[House Hearing, 111 Congress]
[From the U.S. Government Publishing Office]


 
             THE FUTURE OF THE REGISTERED TRAVELER PROGRAM 

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

                                HEARING

                               before the

                SUBCOMMITTEE ON TRANSPORTATION SECURITY
                     AND INFRASTRUCTURE PROTECTION

                                 of the

                     COMMITTEE ON HOMELAND SECURITY
                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED ELEVENTH CONGRESS

                             FIRST SESSION

                               __________

                           SEPTEMBER 30, 2009

                               __________

                           Serial No. 111-37

                               __________

       Printed for the use of the Committee on Homeland Security
                                     

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                     COMMITTEE ON HOMELAND SECURITY

               Bennie G. Thompson, Mississippi, Chairman
Loretta Sanchez, California          Peter T. King, New York
Jane Harman, California              Lamar Smith, Texas
Peter A. DeFazio, Oregon             Mark E. Souder, Indiana
Eleanor Holmes Norton, District of   Daniel E. Lungren, California
    Columbia                         Mike Rogers, Alabama
Zoe Lofgren, California              Michael T. McCaul, Texas
Sheila Jackson Lee, Texas            Charles W. Dent, Pennsylvania
Henry Cuellar, Texas                 Gus M. Bilirakis, Florida
Christopher P. Carney, Pennsylvania  Paul C. Broun, Georgia
Yvette D. Clarke, New York           Candice S. Miller, Michigan
Laura Richardson, California         Pete Olson, Texas
Ann Kirkpatrick, Arizona             Anh ``Joseph'' Cao, Louisiana
Ben Ray Lujan, New Mexico            Steve Austria, Ohio
Bill Pascrell, Jr., New Jersey
Emanuel Cleaver, Missouri
Al Green, Texas
James A. Himes, Connecticut
Mary Jo Kilroy, Ohio
Eric J.J. Massa, New York
Dina Titus, Nevada
Vacancy
                    I. Lanier Avant, Staff Director
                     Rosaline Cohen, Chief Counsel
                     Michael Twinchek, Chief Clerk
                Robert O'Connor, Minority Staff Director
                                 ------                                

 SUBCOMMITTEE ON TRANSPORTATION SECURITY AND INFRASTRUCTURE PROTECTION

                 Sheila Jackson Lee, Texas, Chairwoman
Peter A. DeFazio, Oregon             Charles W. Dent, Pennsylvania
Eleanor Holmes Norton, District of   Daniel E. Lungren, California
    Columbia                         Pete Olson, Texas
Ann Kirkpatrick, Arizona             Candice S. Miller, Michigan
Ben Ray Lujan, New Mexico            Steve Austria, Ohio
Emanuel Cleaver, Missouri            Peter T. King, New York (Ex 
James A. Himes, Connecticut              Officio)
Eric J.J. Massa, New York
Dina Titus, Nevada
Bennie G. Thompson, Mississippi (Ex 
    Officio)
                     Michael Beland, Staff Director
                   Natalie Nixon, Deputy Chief Clerk
              Joseph Vealencis, Minority Subcommittee Lead


















                            C O N T E N T S

                              ----------                              
                                                                   Page

                               Statements

The Honorable Sheila Jackson Lee, a Representative in Congress 
  From the State of Texas, and Chairwoman, Subcommittee on 
  Transportation Security and Infrastructure Protection..........    17
The Honorable Charles W. Dent, a Representative in Congress From 
  the State of Pennsylvania, and Ranking Member, Subcommittee on 
  Transportation Security and Infrastructure Protection..........     2
The Honorable Bennie G. Thompson, a Representative in Congress 
  From the State of Mississippi, and Chairman, Committee on 
  Homeland Security..............................................     1

                               Witnesses

Mr. John Sammon, Assistant Administrator, Transportation Sector 
  Network Management, Transportation Security Administration:
  Oral Statement.................................................     4
  Prepared Statement.............................................     7
Mr. Carter Morris, Senior Vice President, Transportation Policy, 
  American Association of Airport Executives:
  Oral Statement.................................................     9
  Prepared Statement.............................................    10
Ms. Alison Townley, Principal, Henry Incorporated:
  Oral Statement.................................................    27
  Prepared Statement.............................................    29
Mr. Fred Fischer, Principal and Managing Partner, FLO 
  Corporation:
  Oral Statement.................................................    31
  Prepared Statement.............................................    33
Mr. Michael W. McCormick, Executive Director, National Business 
  Travel Association:
  Oral Statement.................................................    36
  Prepared Statement.............................................    37

                               Appendix I

Mr. Ben C. Bishop, Chief Executive Officer, Travel Card Services, 
  LLC:
  Statement, Submitted by the Honorable Sheila Jackson Lee.......    55

                              Appendix II

Questions From Chairwoman Sheila Jackson Lee.....................    57


             THE FUTURE OF THE REGISTERED TRAVELER PROGRAM

                              ----------                              


                     Wednesday, September 30, 2009

             U.S. House of Representatives,
                    Committee on Homeland Security,
Subcommittee on Transportation Security and Infrastructure 
                                                Protection,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 2:09 p.m., in 
Room 311, Cannon House Office Building, Hon. Bennie G. Thompson 
[Chair of the committee] presiding.
    Present: Representatives Thompson, Jackson Lee, DeFazio, 
Cleaver, Massa, Dent, Olson, and Austria.
    Also present: Representative Lofgren.
    Mr. Thompson [presiding]. The subcommittee will come to 
order. The Chairwoman of the subcommittee is handling a bill on 
the floor, and I have been asked to stand in her stead for 
however long.
    The subcommittee is meeting today to receive testimony on 
the future of the Registered Traveler Program. Our witnesses 
today will help us access the state of the Registered Traveler, 
or RT, Program, and discuss the path forward.
    I guess I can start at the outset: One of the real concerns 
that I have as Chair of the full committee, and I am sure other 
Members share it, I understand we have just received the 
testimony of TSA, which is clearly of violation of committee 
rules. That is not a good start for any hearing, and we will 
move into that a little bit later.
    The hearing is designed to provide stakeholders and 
Congress with an opportunity to have an important dialogue 
about expectations and the path forward for this program. I am 
ready to work with TSA, but I also think it should consider the 
views of Congress as they were expