemeal one, leaving our country and our 
economy still vulnerable.
    After the 9/11 attacks, the Federal Government installed 
equipment to scan 100 percent of passengers and baggage 
boarding a plane. It should not take another attack on our 
country for the Federal Government to secure our ports.
    To that end, Congress passed a law last year requiring that 
by year 2012, all shipping containers coming into our ports 
should be scanned for nuclear weapons and radiation before they 
reach our shores. It is my understanding that today's 
administration witnesses are about to tell us that July 2012, 
the deadline, will not be met.
    The GAO has already told Congress twice this year that the 
Bush Administration's cargo security programs are riddled with 
loopholes. For example, we still do not have minimum standards 
for container security. The Department of Homeland Security 
still has not established a standard lock for metal shipping 
containers, and I am deeply concerned that more than 6 years 
after 9/11, the Bush Administration is back once again to 
report on more problems. The administration's approach to 
securing our ports is unacceptable, and while they get the 
technology in place for 100 percent scanning, we also need to 
find additional ways to increase security at our ports.
    To that end, I will soon introduce legislation which will 
make real improvements to our port security programs and keep 
our economy and families safe.
    I look forward to hearing from our witnesses on these 
critical issues. I thank you for being here. I would ask that 
Jayson Ahern, who is the Deputy Commissioner for U.S. Customs 
and Border Protection, be the first to speak. Mr. Ahern has 
spent 32 years in public service, and I want to thank you for 
your commitment to the country.
    We will, after that, hear from David Huizenga, Assistant 
Deputy Administrator at the U.S. Department of Energy. At the 
Department, Mr. Huizenga is responsible for the Second Line of 
Defense Program, which includes maritime security and the 
Megaports initiative.
    Stephen Caldwell is the Director of Maritime Security 
Issues at the U.S. Government Accountability Office, and he has 
written GAO reports on maritime legislation such as the SAFE 
Port Act and the issues of port security and container 
security.
    So, once again, I thank each of you for joining us today, 
for sharing your expertise with us. Mr. Ahern, if you will, 
please. It is a 5-minute rule, as you know. Please give us your 
testimony.

 STATEMENT OF JAYSON AHERN, DEPUTY COMMISSIONER, U.S. CUSTOMS 
  AND BORDER PROTECTION, U.S. DEPARTMENT OF HOMELAND SECURITY

    Mr. Ahern. Good morning Chairman Lautenberg, and thank you 
very much for this opportunity to discuss the Secure Freight 
Initiative, or SFI, and the recently released report on the 
pilot ports.
    First of all, I want to apologize to you and the rest of 
the Committee and the staff for providing this report so late 
in the process and after the April deadline, but we wanted to 
make sure the information we provided was as complete and as 
thorough as possible and we wanted to include the reviews of 
our trade and our international partners as well.
    I also want to thank the Members of this Committee for your 
strong support of Customs and Border Protection as we work to 
continue to provide the protection our nation is so necessarily 
in need of. This Committee has been instrumental in the success 
of CBP's cargo security strategy, as well as the passage of the 
SAFE Port Act, which in itself represents an impressive 
collaboration between the Congress and the Administration to 
protect our nation.
    In addition to requiring the SFI ports, the SAFE Port Act 
codified a number of CBP supply chain security programs, 
specifically our advance information requirements and automated 
targeting systems, the Customs-Trade Partnership Against 
Terrorism, the Container Security Initiative, and the use of 
nonintrusive inspection technology to scan high-risk shipments. 
These provisions reflect strong support for our current layered 
risk-based approach to maritime and cargo security.
    We continually point out that the layers of the strategy 
are interdependent, different layers focus on securing 
different parts of the supply chain. This ensures that cargo is 
regularly assessed and that security does not rely on one 
single point that could be easily compromised. Over the last 
several years, we have dedicated significant resources to our 
cargo and port security programs and this has resulted in a 
strong risk management approach.
    I am concerned, however, that while we continue to increase 
resources for an initiative like SFI, we may be neglecting 
other areas that could potentially pose a greater risk to the 
country. While increased resources for programs such as SFI 
have enhanced our ability to address maritime container 
security vulnerabilities, it is important to recognize that 100 
percent scanning does not equal 100 percent security. Risk 
management and security must be driven by our informed judgment 
and totality of the risks.
    As directed by the Congress, last October we began testing 
the feasibility of scanning 100 percent of U.S.-bound 
containers in three SFI ports, in Honduras, Pakistan, and the 
United Kingdom. From October to May of this year, we scanned 
over 170,000 containers passing through these ports to the 
United States.
    Under SFI, an integrated scanning system, consisting of 
radiation portal monitors provided by the Department of Energy 
and nonintrusive inspection imaging systems provided by Customs 
and Border Protection, scans containers as they move through 
the foreign ports. The data from the SFI systems provide 
additional data points that are used in conjunction with the 
advance manifest information such as the 24-hour rule, C-TPAT, 
and our automated targeting system so we can assess the 
totality of the risk in each container coming to the United 
States.
    CBP and the Department of Energy are true partners, and my 
counterpart, Mr. Huizenga, as a trusted colleague in the 
Megaports program, has brought invaluable resources and 
institutional knowledge to our effort.
    As our report will show, we learned important lessons, both 
positive and negative, from the pilots.
    On the positive side, we benefited from considerable host 
nation cooperation, low transshipment rates, as well as 
technology and infrastructure, paid for primarily by the U.S. 
Government, but we also recognize that such accommodations and 
supportive conditions do not and will not exist in all ports 
shipping to the United States.
    The pilots also demonstrated that integrated imaging and 
radiation detection equipment can produce useful data. The 
additional data elements gathered at the foreign ports assist 
Customs and Border Protection officers in mitigating risk and 
resolving radiation alarms at a domestic seaport. This results 
in enhanced data collection and more effective trade 
facilitation.
    But on the negative side or the side that presents the 
greatest challenges, even with favorable conditions, we found 
that deploying container scanning equipment at each of the SFI 
ports has presented certain operational, technical, logistical, 
financial, and diplomatic challenges, including reconfiguring 
port layouts to accommodate the equipment without affecting 
port efficiency, identifying who will incur the cost for 
operating and maintaining the scanning equipment, concluding 
agreements with partnering nations and terminal operators, and 
staffing implications for the foreign customs service and 
terminal operators.
    But I would submit the most important and challenging issue 
facing SFI is finding an effective and meaningful way to scan 
transshipped containers. The initial pilots demonstrated that 
technological and operational solutions are not yet available 
to capture transshipped cargo efficiently. New equipment and 
software must be developed to overcome the considerable 
challenge of scanning containers that often transit through 
ports quickly and without necessarily being placed on trucks or 
passing through the front gates. So while additional data can 
be useful, challenges and expenses are significant even in 
these limited environments.
    As a result of what we have learned so far, Customs and 
Border Protection will focus future scanning deployments on 
high-risk trade corridors since they pose the greatest threats 
to the United States, prioritizing these deployments in a way 
which will maximize the security benefit, and ensure that we 
have the capacity to integrate the additional scan data into 
our risk-based strategy. Considering the approximate 11.5 
million containers in a maritime environment that enter the 
United States annually, it is imperative that resources remain 
focused on securing global commerce without interrupting the 
flow of legitimate goods. To ensure these twin goals of trade 
facilitation and security, CBP will continue to employ a 
layered risk-based approach to security. Our judgments will be 
based on the totality of risk we face from potentially 
dangerous goods and people entering our nation.
    Over the last several years, we have devoted much 
discussion and effort to container security, but with our 
layered defense strategy in place, we believe we must devote 
equal energy and resources to other potential threats to U.S. 
ports and other areas along our borders in the supply chain.
    Thank you very much for the opportunity and I look forward 
to dialogue on this issue with you today.
    [The prepared statement of Mr. Ahern follows:]

 Prepared Statement of Jayson Ahern, Deputy Commissioner, U.S. Customs 
      and Border Protection, U.S. Department of Homeland Security

Introduction
    Chairman Lautenberg, Ranking Member Smith, and distinguished 
Members of the Subcommittee:
    Good morning and thank you for this opportunity to discuss the 
Secure Freight Initiative (SFI) and the recently released report on the 
initial pilot ports. I want to take this opportunity to apologize for 
submitting the report past the April deadline. We wanted to ensure that 
the report was as robust as possible and have worked hard to provide a 
comprehensive assessment of the progress made at each of the seven 
locations, detail the challenges and successes, and outline the future 
strategy for the deployment of integrated scanning technology abroad.
    I want to thank the Committee for its strong support of CBP. This 
Committee played a central role in the passage of the Security and 
Accountability for Every Port (SAFE) Act of 2006, legislation that 
directed the Department of Homeland Security (DHS) to explore, on a 
pilot basis, the feasibility and potential benefits of an international 
scanning program at three foreign ports. I look forward to reporting 
back to you on our experiences during these pilots and on some of the 
lessons we have learned.
    I would also like to take the opportunity to thank the foreign 
governments and customs officials that have partnered with us 
throughout this process, as well as the port and terminal operators and 
other stakeholders whose support and collaboration was indispensible. 
The SFI pilots have benefited from host nation officials and port 
operators willing to expend, to varying degrees, the resources 
associated with additional staffing, alarm response protocols, 
construction and other infrastructure upgrades. Importantly, this 
report also includes input from these industry and foreign government 
partners.
    Before discussing the SFI program, I must note that the success of 
CBP's cargo security strategy stems from a risk-based, layered 
enforcement approach. It includes advance information, sophisticated 
technology, and partnerships with the trade community and other 
countries. In addition to requiring the SFI pilots, the SAFE Port Act 
supported the current layered, risk-based approach to maritime and 
cargo security by codifying a number of supply chain security programs 
that DHS established following the September 11, 2001 terrorist attacks 
and which continue today. Specifically, the SAFE Port Act codified DHS' 
advanced information requirements and automated analysis, the Customs-
Trade Partnership Against Terrorism (C-TPAT), the Container Security 
Initiative (CSI), and the use of non-intrusive inspection (NII) 
technology to scan high-risk shipments.
    These programs form the backbone of CBP's risk-management, layered 
enforcement strategy. To most effectively manage multiple threats to 
our country, we must direct resources to areas of greatest risk. We are 
constantly working to refine this layered process by strengthening our 
tools and capabilities, working to maintain an appropriate balance 
between the wide range of threats we face and allocating our limited 
resources accordingly. It is important to reiterate that the layers of 
this strategy are interdependent and that different layers secure 
different parts of the supply chain. This approach ensures that cargo 
is regularly assessed and that security does not rely on any single 
point that could be compromised.
    Although there has been much discussion about maritime container 
security in recent years, we have also been--and must remain--focused 
on other threats to our borders and to other components of the supply 
chain. We must remain vigilant in securing all conveyances and in 
screening passengers at our land borders, airports, railways, and small 
vessel terminals. In fact, although we frequently refer to the 11.5 
million containers arriving by sea, there are an equal number of truck 
containers arriving across our land borders with Canada and Mexico.
    While increased resources for programs such as SFI have enhanced 
our ability to address maritime container security vulnerabilities, it 
is important also to recognize that 100 percent scanning DOES NOT equal 
100 percent security and that no single layer or tool in our risk-based 
approach should be overemphasized at the expense of the others. The 
strength of the strategy is that it ensures continuous security at 
multiple nodes in the supply chain, distributing resources so that 
focus on one threat does not overshadow other vulnerable areas that 
could also be exploited.

The Secure Freight Initiative (SFI)
    Now I'd like to turn my attention to the international integrated 
scanning program under the Secure Freight Initiative (SFI).
    Under SFI, an integrated scanning system, consisting of radiation 
portal monitors (RPM) provided by DOE/National Nuclear Security 
Administration and non-intrusive inspection (NII) imaging systems 
provided by CBP, is used to scan containers as they move through the 
pilot locations in the foreign ports. Through optical character 
recognition (OCR) technology, data from these systems is integrated and 
provided to CBP officers who can use it, along with customary data 
sources, to determine if the container should be referred to the host 
nation for secondary examination prior to being loaded onto a vessel 
destined for the United States. SFI provides additional data points 
used by CBP officers in conjunction with advanced manifest data, such 
as 24-hour rule information, Customs-Trade Partnership Against 
Terrorism (C-TPAT) information, and the Automated Targeting System 
(ATS) to identify high risk containers that warrant additional scrutiny 
prior to continuing on through the global supply chain.
    Meeting the legislative requirements of the SAFE Port Act, the 
first three SFI ports (Puerto Cortes, Honduras; Port Qasim, Pakistan; 
and Southampton, United Kingdom) became fully operational on October 
12, 2007. Under SFI, DHS and DOE work to scan all U.S.-bound maritime 
containers; the total U.S.-bound container volume at these three ports 
from October 12, 2007 to May 25, 2008 was 170,564 containers. 
Furthermore, CBP and DOE are working to pilot scanning equipment in 
additional complex environments, such as high-volume and transshipment 
ports. These additional locations include certain terminals in Hong 
Kong (which is now fully operational); Salalah, Oman and Port Busan, 
South Korea.
    With the three initial SFI pilot ports in Honduras, the United 
Kingdom, and Pakistan, CBP has focused its efforts on exploring methods 
by which efficient operation (defined as maximizing the security 
benefit, minimizing disruptions to port operations, and containing 
costs) could be achieved within the deadline prescribed by law (the 
SAFE Port Act and the 9/11 Act). The SFI deployments in Honduras, the 
United Kingdom, and Pakistan indicate that scanning U.S.-bound maritime 
containers is possible on a limited scale.
    However, SFI operations in these initial locations benefited from 
considerable host nation cooperation, low transshipment rates, and 
technology and infrastructure costs covered primarily by the United 
States Government--accommodating and supportive conditions that do not 
exist in all ports shipping to the United States.
    As will be discussed in more detail, the data obtained by the 
scanning technology does have the potential to enhance targeting by 
providing two additional data points (RPM spectra and NII images) to 
the information and tools already available to CBP officers. CBP is 
committed to a realistic and responsible approach that will incorporate 
these scan data points into our risk-based methodology in places where 
the additional information would be of the most benefit to our 
targeters.

SFI Challenges
    The pilots have demonstrated that not just scanning equipment, but 
a combination of technology, processes, and collaboration is necessary 
to a successful scanning system; additional necessary factors include 
innovative solutions to operational hurdles, useful data that is 
collected, analyzed and primed to enhance targeting, a collaborative 
approach with the international community and port operators, and 
perhaps most importantly, responsible and practical policies informed 
by the totality of the threats to which the U.S. remains vulnerable.
    The continuation of operations in some of the current SFI pilot 
locations will afford CBP the opportunity to further test possible 
solutions to the complex challenges posed by transshipment and high-
volume ports. . While we continue to learn important lessons in these 
initial pilot locations, CBP will focus future scanning deployments on 
high-risk trade corridors that represent the greatest threats to the 
United States. Prioritizing deployments in this way will maximize the 
security benefit that can be achieved with limited departmental funds 
and ensure that CBP has the capacity to compile, assess, and integrate 
the additional scan data into its effective, functioning risk-based 
strategy.
    Thus far, the deployment of container scanning equipment at each of 
the SFI ports has presented certain operational, technical, logistical, 
financial, and diplomatic challenges that will likely continue to be 
encountered, to varying degrees, as SFI deploys to additional 
locations. These challenges include:

   Sustainability of the scanning equipment in extreme weather 
        conditions and certain port environments;

   Varying costs of transferring the data back to the United 
        States (National Targeting Center) in real-time, etc.;

   Re-configuring port layouts to accommodate the equipment 
        without affecting port efficiency;

   Developing local response protocols for adjudicating alarms;

   Addressing health and safety concerns of host governments 
        and respective trucking and labor unions;

   Identifying who will incur the costs for operating and 
        maintaining the scanning equipment;

   Acquiring necessary trade data prior to processing 
        containers through the SFI system;

   Addressing data privacy concerns in regards to the scanning 
        data;

   Concluding agreements with partnering nations and terminal 
        operators to document roles and responsibilities regarding 
        issues such as: ownership, operation, and maintenance of the 
        equipment; sharing of information; and import duty and tax 
        considerations;

   Staffing implications for both the foreign customs service 
        and terminal operator;

   Licensing requirements for the scanning technology;

   Reaching agreement with foreign and industry partners to 
        continue scanning 100 percent of U.S.-bound containers after 
        the pilot ends; and

   Discussing the potential requirements for reciprocal 
        scanning of U.S. exports.

    While these challenges are consistent at our pilot ports, the 
remedies must be specifically tailored to the unique characteristics of 
each port. One example of a challenge requiring different fixes in each 
location was the different level of automation, with paper-based rather 
than computerized systems, in some of the initial SFI ports. In many 
situations, containers can arrive at the port up to several days before 
they are loaded on vessels. If containers arrive more than one day 
before lading, then CBP will not yet have the container's corresponding 
trade information, received under the 24-hour rule. Without information 
about what is in the container or whether it is U.S.-bound, resolving 
an RPM alarm or image anomaly is more difficult. CBP addressed this 
challenge in a variety of ways, including agreements with customs 
partners, terminal operators, and carriers for access to certain 
information (such as destination and commodity descriptions to identify 
U.S.-bound containers) that assisted with the risk assessment process 
and adjudication of radiation alarms. Those ports that lack an 
automated system will provide additional challenges for providing 
manifest and destination information to CBP.
    One challenge has proven particularly difficult to overcome: 
operating these systems in a transshipment port. The initial SFI pilots 
have demonstrated that technical and operation solutions are not yet 
available to capture transshipped cargo efficiently. New equipment and 
software must be developed to address the considerable challenge of 
scanning containers that often transit through ports quickly and 
without necessarily being placed on trucks or passing through port 
gates. To date, SFI has progressed on a limited scale in ports that 
take advantage of the natural chokepoints of entry and exit gates to 
scan containers. This approach typically prevents significant impact on 
port operations, but is not applicable in heavy transshipment ports 
where containers arrive on one ship and depart on another without 
entering or exiting through the port gates. Because of shorter dwell 
times for containers, space constraints, lack of immediate availability 
of shipping data, and the difficulty of identifying chokepoints within 
busy container terminals, capturing transshipped cargo without 
seriously impacting port operations remains a significant challenge. 
Solutions to this challenge will depend upon the specific 
infrastructure conditions at any given port, technology interface 
issues, and the development of operational procedures in concert with 
host nation and port officials. Advances in technology that require a 
smaller physical footprint are also essential to any future large-scale 
implementation of SFI.
    The initial deployments under SFI also demonstrate the significant 
costs associated with procuring and deploying scanning technology and 
the supporting information technology (IT) infrastructure. With the 
announcement of SFI in 2006, DHS and DOE each committed approximately 
$30 million toward the implementation of SFI at the initial three ports 
and the installation of equipment at three additional ports where 
integrated scanning is to be demonstrated on a limited scale.
    Costs to industry and foreign partners were minimized during the 
initial SFI pilot by the use of primarily U.S.-owned systems in SFI 
ports, as well as U.S.-funded upgrades to terminal operating systems 
(TOS) and enhancing the local IT infrastructure. In addition to costs 
incurred by the U.S. Government associated with SFI scanning, the 
terminal operators are also absorbing costs in the form of fuel for the 
trucks, time to run containers through the systems, and utilities. With 
the exception of Puerto Cortes, terminal operators do not presently 
assess a fee to recoup their costs; however, they may begin to do this 
after the pilot phase. Additionally, our foreign Customs partners are 
absorbing costs associated with increased staffing levels including 
overtime, training, and personnel assigned to full-time operations.
    Although DHS and DOE funded the initial phase of SFI deployments, 
the equipment, IT, and personnel costs associated with expanding the 
program to cover all U.S. bound traffic from the more than 700 
different ports that ship to the United States--some significantly 
larger and more complex than any of the first three pilots--means that 
the benefit of immediate widespread deployments must be weighed against 
the Department's funding needs to address other homeland security 
priorities.
    While RPM spectra and NII images can be useful additional data 
points for evaluating the risk of U.S.-bound containers, the lack of 
universal solutions to make scanning cost-effective and efficient in 
every port underlies the Department's strategy to focus future SFI 
deployments on trade corridors that present the highest risk. Gathering 
scan data from these high risk corridors will provide additional 
information, consistent with the Department's successful layered 
strategy, for CBP targeters, enhancing risk assessments in the most 
vulnerable areas without overwhelming the Department's budget, 
personnel resources, and ability to defeat other serious threats to the 
homeland.

SFI Benefits
    While highlighting many challenges, the SFI pilots have also 
produced valuable and positive feedback. SFI, in the initial three 
ports, has demonstrated the operational feasibility of integrating 
various scanning technologies and transmitting large amounts of data in 
near-real time for review and analysis. SFI has also demonstrated that 
scanning data associated with maritime containers at a port of lading 
can be integrated into CBP's ATS and reviewed alongside the targeting 
system's risk assessment rule sets. This information can be 
successfully integrated by electronically linking specific container 
identification data to that container's scanning data. To date, CBP has 
successfully integrated, transmitted, and received thousands of data 
files from the three operational ports.
    Additionally, a preliminary analysis of the potential trade 
facilitation benefits of SFI has been positive. Containers arriving in 
the United States accompanied by SFI data do not experience the same 
rate of examination at U.S. ports as containers that originate from 
non-SFI locations. As well, the additional data elements gathered at 
the foreign port assist CBP officers in more quickly and efficiently 
mitigating risk and adjudicating radiation alarms occurring at a 
domestic seaport.

SFI Potential Operation in Additional Ports
    As noted earlier, the implementation of SFI in Pakistan, Honduras, 
and the United Kingdom, and the limited testing in the four other SFI 
locations, illustrates that the scanning of all U.S.-bound maritime 
containers in a foreign port is possible on a relatively contained 
scale. As DHS, in conjunction with the DOE and the DOS, develops a 
specific policy forward, we will prioritize our resources and efforts 
by focusing on specific higher risk trade corridors where the most 
security benefit can be realized. Based on preliminary results from the 
three pilot locations, and in light of the considerable costs and 
challenges associated with the deployment of SFI/ICS systems, this high 
risk trade corridor approach accords with the current risk-based 
strategy, best addresses the greatest threats to the United States, and 
represents the most worthwhile investment of limited available 
resources for the scanning of cargo containers at foreign ports.
    The issue of container security has precipitated much discussion 
and effort over the last several years, but the Department has also 
been, and must remain, attuned to other threats to U.S. ports and other 
potentially vulnerable components of the supply chain. DHS and Congress 
have dedicated significant resources and efforts to our cargo and port 
security programs which have been instrumental in the development of 
the robust layered and risk-management approach currently in place. We 
are always eager to enhance these layers and even further refine our 
targeting to ensure that we focus on those goods and people that 
represent a threat to our nation. I'm concerned, however, that while we 
continue to increase resources specifically for container security 
initiatives, like SFI, we could be neglecting other areas of concern 
that potentially pose greater risk and vulnerability to the country. 
Again, a risk management approach to security has to be driven by our 
informed judgment about the totality of potential risks to the country, 
not just risks to a single vector.
    Furthermore, traffic congestion brought upon by the movement of 
shipping containers is a threat to the global economy. The United 
States is especially vulnerable since over 90 percent of its imports 
and exports move via sea container. As a nation, and as a global 
trading partner, we must prioritize our security efforts to embrace the 
principle ``to facilitate the movement of commerce'', and align 
security programs with those efforts that enhance cargo flow through 
the supply chain in a transparent and accountable process. In this way, 
transportation providers may be more effective and efficient in 
protecting our prosperity and those of other trading partners.
    Thank you again for this opportunity to testify. I look forward to 
having a dialogue with this Subcommittee on the merits and future of 
container scanning.

    Senator Lautenberg. Thank you very much, Mr. Ahern.
    Now, do you pronounce your name Huizenga or Huizenga?
    Mr. Huizenga. The former, Mr. Chairman. Huizenga.
    Senator Lautenberg. Yes, the hockey team owner and that 
kind of thing?
    Mr. Huizenga. Yes. I am not sure if I am a distant relative 
of Uncle Wayne. It is not clear.
    Senator Lautenberg. It is worth the search.
    [Laughter.]
    Mr. Huizenga. We could start a rumor I guess.
    [Laughter.]
    Senator Lautenberg. Welcome and we invite you to give your 
testimony.

         STATEMENT OF DAVID HUIZENGA, ASSISTANT DEPUTY

        ADMINISTRATOR, OFFICE OF INTERNATIONAL MATERIAL

          PROTECTION AND COOPERATION, DEFENSE NUCLEAR

          NONPROLIFERATION, NATIONAL NUCLEAR SECURITY

           ADMINISTRATION, U.S. DEPARTMENT OF ENERGY

    Mr. Huizenga. Thank you, Chairman Lautenberg, for the 
opportunity to be here today, along with Deputy Commissioner 
Ahern and the General Accounting Office to address this 
important issue.
    I am here to discuss the Department of Energy's role in the 
Secure Freight Initiative, which is a partnership with the 
Department of Homeland Security's Customs and Border Protection 
and the State Department. I will highlight recent progress in 
our efforts to thwart nuclear terrorism, as well as discuss key 
challenges to accelerating and expanding radiation scanning of 
U.S.-bound containers at foreign seaports, as required by the 
SAFE Port and 
9/11 Acts.
    For the last 15 years, my office has focused on securing 
nuclear materials and weapons at well over 100 facilities in 
Russia and other states of the former Soviet Union. This is the 
first line of defense in a strategy to deny terrorists access 
to fissile materials, or the essentials elements of a nuclear 
weapon. We are scheduled to complete the vast majority of the 
security upgrades at these facilities by the end of 2008.
    As a natural complement to these efforts, in 1998 we 
established the Second Line of Defense Program, or the SLD 
program. As part of the defense-in-depth strategy to protect 
the U.S. homeland from attack by a nuclear or radiological 
device, the SLD program provides equipment and training to 
foreign authorities to help them detect, deter, and interdict 
illicit trafficking in nuclear and other radioactive materials. 
To date, we have installed over 1,000 radiation portal monitors 
at over 160 sites, including vehicle, rail and pedestrian 
border crossings, airports and seaports.
    The Second Line of Defense's Megaports Initiative was 
launched in 2003 to address the possibility of nuclear 
trafficking in the global maritime shipping system. Megaports 
is focused on radiation scanning of containerized cargo, 
including imports, exports, and transshipments, regardless of 
the destination of the cargo. Based on research and modeling 
that takes into account both shipping volume and regional 
threat, Megaports has identified approximately 75 ports of 
interest to be equipped by 2013, which would constitute over 50 
percent of the global shipping traffic. We have made strong 
progress toward this goal. We are operational in 12 ports and 
in various phases of implementation and engagement in 27 
others.
    For several years, the Megaports program has partnered with 
CBP on its Container Security Initiative, which led naturally 
to working together on the Secure Freight Initiative. In 
support of the SFI, we provided radiation detection equipment, 
optical character recognition technology, integrated software 
and communications systems, as well as training and maintenance 
to support the host and U.S. Government officials at the SFI 
ports.
    So what have we learned from the SFI work and where do we 
go from here?
    I believe that the SFI pilots have demonstrated that 100 
percent scanning of U.S.-bound containers is possible, albeit 
on a limited scale. For example, we have been able to integrate 
the radiation scanning equipment with the nonintrusive imaging 
equipment provided by CBP, thus providing a more powerful tool 
for detecting shielded nuclear materials by allowing us to look 
for anomalies in the container, as well as for a radiation 
alarm. We have been able to transmit large amounts of data on 
U.S.-bound containers to the local CSI representatives and to 
CBP in the U.S. for analysis and have provided this and other 
data to the host governments. We also used the pilot effort in 
Southampton in the U.K. to demonstrate the usefulness of an 
advanced spectroscopic portal as a secondary inspection tool. 
All of this has been accomplished without seriously impacting 
port operations.
    Nonetheless, certain key challenges have been identified 
through the pilot port effort. From a technology and 
operational perspective, the most fundamental challenge is to 
find a way to capture transshipped cargo without seriously 
impacting port operations. Since transshipped containers do not 
pass through any entry or exit gate, there is no clear choke 
point at which the radiation portal monitors and the imaging 
equipment can be deployed. The operators of large transshipment 
ports have been consistent in pointing out the operational 
difficulty of scanning such cargo.
    In an attempt to overcome this hurdle, we have been working 
on several innovative approaches to scan transshipped cargo 
through the use of straddle carriers as mobile radiation 
detection devices, and working with CBP and DNDO, on an 
investigation of crane-mounted detectors. While we are not 
there yet and the testing continues, some of these technologies 
appear to hold promise. I would point out, though, that while a 
solution to transshipped containers may be in the works for 
radiation detection, it is unclear if such solutions are 
applicable for the imaging component of SFI in the near term.
    The second obvious challenge is cost. Even if the 
technology is developed to effectively scan 100 percent of the 
U.S.-bound containers with both imaging and detection systems, 
it may not necessarily be a cost-effective risk management 
strategy to equip the 700-plus ports that ship directly to the 
United States. To maximize our efforts to successfully combat 
nuclear terrorism, we believe we must strive for an effective 
layered strategy that addresses multiple threats and risks. We 
cannot neglect our other priority areas of concern, for 
example, the First Line of Defense, by putting all of our 
resources into the latter, into the Second Line of Defense.
    In an attempt to address this issue, we have developed 
cost-sharing arrangements with several SLD and Megaports host 
partner nations. We also are discussing various models with 
private industry and encouraging them to integrate scanning 
into their future port operations. We intend to work closely 
with CBP and the State Department to promote a risk-based 
approach to guide implementation priorities.
    Another challenge identified through the pilot port effort 
concerns data sharing. One of our lessons learned has been the 
difficulty of overcoming laws that prohibit such sharing of 
information or, alternatively, the lack of a legal framework 
that will allow us to negotiate such data sharing. These issues 
must be addressed on a case-by-case basis as they are a point 
of sensitivity with our partners.
    This leads, of course, to the final challenge and that is 
the need to ensure host nation and terminal operator buy-in. 
None of these programs overseas will be successful without 
their direct support.
    In summary, the concept of scanning 100 percent of U.S.-
bound----
    Senator Lautenberg. Please conclude as----
    Mr. Huizenga.--containers overseas has proven to be viable 
in some ports, and we believe that in light of the lessons 
learned, a balanced risk-based approach to the deployment of 
the systems is the best use of available resources.
    Thank you, Mr. Chairman.
    [The prepared statement of Mr. Huizenga follows:]

 Prepared Statement of David Huizenga, Assistant Deputy Administrator, 
 Office of International Material Protection and Cooperation, Defense 
  Nuclear Nonproliferation, National Nuclear Security Administration, 
                       U.S. Department of Energy

Introduction
    Thank you Chairman Lautenberg, Ranking Member Smith, and other 
distinguished Members of the Subcommittee. I am the Assistant Deputy 
Administrator for the Department of Energy--(DOE) National Nuclear 
Security Administration's (NNSA) Office of International Material 
Protection and Cooperation (IMPC). My office is one of six program 
offices within the Office of Defense Nuclear Nonproliferation (DNN). 
The collective mission of DNN is to detect, prevent, and reverse the 
proliferation of weapons of mass destruction. Our programs are 
structured in support of multiple layers of defense against nuclear 
terrorism and state-sponsored nuclear proliferation. This multi-layered 
approach is intended to identify and address potential vulnerabilities 
within the international nonproliferation regime, to limit terrorists' 
access to deadly weapons and material, and to prevent the illicit 
trafficking of dangerous materials that could be used in a nuclear or 
radiological weapon.
    Today, I will be discussing NNSA's Megaports Initiative and our 
role in the Secure Freight Initiative (SFI). I would like to highlight 
recent progress made under SFI and Megaports. I will also address some 
of the positive lessons learned from the SFI Pilot deployments and key 
hurdles that we will have to overcome in order to accelerate and expand 
the radiation scanning of U.S.-bound containers at foreign seaports as 
required by the Safe Port and 9/11 Implementation Acts. In short, 
building on decades of experience securing nuclear materials in DOE's 
nuclear weapons complex, NNSA is supplying radiation detection 
equipment and relevant training to the SFI ports to scan containers for 
the presence of nuclear and other radioactive materials that could be 
used by terrorists to fabricate a nuclear or radiological dispersal 
device.
    In summary, we have learned a lot from SFI pilot implementation. 
The SFI deployments in Honduras, the United Kingdom, and Pakistan 
indicate that scanning U.S.-bound maritime containers is possible on a 
limited scale. We have proven that we can effectively integrate data 
from radiation detection equipment and non-intrusive imaging equipment 
to improve our overall detection capability, and that we can take this 
large amount of data and transmit it near real-time to the United 
States for analysis. While we have been successful at these three 
locations, transshipment continues to present the greatest challenge to 
fully implementing the 100 percent scanning requirements. It is clear 
that obtaining buy-in from the foreign governments and key stakeholders 
at the port is critical to success. Overall, the concept of scanning 
U.S.-bound containers overseas has proven to be viable in some cases, 
but we continue to believe that a risk-based approach to deployment of 
these systems is the best use of available resources.
    We know that the threat of nuclear terrorism is real. It is common 
knowledge that AlQa'ida's desire to develop weapons of mass destruction 
goes back at least 10 years. But we also know that ongoing nuclear 
detection efforts have successfully resulted in seizures of nuclear and 
radiological materials--underscoring the importance of the nuclear 
detection mission. For example, in 2003, Georgian border guards, using 
U.S.-provided portal monitoring equipment at the Sadakhlo border 
crossing with Armenia, detected and seized approximately 173 grams of 
highly enriched uranium (HEU) carried by an Armenian national. Also, in 
late 2005, a Megaports radiation portal monitor (RPM) picked up a 
neutron signal from a scrap metal container leaving Sri Lanka bound for 
India. The source of the signal turned out to be an extremely small 
commercial neutron source, which was found by the Indian authorities. 
More recently, in November 2007, several Cesium-137 sources were 
detected in a container of scrap metal leaving Honduras bound for a 
smelting facility in the Far East. An NNSA team assisted the Honduran 
Government with the recovery of the industrial sources, preventing 
those sources from reaching, and possibly contaminating, the facility. 
These examples provide clear evidence that detection systems are 
effective in alerting us to the presence of very small quantities of 
radioactive material and therefore play an important role in our 
efforts to combat the threat of nuclear terrorism.

Overview of the Material Protection Effort
    For the last 15 years, the IMPC office has focused on securing 
nuclear materials and weapons at well over 100 research, storage and 
manufacturing facilities in Russia and other states of the Former 
Soviet Union. Our longstanding nonproliferation programs in 
international safeguards and export controls have existed for more than 
30 years, but the dramatic increase in our efforts to secure nuclear 
material took place in the years following the demise of the Soviet 
Union. All of our efforts are centered on the premise that confronting 
the threat of nuclear terrorism as close to the source as possible, far 
from our borders, is the most effective means to reduce the risk of an 
attack. This focus on securing nuclear weapons and materials in-place 
is the first line of defense in our strategy to deny terrorists access 
to the essential element of a nuclear weapon--fissile material. We are 
scheduled to complete the vast majority of the nuclear security 
upgrades at these facilities by the end of 2008 as part of the 
Bratislava Agreement between President George W. Bush and then-Russian 
President Vladimir Putin.

Second Line of Defense (SLD) Program
    The Second Line of Defense (SLD) Program--the other mission area of 
my office--is a natural complement to these activities and supports the 
multi-layered defense system to protect the U.S. homeland from attack 
by a nuclear or radiological dispersal device. The mission of the SLD 
program is to strengthen the capability of foreign governments to 
deter, detect, and interdict illicit trafficking in nuclear and other 
radioactive materials across international borders and through the 
global maritime shipping system. Under this program, NNSA works 
collaboratively with foreign partners to equip border crossings, 
airports and seaports with radiation detection equipment. SLD provides 
training in the use of the systems for appropriate law enforcement 
officials and initial system sustainability support while the host 
government assumes long-term responsibility for the system's operations 
and maintenance. To date, under the SLD Program, NNSA has installed 
over 1,000 radiation portal monitors (RPMs) at over 160 sites. The SLD 
Program has recently awarded contracts to three teams at a value of up 
to $700 million for the equipment, design, integration, and 
construction expertise to support the deployment of systems in 
additional locations. The SLD program is divided into two areas: the 
Core Program and the Megaports Initiative.
    Under our Core Program, NNSA focuses primarily on partnerships in 
Russia, former Soviet states, and Eastern Europe to install radiation 
detection systems at land borders, international airports, and 
strategic feeder ports. The SLD Core Program started in 1998 in Russia. 
Since its inception, the Core Program has worked closely with the 
Federal Customs Service of the Russian Federation to deploy radiation 
detection systems to international crossing points throughout Russia. 
With our Russian colleagues, we have committed to equip all border 
crossings in Russia (approximately 350 sites) by 2011. Russian Customs 
is a full partner in this effort and is paying to equip approximately 
half of these sites themselves. In addition, they will be assuming 
responsibility for the maintenance of all equipment deployed under this 
program by 2013.

Megaports Initiative
    Building on the experience we have gained by equipping 20 seaports 
in Russia under the SLD Core Program, in 2003 we expanded the scope of 
the program to consider large seaports worldwide with the establishment 
of the Megaports Initiative. This effort was developed in response to 
the concern that terrorists and states of concern might use the global 
maritime shipping network to smuggle nuclear or other radioactive 
materials to locations where terrorists could utilize those materials 
to fabricate or detonate a nuclear weapon or radiological dispersal 
device. The goal of the Megaports Initiative is to scan as much 
container traffic at a port as possible (including imports, exports, 
and transshipments) regardless of destination.
    We began with a focus on the first 20 seaports in the Department of 
Homeland Security's Container Security Initiative (CSI), i.e., the 
ports shipping the largest volumes of containerized cargo to the United 
States. Supported by consultations with the Intelligence Community, 
private-sector specialists, and our national laboratories, we later 
added a threat component to our prioritization strategy. As a result, 
we identified approximately 75 ports of interest (i.e., a little over 
10 percent of the total number of container ports shipping directly to 
the United States) for the deployment of our systems. We update this 
list periodically based on new information.
    I am pleased to report that we have made significant progress on 
the Megaports Initiative over the last 5 years. We are currently 
operational in 12 ports (including the three ports selected as pilots 
under the Department of Homeland Security's Secure Freight Initiative 
and as mandated by the 2006 SAFE Port Act). We are at various phases of 
implementation and testing in 27 additional ports. We expect to 
complete eleven of these ports by the end of this Fiscal Year. We are 
finalizing agreements with a number of additional countries and 
continue to conduct outreach and planning activities with approximately 
30 other major international seaports in anticipation of implementation 
in the future. Our goal is to equip approximately 75 priority ports by 
2013, at which point we estimate that we will be scanning over 50 
percent of global shipping traffic.

Support to Secure Freight Initiative
    NNSA has been partnering with the Department of Homeland Security's 
Customs and Border Protection (CBP) for several years on its container 
security initiatives. The synergy between the Megaports Initiative and 
the Container Security Initiative (CSI) is an important element in 
ensuring the security of U.S.-bound containers--radiation detection 
equipment provided by NNSA under the Megaports Initiative provides an 
additional tool that enhances risk assessment and targeting activities 
at foreign seaports in support of CSI. NNSA has participated with CBP 
on joint outreach missions and has signed seven agreements jointly with 
CBP and our international partners to implement both Megaports and CSI. 
Because of the success of the Megaports Initiative and our ongoing 
relationship with CBP, partnering on the Secure Freight Initiative 
(SFI) mission was a natural fit.
    In support of SFI, NNSA has provided radiation detection equipment, 
and associated optical character recognition (OCR) technology, 
integrated software and communications systems, as well as training and 
maintenance support, to host and U.S. Government officials at SFI 
ports. SFI builds upon existing port security measures by utilizing the 
OCR technology to integrate data from radiation detection and non-
intrusive imaging equipment, along with data from secondary inspection 
equipment, thereby providing more comprehensive information about U.S.-
bound containers that strengthens existing risk assessment efforts.

SFI Pilot Lessons Learned and Challenges to 100% Scanning
    Let me start by stating that the SFI pilots have demonstrated that 
100 percent scanning of U.S.-bound containers is possible on a limited 
scale. Operationally, we have been able to demonstrate three different 
approaches to integrated scanning of the U.S.-bound containers at 
overseas ports that provide valuable lessons learned as we look to 
expand scanning efforts to additional ports. We were able to 
demonstrate both the feasibility of transmitting large amounts of data 
in near-real time for review and analysis by CBP and the host nation, 
and the successful integration of multiple sets of data by 
electronically linking container ID number to scanning data through use 
of OCR technology. Coupling radiation scans with imaging efforts 
increases our chances of detecting shielded HEU, because the image 
allows us to look for anomalies within the contents of the shipping 
container that might indicate shielding and therefore warrant further 
inspection. Under SFI, we have demonstrated that these two technologies 
can be integrated effectively without negatively impacting the flow of 
commerce, albeit at relatively small ports. We were also able to take 
advantage of the SFI pilot project in Southampton England, to 
demonstrate the use of an advanced spectroscopic portal (ASP) as a 
secondary inspection tool that should dramatically improve the 
secondary inspection process in terms of reliability, process time, and 
manpower requirements. Based on lessons learned and the results of the 
pilot in Southampton, we plan to deploy ASPs to additional Megaports 
around the world for use in secondary inspections.
    Additionally, our partnership with CBP on SFI implementation has 
been successful and the roles and responsibilities have been well 
defined. As we have done in our cooperation with CBP for the last 
several years, we continue to explore ways to maximize use of NNSA and 
CBP resources, in order to streamline SFI implementation and avoid 
duplication of efforts.
    Nonetheless, in addition to the positive lessons learned from the 
SFI pilot ports, there are still several challenges to implementing 100 
percent scanning of all U.S.-bound containers at overseas ports. We 
believe that scanning U.S.-bound containers overseas is possible at 
some locations; however, scanning every U.S.-bound container at a 
foreign port before it arrives in the United States presents 
significant operational, technical, cost, and diplomatic challenges. 
There are a few challenges, in particular, that I would like to focus 
on as these have the most direct impact on NNSA and the Megaports 
Initiative.

Transshipment
    First, while the operational Megaports and the SFI pilot ports have 
shown that gate traffic can be easily captured by taking advantage of 
existing chokepoints into and out of a port, transshipped cargo 
continues to present a significant challenge for both SFI and Megaports 
implementation. Because of shorter dwell times for containers, space 
constraints, availability of shipping data, and the difficulty of 
identifying chokepoints within the container terminals, capturing 
transshipments without seriously impacting port operations requires new 
and creative solutions.
    From a technical standpoint, NNSA has been innovative in its 
approach to scanning transshipped containers. The first mobile 
detection platform, a straddle carrier, was deployed at the Port of 
Freeport in the Bahamas in June 2006 using both plastic Polyvinyl 
Toleune (PVT) for primary detection and a spectroscopic detector for 
secondary isotopic identification. NNSA, working in conjunction with 
the terminal operator, Hutchison Port Holdings, has successfully 
scanned over 730,000 containers at Freeport Container Terminal. We will 
soon be issuing a request for proposals to provide straddle carriers 
equipped with radiation detectors at additional transshipment ports.
    NNSA is also evaluating a new mobile platform for scanning 
transshipped containers on the quay at the Port of Salalah, Oman. The 
mobile system will increase the number of transshipped containers that 
can be scanned as well as improve the effectiveness and efficiency of 
the scanning process of transshipped containers with the same 
efficiency as fixed monitors. Containers will be scanned using the 
Mobile Radiation Detection and Identification System (MRDIS)--utilizing 
a plastic PVT for primary detection and a second MRDIS unit with 
spectroscopic detectors for secondary isotopic identification.
    NNSA is currently analyzing crane-based technology, which, if 
proven effective for the radiation detection component, would improve 
our ability to scan transshipped containers. In this regard, we are 
working closely with our colleagues at CBP and at the Domestic Nuclear 
Detection Office (DNDO) in evaluating private-sector efforts to develop 
a crane-based radiation detection system utilizing existing spreader-
bar technology. We recently conducted a suite of tests on a spreader-
bar in the Port of Oakland, California, and will be participating in 
CBP's upcoming evaluation of spreader-bar systems at their test bed at 
the Port of Tacoma, WA. We anticipate conducting additional testing and 
analysis on the effectiveness of these systems at one of our national 
laboratories later this summer.
    While we are hopeful that these technologies will help address the 
transshipment issue for radiation scanning, it is currently unclear if 
it would be possible to pursue similar technological solutions to 
conduct the complementary non-intrusive imaging (NII) scan. In the near 
term, coupling radiation scans with NII operations at transshipment 
ports is likely to continue to pose significant technological and 
operational challenges.

Cost
    Moving beyond operational and technical challenges, there is also a 
significant cost to scanning all U.S.-bound containers before they 
reach the homeland. Even if technology is developed to effectively scan 
100 percent of U.S.-bound containers with both the detection and 
imaging systems without impacting port operations, it may not 
necessarily be a cost-effective risk management strategy to equip the 
700+ ports that ship directly to the United States. As I mentioned 
earlier, Megaports and SFI are two programs that support a multi-
layered approach to increasing our security against nuclear and 
radiological threats and defending the homeland from terrorist attacks. 
We need to ensure that we continue to expand nuclear detection and 
container security efforts overseas without neglecting other areas of 
concern that potentially pose greater risk and vulnerability to the 
country. For example, NNSA also has a responsibility to apply resources 
and efforts to broader nonproliferation programs including our 
international material protection program--securing materials at the 
source--and the SLD Core Program. We must strive for an effective 
layered strategy that addresses multiple threats and risks in order to 
reduce the likelihood that dangerous materials will fall into the hands 
of terrorists. NNSA will continue to promote the use of a risk-based 
approach to guide implementation priorities to scanning U.S.-bound 
containers. We will work closely with our interagency partners to 
prioritize countries and ports as we move ahead with the Megaports 
Initiative and implementation of SFI, as this approach allows us to 
utilize our resources and funding in the most effective way.
    One obvious way to address the cost of overseas scanning is to 
encourage cost-sharing with host governments and with private industry. 
Indeed under the Megaports program, we are finding ways to do this 
where we provide equipment and training and the host government is 
responsible for design, construction and installation costs. We are 
also discussing various models with industry and encouraging them to 
integrate scanning into their fundamental port operations. Beyond 
purchasing and installing radiation detection equipment, an integrated 
scanning system requires effective staffing levels to assess and 
respond to radiation alarms and image anomalies. Our host nation 
partners (both government and private sector) will also have to absorb 
costs associated with increased staffing levels including overtime, 
training, and personnel assigned to full-time operations.

Data Sharing
    Our partnership with the host government also relies on the 
exchange of information, including scan and image data. One of the 
lessons learned during the SFI pilot phase is that for some countries, 
the data sharing requirement presents a significant challenge, either 
because there are specific laws that prohibit or limit the provision of 
this type of information or because there is no existing legal 
framework to allow it to happen. These concerns, along with the issue 
of reciprocal provision of information on cargo leaving the U.S., will 
need to be addressed if we continue to expand SFI.
    Information exchange is also an important element of the Megaports 
Initiative. Under Megaports, we have been able to address this issue by 
limiting the information we receive to data on detections and seizures 
and by developing specific data-sharing formats; however, it is 
important to note that data under Megaports is not received in real-
time. It is provided to CSI if in-country and to the Embassy.

Stakeholder Partnerships
    Which brings me to the last point . . . a critical aspect to 
implementation of scanning initiatives is host nation and terminal 
operator buy-in. I cannot underscore enough that SFI or Megaports 
Initiative implementation cannot be successful without the partnership 
of the host nation, port authority, terminal operators, and other key 
stakeholders at the port. We have been very successful where we have 
strong partnership with our host nation partners. Alternatively, we 
have had considerable implementation challenges where we have not. For 
that reason, we will continue to partner with CBP to conduct joint 
outreach missions in attempt to garner both host government and 
private-sector support for these critical initiatives. We believe that 
integrating security measures into the design and business practices of 
the supply chain will improve security with the least amount of 
disruption to legitimate trade and could ultimately reduce costs 
through increased efficiencies. NNSA will continue to work closely with 
DHS, host nations, and the major marine terminal operators to develop 
and implement strategies for increasing container security without 
impacting port operations.
    All in all, the lessons learned during Phase I of SFI 
implementation have provided us with useful information on how to move 
ahead with our nuclear detection efforts in the future. However, there 
are many hurdles and significant costs associated with 100 percent 
scanning of U.S.-bound containers that need to be carefully considered 
as we move forward with the SFI program.

Conclusion
    In summary, NNSA is committed to continue to expand our Megaports 
program to scan overseas containers independent of destination and 
partner with CBP in the SFI efforts to scan U.S.-bound containers. As 
we consider the expansion of SFI, I believe that NNSA and CBP should 
continue to work together to identify the ports at which we would like 
to work by applying the principles of risk-based prioritization, which 
include both volume and regional threat. We have both utilized such 
approaches successfully in the past.
    We will also continue to work with DHS and the private sector to 
explore new concepts of operation that will enable us to scan more 
containers and to investigate new technologies to scan transshipped 
containers without impacting port operations. We will continue to 
advocate with the major marine terminal operators that partnering with 
NNSA and DHS on these container security initiatives makes good 
business sense.
    Finally, while NNSA will continue to support SFI implementation, 
the Megaports mission has proven to be an important element of our 
multi-layered defense strategy both from a nonproliferation and 
counter-terrorism perspective. Indeed, the program is already 
operational in 12 ports around the world and several more ports should 
go operational this year. NNSA will continue to push forward with the 
Megaports Initiative to meet our goal of 75 Megaports by 2013.
    I want to thank Congress for their continued support of our 
program. I hope that the information that I have provided will be 
useful to the Subcommittee as it considers the SFI pilot project and 
the future of SFI implementation.
    Thank you. I would be happy to answer any questions you may have.

    Senator Lautenberg. Thank you very much.
    Mr. Caldwell?

          STATEMENT OF STEPHEN L. CALDWELL, DIRECTOR,

             HOMELAND SECURITY AND JUSTICE ISSUES,

          U.S. GOVERNMENT ACCOUNTABILITY OFFICE (GAO)

    Mr. Caldwell. Thank you very much, Chairman Lautenberg, for 
inviting me here to testify on our supply chain security work.
    My statement is based on about 5 years' worth of work that 
GAO has done on supply chain security. Through that time, we 
have noted that DHS has made progress in a number of ways in 
developing these programs as part of its layered security 
strategy to prevent WMD from entering the United States through 
containers.
    As part of this layered strategy, CBP's risk-based approach 
included two facets, one using shipment information to detect 
anomalies that might indicate that a container is a high-risk 
container and only then applying the additional scrutiny of 
scanning such high-risk containers. This risk-based approach 
was an attempt to balance the need to improve security while 
also facilitating the free flow of trade.
    CBP's strategy also pushed out the borders through various 
partnerships. These partnerships were bilateral in the sense 
that we work with other countries through CSI. They are 
multilateral in the fact that we work through multilateral 
organizations such as the World Customs Organization, and there 
are also private sector partnerships such as the C-TPAT 
program. I think we all recognize that the private sector 
actually runs most of the port infrastructure.
    And we have reported positively on many of the outcomes of 
these partnerships. There is good working relationships in many 
of the CSI ports between the U.S. and the host nation. There is 
a movement toward, if not the achievement yet, of an 
international standardized approach to supply chain security 
through the World Customs Organization's SAFE framework. And 
finally, there is the industry adoption of improved security 
standards.
    Now, to make these partnerships work, an important part of 
that was the shared resource burden. It was shared in terms of 
CSI which was a program where we actually had U.S. staff out at 
these locations at these ports, but the host nation supplied 
their own equipment, as well as their own staff to help assist 
us in targeting and inspecting containers.
    The current approach to SFI that CBP has taken, shares some 
of the characteristics that I have already talked about. In 
terms of risk management, part of the SFI program is the 10 
plus 2 secure filing, and this has been developed as part of 
the risk-based strategy to plug some of the holes in 
information that currently exist in the 24-hour rule.
    In terms of partnerships, the 10 plus 2 program has also 
been developed in partnership with industry and international 
organizations, and similarly the SFI pilot program has been 
developed with partnerships in the sense that CBP found 
volunteer ports in countries that were willing to participate.
    In terms of resources, again there was some sharing of the 
resource burden. The U.S. Government supplied the equipment 
generally, whether it was DOE or CBP. The U.S. Government 
supplied some of our own staff, over there. But those countries 
and the port operators, we have to recognize, also supplied a 
substantial amount of resources as well.
    But the ultimate purpose of the SFI pilot was not to 
continue this layered strategy as much as to test the options 
of going in a different direction, 100 percent scanning. And 
now CBP awkwardly finds itself at a crossroad trying to 
maintain its existing risk-based strategy at the same time 
Congress is asking it, in some ways, to go in the opposite 
direction.
    Most of the observers believe that the 100 percent scanning 
approach is contrary to risk management in that it applies the 
same assumption of risk to all containers before any analysis 
is done of risk levels.
    In addition, the 100 percent scanning requirement is also 
contrary to the partnership approach that has been used so far, 
and there have been quite a lot of complaints about this from 
our partners, whether they be international organizations, 
other countries, or the private sector.
    Moreover, unlike some of the resource sharing that has 
occurred so far, there seems to be an expectation that foreign 
governments and foreign ports will be picking up all or most of 
the additional costs associated with this. So not surprisingly, 
foreign governments are responding that the flow of trade is 
going to be harmed. They are talking about a reciprocal 
requirement which would require that the U.S. scan all of its 
outbound containers. Most observers within CBP and our own port 
operators have raised concerns at least to us in terms of the 
difficulties that would be involved in that.
    Similarly, some of the officials in either foreign 
governments or the private sector question the value of some of 
the existing U.S. programs like CSI and C-TPAT. If everything 
is going to be scanned, they ask what is the point of the risk-
based system?
    Given that the 100 percent requirement is in our view a 
marked departure from the existing strategy, we advise to 
proceed with caution here. CBP needs to continue thoroughly 
evaluating the SFI program, laying out all the potential 
challenges and potential ways to overcome those challenges.
    And now that the CBP report to Congress is out, we at GAO 
will start working with your staff, as well as other 
Committees, to review that program in detail and provide 
additional information on the way ahead.
    Thank you. I would be pleased to answer any questions.
    [The prepared statement of Mr. Caldwell follows:]

Prepared Statement of Stephen L. Caldwell, Director, Homeland Security 
    and Justice Issues, U.S. Government Accountability Office (GAO)

    Mr. Chairman and Members of the Subcommittee:
    I am pleased to be here today to discuss challenges to 100 percent 
scanning of U.S.-bound cargo containers. More than 700 foreign seaports 
ship cargo containers to the United States and over 11 million 
oceangoing cargo containers arrived at U.S. seaports last year. The 
terrorist attacks of 2001 heightened concerns about the potential 
vulnerability of U.S.-bound cargo containers to terrorist exploitation, 
and the prevention of such activity became a goal for the Federal 
Government.
    Within the Department of Homeland Security (DHS), U.S. Customs and 
Border Protection (CBP) is responsible for preventing terrorists and 
weapons of mass destruction (WMD) from entering the United States, 
including the potential WMD threat posed by the movement of oceangoing 
cargo containers. As it performs this mission, CBP maintains two 
overarching and sometimes conflicting goals--increasing security while 
facilitating legitimate trade. To address these goals, CBP has 
developed a layered security strategy that includes the Container 
Security Initiative (CSI) and the Customs-Trade Partnership Against 
Terrorism (C-TPAT). The CSI program, begun in 2002, aims to deter and 
detect the smuggling of WMD via cargo containers before they reach U.S. 
seaports. At the 58 seaports participating in the CSI program as of 
January 2008, foreign governments allow CBP personnel to be stationed 
at the seaports and use intelligence and automated risk assessment 
information to determine whether U.S.-bound shipments are at risk of 
containing WMD or other terrorist contraband--a process referred to as 
targeting. CBP personnel can then request that host government customs 
officials scan the identified high-risk cargo.\1\ CBP also operates C-
TPAT, a voluntary partnership with the trade community, in which member 
companies commit to improving the security of their supply chains and 
develop security profiles that outline the companies' security 
measures. Because of their cooperation, and after verification by CBP 
that such stronger measures are in place, C-TPAT members generally are 
subjected to reduced levels of CBP scrutiny of their shipments.
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    \1\ Examining cargo containers involves using radiation detection 
equipment or nonintrusive imaging equipment, which may include X-ray or 
gamma ray technology, or both, to determine if a cargo container poses 
a WMD risk.
---------------------------------------------------------------------------
    To further address container security concerns, Congress passed, 
and the President signed, the Security and Accountability for Every 
(SAFE) Port Act in October 2006, which includes provisions that 
codified CSI and C-TPAT, both of which had been CBP initiatives but not 
previously required by law.\2\ In addition, the act calls for the 
establishment of a pilot program to test the feasibility of scanning 
100 percent of U.S.-bound cargo containers and directs CBP to require 
transmission of additional data from importers and cargo carriers for 
improved targeting of U.S.-bound cargo containers. CBP is implementing 
these requirements as part of its Secure Freight Initiative (SFI) 
program. The SAFE Port Act also requires that 100 percent of U.S.-bound 
cargo containers be scanned using nonintrusive imaging equipment and 
radiation detection equipment at foreign seaports as soon as feasible. 
The SFI pilot program tests the feasibility of using this equipment and 
implementing 100 percent scanning at seven foreign seaports. In August 
2007, the Implementing Recommendations of the 9/11 Commission Act (9/11 
Act) was enacted, which revised the SAFE Port Act provision on 100 
percent scanning to require implementation by 2012, with possible 
exceptions for seaports for which DHS certifies that specified 
conditions exist.\3\
---------------------------------------------------------------------------
    \2\ Pub. L. No. 109-347, 120 Stat. 1884.
    \3\ Pub. L. No. 110-53,  1701(a), 121, Stat. 266, 489-90 (amending 
6 U.S.C.  982(b)).
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    We have issued several reports over the past few years relating to 
cargo container security that include challenges that are also 
applicable to 100 percent scanning because of the similarities in the 
operations of the programs reviewed and their overall purpose to 
strengthen cargo security.\4\ This statement discusses these and other 
challenges that relate to the continuation of the SFI pilot program and 
the longer-term requirement to scan 100 percent of all cargo containers 
bound for the United States.
---------------------------------------------------------------------------
    \4\ See the end of this statement for a list of related GAO 
products.
---------------------------------------------------------------------------
    The information in this testimony is based on GAO reports and 
testimonies issued from July 2003 through April 2008 addressing cargo 
container security operations and programs, as well as ongoing work 
concerning CBP's international efforts for the Senate Committee on 
Commerce, Science, and Transportation; the Senate Committee on Homeland 
Security and Governmental Affairs and its Permanent Subcommittee on 
Investigations; and the House Committee on Energy and Commerce, to be 
published later this year. For this ongoing work, we reviewed CBP 
documents, such as the report on the SFI program required by the 2006 
DHS Appropriations Act.\5\ We also reviewed documentation from the 
World Customs Organization (WCO) related to international initiatives 
for enhancing supply chain security.\6\ We also analyzed documents from 
some of CBP's international partners, which include European Commission 
comments on the SFI Pilot Seaport at Southampton, United Kingdom (UK); 
a position paper from the Association of German Port Operators; and 
reports on 100 percent scanning issued by the World Shipping Council 
and the WCO. In addition, we reviewed available documentation, such as 
reports and international agreements, related to CBP's work in the 
international trade community. We also met in Washington, D.C., with 
CBP officials who have program responsibilities for international 
affairs and trade, as well as with representatives from the European 
Commission, the WCO, and industry representative groups to discuss 
multilateral and bilateral efforts to promote security of the supply 
chain--the flow of goods from manufacturer to retailer. We also visited 
six CSI seaports located overseas to meet with local customs officials, 
selecting the locations based on geographic and strategic significance, 
container volume to the United States, the dates when the seaports 
began conducting CSI operations. Although the perspectives of the 
officials we spoke with cannot be generalized across the wider 
population of countries that participate in the CSI or C-TPAT programs 
or that ship container cargo to the United States, they provided us 
with an overall understanding of how CSI operations were conducted, as 
well as views on scanning 100 percent of U.S.-bound cargo containers.
---------------------------------------------------------------------------
    \5\ In addition to this report, the SAFE Port Act also required 
that CBP produce a report on lessons learned from the SFI pilot 
program; however, this report was not available as of the time we 
prepared this statement.
    \6\ The WCO is an independent international organization whose 
mission is to enhance the efficiency and effectiveness of customs 
administrations.
---------------------------------------------------------------------------
    We conducted our work from May 2006 to June 2008 in accordance with 
generally accepted government auditing standards. Those standards 
require that we plan and perform the audit to obtain sufficient, 
appropriate evidence to provide a reasonable basis for our findings and 
conclusions based on our audit objectives. We believe that the evidence 
obtained provides a reasonable basis for our findings based on our 
audit objectives.

Summary
    In our previous and ongoing work on maritime container security 
issues, we have identified numerous challenges related to the 
continuation of the SFI pilot and the longer-term requirement to scan 
100 percent of all cargo containers bound for the United States. These 
challenges are in the following nine areas:

   Workforce planning: Given the additional scanning equipment 
        used--as well as the additional cargo containers to be 
        scanned--the SFI pilot, as well as 100 percent scanning, 
        program could generate an increased quantity of scan data. 
        Therefore, CBP could face even greater staffing challenges 
        because more CBP officers will be required to review and 
        analyze these data for participating seaports. Furthermore, our 
        past work on maritime container security found weaknesses in 
        CBP's workforce planning.

   Host nation examination practices: While the SAFE Port and 
        9/11 Acts require DHS to develop operational and equipment 
        standards for the scanning systems used for 100 percent 
        scanning, CBP does not systematically collect information on 
        the efficacy of host government examination systems.

   Measuring performance: While the intention of the SFI pilot 
        program and 100 percent scanning is to increase security for 
        the United States, CBP has had ongoing difficulties in defining 
        performance measures for its maritime container security 
        programs to indicate whether security is increased.

   Resource responsibilities: It is unclear who will pay for 
        additional resources--including increased staff, equipment, and 
        infrastructure--and who will be responsible for operating and 
        maintaining the equipment used for the statutory requirement to 
        scan 100 percent of U.S.-bound cargo containers at foreign 
        seaports. Neither the SAFE Port Act nor the 9/11 Act specifies 
        whether the Federal Government will bear the cost of scanning 
        100 percent of U.S.-bound cargo containers.

   Logistics: Scanning equipment is sometimes placed miles from 
        where cargo containers are stored, which could add to the time 
        and cost requirements for scanning these containers, and 
        transshipment cargo containers--containers moved from one 
        vessel to another--are only available for scanning for a 
        comparatively short period of time and may be difficult to 
        access.

   Technology and infrastructure: Issues, such as environmental 
        conditions that damage equipment and cause delay, limited 
        bandwidth capacity of local infrastructure, and compatibility 
        with older equipment have presented difficulties in the SFI 
        pilot program.

   Use and ownership of data: While the SAFE Port Act specifies 
        that scan data produced in the SFI pilot program should be 
        available for review by U.S. officials, legal restrictions in 
        foreign countries may make it difficult to share this 
        information with CBP. In some cases, transferring such 
        information to U.S. officials could require new international 
        agreements.

   Consistency with risk management: International partners 
        state that 100 percent scanning is inconsistent with widely 
        accepted risk management principles, and some CBP international 
        partners have stated that the requirement could potentially 
        reduce the security of the supply chain by diverting scarce 
        resources away from other essential security measures.

   Reciprocity and trade concerns: Foreign governments could 
        call for reciprocity of 100 percent scanning, requiring the 
        United States to scan container exports to those countries. 
        This will be a challenge, as CBP officials have stated that the 
        agency does not have the resources to scan other countries' 
        exports leaving the United States. Further, some view this 
        scanning requirement as a barrier to trade.

Background
CBP Has Developed a Layered Security Strategy to Help Implement Its 
        Risk 
        Management Approach
    CBP has developed a layered security strategy that provides 
multiple opportunities to mitigate threats and allows CBP to focus its 
limited resources on cargo containers that are the most likely to pose 
a risk to the United States. Risk management is a strategy called for 
by Federal law and Presidential directive and is meant to help 
policymakers and program officials most effectively mitigate risk while 
allocating limited resources under conditions of uncertainty. This 
layered security strategy is composed of different but complementary 
initiatives and programs, such as CSI and C-TPAT, which build on each 
other and work with other Federal security programs, such as the 
Department of Energy's (DOE) Megaports Initiative.\7\ This layered 
strategy attempts to address cargo container security comprehensively 
while ensuring that security attention is directed toward the highest-
risk containers within the supply chain.
---------------------------------------------------------------------------
    \7\ Begun in 2003, DOE's Megaports Initiative complements CBP's 
layered security strategy by providing foreign nations with radiation 
detection equipment, such as radiation portal monitors, to scan cargo 
containers moving through their seaports. As of February 2008, the 
Megaports Initiative was fully operational at 12 foreign seaports and 
in various stages of implementation at 17 others.
---------------------------------------------------------------------------
The Container Security Initiative
    CBP's CSI program aims to identify and examine U.S.-bound cargo 
that pose a high risk of concealing WMD or other terrorist contraband 
by reviewing advanced cargo information sent by ocean cargo carriers. 
As of January 2008, CBP operated CSI in 58 foreign seaports, which, at 
the time, accounted for 86 percent of all U.S.-bound cargo containers. 
As part of the CSI program, CBP officers, usually stationed at foreign 
seaports, seek to identify high-risk U.S.-bound cargo containers by 
using information from cargo carriers as well as reviewing data bases 
and interacting with host government officials. When requested by CBP, 
host government customs officials examine the high-risk container cargo 
by scanning it using various types of nonintrusive inspection (NII) 
equipment, such as large-scale X-ray machines, or by physically 
searching a container's contents before it is sent to the United 
States.\8\
---------------------------------------------------------------------------
    \8\ There are generally two types of CSI cargo container 
examinations--scanning with NII equipment and physical searches. To 
scan cargo containers, CSI depends on imaging equipment, which may use 
X-rays or gamma rays to create images of the container's contents, and 
radiation detection equipment. CBP officials, along with host 
government officials, may review the information produced with the 
scanning equipment to determine the presence of WMD. Depending on the 
results of the scans, physical searches may be conducted.
---------------------------------------------------------------------------
Customs-Trade Partnership against Terrorism
    Initiated in November 2001, the C-TPAT program aims to secure the 
flow of goods bound for the United States by developing a voluntary 
antiterrorism partnership with stakeholders from the international 
trade community.\9\ To join C-TPAT, a company submits a security 
profile, which CBP compares to its minimum security requirements for 
the company's trade sector. CBP then reviews the company's compliance 
with customs laws and regulations and any violation history that might 
preclude the approval of benefits--which includes reduced scrutiny or 
expedited processing of the company's shipments. CBP data show that 
from 2004 through 2006, C-TPAT members were responsible for importing 
about 30 percent of U.S.-bound cargo containers, specifically importing 
29.5 percent of the 11.7 million oceangoing cargo containers off-loaded 
in the United States in the first 9 months of 2007. As of May 2008, 
there were over 8,400 C-TPAT members from the import trade community 
that had various roles in the supply chain.
---------------------------------------------------------------------------
    \9\ Stakeholders of the international trade community include 
importers; customs brokers; air, sea, and land carriers; and other 
logistics service providers, such as freight consolidators.
---------------------------------------------------------------------------
The Importance of International Partnerships
    To more effectively implement the components of its layered 
security strategy, CBP has worked to promote international partnerships 
to enhance security so that high-risk cargo can be identified before it 
arrives in the United States. For the CSI program, CBP has negotiated 
and entered into nonbinding, reciprocal arrangements with foreign 
governments, specifying the placement of CBP officials at foreign 
seaports and the exchange of information between CBP and foreign 
customs administrations. These arrangements allow participating foreign 
governments the opportunity to place their customs officials at U.S. 
seaports and request inspection of cargo containers departing from the 
United States that are bound for their respective countries. CBP also 
works with other customs organizations to enhance international supply 
chain security. For example, CBP has taken a lead role in working with 
foreign customs administrations and the WCO to establish and implement 
international risk-based management principles and standards, similar 
to those used in the CSI and C-TPAT programs, to improve the ability of 
member customs administrations to increase the security of the global 
supply chain while facilitating international trade. The member 
countries of the WCO, including the United States, adopted such risk-
based principles and standards through the WCO Framework of Standards 
to Secure and Facilitate Global Trade (commonly referred to as the SAFE 
Framework), in June 2005.

The SAFE Port Act Requires a Pilot Program to Test the Feasibility of 
        100 Percent Scanning
    To improve maritime container security, the SAFE Port Act was 
enacted in October 2006 and requires, among other things, that CBP 
conduct a pilot program to determine the feasibility of scanning 100 
percent of U.S.-bound containers. It also specifies that the pilot 
should test integrated scanning systems that combine the use of 
radiation portal monitors and NII equipment, building upon CSI and the 
Megaports Initiative. To fulfill this and other requirements of the 
SAFE Port Act, CBP and DOE jointly announced the formation of SFI in 
December 2006. The first phase of SFI is the International Container 
Security project--commonly known as the SFI pilot program.\10\ The SFI 
pilot program tests the feasibility of 100 percent scanning of U.S.-
bound container cargo at seven overseas seaports and involves the 
deployment of advanced cargo scanning equipment and an integrated 
examination system. The advanced cargo scanning equipment--NII and 
radiation detection equipment--produce data to indicate the presence of 
illicit nuclear and radiological material in containers. The integrated 
examination system then uses software to make this information 
available to CBP for analysis. According to CBP, it will review the 
scan data at the foreign seaport or at CBP's National Targeting Center-
Cargo (NTCC) in the United States.\11\ If the scanning equipment 
indicates a potential concern, both CSI and host government customs 
officials are to simultaneously receive an alert and the specific 
container is to be further inspected before it continues on to the 
United States.
---------------------------------------------------------------------------
    \10\ The second phase of SFI is still in development. This phase 
involves the advance transmission of cargo information from importers 
and cargo carriers.
    \11\ According to CBP, the National Targeting Center (NTC) was 
established in response to the need for proactive targeting aimed at 
preventing acts of terror and to seize, deter, and disrupt terrorists 
and implements of terror. NTC originally combined both passenger and 
cargo targeting in one facility. It was later divided into NTCC and the 
National Targeting Center-Passenger. For purposes of this report, we 
use NTCC in our references since its mission is to support CBP cargo-
targeting operations.
---------------------------------------------------------------------------
    As shown in table 1, under the SFI pilot program, three SFI 
seaports are to scan 100 percent of U.S.-bound container cargo that 
passes through those seaports, while the other four seaports are to 
deploy scanning equipment in a more limited capacity.
 


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



           Table 1.--Information on the Seven Foreign Seaports Participating in the SFI Pilot Program
----------------------------------------------------------------------------------------------------------------
                                  Deployment level                                              Volume of U.S.-
            SFI port                 when pilot        Testing date a     Operational date b   bound containers,
                                     operational                                               Fiscal Year 2006
----------------------------------------------------------------------------------------------------------------
Qasim, Pakistan                             Full c          March 2007     October 12, 2007                2,058
----------------------------------------------------------------------------------------------------------------
Puerto Cortez, Honduras                     Full c          April 2007     October 12, 2007               77,707
----------------------------------------------------------------------------------------------------------------
Southampton, UK                             Full c         August 2007     October 12, 2007               31,780
----------------------------------------------------------------------------------------------------------------
Busan, South Korea                       Limited d          April 2008     To be determined              610,061
                                                           (projected)
----------------------------------------------------------------------------------------------------------------
Salalah, Oman                            Limited d            May 2008     To be determined               81,333
                                                           (projected)
----------------------------------------------------------------------------------------------------------------
Singapore                                Limited d           June 2008     To be determined              376,846
                                                           (projected)
----------------------------------------------------------------------------------------------------------------
Hong Kong                                Limited d       November 2007         January 2008            1,333,812
----------------------------------------------------------------------------------------------------------------
Source: U.S. Customs and Border Protection.
a Testing date is defined as the date when the scanning systems are in place and operational testing begins.
b Operational date is defined as the date when the SFI scanning data are transmitted successfully to the local
  central alarm station and to the CBP network in the United States.
c Fully operational seaports are to scan 100 percent of U.S.-bound container cargo under the SFI pilot program.
d Limited operation seaports are to scan less than 100 percent of U.S.-bound container cargo. For these
  seaports, CBP plans to conduct SFI operations at a reduced level, typically limited to one terminal in the
  port, such as Gamman Terminal in Busan.

    As required by the SAFE Port Act, CBP was to issue a report in 
April 2008 on the lessons learned from the SFI pilot program and the 
need and feasibility of expanding the 100 percent scanning system to 
other CSI seaports, among other things.\12\ As we prepared this 
statement, CBP had not yet issued this report. Every 6 months after the 
issuance of this report, CBP is to report on the status of full-scale 
deployment of the integrated scanning systems at foreign seaports to 
scan 100 percent of U.S.-bound cargo.
---------------------------------------------------------------------------
    \12\ 6 U.S.C.  981(d). The DHS Appropriations Act for Fiscal Year 
2007, enacted shortly before the SAFE Port Act, also required a pilot 
program to test 100 percent scanning at three ports, and established 
similar, but not identical, requirements for the program. For example, 
the report to Congress on lessons learned is to include a plan and 
schedule to expand the scanning system developed under the pilot to 
other CSI ports rather than an assessment of the need and feasibility 
of such an expansion.
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The SFI Pilot Program and 100 Percent Scanning Face a Number 
        of Challenges
    We identified challenges in nine areas that are related to the 
continuation of the SFI pilot program and the longer-term 100 percent 
scanning requirement: (1) workforce planning, (2) the lack of 
information about host government cargo examination systems, (3) 
measuring performance outcomes, (4) undefined resource responsibilities 
for the cost and labor for implementation, (5) logistical feasibility 
for scanning equipment and processes, (6) technological issues, (7) the 
use and ownership of scanning data, (8) a perceived disparity between 
100 percent scanning and the risk management approach of CBP's 
international partners, and (9) potential requests for reciprocity from 
foreign governments.

Workforce Planning Will Be Critical to Success
    In our prior work examining the CSI and C-TPAT programs, we 
reported that CBP faced challenges identifying an appropriate number of 
positions for the programs and finding enough qualified people to fill 
these positions.\13\ For example, we reported in 2005 and again in 2008 
that CBP's human capital plan did not systematically determine the 
optimal number of officers needed at each CSI seaport to carry out 
duties that require an overseas presence (such as coordinating with 
host government officials or witnessing the examinations they conduct) 
as opposed to duties that could be performed remotely in the United 
States (such as reviewing data bases).\14\ Determining optimal staffing 
levels is particularly important since CBP reports facing ongoing 
challenges identifying sufficient numbers of qualified employees to 
staff the program. For example, CBP officials reported that 9 qualified 
applicants applied for 40 permanent positions at CSI seaports. We also 
reported that according to CBP officials, to fill open CSI positions, 
officers have in some cases been deployed who have not received all 
required training. We recommended in April 2005 that CBP revise the CSI 
staffing model to consider: (1) what functions need to be performed at 
CSI seaports and what can be performed in the United States, (2) the 
optimum levels of staff needed at CSI seaports to maximize the benefits 
of targeting and inspection activities in conjunction with host nation 
customs officials, and (3) the cost of locating targeters overseas at 
CSI seaports instead of in the United States.\15\ CBP agreed with our 
recommendation on CSI's staffing model and said that modifications to 
the model would allow program objectives to be achieved in a more cost-
effective manner. CBP said that it would evaluate the minimum level of 
staff needed at CSI seaports to maintain ongoing dialogue with host 
nation officials, as well as assess the staffing levels needed 
domestically to support CSI activities. However, as of January 2008, 
CBP's human capital plan did not systematically make these 
determinations.
---------------------------------------------------------------------------
    \13\ For our prior recommendations and observations on C-TPAT's 
workforce challenges, see GAO, Container Security: Expansion of Key 
Customs Programs Will Require Greater Attention to Critical Success 
Factors, GAO 03 770 (Washington, D.C.: July 25, 2003). Also, see GAO, 
Cargo Security: Partnership Program Grants Importers Reduced Scrutiny 
with Limited Assurance of Improved Security, GAO-05-404 (Washington, 
D.C.: Mar. 11, 2005).
    \14\ GAO, Container Security: A Flexible Staffing Model and Minimum 
Equipment Requirements Would Improve Overseas Targeting and Inspection 
Efforts, GAO 05 557 (Washington, D.C.: Apr. 26, 2005) and GAO, Supply 
Chain Security: Examinations of High-Risk Cargo at Foreign Seaports 
Have Increased, but Improved Data Collection and Performance Measures 
Are Needed, GAO 08 187 (Washington, D.C.: Jan. 25, 2008).
    \15\ GAO-05-557.
---------------------------------------------------------------------------
    The ability of the SFI pilot program--and by extension the 100 
percent scanning requirement of the SAFE Port and 9/11 Acts--to operate 
effectively and enhance maritime container security depends, in part, 
on the success of CBP's ability to manage and deploy staff in a way 
that ensures that critical security functions are performed. Under the 
CSI program, CBP operated and conducted cargo container scanning at 58 
foreign seaports as of January 2008; however, given that additional 
scanning equipment will be used in the SFI pilot program, and 
fulfilling the 100 percent scanning requirement will naturally increase 
the number of containers to be scanned at the more than 700 seaports 
that ship cargo to the United States, the SFI pilot program and 100 
percent scanning requirement will generate an increased quantity of 
scan data. According to European customs officials, for there to be 
value added in these additional scans, the scan data must be reviewed. 
Therefore, in implementing the 100 percent scanning requirement, CBP 
will face staffing challenges because more CBP officers will be 
required to review and analyze these data for participating seaports.

CBP Generally Lacks Key Information on Host Government Examination 
        Systems Because of Sovereignty Constraints
    As we reported in January 2008, CBP does not systematically collect 
information on CSI host governments' examination equipment or 
processes.\16\ We noted that CBP must respect the sovereignty of 
countries participating in CSI and, therefore, cannot require that a 
country use specific scanning equipment or follow a set of prescribed 
examination practices. Thus, while CBP has set minimum technical 
criteria to evaluate the quality and performance of equipment being 
considered for use at domestic seaports, it has no comparable standards 
for scanning equipment used at foreign seaports. In addition, CBP 
officials stated that there are no plans to evaluate examination 
equipment at foreign seaports against the domestic criteria. CBP 
officials added, however, that the capabilities of scanning equipment 
are only one element for determining the effectiveness of examinations 
that take place at CSI seaports. It is better, in their view, to make 
assessments of the processes, personnel, and equipment that 
collectively constitute the host governments' entire examination 
systems. However, in January 2008, we reported that CBP does not gather 
this type of information and recommended that CBP, in collaboration 
with host government officials, improve the information gathered at 
each CSI port by: (1) establishing general guidelines and technical 
criteria regarding the minimal capability and operating procedures for 
an examination system that can provide a basis for determining the 
reliability of examinations and related CSI activities; (2) 
systematically collecting data for that purpose; and (3) analyzing the 
data against the guidelines and technical criteria to determine what, 
if any, mitigating actions or incentives CBP should take to help ensure 
the desired level of security. CBP partially concurred with this 
recommendation in terms of improving the information gathered about 
host governments' examination systems. In particular, CBP agreed on the 
importance of an accepted examination process and noted that it 
continues to improve the information it gathers. CBP did not indicate 
that it would systematically pursue information on these host 
government examination systems. It did state that it was working 
through the WCO to address uniform technical standards for equipment. 
We reported that while CBP engaged with international trade groups to 
develop supply chain security requirements, these requirements do not 
specify particular equipment capabilities or examination practices.
---------------------------------------------------------------------------
    \16\ GAO-08-187.
---------------------------------------------------------------------------
    Both the SAFE Port and 9/11 Acts require DHS to develop technical 
and operational standards for scanning systems; therefore, the 
challenges that CSI has faced in obtaining information about host 
governments' examination systems are relevant to the SFI pilot program 
and the 100 percent scanning requirement.\17\ However, as noted earlier 
in this statement, the United States cannot compel foreign governments 
to use specific equipment for the SFI pilot program or the 100 percent 
scanning requirement, thus challenging CBP's ability to set and enforce 
standards. In addition, because CBP does not systematically collect 
information on the efficacy of host governments' examinations systems, 
it lacks reasonable assurance that these examinations could reliably 
detect and identify WMD unless it implements our January 2008 
recommendation to determine actions to take to ensure the desired level 
of security. This is particularly important since currently, under CSI, 
most high-risk cargo containers examined at international seaports are 
not re-examined upon arrival at domestic seaports.
---------------------------------------------------------------------------
    \17\ The SAFE Port Act directs DHS to: (1) establish technical 
criteria and standard operating procedures for the use of NII equipment 
at CSI seaports and (2) require CSI seaports to operate the equipment 
in accordance with the criteria and operating procedures established by 
DHS. The act states that the technical criteria and operating 
procedures should not be designed to conflict with the sovereignty of 
host countries, but it did not address host government s' sovereignty 
related to requirements for CSI seaports to operate the equipment in 
accordance with the criteria and procedures. The 9/11 Act directs DHS 
to establish technological and operational standards for systems to 
conduct 100 percent scanning of containers and to ensure that this and 
other actions taken to implement 100 percent scanning are consistent 
with the United States' international obligations.
---------------------------------------------------------------------------
Measuring Performance, Particularly Outcomes, Will Be Difficult
    In our reviews of the CSI and C-TPAT programs, we identified 
challenges with CBP's ability to measure program performance because 
of, among other things, the difficulty in determining whether these 
programs were achieving their desired result of increasing security for 
the United States.\18\ In the past, we and the Office of Management and 
Budget (OMB) have acknowledged the difficulty in developing outcome-
based performance measures for programs that aim to deter or prevent 
specific behaviors.\19\ In the case of C-TPAT, we noted in our March 
2005 \20\ and April 2008 reports that CBP had not developed a 
comprehensive set of performance measures and indicators for the 
programs, such as outcome-based measures, to monitor the status of 
program goals. A senior CBP official stated that developing these 
measures for C-TPAT, as well as other CBP programs, has been difficult 
because CBP lacks the data necessary to determine whether a program has 
prevented or deterred terrorist activity. We recommended that CBP 
complete the development of performance measures, to include outcome-
based measures and performance targets, to track the program's status 
in meeting its strategic goals. CBP agreed with our recommendation on 
developing performance measures, and had developed initial measures 
relating to membership, inspection percentages, and validation 
effectiveness. However, as we reported in April 2008, CBP had yet to 
develop measures that assess C-TPAT's progress toward achieving its 
strategic goal to ensure that its members improve the security of their 
supply chains pursuant to C-TPAT security criteria.
---------------------------------------------------------------------------
    \18\ For more information on the difficulty that CSI has had in 
developing outcome-based performance measures and in measuring the 
deterrence effect of the program, see GAO-08-187.
    \19\ According to OMB, outcome measures describe the intended 
result of carrying out a program or activity. For example, for a 
tornado warning system, a measure of outcome could be the number of 
lives saved and amount of property damage averted.
    \20\ GAO-05-404 and GAO, Supply Chain Security: U.S. Customs and 
Border Protection Has Enhanced Its Partnership with Import Trade 
Sectors, but Challenges Remain in Verifying Security Practices, GAO-08-
240 (Washington, D.C.: Apr. 25, 2008).
---------------------------------------------------------------------------
    Given that, as with CSI and C-TPAT, the purpose of the SFI pilot 
program and the 100 percent scanning provision is to increase security 
for the United States, the same challenges related to defining and 
measuring performance could also apply to the SFI pilot program and the 
100 percent scanning provision. Without outcome-based performance 
measures, it will be difficult for CBP and DHS managers and Congress to 
effectively provide program oversight and determine whether 100 percent 
scanning achieves the desired result--namely increased security for the 
United States.

Resource Responsibilities for Implementing 100 Percent Scanning Have 
        Not Been 
        Determined
    While CBP and DOE have purchased security equipment for foreign 
seaports participating in the SFI pilot program, it is unclear who will 
pay for additional resources--including increased staff, equipment, and 
infrastructure--and who will be responsible for operating and 
maintaining the equipment used for the statutory requirement to scan 
100 percent of U.S.-bound cargo containers at foreign seaports. 
According to CBP, the average cost of initiating operations at CSI 
seaports was about $395,000 in 2004 and $227,000 in 2005.\21\ By 
comparison, CBP reported that it and DOE have spent approximately $60 
million, collectively, to implement 100 percent scanning at the three 
foreign seaports fully participating in the SFI pilot program.\22\ The 
SAFE Port and 9/11 Acts did not require nor prohibit the Federal 
Government from bearing the cost of scanning 100 percent of U.S.-bound 
cargo containers.\23\ According to customs officials in the U.K. who 
participated in the SFI pilot program at the Port of Southampton, 
resource issues will inhibit their ability to implement permanently the 
100 percent scanning requirement. For example, these customs officials 
commented that to accommodate the SFI pilot program at the Port of 
Southampton, existing customs staff had to be reallocated from other 
functions. The U.K. customs officials further stated that this 
reallocation was feasible for the 6-month pilot program, but it would 
not be feasible on a permanent basis. Similarly, a customs official 
from another country with whom we met told us that while his country 
does not scan 100 percent of exports, its customs service has increased 
its focus on examining more exported container cargo, and this shift 
has led to a 50 percent increase in personnel.
---------------------------------------------------------------------------
    \21\ CBP had used the average cost per CSI port to achieve 
operational status as a performance measure. However, agency officials 
told us that they stopped using the measure in 2006 because at that 
point, the majority of CSI seaports had already become operational and 
because there were too many variables beyond CBP's control in the 
calculation.
    \22\ Under the SFI pilot program, three seaports will scan 100 
percent of U.S.-bound container cargo while the remaining four will 
scan less than 100 percent of U.S.-bound container cargo. CBP will 
conduct a reduced level of SFI operations at these four seaports, 
typically limited to one terminal in the port, such as Gamman Terminal 
in Busan or the Brani Terminal in Singapore.
    \23\ However, the Congressional Budget Office assumed in its 
analysis of estimates for implementing this requirement that the cost 
of acquiring, installing, and maintaining systems necessary to comply 
with the 100 percent scanning requirement would be borne by foreign 
seaports so that they could maintain trade with the United States.
---------------------------------------------------------------------------
    European government officials expressed concerns regarding the cost 
of equipment to meet the 100 percent scanning requirement, as well as 
the cost of additional personnel necessary to operate the new scanning 
equipment, view and transmit the images to the United States, and 
resolve false alarms. Though CBP and DOE have provided the bulk of 
equipment and other infrastructure necessary to implement the SFI pilot 
program, they have also benefited from host nation officials and port 
operators willing to provide, to varying degrees, the resources 
associated with additional staffing, alarm response protocols, 
construction, and other infrastructure upgrades. However, according to 
CBP, there is no assurance that this kind of mutual support is either 
sustainable in the long term or exists in all countries or at all 
seaports that export goods to the United States.

Logistical Feasibility Could Vary by Seaport
    Logistical issues, such as crowded terminal facilities and the 
variety of transportation modes at terminals, could present challenges 
to the SFI pilot program and implementation of 100 percent scanning. 
Seaports may lack the space necessary to install additional scanning 
equipment needed to comply with the 100 percent scanning requirement. 
For example, we observed that scanning equipment at some seaports is 
located several miles away from where cargo containers are stored, 
which could add to the time and cost requirements for scanning these 
containers. Similarly, while some seaports have natural bottlenecks 
that allow for container scanning equipment to be placed such that all 
outgoing containers would have to pass through the equipment, not all 
seaports are so configured, and the potential exists for containers to 
be shipped to the United States without being scanned. Another 
potential logistical vulnerability is related to the transportation 
modes by which cargo containers arrive and pass through seaports. For 
example, cargo containers that arrive at a seaport by truck or rail are 
generally easier to isolate, whereas transshipment cargo containers--
those moved from one vessel to another--are only available for scanning 
for a comparatively short time and may be more difficult to access.\24\ 
For example, U.K. customs officials stated that it was not possible to 
route transshipment containers that arrived by sea through the SFI 
equipment. As a consequence, according to CBP officials, the scanning 
of transshipment containers has not begun at the Port of Southampton. 
CBP and European customs officials evaluating the SFI pilot program 
stated that while the pilot has been comparatively successful at 
relatively lower-volume seaports, such as Southampton, implementing 100 
percent scanning would be significantly more challenging at seaports 
with a higher volume of cargo container traffic or greater percentages 
of transshipment cargo containers.
---------------------------------------------------------------------------
    \24\ Similarly, it may be difficult to scan cargo containers that 
remain on board a vessel as it passes through a foreign seaport.
---------------------------------------------------------------------------
Technology and Compatibility Issues Could Present Challenges
    The SFI pilot program currently faces technology challenges, such 
as mechanical breakdowns of scanning equipment because of environmental 
factors, inadequate infrastructure for the transmission of electronic 
information, and difficulties in integrating different generations of 
scanning equipment. Environmental conditions at some sites can 
compromise the effectiveness of radiation detection equipment used in 
the SFI pilot program. For example, two of the three seaports fully 
participating in the SFI pilot program experienced weather-related 
mechanical breakdowns of scanning equipment. Specifically, at the Port 
of Southampton, a piece of radiation scanning equipment failed because 
of rainy conditions and had to be replaced, resulting in 2 weeks of 
diminished scanning capabilities. Additionally, Port Qasim in Pakistan 
has experienced difficulties with scanning equipment because of the 
extreme heat. Because of the range of climates at the more than 700 
other international seaports that ship cargo to the United States, 
these types of technological challenges could be experienced elsewhere.
    The limited infrastructure at some foreign seaports poses a 
challenge to the installation and operation of radiation detection 
equipment, as well as to the electronic transmission of scan data to 
CBP officers in the United States. Many seaports are located in remote 
areas that often do not have access to reliable supplies of electricity 
or infrastructure needed to operate radiation portal monitors and 
associated communication systems. For example, at Port Salalah in Oman, 
a key challenge has been the cost of data transmission, because of low 
bandwidth communications infrastructure, to send data to the CBP 
officers who review the scans. Prior to SFI, the CSI office in Port 
Salalah already used transmission technology that cost annually about 
10 times that of other SFI seaports. To participate in SFI, CBP 
originally planned to procure additional technology costing 
approximately $1.5 million each year to transmit the SFI data from Port 
Salalah. However, CBP was able to devise a lower-cost option that 
involved sharing communications infrastructure with existing CSI 
operations at the port because U.S.-bound container volume is 
relatively low in Oman. While CBP reported that this solution could 
keep data transmission costs down at other low-volume seaports, it is 
unclear whether this could be accomplished at higher-volume seaports. 
In addition to compatibility with existing infrastructure, SFI seaports 
have experienced compatibility issues with equipment from different 
generations. According to CBP, there are various manufacturers of 
equipment used at CSI seaports, and although the integration of 
equipment and technology at SFI pilot program seaports has generally 
been successful, it has not been without challenges. For example, at 
Port Salalah integration of a large number of new pieces of equipment 
by new vendors caused operational delays.

Use and Ownership of Data Have Not Been Determined
    The legislation that mandated the SFI pilot program and 100 percent 
scanning does not specify who will have the authority or responsibility 
to collect, maintain, disseminate, view, or analyze scan data collected 
on cargo containers bound for the United States. While the SAFE Port 
Act specifies that SFI pilot program scan data should be available for 
review by U.S. Government officials, neither it nor the 9/11 Act 
establishes who is to be responsible for managing the data collected at 
foreign seaports. Other unresolved questions include ownership of data, 
how proprietary information is to be treated, and how privacy concerns 
are to be addressed. For example, officials from U.K. Customs stated 
that U.K. privacy legislation barred sharing information on cargo 
containers with CBP unless a specific risk was associated with the 
containers. To comply with U.K. laws, while still allowing CBP to 
obtain scan data on container cargo, U.K. Customs and CBP negotiated 
working practices to allow CBP to use its own handheld radiation 
scanning devices to determine whether cargo containers emitted 
radiation, but this was only for purposes of the SFI pilot program. 
According to the European Commission, for 100 percent scanning to go 
forward, the transfer of sensitive information would have to take place 
systematically, which would only be possible if a new international 
agreement between the United States and the European Union (EU) was 
enacted. In the absence of agreements with the host governments at the 
more than 700 seaports that ship cargo to the United States, access to 
data on the results of container scans could be difficult to ensure.

CBP International Partners Have Stated That 100 Percent Scanning Is 
        Inconsistent with Widely Accepted Risk Management Practices
    Some of CBP's international partners, including foreign customs 
services, port operators, trade groups, and international 
organizations, have stated that the 100 percent scanning requirement is 
inconsistent with widely accepted risk management principles, and some 
governments have expressed to DHS and Congress that 100 percent 
scanning is not consistent with these principles as contained in the 
SAFE Framework.\25\ Similarly, some European customs officials have 
told us that the 100 percent scanning requirement is in contrast to the 
risk-based strategy behind CSI and C-TPAT, and the WCO has stated that 
implementation of 100 percent scanning would be ``tantamount to 
abandonment of risk management.'' In addition, some of CBP's 
international partners have stated that the requirement could 
potentially reduce security. For example, the European Commission noted 
that there has been no demonstration that 100 percent scanning is a 
better means for enhancing security than current risk-based methods. 
Further, CBP officials have told us that the 100 percent scanning 
requirement may be a disincentive for foreign countries or companies to 
adopt risk-based security initiatives, such as CSI, C-TPAT, or the SAFE 
Framework. Similarly, in April 2008, the Association of German Seaport 
Operators released a position paper that stated that implementing the 
100 percent scanning requirement would undermine mutual, already 
achieved security successes and hinder maritime security by depriving 
resources from areas that present a more significant threat and warrant 
closer scrutiny.
---------------------------------------------------------------------------
    \25\ Currently, the CSI program employs a risk management approach 
to identify cargo containers at high risk of containing WMD for 
scanning with nonintrusive imaging equipment and possible physical 
inspection before being placed on vessels bound for the United States. 
In contrast, the 100 percent scanning approach subjects to all U.S.-
bound cargo containers to scanning with nonintrusive imaging equipment 
regardless of risk.
---------------------------------------------------------------------------
100 Percent Scanning Could Lead to Calls for Reciprocity and Be Viewed 
        as a 
        Barrier to Trade
    Implementation of the 100 percent scanning requirement could result 
in calls for reciprocity of scanning activities from foreign officials 
and be viewed as a barrier to trade. European customs officials, as 
well as officials from the WCO, have objected to the unilateral nature 
of the 100 percent scanning requirement, noting that this requirement 
contrasts with prior multilateral efforts CBP has implemented. 
Similarly, the Association of German Port Operators published a 
position paper stating that the legislative requirement inherently 
ignores the international character of global maritime trade and is a 
classic example of an issue that should have been discussed with and 
passed by the legislative body of an international organization, such 
as the WCO. In its report on the SFI pilot program, the European 
Commission expressed concern that it would be difficult for EU customs 
administrations to implement a measure designed to protect the United 
States that would divert resources away from strengthening EU security. 
Customs officials from Europe, as well as members of the World Shipping 
Council and the Federation of European Private Port Operators, 
indicated that should implementation of the 100 percent scanning 
requirement be pursued, foreign governments could establish similar 
requirements for the United States, forcing U.S. export cargo 
containers to undergo scanning before being loaded at U.S. seaports. 
According to CBP officials, the SFI pilot program, as an extension of 
CSI, allows foreign officials to ask the United States to reciprocate 
and scan 100 percent of cargo containers bound for their respective 
countries. CBP officials told us that CBP does not have the personnel, 
equipment, or space to scan 100 percent of cargo containers being 
exported to other countries, should it be requested to do so.
    In addition to the issue of reciprocity, European and Asian 
government officials, as well as officials from the WCO, have stated 
that 100 percent scanning could constitute a barrier to trade. For 
example, the Association of German Seaport Operators stated that the 
100 percent mandate would amount to an unfair nontariff trade barrier 
between the United States and foreign seaports. Similarly, senior 
officials from the European Commission expressed concern that a 100 
percent scanning requirement placed on foreign seaports could disrupt 
the international trading system.\26\ Further, the WCO passed a 
unanimous resolution in December 2007, expressing concern that 
implementation of 100 percent scanning would be detrimental to world 
trade and could result in unreasonable delays, port congestion, and 
international trading difficulties.\27\
---------------------------------------------------------------------------
    \26\ The European Commission is the EU's policy-making and 
executive engine. The commission is composed of 27 commissioners, one 
from each member state. Among its many powers, the commission proposes 
legislation for approval by the EU Council and European Parliament in 
matters relating to economic integration, ensures that EU laws are 
applied and upheld throughout the EU, implements the budget, and 
represents the European community in international trade negotiations.
    \27\ The United States abstained from the vote.
---------------------------------------------------------------------------
    Mr. Chairman and Members of the Subcommittee, this concludes my 
prepared statement. We look forward to working with CBP and the 
Congress to track progress of the SFI pilot and to identify the way 
forward for supply chain security. I would be happy to respond to any 
questions you may have.

Related GAO Products
    Supply Chain Security: U.S. Customs and Border Protection Has 
Enhanced Its Partnership with Import Trade Sectors, but Challenges 
Remain in Verifying Security Practices. GAO-08-240. Washington, D.C.: 
April 25, 2008.
    Supply Chain Security: Examinations of High-Risk Cargo at Foreign 
Seaports Have Increased, but Improved Data Collection and Performance 
Measures Are Needed. GAO-08-187. Washington, D.C.: January 25, 2008.
    Maritime Security: The SAFE Port Act: Status and Implementation One 
Year Later. GAO-08-126T. Washington, D.C.: October 30, 2007.
    Maritime Security: One Year Later: A Progress Report on the SAFE 
Port Act. GAO-08-171T. Washington, D.C.: October 16, 2007.
    Maritime Security: The SAFE Port Act and Efforts to Secure Our 
Nation's Seaports. GAO-08-86T. Washington, D.C.: October 4, 2007.
    Combating Nuclear Smuggling: Additional Actions Needed to Ensure 
Adequate Testing of Next Generation Radiation Detection Equipment. GAO-
07-1247T. Washington, D.C.: September 18, 2007.
    Maritime Security: Observations on Selected Aspects of the SAFE 
Port Act. GAO-07-754T. Washington, D.C.: April 26, 2007.
    Customs Revenue: Customs and Border Protection Needs to Improve 
Workforce Planning and Accountability. GAO-07-529. Washington, D.C.: 
April 12, 2007.
    Cargo Container Inspections: Preliminary Observations on the Status 
of Efforts to Improve the Automated Targeting System. GAO-06-591T. 
Washington, D.C.: March 30, 2006.
    Combating Nuclear Smuggling: Efforts to Deploy Radiation Detection 
Equipment in the United States and in Other Countries. GAO-05-840T. 
Washington, D.C.: June 21, 2005.
    Homeland Security: Key Cargo Security Programs Can Be Improved. 
GAO-05-466T. Washington, D.C.: May 26, 2005.
    Maritime Security: Enhancements Made, but Implementation and 
Sustainability Remain Key Challenges. GAO-05-448T. Washington, D.C.: 
May 17, 2005.
    Container Security: A Flexible Staffing Model and Minimum Equipment 
Requirements Would Improve Overseas Targeting and Inspection Efforts. 
GAO-05-557. Washington, D.C.: April 26, 2005.
    Preventing Nuclear Smuggling: DOE Has Made Limited Progress in 
Installing Radiation Detection Equipment at Highest Priority Foreign 
Seaports. GAO-05-375. Washington, D.C.: March 31, 2005.
    Cargo Security: Partnership Program Grants Importers Reduced 
Scrutiny with Limited Assurance of Improved Security. GAO-05-404. 
Washington, D.C.: March 11, 2005.
    Homeland Security: Process for Reporting Lessons Learned from 
Seaport Exercises Needs Further Attention. GAO-05-170. Washington, 
D.C.: January 14, 2005.
    Port Security: Better Planning Needed to Develop and Operate 
Maritime Worker Identification Card Program. GAO-05-106. Washington, 
D.C.: December 10, 2004.
    Maritime Security: Substantial Work Remains to Translate New 
Planning Requirements into Effective Port Security. GAO-04-838. 
Washington, D.C.: June 30, 2004.
    Homeland Security: Summary of Challenges Faced in Targeting 
Oceangoing Cargo Containers for Inspection. GAO-04-557T. Washington, 
D.C.: March 31, 2004.
    Container Security: Expansion of Key Customs Programs Will Require 
Greater Attention to Critical Success Factors. GAO-03-770. Washington, 
D.C.: July 25, 2003.

    Senator Lautenberg. Thank you very much.
    I would like a definition, Mr. Caldwell. How would you 
describe a layered approach to things? Is it basically modular?
    Mr. Caldwell. Well, the layered approach is several 
different programs trying to get at different parts of vectors 
that terrorists may use to get a weapon of mass destruction or 
other kind of contraband into this country. Part of that layer 
is Megaports that the Department of Energy operates to look for 
containers that would contain radioactive WMD. CBP's layers 
include, first, advance information to try to get information 
which could reveal potential----
    Senator Lautenberg. But tell me, does that not really 
describe the whole picture? I think when we modify the design 
of the program with a layered approach--I do not think that is 
any different than the approach to get to the end of the game, 
regardless of route. I mean, you have to do these things. What 
concerns me is that layered comes in there as an opportunity, 
Mr. Ahern, for the inability to meet a target that we have for 
the 100 percent scanning. So we use different words to describe 
it. ``Layered'' is one of them.
    And I talked to several of the staff as well.
    I mean, to me it is which of the routes is most important. 
Well, you have to consider that totally when you are looking 
for the security that we would like to see.
    Mr. Ahern, the Congress last year passed a law requiring 
all shipping containers coming into our ports to be scanned for 
nuclear weapons and radiation before they reach our shores. 
Now, according to the testimony this morning, the July 2012 
deadline will not be met. What will you say is a reasonable 
expectation now to have a 100 percent scanning system in place 
for all maritime cargo coming into the United States?
    Mr. Ahern. Well, as stated, the 2012 deadline that was 
actually expressed in the 9/11 Act had six caveats where there 
could be extensions if certain conditions were not met. Those 
are very specific in the law: making sure there was sufficient 
equipment available for purchase and installation; sufficient 
low false alarm rates; the capability to physically deploy the 
logistical challenges, some of which I described in some 
minimal detail, which is much more described in the report, 
some of the physical lay-down challenges we have seen in two 
very small ports that we have tested it in; the integration 
with the existing systems. I mean, Mr. Huizenga spoke about the 
fact that integrating the systems. Yes, there is a 
complementary package of technology that is out there, but one 
of the other conditions is about the software anomaly 
recognition system.
    Senator Lautenberg. Yes. Listen, we have got lots of 
brilliant people who are helping to devise the program into 
place. Why are all of these things anomalous? To me it seems 
that is part of what you do in order to make an estimate. 
Otherwise, it is kind of hip shooting and picking out a date. 
From day one almost, it says that we are never going to meet 
this date.
    Mr. Ahern. Let me try to simplify it as best I can. The 
anomaly recognition, to be able to look at each one of the X-
rays that comes through the gates for the containers--if we 
were to apply that against a universal 11.5 million containers, 
continuing to grow each year by 10 to 12 percent, it is not a 
matter of just running the containers through the X-ray 
systems. At this point in time, someone--that means a human, a 
trained officer, we believe a Government officer--needs to be 
able to go ahead and look and review those images. That takes--
--
    Senator Lautenberg. You mean that was not thought of?
    Mr. Ahern. No. That has absolutely been thought of. We have 
made this very clear for a number of years----
    Senator Lautenberg. So why do we not get past the problems 
that exist and answer the question, well, why in the planning 
were these things not reviewed? Why were these situations not 
expected? If it was a NASA flight, it would be terrible if the 
planning had been this far off the mark.
    Mr. Ahern. Well, very respectfully, sir, there is 
conflicting direction from the Congress. The SAFE Port Act 
actually was going to give us the opportunity to go ahead and 
provide the opportunity to study through piloting three 
locations, which we are underway, in the process of doing, 
which is the report that was just submitted late.
    The 9/11 Act that came along later then just trumped that 
legislation and basically called for 100 percent scanning of 
all containers coming into the United States. So there was not 
the opportunity to continue to work through the pilot in an 
appropriate fashion to discover all the concerns that are out 
there with the development and maturity of technology, the 
integrating of the images, the software anomaly recognition 
capabilities, the challenges to sovereignty that we have out 
there as well, and also deal with some of the diplomatic 
challenges.
    One of the things I would like to present to you--and I 
would really offer it into the record for your consideration 
for the full committee here--is that we have had 27 countries 
that have written to us and expressed their concerns. We have 
had nine international trade associations and two international 
associations.
    [The information referred to follows:]

     List of Countries and Trade Organizations Expressing Concerns 
                        on 100 Percent Scanning

             Provided by U.S. Customs and Border Protection

Countries:
Australia
Belgium
Bulgaria
Cameroon
Canada
China
Finland
Germany
Honduras
Hong Kong
Indonesia
Italy
Japan
Latvia
Mauritania
Netherlands
New Zealand
Oman
Philippines
Poland
Port-au-Prince
Singapore
South Korea
Taiwan
Thailand
Ukraine
United Kingdom
International Organizations:
European Union
World Customs Organization
Industry Organizations:
American Association of Exporters and Importers
Business Alliance for Customs Modernization
Joint Industry Group
National Industrial Transportation League
National Customs Brokers & Forwarders Association of America
Retail Industry Leaders Association
U.S. Chamber of Commerce
WCO Private Sector Consultative Group
World Shipping Council

    There was also a study that was just recently released this 
week that I would also provide for the record* to 
make sure that has an opportunity to be reviewed as well 
talking about the economic impact that this would have to the 
global supply chain as well. I think these are important things 
that we would have had the opportunity to continue to learn had 
we followed the track of the SAFE Port Act.
---------------------------------------------------------------------------
    \*\ This study, Global Logistic Chain Security--Economic Impacts of 
the U.S. 100% Container Scanner Law is maintained in Committee files.
---------------------------------------------------------------------------
    Senator Lautenberg. There were opportunities for testimony 
to be given, and I listened with respect. But I will tell you 
that if this was a brain operation and the doctor said, well, I 
did not know that I had to have a particular type of tool, I 
did not know that we used a particular type of anesthesia, 
fundamental to planning.
    I had the opportunity run a pretty big corporation before I 
came here, and we made mistakes. But what happened is we 
learned that you cannot enter these things, offer a deadline 
based on the conditions you are describing now. It is 
absolutely impossible.
    When will we have 100 percent scanning?
    Mr. Ahern. Well, I would submit to you that is not a wise 
investment for the taxpayers' dollars. I do not believe 100 
percent scanning would equal 100 percent security. I think when 
you actually take a look at the risk to the global supply 
chain, the risk for security concerns is relatively low based 
on intelligence assessments. Given the fact that 90 percent of 
the global economy moves through the maritime environment, the 
consequences are high. But I would submit that we have very 
productive layered defenses in place through the advance 
information that we are doing a better job of----
    Senator Lautenberg. Well, OK. We are looking here at a 
commitment that was made, a very important commitment. We knew 
that we had to do studies along the way. We knew we had to do 
tests along the way. It has been 7 years since 9/11. The 9/11 
Commission found that the greatest failure in their review was 
one of imagination.
    And when I hear your response to picking a date that has 
some degree of reliability without a broad explanation of why 
it cannot be done--can you offer a date with any sense of 
satisfaction it will be met?
    Mr. Ahern. Not with the current technology, not with the 
economics involved with this, not with the fact that----
    Senator Lautenberg. OK. What you are saying realistically 
is that they are going to continue to have to take these risks. 
There is no other way to assure ourselves that these materials 
are not included in a container. So you are telling the world 
here that we cannot do that. This country is not capable of it.
    Mr. Ahern. What I am suggesting is that the layered defense 
approach, beginning with advance information, running it 
through an automated targeting system, interfacing with 
intelligence, having the ability to have our Customs-Trade 
Partnership Against Terrorism be able to do supply chain 
verification at the point of stuffing, having over 200 officers 
identified and assigned at the top locations, 58 locations----
    Senator Lautenberg. I hear you, Mr. Ahern. And I thank you. 
I think what you are doing is presenting questions now that 
should have been in the origination of a date and a program.
    Mr. Ahern. Well, very respectfully, I would ask that the 
record be reviewed since the beginning of this process. We have 
talked about some of the challenges with 100 percent scanning 
before the law was passed last year.
    We thought the SAFE Port Act was a very thoughtful approach 
and a way to go forward with dealing in a pilot location so 
that we could learn all the different challenges that are out 
there.
    Senator Lautenberg. When does it get done?
    I am going to go on to Mr. Caldwell. Four of the world's 
largest marine terminal operators have indicated on their own 
that they are going to begin to scan all cargo through their 
facilities. They are waiting for the administration to set 
performance standards for the scanning equipment as Congress 
required in the 2006 SAFE Port Act. When will these technology 
performance standards be put in place?
    Mr. Caldwell. Sir, I do not know when those standards will 
be in place. It is very important to have those standards, and 
it is important that they be developed through a standard-
setting organization such as ISO. Once you actually have those 
standards, whether it is for NII equipment or RPM equipment, 
only then can you really independently assess and compare 
equipment. Then you can compare equipment in another port 
versus our port? Then you can determine if its capability is 
less than ours, or if it meets a minimum standard?
    I am not sure how the Government or CBP gets that process 
started within ISO. There is an ISO standard which some port 
terminal operators have used to certify the general security 
management in their ports. But there still is not a standard 
for the actual equipment performance.
    Senator Lautenberg. So with these terminal operators on 
their own--what is their target? Does each one make the 
assessment that they are going to meet the qualities we want in 
our protection? Or do we keep on waiting for a performance 
standard that is universal that everyone has to meet?
    Mr. Caldwell. I think these are competitive decisions by 
these terminal operators. Maybe they see the writing on the 
wall. They are pushing toward 100 percent scanning, which 
clearly is in U.S. law at this point, and it would certainly 
give them a competitive edge if they are able to set up such a 
system. I do not think any of these terminal operators are 
claiming they can do this for transshipped items.
    Obviously, this equipment is out there. It is being used--
advancing the state-of-the-art and hopefully increasing those 
performance capabilities.
    But again, I do not know if there is an active process at 
ISO to actually set such performance standards.
    Senator Lautenberg. Mr. Huizenga, do you want to make a 
comment?
    Mr. Huizenga. Yes. If you do not mind, Mr. Chairman, I will 
try to address your concern.
    We have been working pretty closely with the industry 
representatives for some time now. Although we could formalize 
this--and I think it is useful and we are in the process of 
doing so, industry representatives are familiar with--the 
targets that we are trying to hit. The information is out there 
and we will work with Mr. Ahern's people and the DNDO people at 
the Department of Homeland Security to formalize this process.
    But the more important point is that the technology 
actually does not exist, despite our best efforts right now. If 
you want to try to capture an X-ray image or a radiation scan 
for a transshipped container that comes into Singapore and gets 
off one ship, gets put on the dock for a very short period of 
time and then put on another one, there is no space in the 
terminal to put the equipment. So if you had to take that 
container and drive it off the port and back through the entry 
and exit gate, where it is easy to capture the containers, it 
would completely disrupt the operations of the port. Despite 
our best efforts, there are some things that cannot be done and 
keep the port operating.
    Senator Lautenberg. But even if the manifest or bill of 
lading would have been established for each container and some 
certification that this container is filled with safe cargo, 
now if the transfer is made without breaking the seal--and I am 
not intimately familiar with this--does that not take care of 
it?
    Mr. Huizenga. It is a simple logistics issue really. The 
container comes into the port and gets taken off the ship and 
put down on the dock, and then put on another ship, and it 
really does not go through a convenient choke point where it 
can be driven through a scanning device. Now, we are looking 
for ways to overcome this, but right now we do not have a 
technology that can solve the problem.
    Senator Lautenberg. But it would have been driven through a 
device, to use your expression, before it left the port of 
embarkation.
    Mr. Huizenga. It was through a feeder port, perhaps. But 
that port might not necessarily have been shipping anything 
directly to the United States. It just adds another layer of 
complexity to the number of ports you need to try to work at.
    Senator Lautenberg. Mr. Ahern, any idea what the cost might 
be to the country to install the necessary equipment to be able 
to allow our Government to receive the scanning data we need 
for shipments from overseas?
    Mr. Ahern. If we were to look at it globally for 100 
percent application, we have over 700 ports around the world 
that ship to the United States. Obviously, those are pretty 
large and go down to very, very small feeder ports. We have not 
actually done a footprint of each one of those 700 ports for 
the number of terminals and the number of gates that would 
actually be in each one of these environments. But a rough 
order of magnitude, we are looking at about $8 million per 
lane. A place like Hong Kong, just one terminal has 10 lanes.
    That does also not address the issue that Mr. Huizenga 
spoke about which is transshipment cargo that does not come 
through the gates. Those are basically on-dock transfers when 
you have a vessel that comes alongside and takes some 
containers off to then put on another vessel destined to the 
United States. There is that complicating factor as well.
    Certainly for this initial pilot, the cost of DOE and 
Customs and Border Protection was about $30 million each, for a 
total of $60 million just to run the pilots in these three very 
small locations. That was a combination of DOE's resources and 
capabilities for some of the hardware, the radiation portal 
monitors, ours for the X-ray, and in one case, Honduras 
actually capitalized the investment for the X-ray system. So it 
is a very expensive proposition.
    Senator Lautenberg. Without being too specific, are the 
ports that send material to our country rated on some kind of a 
risk basis? Do we believe that there are ports that are far 
riskier than others for whatever the reason?
    Mr. Ahern. Yes, we do, and there are a couple of additional 
factors. Certainly the Coast Guard through their HSBIS reviews 
do ratings. Certainly there is intelligence community 
assessments as well, and also we have our own track record now 
of a number of years of collecting information and doing risk 
assessment on individual shipments coming from a location where 
our automated targeting system has rated them above the 
threshold that requires an examination. We have that data as 
well. That goes into the compilation of how we would begin to 
look at a more risk-based approach for particular trade lanes.
    Senator Lautenberg. I recognize the work that you and your 
CBP staff have done to set up the scanning pilot program, and 
there will be some valuable lessons, as you indicated, learned 
for going forward.
    Industry representatives have tried to claim that some 
security measures like mandatory container scanning are bad for 
business because they will slow commerce. But I understand that 
in some ports, including Southampton which you mentioned, after 
scanning operations were in place, the port actually moved more 
containers overall. Can you elaborate on that?
    Mr. Ahern. Could you repeat that last line again? I am 
sorry.
    Senator Lautenberg. Yes. That the port actually moved more 
containers overall out of Southampton, for instance. Can you 
tell us whether or not the concerns of the industry are valid, 
that they will slow commerce to a halt? I think our experience 
in Southampton said that they see things moving more containers 
as a result of their inspection.
    Mr. Ahern. I would need to look precisely at the numbers or 
the analysis that led to that conclusion. But I would submit 
that with a place like Southampton--it is a very small universe 
of containers coming to the United States. It is an 
intermittent flow at best. I was just there about 6 weeks ago 
to look at it again, and it is an 8-acre footprint, which goes 
to one of the issues. We don't have the environment in most of 
these ports to be able to put the lay-down of technology so 
that it could stop at intermittent locations, usually three, to 
be able to be scanned by the X-ray, the radiation portal 
monitor, the optical character recognition, and then for the 
officer in the alarm station to be able to do the review.
    There has been some resulting benefit--and this is what I 
touched on briefly in my oral statement--that if we can reduce 
that risk overseas, that certainly is one of the exams we do 
not need to do upon arrival in the United States if there is an 
alarm that occurs. We then have the ability through the 
information we have collected to transmit that whole electronic 
file with the radiation spectra, the X-ray image, as well as 
the automated targeting systems in one electronic file to our 
domestic location, Newark, for example, to be able to say we 
did have an alarm. We did resolve it before it came. That is a 
very, very small manageable universe.
    Senator Lautenberg. Right.
    Mr. Ahern. That is one of the challenges to try to put 
the----
    Senator Lautenberg. Did that slow the pace? The work done 
there--does that slow the pace of movement?
    Mr. Ahern. I would submit there was no pace to disrupt in a 
place like Southampton. It was such a small, intermittent type 
traffic that shows up at the gate. It is such a small universe.
    In a place like Hong Kong, for example, 1.2 million 
containers roughly a year to the United States. Through each 
one of those gates, you are running 300 containers an hour 
through those gates. To be able to review the image, to be able 
to read the spectra, to be able to go ahead and do any 
resolution would add exponentially to the traffic and 
throughput through those gates. That is where we see the 
problems. It is not so much----
    Senator Lautenberg. So 300 containers an hour move through 
there.
    Mr. Ahern. In a place like Hong Kong, that is where----
    Senator Lautenberg. Yes, but electronic readings, however 
they get them, for each container--inspection is done 
electronically, technologically. Right?
    Mr. Ahern. In Southampton, yes. And in Hong Kong, just one 
lane of one terminal. And the normal throughput through all the 
lanes is about 300 per hour.
    Senator Lautenberg. Oh, all the lanes. OK, I am sorry.
    Mr. Ahern. Per lane over all of the lanes. So it would be 
300 times the 10 per hour coming through those facilities.
    Senator Lautenberg. OK.
    Mr. Ahern. But what the problem is--and we saw this even 
when we went back to the Hong Kong demonstration project called 
ISIS about 3 or 4 years ago, when there were claims and 
representation that it was providing 100 percent scanning, I 
also had an opportunity to see that personally as well. They 
were scanning. They were just running containers through X-ray 
and radiation portal monitors with no regard for the quality of 
the image or any resolution of the image that was occurring 
through this demonstration project through industry.
    Each one of these technological systems has to be manned at 
this point in time for somebody to look for the anomaly. 
Otherwise, the complementary package of an X-ray with a 
radiation spectra to see if there is any shielding of a harmful 
isotope is going to be negated. So it has to have the human 
intervention, a trained officer to look at the image to see if 
there is an anomaly that could be there hiding an isotope of 
concern.
    Right now what does not exist--and this is one of the 
challenges we see very significantly that is in the report--is 
an anomaly recognition software so you do not have to spend 3 
to 5 minutes per image to see if there are anomalies that are 
out there.
    Senator Lautenberg. It sounds fairly basic in terms of--if 
it needs human intervention, obviously it is going to be 
different. I am assuming that some kind of an alarm system that 
picks out the particular thing that has got to be called 
attention to would be operated also through the system that 
does the analysis.
    Mr. Ahern. There is a system for an alarm if an isotope is 
identified. Those alarms are actually identified through the 
radiation spectra capabilities. What is not existent is the 
complementary package for the nonintrusive inspection 
capability, the large-scale X-ray. There is no alarm capability 
there that identifies that there is an anomaly in this 
particular box without getting into too much detail. That is 
what is going to be a critical piece to make this integration 
of these technological packages a success, that each one have a 
software capability to be able to alarm someone, whether it be 
our presence overseas, which we would advocate----
    Senator Lautenberg. That being the case, do the concerns of 
industry register a problem that is real, that it would bring a 
halt to commerce?
    Mr. Ahern. In my estimation and in my experience and my 
observation of the three pilot locations and also looking at 
Hong Kong, if we were to apply this in a universe of 100 
percent environment and each one of the alarms needed to be 
resolved and each one of the X-rays needed to be determined by 
a trained officer, it would bring commerce to a halt.
    Senator Lautenberg. Well, Mr. Huizenga?
    Mr. Huizenga. And I just want to add, if I could, one 
clarification. In Southampton, I think it is fair to say, that 
the gate traffic, the containers coming into and exiting the 
terminal--it really did not impact the operation.
    But the transshipped containers in Southampton were really 
not inspected according to the requirements of the SFI. It was 
not possible in the end. We ended up having to do some 
workarounds. So it is another example of, although the gate 
traffic is pretty easy to get, the transshipped containers were 
still difficult to----
    Senator Lautenberg. Yes. Well, but I am not sure about the 
message we are sending out of here. We obviously need the 
commerce. We need the activity of shipped materials. Enormous 
traffic.
    Is it suggested that we cannot be as safe as we should be 
and still have the movement of material?
    Mr. Ahern. Mr. Chairman, I would submit a few factors for 
consideration.
    First, the security systems--the layers we have in place 
post-
9/11--have actually been very effective and they continue to 
improve. We thank GAO for their continued reviews. Each time 
they come, we find additional enhancements. For our 24-hour 
rule, where we get advance information, we have a final 
rulemaking about to come out that will get additional 
information in advance of shipments so that we can run that 
through our targeting systems to identify shipments of concern.
    I think it is also important, as we look at our partnership 
with industry, the security protocols they have put in place, 
beginning at the onset of the supply chain, at the point of 
stuffing which is the greatest opportunity for the introduction 
of a significant piece of material that could be of concern or 
a weapon or other contraband of concern--that is continuing to 
get better.
    I think it is also important to realize that when we began 
this, we did have any radiation portal monitors here in the 
United States. We had one that was being demonstrated over 4 
years ago in Detroit. We now have 98 percent. 98 percent of the 
container traffic coming to the United States, before it goes 
into the commerce of the United States, actually goes through 
radiation portal monitors before it departs the terminals at 
the ports within the United States. That is a significant 
accomplishment.
    As we continue to go ahead and balance the security 
responsibility, we also need to balance it against the risk. 
The continual threat assessments show that the risk in the 
maritime environment is relatively low. Certainly the 
consequence is high. And I would submit with the risk reduction 
strategy we have in place, I believe it matches what the risk 
would be.
    Now you weigh that against the consequence, the economic 
consequence, of the layering of 100 percent scanning globally, 
I think that is a huge consideration, and we need to make sure, 
as we are putting security protocols in place, that we are not 
going to give the terrorist organizations an opportunity to 
claim victory because we responded in such a way that is going 
to drive up costs so significantly.
    And finally, I think we need to be mindful of the fact of 
the consequences that really are out there looming large. I 
again ask this committee to take a look at the report released 
by the World Customs Organization and look at the submissions 
by the trade industries, the international organizations, and 
our international partners. They are calling for reciprocity. 
So your port in New Jersey, sir, would be one that they would 
say if you want us to do 100 percent scanning destined to your 
country, we want the same reciprocal requirement from you. You 
talk about logistics and movement to the trade community here 
in the United States that exports, the impact that will have on 
the trucking industry, the rail industry, the maritime 
industry, the footprint to be required here in the United 
States. It is a huge issue that has not even been studied from 
an economic standpoint as we look at 100 percent scanning 
overseas. Our foreign partners are saying we are just as 
concerned with things coming from the United States. And that 
really should be considered as well, sir.
    Senator Lautenberg. Well, but there were things said a few 
years ago about our ability to get the 100 percent scanning, 
implying there that that would be 100 percent safe, 100 percent 
secure.
    Now, when you talk about the money being spent, look at 
what we spend on baggage screening for airplanes. There is an 
entire industry now that is related to having to provide that 
kind of security and safety.
    But as I hear you now, Mr. Ahern, I am concerned that the 
message is, well, we cannot do it. If that is the case, then I 
am going to ask for a comprehensive report from your Department 
that tells us what can--I want the public to hear from the 
people who have the authority, have the responsibility, have 
the resources to do it to tell us exactly what the score is 
here.
    I want to just ask a question here. I understand that CBP 
is receiving container scans now but that an individual person 
has to look at each one of them to see if they present a 
security risk, the thing we have just been talking about. So 
what does the Department do now to develop the technology for, 
as I suggested earlier, automatic detection? Can that be 
achieved?
    Mr. Ahern. Right now that has been a real technological 
challenge for industry, and we certainly have been--the medical 
industry has been challenged by this issue for a number of 
years before we had this issue emerge as a homeland security 
problem. We do not have the solution to that within Homeland 
Security. We really challenge industry to come up with that 
software anomaly recognition package. That is going to be the 
key to make this go forward.
    I also would submit, back to your previous question of 
mixed messaging, I hope that is certainly not the case. But 
just to clarify again here, I believe, to make sure the country 
realizes, the security measures that are in place I believe 
provides a layer of security that is appropriate and continue 
to enhance each one of the layers.
    And as we look forward, I would believe that we need to 
take a look--to continue the risk layers in appropriate ways in 
a place like we currently have in Pakistan where we have a 
protocol in place where we actually screen 100 percent of 
containers coming out of just one of the ports in a place like 
Qasim, Pakistan. We certainly think it would make sense to take 
a look at another location right there out of the same country, 
a place like Karachi. We need to make sure that we start to 
have a thoughtful approach to 100 percent scanning where it 
makes sense in high-risk trade lanes so that we can actually 
provide an additional layer, where we do not think the current 
five layers of risk reduction are sufficient.
    Senator Lautenberg. Yes. Well, it raises a question that is 
not going to be resolved this day in this hearing.
    Are we saying that there is a limit to the amount of 
protection that the public can be afforded? And I am not 
talking about afforded in price. I am talking about afforded in 
functioning. We have so much of our resources now helping us to 
defend against terrorist attack, against malicious targeting 
with very high-powered weapons. Do you want to comment? Do you 
want to give us an index of how safe we can be?
    Mr. Ahern. I will give several points for consideration.
    First off, no one should be misled to believe that 100 
percent scanning with the current technology that is out there 
or anything we see on the horizon is going to provide 100 
percent security. No one should be misled by that point.
    The other thing is certainly we need to realize there is 
risk that needs to be assumed in every environment. The 
maritime environment is not excluded or separate alone. I mean, 
certainly it is a global impact economically, but certainly 
even with the layers, even with 100 percent scanning thrown on 
top, you still will not reduce the risk 100 percent. That has 
to be an assumption going forward.
    My biggest concern, with 32 years of experience, is we are 
focusing in the maritime environment to the exclusion of other 
areas of higher concern to this country and continue to invest 
time, efforts, and resources in the maritime environment where 
have other concerns that we need to have the funding, the 
resources, and our technological attention directed toward. I 
will be meeting with you this afternoon, sir, to talk about 
rail security. That is another environment we have other 
concerns about. So we need to take a look at the borders and 
border security in its totality, not just continue to focus on 
one particular aspect of homeland security in one particular 
vector.
    Senator Lautenberg. Do you want to add something, Mr. 
Caldwell?
    Mr. Caldwell. Yes, Senator Lautenberg. In my portfolio, I 
do have other areas of maritime security beyond the CBP 
programs, to include Coast Guard programs. Based on this other 
work, I share some of Mr. Ahern's concerns. I would not want to 
see 100 percent scanning become the ``Masinot Line'' of 
maritime security. You are putting all your resources in a 
certain type of attack in a certain vector. Those resources 
could also be used to protect maritime areas that are 
relatively unprotected now, such as bulk cargos, small vessels, 
or attacks in the maritime environment by other means.
    Senator Lautenberg. I remind you, before we close this 
hearing, that we spend over a quarter of a trillion dollars, 
close to a half, on a war that is supposed to protect us 
against terrorism. That is what we say. Now, if we were to 
place the same emphasis financially on protecting us from an 
invasion through the shipping structure, might we solve the 
problem? Mr. Ahern, you mentioned money several times. And I 
agree. We have got to put it where our interests lie. But I do 
not see it happening right now, but I do see us spending the 
money in Iraq and Afghanistan and other places around the 
world. But we have not had the kind of loss that we had on our 
own shores at 9/11, the number of people that lost their lives 
in my neighborhood, if you will.
    So there is something here that I think would be of 
significant public interest, and that is, we are saying--or the 
Administration is saying--you are representing their view and 
their determination--that we cannot expect the kind of result 
that we were led to believe we would get. That was the 
assumption. The 100 percent inspection was thought to be, if 
not 100 percent safety, that we were very close to that kind of 
a protection wall.
    So whatever you have got to develop for us, Mr. Ahern, I 
ask you to do so and be blunt so that the public understands 
what is happening now in this Administration and in our world.
    Thank you. This Committee hearing is adjourned.
    [Whereupon, at 11:06 a.m., the hearing was adjourned.]

                            A P P E N D I X

 Prepared Statement of American Association of Exporters and Importers

    Chairman Lautenberg, Ranking Member Smith, and Members of the 
Subcommittee,

    The American Association of Exporters and Importers (AAEI) 
appreciates the opportunity to offer its comments on U.S. Customs and 
Border Protection's (CBP) Secure Freight Initiative (SFI) and its other 
supply chain security efforts.
    AAEI has been a national voice for the international trade 
community in the United States since 1921. Our unique role in 
representing the trade community comes from our broad base of members, 
including manufacturers, importers, exporters, wholesalers, retailers 
and service providers, including brokers, freight forwarders, trade 
advisors, insurers, security providers, transportation interests and 
ports. Many of these enterprises are small businesses seeking to export 
to foreign markets.
    AAEI is truly a member driven organization. In AAEI's committees, 
conferences and working groups, the professionals who make up our 
membership spend hours sharing their trade facilitation, supply chain 
security and other international trade experiences with other 
professionals and learning from the experiences of others. Through 
those activities, our members are able to coalesce around those 
experiences into an in-depth analysis of important international trade 
policy issues and provide that insight to policymakers in Washington 
and throughout the world.
    AAEI is deeply interested and vested in the subject of this 
hearing. We have multiple concerns regarding the effectiveness, 
efficiency, significant costs, practicality, and real world benefits of 
SFI initiatives and other government mandated efforts such as 100 
percent scanning. We hope that the practical experience of our members 
in compliance, trade facilitation and security will be of assistance.
    While AAEI remains very concerned about the implementation of 100 
percent scanning on a global basis,\1\ we believe the prototype testing 
undertaken in implementing SFI to be a correct approach to the 
development and implementation of important supply chain security 
programs. The development and implementation of such important and 
complex programs requires comprehensive testing to, ensure that the 
programs will effectively and efficiently provide the enhanced 
operation that we all desire and recognize, as intrinsic to achieving 
immediate and long term economic and homeland security benefits. 
Implementing 100 percent scanning or any other universal data 
submission project without such a prototype may unnecessarily result in 
gridlock at the ports, the submission of overwhelming volumes of data 
and the expenditure of enormous public and private resources 
reengineering solutions to problems that could have been, and frankly 
must be, avoided. As export/import enterprises, it has been our 
experience that testing proposed security programs using real world 
systems and processes is not only necessary for successful 
implementation but critical to the determination of what, if any, 
increased security can be obtained.
---------------------------------------------------------------------------
    \1\ Among our concerns are that each and every one of the statutory 
performance and implementation criteria are met. See 9/11 Commission 
Act Section 1701(b)(4).
---------------------------------------------------------------------------
    In our comments on CBP's January 2, 2008, Notice of Proposed 
Rulemaking, we urged CBP to fulfill its obligation under the SAFE Port 
Act to test the ``feasibility'' of its proposal by undertaking just 
such a prototype before implementing the 10+2 advanced data 
requirements. Unfortunately, CBP has steadfastly refused to conduct a 
full pilot of its 10+2 proposal, instead running a very limited 
prototype.
    AAEI believes that a pragmatic ``holistic'' approach to trade 
security is paramount. This committee's grasp of commercial and 
technological realities is of great value in understanding and dealing 
with multiple independently created public and private sector 
initiatives each intended to address vital homeland security related 
issues. Your jurisdiction both requires and enables exploration at the 
increasingly difficult intersection of compliance, facilitation, 
safety, and security.
    As the Committee knows, there are numerous trade security efforts 
that directly impact vital U.S. supply chains. These programs include 
supply chain partnerships, data collection, advanced data methods, 
related security program elements and 100 percent scanning, among many 
others. The depth and extent of these programs can be seen in AAEI's 
now familiar American Trader's Guide to Post 9/11 and 
Homeland Security Programs. (A copy is attached.) Also available at 
http://www.aaei.org/aaei/files/ccLibraryFiles/Filename/000000003019/
TSP%20FINAL%
20%2801-16-08%29.pdf.
    Initially released in the Fall of 2007, and recently updated to 
include the ``10+2'' information, the Guide is the product of extensive 
discussions and review with policymakers, industry observers and trade 
professionals. The Guide provides trade professionals with one piece of 
paper showing the vast number of the trade security programs that 
companies have to deal with. You will notice that the single sheet of 
paper is not a standard size sheet. In order to make the list of trade 
security programs fit on a single sheet of paper, we had to use a 
larger size. In fact, we had to go to two pages!
    The Guide provokes one of the fundamental security questions of the 
Post-9/11 age: How many layers of security are enough for risk 
management to work?
    AAEI supports the risk management concept of ``defense in depth.'' 
We believe that the best security is derived from an approach in which 
well integrated security programs are layered together to create a web 
of defense against terrorism. To be well integrated, the layers of such 
a defense must not unnecessarily overlap, or leave gaps. Layers should 
not be added if they provide no demonstrable security gains. In fact, 
such layers are likely to undermine security as they take scarce 
resources of time and money from the layers that do provide security 
gains.
    While each program listed in the Guide may have provided valuable 
security initiatives when they were implemented or even when viewed in 
isolation, the Guide makes clear that, these programs have, with the 
best of intentions, been introduced without being integrated into 
existing regulatory legislative or private sector designed structures. 
In fact, they have emerged from multiple Congressional committees, 
Government Agencies and private sector initiatives with limited policy 
consultation amongst these diverse ``entities''. Thus, both DHS/CBP and 
the trade community face an expanding trade security environment of 
unnecessarily burdensome, complex and often overlapping programs. With 
the complexity and overlapping nature of the current security 
environment, programs that, on their face, may appear to increase 
security may actually provide no measurable security gains.
    This point can be best illustrated by examining the security 
environment of a single supply chain.
    Let's look at security layers that are applied by U.S. CBP to a 
container exported from Pakistan's Port Qasim to a validated C-TPAT 
participant in the U.S. today.

        Layer 1: As a validated C-TPAT participant, information about 
        the participants in the supply chain and their security 
        practices have been provided to, and validated by, U.S. CBP. 
        CBP has validated that the C-TPAT participant is utilizing the 
        supply chain security ``best practices'' that have been 
        identified by CBP. CBP's validation of this information is done 
        prior to the container's arrival at the port of export.

        Layer 2: Once a specific shipment has been initiated, the 
        container is prepared and sent to Port Qasim. According to 
        CBP's Secure Freight Fact Sheet, when the container arrives in 
        the port, officials of the Pakistan government subject it to 
        passive radiation detection equipment and non-intrusive 
        inspection (NII) equipment. The NII uses ``x-rays or gamma rays 
        to penetrate the container and produce an image of the 
        contents.'' The output of these scans is integrated with other 
        data available to the terminal operator, the Pakistani 
        government (including export declaration data which is also 
        sent to CBP), and in other governmental systems. The image of 
        the content and the other integrated data is electronically 
        provided to CBP's targeting system in real time. CBP personnel 
        are able to examine that information to determine whether the 
        contents of the container present any threat.

        Layer 3: Twenty 4 hours prior to the loading of the vessel, the 
        vessel carrier must provide CBP with manifest information 
        through CBP's Automated Manifest System. That manifest 
        information includes the names of the parties involved in the 
        transaction, a description of the goods and other shipment and 
        transportation data.

        Layer 4: Within 24 hours of arrival at the U.S. port, the 
        validated C-TPAT importer will pre-file its entry summary in 
        order to get the benefit of CTPAT's lower targeting scores. 
        Again, the entry summary contains much of the same basic 
        information that has been provided in the three previous layers 
        described above (e.g., names of the parties, description of the 
        goods etc.)

    Yes, there are data differences between the various layers, but the 
vast majority of the information is the same. Moreover, for repetitive 
shipments of the same commodity between the same parties, the redundant 
data will be provided over and over again. This is in direct 
contradiction to one of the principle goals of ATDI--an account based 
approach to homeland security, which would greatly reduce the need for 
redundant data to be submitted to the government over and over again.
    On January 2, 2008, CBP proposed a 5th data layer--the ``Importer 
Security Filing and Additional Carrier Requirements'' proposal (also 
known as the 10+2 proposal). This layer would require the U.S. importer 
(regardless of CTPAT status) to file a Security Filing (SF) to CBP 24 
hours prior to the loading of the container on the vessel. The filing 
of the SF is required without any consideration being given to whether: 
(1) the importer is validated C-TPAT member; (2) that much of the same 
basic information from the same sources has already been provided by or 
on behalf of the importer; or (3) whether the shipment is being 
exported from a SFI port that provides CBP with a real time image of 
the contents of the container before it is loaded on the vessel.
    As just one example, AAEI believes it is unnecessarily duplicative 
to require the submission of the ``10+2'' line by line targeting data 
24 hours prior to vessel loading from low risk importers on shipments 
that have already been subject to: (1) C-TPAT validation; (2) 
radiological scanning; (3) content image scanning; and (4) the filing 
of manifest data. Thus, for C-TPAT shipments from SFI ports, no 10+2 
submission should be required.
    AAEI urges the members of this subcommittee and other Members of 
Congress to require CBP to take a holistic approach to supply chain 
security and integrate the plethora of security programs into a 
cohesive program that provides quantifiable risk reduction in light of 
the true risks posed by terrorists.
    We thank you again for allowing us to submit these comments. We 
look forward to providing you with further information at your request, 
and stand ready to assist in any way possible.



                                 ______
                                 
  Prepared Statement of Renee Stein, Chair, and Richard M. Belanger, 
    Counsel; Business Alliance for Customs Modernization*
---------------------------------------------------------------------------
    \*\ American Honda Motor, Archer Daniels Midland, BP America, 
Caterpillar, Chrysler, Ford Motor, General Electric, General Mills, 
General Motors, Hanesbrands, Hewlett Packard, Home Depot, IBM, J.C. 
Penney, Limited Brands, Lowe's, Mattel, Microsoft, Nike, Nissan North 
America, Sears, Shell, Sony Electronics, Target Corporation, Toyota, 
Wal-Mart
---------------------------------------------------------------------------
    The Business Alliance for Customs Modernization (BACM) submits this 
statement to the Senate Commerce Subcommittee on Surface Transportation 
and Merchant Marine Infrastructure, Safety and Security regarding its 
hearing June 12, ``Supply Chain Security: Secure Freight Initiative and 
the Implementation of 100 Percent Scanning.''
    BACM is a coalition of U.S. companies that import and export 
extensively, filing over two million entries valued at more than $130 
billion per year. It is dedicated to modernization of U.S. customs 
laws, regulations and policies and committed to the facilitation of 
trade to the greatest extent possible consistent with customs 
compliance and trade security.
    BACM members strongly support U.S. Government efforts to make the 
global supply chain more secure in the post-9/11 environment. We have 
eagerly participated in forums like the TSN and COAC and have 
participated in the development of programs such as C-TPAT and the 24-
hour rule. What makes these programs so successful is that they were 
developed cooperatively with the trade to target security risks without 
creating unnecessary burdens for businesses. While BACM members have 
faced increased costs as part of these efforts, we support these 
programs because they achieve the critical balance between our national 
security and economic interests.
    BACM members object, however, to additional security requirements 
for shipping when the security benefit is negligible and adds an 
unnecessary burden to industry. We are concerned that, in its desire to 
protect our borders, the U.S. is enacting layer upon layer of security 
programs without consideration of how they reconcile with each other or 
whether they create burdensome redundancies. The 100 percent scanning 
requirement raises this question. If CBP will be requiring the trade to 
perform extensive data reporting under the 10+2 initiative to identify 
high risk cargo for further scanning, how does this reconcile with the 
100 percent scanning requirement once implemented?
    We urge the Committee to give serious consideration to these issues 
in order to avoid putting U.S. companies at a competitive disadvantage 
through compliance costs that are economically and logistically 
burdensome and yield no appreciable additional security benefit.
    The Security and Accountability For Every (SAFE) Port Act of 2006 
(P.L. 109-347) created the Secure Freight Initiative, a pilot program 
for 100-percent screening of inbound containers at three overseas 
ports. The program combines non-intrusive inspection imaging with 
radiation portal monitors to identify any anomalies in shipments 
destined to the United States and to target those containers for 
further inspection. The program has now been tested for a limited time 
in smaller ports in Honduras, Pakistan and the United Kingdom and has 
been found by CBP to have significant technical, operational, resource-
related shortcomings. Of high concern is the fact that the computer 
technology and capacity does not exist for quickly and accurately 
identifying anomalies in shipments, particularly for transshipped 
cargo.
    The Implementing Recommendations of the 9/11 Commission Act of 2007 
(P.L. 11053), requires 100 percent screening of all imported containers 
by non-intrusive imaging equipment and radiation detection equipment by 
July 1, 2012. With this hearing, Congress is looking at how to 
reconcile the SFI pilot results with the mandates under the 9/11 
Commission Act. We hope that the Congress will delay implementation of 
the 100 percent scanning requirement until the technology is available 
to ensure quick and efficient scanning that does not cause burdensome 
congestion in port operations overseas.
    The SAFE Port Act of 2006 also instructed CBP to evaluate whether 
additional cargo information would be needed to better evaluate 
shipment risk. In response to this mandate, CBP has recently proposed 
its so-called ``10+2'' data elements proposal, which would impose 
extensive new data reporting requirements on shipments to the U.S. 24 
hours before lading at foreign ports. The purpose of 10+2 is to prevent 
smuggling of weapons of mass destruction into the U.S. and enhance 
cargo safety before goods are loaded onto U.S. bound boats. If CBP 
identifies an anomaly in the data reported, the cargo is then subject 
to scanning to better identify whether there is a threat to U.S. 
commerce.
    The mandate for the 10+2 proposal was enacted before Congress 
passed the 100 percent scanning requirement. It is now clear, however, 
that the two programs together overreach. The 10+2 was meant to help 
CBP target suspect cargo for scanning. The 100 percent scanning 
requirement would render the 10+2 additional data elements redundant or 
useless.
    BACM has submitted public comment on CBP's 10+2 program, expressing 
significant concerns that the program would impose commercial costs and 
delays, putting U.S. companies at a competitive disadvantage in the 
global economy. Our concerns are many but can be summarized as follows:

        1. there has been no demonstration to the trade community as to 
        how this proposal would measurably improve supply chain 
        security;

        2. the proposal moves away from risk management principles as 
        the necessary solution to burgeoning trade flows, legitimate 
        regulatory needs and limited or static resources;

        3. the proposal treats all shipments for all sources as the 
        same, without regard to trusted partner or authorized economic 
        operator programs such as Customs-Trade Partnership Against 
        Terrorism (C-TPAT) and more secure trade;

        4. for many shipments 10+2 requires reporting combinations of 
        the same data attributes over and over again, resulting in 
        redundancies and the overload of repetitive data;

        5. in many cases, the newly required data elements are not 
        known or readily available as early in the supply chain as the 
        proposal assumes;

        6. 10+2 reporting requirements would ignore account-based 
        processing that is the basis for the Automated Customs 
        Environment;

        7. the proposal seriously underestimates the costs that would 
        be imposed on business; and

        8. it would not address a number of logistical and processing 
        issues that need clarification before moving forward

        9. a true-to-life prototype should be conducted using 
        representative importers of different sizes and from different 
        industries in order to learn more about how the proposal will 
        work when CBP collects the data according to proposed rules and 
        conducts actual targeting.

    We believe that these concerns should be addressed before the 
Administration moves ahead with the 10+2 initiative. More broadly, it 
is critical that coherence be brought to the entire spectrum of supply 
chain security programs.
    We agree that it is imperative that the U.S. Government work to 
eliminate container vulnerabilities, but it must not be done by piling 
on layer after layer of initiatives with little added security benefit. 
Congress must work to reconcile all of the security initiatives 
currently in place to ensure a more fluid and complementary system that 
is not overly burdensome to the trade. Serious consideration must be 
given to the cost and benefits of each new security system before the 
Congress and Administration impose additional burdens on the industry. 
Such concepts as reporting exemptions for low-risk shipment and 
account-based filing for repetitive shipments are examples of 
provisions that might better reconcile the overlapping security 
mandates.
    We appreciate the opportunity to submit this statement. Thank you 
for your consideration of our views.
                                 ______
                                 
  Prepared Statement of Catherine Robinson, Associate Director, High 
   Technology Trade Policy on behalf of the National Association of 
                          Manufacturers (NAM)

    The National Association of Manufacturers (NAM) is providing the 
following written statement for the record of the Committee on 
Commerce, Science, and Transportation; Subcommittee on Surface 
Transportation and Merchant Marine Infrastructure, Safety, and Security 
Hearing ``Supply Chain Security: Secure Freight Initiative and the 
Implementation of 100 Percent Scanning'' held on June 12, 2008. The NAM 
represents a broad spectrum of U.S. manufacturers, with members in 
every industrial sector and every state. Its membership includes both 
large multinational corporations with operations in many foreign 
countries and small and medium manufacturers that are engaged in 
international trade on a more limited scale. Our members depend heavily 
on imported parts, components and finished products to compete not only 
in the U.S. marketplace but in foreign markets as well.
    NAM members recognize the important role Customs and Border 
Protection (CBP) plays not only in protecting the United States but 
also in facilitating legitimate trade. Our members are committed to 
working with CBP and other U.S. law enforcement agencies to keep 
America secure and safe from terrorist threats and other security 
challenges. Many NAM members gladly participate in the numerous CBP 
initiatives that make the United States more secure.
    This hearing is timely as CBP is currently working on a number of 
new initiatives. While the NAM supports the efforts of CBP, we want to 
ensure that new customs requirements achieve the dual CBP goals to 
``enhance national security while protecting the economic vitality of 
the United States.'' The NAM recognizes the difficulty of striking the 
right balance between the two. We believe, however, that protecting 
national security and facilitating international trade need not be 
mutually exclusive.
    Striking the right balance between enhancing national security and 
facilitating trade is critical. Manufactured goods accounted for 76 
percent of all imports into the United States in 2007, or $1.9 
trillion. U.S. manufacturers have global supply chains, source inputs 
from around the world, and import parts and components on a daily 
basis. Many have developed ``just-in-time'' supply chains to stay 
competitive in today's global economy. Therefore, any new programs 
developed by CBP must be mindful of the way U.S. manufacturers operate 
their supply chains and their important role in the U.S. economy. New 
programs should be real world tested to guarantee that they are both 
fully effective from a security perspective and do not place U.S. 
manufacturers at a competitive disadvantage vis-a-vis their competitors 
around the globe.
    In order to strike the right balance, CBP must implement new 
programs based on sound risk management principals. Low-risk cargo from 
trusted, fully-vetted shippers should be treated differently than high 
risk cargo. CBP should not implement programs that treat the two 
identically. Doing so wastes limited resources on containers and 
companies that have been validated by CBP, and leaves insufficient 
resources to focus on the higher risk shipments.
    The NAM welcomes this Committee's and others' interest on customs 
programs. There are a myriad of customs issues that merit attention 
including resources for CBP, technical issues such as duty drawback, 
interagency cooperation, international recognition, intellectual 
property rights and supply chain management programs such as C-TPAT. 
While those issues are deserving of increased attention, the NAM would 
like to focus our statement on the issue at hand--100 percent scanning 
and how it relates to current CBP initiatives such as the so-called 
Customs 10+2 proposed rule.
    While 100 percent scanning remains a controversial and problematic 
issue, the NAM believes in the Congress' approach to testing 100 
percent scanning through a serious pilot program around the world 
before requiring U.S. manufacturers to change business models globally. 
Real-world testing is critical for new programs of this magnitude. The 
100 percent scanning pilot program has already proven useful as it has 
shown the government where the problems lie, what needs to be improved 
or changed, and, most importantly, that the government lacks the 
capacity to process the breath of information provided by 100 percent 
scanning. Specifically, CBP stated in May 2008 that the 100 percent 
scanning pilot program has already shown that the initiative is cost 
prohibitive for three reasons: (1) the cost of the necessary technology 
is extreme; (2) the bandwidth requirements for the scanned images are 
too great; and (3) the cost of the personnel to review the images and 
run the program is exorbitant.
    We believe the 100 percent scanning pilot program provides an 
excellent precedent for current CBP initiatives and strongly believe a 
real pilot program is needed for the proposed 10+2 rule. The proposed 
10+2 rule will also drastically change the way U.S. manufacturers 
operate, even more so than the 100 percent scanning mandate--entire 
supply chains and just-in-time delivery systems will be undone by the 
proposed rule. Yet, CBP has indicated it will not conduct a pilot 
program before a final rule is implemented. We are aware of no test, 
including the Advance Trade Data Initiative (ATDI), that is being run 
that tests from end to end the many requirements of the proposed rule. 
Failure to conduct a pilot program will have severe negative 
consequences to the U.S. economy and our national security.
    The NAM is not opposed to the intent of the proposed 10+2 rule. 
However, as currently drafted the rule not only fails to enhance 
national security, it also fails to facilitate trade by greatly 
increasing the cost of doing business for U.S. manufactures--achieving 
neither of CBP's dual goals. The NAM has offered to CBP several 
specific ideas to improve the rule including testing it through a pilot 
program and providing benefits to C-TPAT members. Our recommendations 
have thus far not been heeded.
    As this hearing has shown, pilot programs are critically important. 
NAM members stand ready to comply with 10+2 and to invest hundreds of 
billions of dollars to change their operations. However, before NAM 
members invest the money, they would like to know that the program will 
not be changed 6 months after implementation to correct some of the 
deficiencies in the program. A pilot program would prevent 
manufacturers and the government from having to make multiple changes 
to their operations. Additionally, it would allow the government to 
address the security risks that will arise from implementation of the 
proposed rule (i.e., containers sitting in foreign ports for several 
days waiting to be loaded on vessels).
    In the Safe Port Act of 2006, Congress instructed CBP to develop a 
way to collect more data in advance of lading for which CBP proposed 
the 10+2 rule. Then in 2007, Congress mandated that every container 
coming into the U.S. should be scanned to provide CBP advanced data 
before lading by 2012. Implementing both programs is not only 
unnecessary but also an inefficient use of limited government 
resources. The NAM believes now is the time to evaluate rigorously all 
customs programs and to take a holistic approach to national security. 
Redundant programs should not be implemented.
    The NAM supports the 100 percent scanning pilot program and 
believes it sets the correct precedent for real-world testing on other 
major CBP initiatives. The NAM asks that the proposed 10+2 rule also be 
real-world tested before final implementation. Phased-in enforcement is 
no substitute for a pilot program.
    NAM members are committed to working with CBP to keep America 
secure from terrorist threats. However, new programs and initiatives 
must be based on risk management principles in order to enhance 
national security and facilitate trade. National security and economic 
vitality are not mutually exclusive and the NAM firmly believes the 
right balance can be struck to achieve the dual goals.
                                 ______
                                 
Response to Written Questions Submitted by Hon. Frank. R. Lautenberg to 
                              Jayson Ahern

    Question 1. In your April report to the Appropriations Committee on 
the SFI pilot, you stated that over 13,000 data filed from the three 
operational ports had been successfully integrated, transmitted and 
received. This is no small feat in technologically and you should be 
lauded for your progress in this area. What is that total number to 
date?
    Answer. Since October 2007, SFI has scanned 237,054 containers in 
Southampton, U.K., Port Qasim, Pakistan, and Porto Cortez, Honduras.
    The scanned images and associated data captured by SFI's integrated 
scanning system at the foreign ports have been transmitted back to the 
National Data Center and fused with trade data required by the 24 hour 
rule and made available to all Customs and Border Protection (CBP) 
Officers with access to Automated Targeting Systems ATS. CBP Officers 
stationed at SFI or CSI ports, the NTC-C, or at domestic ports (ATU's) 
are able to access the additional data when determining the potential 
risk of U.S. bound shipments from SFI locations.

    Question 2. In all of the pilot locations, you experienced 
significant concerns with labor over the safety of scanning equipment 
and concerns about potential radiation exposure. While you mention the 
DHS has conducted extensive studies on the occupational safety of this 
equipment, is your research and findings supported by the National 
Academy of Sciences or the National Institutes of Health? You mention 
in your report that several studies have been conducted on this issue, 
can you please provide for the Committee what specific studies you are 
referring to?
    Answer. There have been several independent studies of health and 
safety issues related to the SAIC P-7500. CBP and the U.S. Department 
of Defense have concluded that the drive-through P-7500 does not pose a 
threat of radiation exposure to drivers, operators or by-standers. SAIC 
has also conducted tests to ensure that its equipment is within the 
radiation dose limits set by the International Council of Radiation 
Protection. Results of these tests have been published and presented to 
foreign governments.
    One of the hurdles in operating scanning equipment overseas has 
been the regulations pertaining to radiation exposure in foreign 
countries. Upon placing imaging equipment in Southampton, U.K., CBP was 
informed that the P-7500 must comply with the United Kingdom Health and 
Safety Ionizing Radiation Regulations (IRR) of 1999. To comply with the 
regulations, a Radiation Protection Advisor was contracted to train and 
certify four CBP officers to become on-site radiation security 
officers. Additionally, an independent study conducted by NUKEM (the 
designated U.K. radiation compliance company for Her Majesty's Revenue 
and Customs and the Southampton Container Terminal), evaluated and 
tested the P-7500. Their conclusions mirrored the same positive 
conclusions as other independent studies stated below. Her Majesty's 
Revenue and Customs also posted a letter on a trade webpage describing 
the safety features of the P-7500, along with the radiation safety 
testing performed by NUKEM. This letter certified that the P-7500 does 
not pose any radiation hazard to truck drivers, operators, or 
bystanders when operated and maintained properly.
    Another hurdle in using scanning equipment overseas has been the 
safety concerns of the personnel operating the equipment. In 
Southampton, U.K., and Busan, Korea, truck drivers and their unions 
were concerned about possible exposure to radiation while driving 
through the non-intrusive inspection (NII) equipment. Therefore, CBP 
published fact sheets describing the safe operation of the P-7500 and 
the numerous tests conducted and the outcomes. These fact sheets were 
distributed to the terminal operators' employees, truck drivers and 
their unions. To further prove that there is no radiation risk 
associated with the P-7500, CBP health physicists were commissioned to 
supply dosimeters to the CBP officers in Southampton. These dosimeters 
are rotated through Southampton and are evaluated in Indianapolis on a 
quarterly basis.
    To date, the National Academy of Sciences and the National 
Institute of Health have not conducted any studies that would challenge 
the findings of our tests.

    Question 3. In your testimony you stated that in both 2005 and in 
2008 GAO reported that CBP's human capital plan did not appropriately 
determine the optimal number of CBP officers needed at each CSI seaport 
to effectively carry out its duties. Do you know if the human capital 
plan has yet been modified since you released your report on the CSI 
program in January?
    Answer. CBP completed a study that determined the optimum number of 
Targeters for each CSI port based on the volume of shipments and risk 
considerations. The total number of CBP personnel who can be stationed 
at the overseas CSI locations is limited by a host of factors. i.e., 
the U.S. Department of State (DOS) determines the number of U.S. 
personnel that can be stationed abroad. DOS takes into consideration 
the number of U.S. personnel that are already stationed abroad and how 
the increase in the numbers would benefit the U.S. They also consider 
whether the host nation will request an equal number of their own 
government personnel to be stationed in the U.S. receiving the same 
Privileges and Immunities granted to U.S. personnel. The staffing 
allocation model has been adjusted by stationing Targeters at the 
National Targeting Center to support CSI operations by pre-screening 
and targeting shipments that cannot be handled due to the reduced 
number of Targeters actually stationed abroad. The Targeters at the 
NTC-C would be screening Bills of Lading that are below a certain 
threshold, in order allow the CSI Targeters to concentrate on shipments 
that have a higher score on the ATS. This allows the CSI Targeter more 
time in developing additional information to substantiate or negate the 
risk of the targeted shipment. The GAO was presented with this Staffing 
Allocation Model on October 2007. This information is For Official Use 
Only (FOUO).

    Question 4. What is the national policy of Canada and Mexico with 
respect to scanning of inbound cargo containers? Does Canada and Mexico 
have a scanning requirement to prevent weapons of mass destruction from 
entering their ports of entry in cargo containers? If either nation 
does have such a requirement, is it stronger or weaker than the U.S. 
requirements for the scanning of inboard container cargo?
    Answer. Canada: Canada uses risk-management systems and processes 
to screen, scan and release goods rapidly while ensuring safety and 
security. Targeting is an approach for identifying potentially high-
risk goods for examination. The Canada Border Services Agency's (CBSA) 
targeting activities are multi-faceted, multi-dimensional and embedded 
in virtually every area of the organization. Goods can be targeted 
before they come to Canada, upon arrival, and in some cases, post-
arrival. For example, under the Advanced Commercial Information (ACI) 
system, marine and air carriers must transmit conveyance and cargo 
reports for all vessels and aircraft loaded with commercial goods 
destined for Canada. Targeters use this data to search for health, 
safety and security threats before the vessel or aircraft arrive in 
Canada. Targeters also review the risk scores and cross-reference 
suspicious cargo against a number of data bases to determine whether an 
examination should follow. If a container is selected for examination, 
Canada may elect to use a mobile Vehicle and Cargo Inspection System 
(VACIS) to detect irregularities in the shipment. The mobile VACIS is a 
truck-mounted, gamma-ray scanning system that captures an image of a 
marine container, rail car or truck contents. Other detection equipment 
that the CBSA employs may be in the form of imaging equipment, 
explosive detectors and radiation detection technologies.
    Mexico: Through bi-national agreements allowing for the sharing of 
best practices with CBP, Mexico has developed a national policy very 
similar to that of the United States in that it utilizes data analyses 
to target high risk shipments. Under this strategy, Mexico Customs 
presently runs 69 cargo non-intrusive inspection (NII) equipment sites 
nationwide. At present time, 100 percent of rail shipments and 90 
percent of all empty inbound conveyances are scanned at Mexico's four 
principal seaports. The ports of Veracruz and Altamira are located 
along the Gulf of Mexico and Lazaro Cardenas and Manzanillo are located 
on the Pacific coast. Trade at the two Pacific coast ports is growing 
at an annual rate of approximately 12 percent, partially because U.S. 
west coast ports are at capacity. Altogether, these four ports account 
for 92 percent of Mexican maritime trade. Mexico's four major Seaports 
scan 100 percent of all inbound shipments with VACIS imaging systems. 
Mexico has implemented a 24-Hour Manifest Rule based upon the U.S. 
version. The Government of Mexico has the capacity to conduct 100 
percent imaging on inbound shipments. Additionally, at the port of 
Veracruz, the Mexican government installed an integrated scanning lane 
(a VACIS system integrated with a radiation portal monitor) to scan all 
exports. Under the Megaports Initiative, Mexico will cost-share with 
the Department of Energy to install radiation detection equipment to 
scan all vehicle import and export traffic at each of the four major 
ports: Veracruz, Altamira, Manzanillo and Lazaro Cardenas.
    Canada: Both Canada and the U.S. have signed a Mutual Recognition 
Arrangement called the Customs-Trade Partnership Against Terrorism (C-
TPAT) and Partners in Protection (PIP) agreement, with the goal of 
securing the entry of goods into the U.S. and Canada by preventing 
terrorists and their weapons from penetrating the global supply chain.
    In addition, the Canada Border Services Agency (CBSA) uses the 
latest technology to help prevent contraband and dangerous goods from 
entering Canada by marine trade and other modes of transportation. Such 
technologies include radiation detection equipment, (VACIS), and Pallet 
VACIS. The use of these technologies enables CBSA officers to conduct 
effective, non-intrusive inspections and allows them to focus on high-
risk goods.
    Mexico: Mexico Customs has deployed 150 handheld? radiation 
detection equipment systems at its seaports and major airports, as well 
as along the U.S.-Mexico border. Mexico Customs presently runs 69 cargo 
non-intrusive inspection (NII) equipment sites nationwide scanning rail 
shipments, empty inbound seaport conveyances and inbound seaport 
shipments. This equipment includes operational VACIS at the four major 
seaports. In 2007 the Mexico Ministry of Finance signed a memorandum of 
understanding (MOU) with the U.S. Department of Energy (DOE) for the 
implementation of the Megaports Initiative. When fully implemented, 
this initiative is intended to allow scanning by radiation detection 
equipment of 100 percent of the imports and exports entering/exiting 
the port by truck at the four largest Seaports (Veracruz, Manzanillo, 
Altamira, and Lazaro Cardenas). These four ports handle 92 percent of 
all seaport cargo. The first Mexican Megaport--Veracruz--is anticipated 
to be operational in February 2009. Under the MOU, Mexico will share 
information on detections or seizures of special nuclear and other 
radioactive materials made as a result of the equipment.

------------------------------------------------------------------------
               Port                   Import       Export       Total
------------------------------------------------------------------------
Manzanillo                             494,620      425,302      919,922
Veracruz                               165,420      243,552      408,972
Lazaro Cardenas                         80,654       81,314      161,968
Altamira                               107,518      129,587      237,105
------------------------------------------------------------------------
    Totals                             848,212      879,755    1,727,967
------------------------------------------------------------------------


    United States: U.S. Customs and Border Protection (CBP) has 
developed numerous programs and systems to identify and select high-
risk shipments as part of our multi-layered enforcement strategy. While 
CBP cannot physically examine all containers, CBP does review virtually 
100 percent of all shipments that arrive into the United States. This 
is accomplished by an electronic review of all shipments through the 
Automated Targeting System (ATS), which then sorts the shipments by 
level of risk.
    In addition, through the Container Security Initiative, CBP is 
pushing our nation's zone of security beyond our physical borders by 
working with nations from around the world to target, screen, and 
inspect high-risk containers that are bound for the United States.
    To further reduce the risk of weapons of mass destruction or 
illicit nuclear/radiological materials that could be smuggled into the 
United States, CBP launched the Customs-Trade Partnership Against 
Terrorism (C-TPAT). As of September 17, 2008, approximately 8,596 
certified partners have joined CBP in the war against terrorism. Under 
the C-TPAT initiative, CBP works with participating companies--i.e., 
carriers, importers, and other industry sectors--to substantially 
increase end-to-end supply chain security.
    At our land borders, CBP currently deploys multiple technologies to 
support our multi-layered inspection process. These technologies 
include large-scale non-intrusive inspection imaging systems, radiation 
portal monitors, radiation isotope identifier devices and personal 
radiation detection devices.
    Risk assessment and targeting have played an important role in the 
U.S., Canada and Mexico's commitment to safeguarding North America, as 
part of the Security and Prosperity Partnership (SPP). At the SPP 
Montebello Summit in August 2007, the U.S., Canada and Mexico agreed to 
work together to establish risk-based screening standards for goods and 
travelers that rely on technology, information sharing and biometrics; 
develop and implement compatible electronic processes for supply chain 
security that use advance electronic cargo information to analyze risk 
and ensure quick and efficient processing at the border; develop 
standards and options for secure documents to facilitate cross-border 
travel; and exchange additional law enforcement liaison officers to 
assist in criminal and security investigations.
    Canada: Canada's requirements for the scanning of inbound container 
cargo are similar to U.S. requirements. The U.S. works closely with 
Canada under the Container Security Initiative (CSI) to detect and 
deter terrorist use of maritime containers while facilitating the 
movement of legitimate trade. CBP officers have been assigned to three 
major ports of entry in Canada--Halifax, Vancouver and Montreal--to 
screen manifest data before a container is shipped to the U.S. by 
cross-referencing CBP data bases. Canadian host government officers 
will then examine containers which pose a potential risk to the U.S., 
using either radiation detectors or large-scale radiographic imaging 
machines to detect potential terrorist weapons. Similarly, Canadian 
joint task officers under the SPP agreement are stationed in Newark and 
Seattle to perform functions similar to those that CBP CSI officers 
perform in Canada, in an effort to increase security for containerized 
cargo destined to Canada.
    Mexico: Mexico has scanning requirements in place and strives to 
mirror those of the U.S., but has less experience in conducting risk 
assessment. Mexico Customs is in the process of establishing its own 
National Targeting Center (NTC) similar to the one CBP currently has. 
CBP will play a key role in assisting Mexico Customs to stand up its 
operations and then to develop targeting systems modeled after the CBP 
systems.

    Question 5. At present, do cargo containers unloaded off ships in 
Canadian and Mexican ports get transshipped by rail and truck to final 
destinations in the United States?
    Currently, what is the level of cooperation and coordination 
between U.S. and Canadian authorities and U.S. and Mexican authorities 
to ensure that these transshipped U.S.-bound cargo containers do not 
present a significant risk for weapons of mass destruction?
    Does Customs and Border Protection need additional authority in 
this area, for example with respect to international freight rail 
crossing at the U.S. border?
    Answer. There are many trade lanes available which an importer may 
utilize while importing cargo into the United States. Transshipping 
cargo by rail/truck from Mexico or Canada is a viable option that is 
routinely used. Approximately 98 percent of all containers entering the 
United States from Mexico or Canada are scanned by a RPM device upon 
entry regardless of their country of origin.
    Seaport security programs in place in Mexico and Canada provide an 
additional layer of screening and scanning of transshipped cargo. As 
was discussed above, 92 percent of Mexican maritime trade arrives at 
one of four principal ports. The Government of Mexico already has 100 
percent imaging capacity for inbound shipments and, under the Megaports 
Initiative, is cost-sharing with the Department of Energy to install 
radiation detection equipment to scan all exports and imports arriving/
departing by truck at each of its four major ports. Under a pilot 
program, Mexico installed an integrated scanning lane (a VACIS co-
located with a radiation portal monitor) at the Port of Veracruz to 
scan all exports.
    CBP has the authority to examine all cargo entering the United 
States, regardless of mode.

    Question 6. As you know, in 2012, there is a 100 percent scanning 
requirement for U.S.-board cargo containers. Will the 100 percent 
scanning requirement apply to cargo containers destined for Canada and 
Mexico ports which are subsequently transshipped by truck and rail to 
the United States?
    If it doesn't apply, are we creating a loophole that could 
potentially be exploited by bad actors? If it does apply, would the 
scanning have to be performed in Canadian and Mexican ports?
    Answer. Section 1701 of the 9/11 Act (H.R. 1, 110th Congress) 
amended the SAFE Port Act and charges DHS with achieving full-scale 
implementation of overseas scanning by July 1, 2012, but permits 
extensions by certifying to Congress that at least two of the six 
conditions outlined in Section 1701(b)(4) apply. The 9/11 Act changed 
the dynamic of the ongoing pilot programs from exploring the 
feasibility of overseas scanning to developing real, practical 
solutions to meet the challenges that arise. These challenges continue 
to be significant. The extensions permitted under the law recognize 
some of the difficulties that may occur in developing an overseas 
scanning strategy, including the impact on trade capacity and the flow 
of cargo, whether the systems can be integrated with existing systems, 
and the infrastructure restraints of foreign ports. We continue to 
refine and develop our expansion approach as we move toward the initial 
2012 deadline.
    We do not believe any loophole exists with transshipped containers 
from Mexico or Canada. Approximately 98 percent of all containers 
entering the United States across our land borders are currently 
scanned by a RPM device regardless of their original country of origin. 
We continue working with our partners in Canada and Mexico to provide 
additional layers of security at their seaports as well as at our land 
points of entry (POE). In fact, under the Megaports Initiative, DOE is 
working with Mexico to equip all four of its major seaports with 
radiation detection equipment in order to scan all import and export 
traffic arriving/departing Mexico by truck.

    Question 7. There has been considerable concern in Congress about 
the performance capabilities of Advanced Spectroscopic Portal Monitors 
(ASP's) and the FY 2007 DHS Appropriations Act required the Secretary 
of DHS to certify a significant increase in operational effectiveness 
prior to moving forward with the Administration's proposal for full 
scale deployment. Has Secretary Chertoff concluded the additional 
testing of the ASP's and provided his certification to Congress? Was 
the technology tested in the SFI pilot? If yes, what was the 
performance findings of the technology?
    Answer. The ASP is currently undergoing integration testing at 
Pacific Northwest National Laboratories (PNNL). During this integration 
period, the ASP is tested in a mock CBP Port of Entry (POE) to ensure 
that the ASP can operate properly with all of CBPs ancillary systems 
(i.e., traffic control mechanisms, stop lights, gate arms, etc.). Upon 
successful completion of this testing, CBP will conduct a field 
validation of the ASP in four high volume POEs; Long Beach, CA, New 
York Container Terminal, Detroit, MI, and Laredo, TX. This validation 
test will be conducted in the stream of commerce at the Northern land 
border, Southern land border and seaport environments to ensure the ASP 
is robust enough to operate at CBPs POEs. Upon successful completion of 
this test and validation, CBP, jointly with the Domestic Nuclear 
Detection Office (DNDO), will recommend certification by the Secretary 
of the Department of Homeland Security.
    The ASP is currently being tested in the SFI port of Southampton, 
U.K. The Department of Energy (DOE) has purchased a limited number of 
ASP detection devices and deployed a unit at Southampton as part of an 
ongoing effort to gain both operational experience and insight into the 
viability of these units as radiation detection/isotope identification 
devices in a secondary application. The ASP is undergoing a DOE field 
test and is not used for official adjudication of RPM alarms. If a U.S. 
bound container generates a radiation alarm at an RPM, it is 
subsequently scanned both by the ASP and by a handheld ORTEC (a 
radioisotope identification device). The DOE and DNDO are evaluating 
the robustness of the ASP, as well as the data transmitted to the 
United States.
                                 ______
                                 
Response to Written Questions Submitted by Hon. Frank. R. Lautenberg to 
                             David Huizenga

    Question 1. In your testimony you state that NNSA has installed 
over 1,000 RPMs at over 160 sites. Are you procuring and installing 
equipment that conforms to the technology performance standards that 
the United States has set for domestic scanning equipment?
    Answer. DOE and DHS have very similar performance standards for 
radiation portal monitors (RPMs). The primary difference is that the 
DOE standards are defined in terms of quantities of Special Nuclear 
Material (SNM) while DHS standards are defined in terms of surrogate 
materials. The advantage of defining standards in terms of surrogate 
materials is that these materials are available commercially and RPM 
vendors can evaluate their monitors on their own. The disadvantage of 
the surrogate materials is there are some slight differences in the 
radiation characteristics compared to the SNM they represent. However, 
the differences between the standards have been thoroughly evaluated by 
DOE and DHS technical staff and are believed to be minor when 
evaluating monitor performance.

    Question 2. In your testimony you state that the goal of the 
Megaports Initiative is to equip approximately 75 priority ports with 
scanning technology by 2013, at which point you estimate that you will 
be scanning over 50 percent of global shipping traffic. Does this just 
cover the radiological detection equipments such as RPM or would this 
also include the non-intrusive imaging equipment such as VACIS? What 
specific equipment are we talking about here? What do you estimate the 
cost to be to the U.S. Government to achieve this goal? What do you 
estimate the cost to be to our trading partners? How many international 
trade agreements will you have to negotiate to achieve this goal?
    Answer. The mission of DOE's Megaports Initiative is to provide 
partner nations with passive radiation detection equipment (i.e., 
radiation portal monitors (RPMs and handheld detection equipment), 
communications and training and technical support to enhance their 
capacity to deter, detect, and interdict illicit trafficking of special 
nuclear and other radioactive materials through the global maritime 
system. DOE does not provide partner nations with non-intrusive imaging 
equipment.
    DOE's budget request from FY 09 through FY 13 is $818 million and 
supports the installation of radiation detection equipment at a total 
of 75 Megaports. The Megaports Initiative is also working with partner 
nations to develop cost-sharing agreements. To date, we have agreed to 
cost-sharing agreements for ports in Honduras, Israel (two), Colombia, 
Panama (multiple), Mexico (multiple), Belgium and Spain (two). Cost-
sharing is a high priority for us and estimates on number of ports that 
will cost-share have been and will continue to be incorporated into our 
budget planning and requests.
    With regard to anticipated costs to our trading partners, one of 
the top priorities of the Megaports Initiative is to install our 
equipment in a manner that will not interrupt the normal flow of 
containers through a port and thus increase costs. When designing an 
installation, the Megaports Initiative looks to place monitors at 
natural chokepoints, such as entry and exit gates, so that containers 
are scanned without deviating from their normal route. For container 
traffic that does not move through the gates, such as transshipped 
containers, DOE has deployed several new mobile technologies, including 
a radiation detection straddle carrier and a Mobile Radiation Detection 
and Identification System (MDRIS). DOE is also active in following and 
evaluating new technologies closely to determine any areas where 
improvements in scanning may be made.
    Our partner countries are responsible for staffing the radiation 
monitoring systems. In addition, after an initial period when 
maintenance costs for the deployment are provided by DOE, the partner 
country assumes the cost of maintaining and sustaining the equipment. 
These costs vary significantly in terms of the number of monitors 
deployed and the labor rates within a country. To date, the average 
annual cost of a maintenance contract has been approximately 88K USD 
annually and it is assumed the partner country will incur similar costs 
when it takes over the maintenance responsibility. The amount of 
additional work, and hence the staffing load that a radiation detection 
system brings to a port is dependent on several factors. In some cases, 
existing staff can easily absorb the amount of additional work. In 
other cases, additional personnel are required, perhaps dedicated fully 
to operating the SLD-provided equipment. The impact on staffing is 
estimated based on operational factors such as number of lanes with 
installed radiation detection equipment, amount of traffic, and 
expected number of innocent alarms.
    DOE has not been involved in any international trade agreements 
with regard to the installation of radiation detection equipment. 
Typically, DOE signs a Memorandum of Understanding (MOU) or a 
Declaration of Principles (DoP) with partner nations to implement the 
Megaports Initiative. However, DOE has also pursued other arrangements, 
such as letters of exchange or joint press releases, with Pakistan, 
Hong Kong, Japan, and the United Kingdom. To date, DOE has signed 24 
agreements (MOUs or DoPs) and issued the aforementioned four additional 
agreements, representing work commitments at more than 40 seaports 
around the world. DOE will continue outreach efforts to negotiate 
additional agreements and meet the goal of 75 operational ports by 
2013.

    Question 3. Is DOE conducting its own testing of the ASP's at the 
Nevada Test Site and if so, why? Has DOE purchased or is it planning to 
purchase any ASP's and if so where will they be deployed? How many have 
been purchased? Why would DOE purchase any before the second round of 
testing is complete and the Secretary of DHS has certified to the ASP's 
effectiveness?
    Answer. DOE has been working closely with DNDO to comprehensively 
test the ASP. Specifically, we have participated in Technical Summits 
to establish the path forward for the ASP program, conducted a 
significant data collection effort at Los Alamos National Laboratory 
using special nuclear materials, provided technical experts to perform 
data analysis during the current data collection at the Nevada Test 
Site, and will continue providing input into future test plans and the 
injection studies.
    In addition to these activities, DOE has conducted some of its own 
testing of the Thermo Fisher ASP at the Los Alamos National Laboratory 
(LANL). The scope of this testing is to define the concept of 
operations that may be suitable for secondary screening at 
international seaports. The scope of the testing is not intended to 
duplicate the performance testing being conducted by DNDO but to 
supplement DOE's understanding of how best to deploy the equipment.
    DOE's Megaports Initiative purchased 12 ASPs from Thermo Fisher 
through a DNDO contract in 2006. Due to the potential advantages for 
more efficient cargo screening, DOE decided to purchase a limited 
number of ASPs to evaluate their performance in operational settings 
for secondary inspections. DOE has deployed these units for secondary 
inspections both to operational Megaports (Southampton, U.K. and 
Antwerp, Belgium) and to the laboratories to gather further data of the 
ASPs performance in a variety of settings. Additional units are planned 
for installation at Colombo, Sri Lanka, and Manila, Philippines, 
Kaohsiung, Taiwan and Port Klang, Malaysia. These systems are currently 
operated in tandem with existing secondary screening protocols, 
including inspection with handheld radiation isotope identification 
devices, until the ASPs have been shown to operate reliably and 
effectively in the field.
    Overall, DOE has been closely involved in the testing conducted 
with DNDO on the ASP and has developed its own test plans to further 
evaluate the performance of the ASP. The testing completed by the labs 
combined with the data we are receiving from our operational testing 
and evaluation of the ASP units we have in the field will provide 
valuable technical and operational insight for future deployments. As 
we move forward with testing and evaluation, it is our expectation that 
we will continue to work closely with our DHS counterparts.

    Question 4. I was interested to read about the technology you are 
testing for mobile radiological detection platforms on straddle 
carriers in the Bahamas. You indicate that over 730,000 containers have 
been successfully scanned. Over what time period is that metric based? 
Has this technology performed well? And, again, just to clarify, that 
is only a radiological scan, not an NII?
    Answer. Yes, the radiation detection straddle carrier (RDSC) 
deployed in the Bahamas only scans containers for radiation and does 
not have a non-intrusive imaging component. The Megaports Initiative 
deployed a prototype RDSC to the Bahamas in 2005 for testing. This unit 
became officially operational in June 2006. This unit was designed 
specifically to address the configuration of the Port of Freeport, 
which exclusively uses straddle carriers for moving and stacking cargo 
containers, up to three high, around the lay-down yard in rows. To 
address this terminal configuration, the Megaports Initiative modified 
one standard straddle carrier by stripping it of its lifting mechanisms 
and equipping it with both portal monitors, which detect the presence 
of radiation, and spectroscopic detectors, which can identify the 
source of radiation causing an alarm. The RDSC traverses container 
rows, scanning containers stacked in the lay-down yard. The unit is 
also equipped with a global positioning system (GPS) and a wireless 
communications system to give precise location data and to transmit 
information generated from scan to a Central Alarm Station (CAS) where 
alarms are assessed and adjudicated by Bahamian Customs Officers.
    The unit has performed very well with over 800,000 containers 
scanned at the Port of Freeport from June 2006 through August 2008. On 
average, the straddle carrier has scanned approximately 85 percent of 
containers passing through Freeport. The RDSC has also demonstrated one 
solution to the challenge of transshipment containers (i.e., those 
containers that move from one ship to another without every passing 
through an entry or exit gate) faced by the Megaports Initiative, by 
allowing containers to be scanned in the lay-down yard as they await 
movement to their next destination. Based on the success of the RSDC, 
DOE has recently awarded a commercial contract for the design and 
manufacture of additional straddle carrier units, which will be 
deployed to other straddle carrier ports in the future. The initial 
RDSC produced under the new contract is expected to undergo acceptance 
testing in late FY 2009.
                                 ______
                                 
   Response to Written Questions Submitted by Hon. Maria Cantwell to 
                          Stephen L. Caldwell

    Question 1. What are the national policies of Canada and Mexico 
with respect to scanning of inbound cargo containers? Does either 
Canada or Mexico have scanning requirements to prevent weapons of mass 
destruction from entering their ports of entry in cargo containers? If 
either nation does have such a requirement, is it stronger or weaker 
than the U.S. requirements for the scanning of inbound container cargo?
    Answer. While GAO has not performed audit work examining the 
national policies of Canada or Mexico with respect to the scanning of 
inbound cargo containers, or reviewed whether their requirements are 
stronger or weaker than those of the United States, we have some 
information on Canada Border Services Agency (CBSA) efforts to prevent 
weapons of mass destruction from entering Canada.
    Canada employs a risk-management system for identifying high-risk 
container cargo bound for Canadian seaports. In particular, CBSA 
receives advanced information for all marine vessels destined to arrive 
at ports in Canada and uses a system which generates a risk score. This 
risk score is then forwarded to Canadian targeters for review. Marine 
vessel targeting is divided by risk level, with the National Risk 
Assessment Center (which CBSA officials describe as being similar to 
the U.S. National Targeting Center) looking for threats for national 
security (e.g., weapons of mass destrction and radioactive materials). 
Regional targeters focus on contraband, environmental contaminants 
(e.g., pine beetles, chemicals, etc.) and other threats. NRAC targeters 
review risk scores for each shipment and conduct an in-depth assessment 
of the shipments identified as posing a potential national security 
threat. If the CBSA officers identify a suspicious shipment, they may 
issue a ``do not load'' or ``do not unload'' order and the cargo is 
examined either in a foreign port or upon arrival depending on the 
nature of the threat.
    The Canadian government has also initiated the Partners-in-
Protection (PIP) program to enlist the cooperation of companies 
involved in interational commerce in enhancing border security, 
combating terrorism, and helping to detect and prevent contraband 
smuggling. Participating companies sign a Memorandum of Understanding 
with CBSA, which focuses on the security of the trading companies' 
cross-border operations (particularly the security of its supply 
chain), information exchanges, and joint training activities. This 
program is similar to the U.S. Customs-Trade Partnership Against 
Terrorism (C-TPAT) program. Additionally, since 2001, the Canadian 
government has deployed new inspection equipment, such as Vehicle and 
Cargo Inspection System (VACIS) machines and x-ray scan trailers. In a 
2005 report, CBSA anticipated that it would have the capacity to 
conduct radiation checks on almost all marine containers arriving at 
the ports of St. John, Halifax, Montreal and Vancouver which together 
receive nearly all container traffic arriving at Canada's marine ports 
of entry.

    Question 2. At present, do cargo containers unloaded off ships in 
Canadian and Mexican ports, get transshipped by rail and truck to final 
destinations in the United States? Currently, what is the level of 
cooperation and coordination between U.S. and Canadian authorities and 
U.S. and Mexican authorities to ensure that these transshipped U.S.-
bound cargo containers do not present a significant risk for weapons of 
mass destruction? Do Customs and Border Protection and NMSA need 
additional authority in this area, for example with respect to 
international freight rail crossing at the U.S. border?
    Answer. While GAO has not reviewed cargo container operations at 
Mexican seaports, based on prior audit work we know that some container 
cargo arriving at Canadian seaports is transported to the United 
States. For example, on a visit to the Port of Halifax, Nova Scotia in 
2006, CBSA officials told us that a portion of the container cargo 
arriving at the port is loaded on to trains for delivery to the United 
States. Regarding coordination efforts to ensure that this cargo bound 
for the United States does not pose a security risk, U.S. Customs and 
Border Protection (CBP) deploys targeters to ports in Vancouver, 
Montreal, and Halifax as part of the Container Security Initiative 
(CSI). These targeters review automated targeting system (ATS) 
information and work with CBSA officials to identify containers that 
may pose a security risk. Similarly, Canadian targeters located at the 
ports in Newark and Seattle review marine containers arriving at U.S. 
ports destined for Canada by rail or by truck. At these U.S. seaports, 
CBP officials assess all shipments for national security threats, while 
Canadian targeters concentrate on identifying contraband smuggling. If 
the Canadian targeters wish to refer a container for examination, they 
submit a formal request to U.S. authorities to conduct the examination 
at the port of entry.
    GAO has not performaed any audit work regarding the issue of 
whether CBP and NMSA need additonal authority regarding transshipped 
rail cargo bound for the United States. We leave it up to those 
respective agencies to comment on whether they believe their current 
authority is sufficient.

    Question 3. As you know, in 2012 there is 100 percent scanning 
requirement for U.S.-bound cargo containers. Will the 100 percent 
scanning requirement apply to cargo containers destined for Canada and 
Mexico ports which are subsequently transshipped by truck and rail to 
the United States? If it doesn't apply, are we creating a loophole that 
could potentially be exploited by bad actors? If it does apply, would 
the scanning have to he performed in Canadian and Mexican ports?
    Answer. The statutory requirement for 100 percent scanning does not 
expressly include or exclude cargo containers destined for Canadian or 
Mexican ports which are subsequently transshipped by truck or rail to 
the United States.\1\ In our audit work to date, we have not obtained 
an official position from CBP as to whether it intends to apply the 100 
percent scanning requirements to such cargo containers. As our audit 
work continues, we will continue to seek an official position from CBP.
---------------------------------------------------------------------------
    \1\ See Section 1701(a) of the Implementing Recommendations of the 
9/11 Commission Act of 2007 (Pub. L. No. 110-53,  1701(a), 121 Stat. 
266,489-90).
---------------------------------------------------------------------------
    This issue is particularly important since Canada has recently 
expanded some of its seaports with the intent to then ship containers 
into the United States over land borders. These include the expansion 
of the seaport in Vancouver and the building of a new container 
terminal in Prince Rupert at a cost of approximately one billion U.S. 
dollars. However, CBP does receive advanced information for cargo that 
arrives in Canada via ship and is then transported to the United States 
via rail. Two rail carriers, CN and CP, carry such containers to the 
United States and both are C-TPAT approved carriers. Rail carriers 
transmit electronic data to CBP 2 hours in advance of the cargo's 
arrival at the U.S./Canadian border. CBP officers assess the cargo data 
and determine whether a threat exists. If they determine it is a risk 
or threat, they will place a ``hold'' on the container for the carrier 
with instructions to ``set out'' the container for examination. When 
the train arrives at the border, CBP conducts VACIS inspection of all 
cars on the train.

                                  
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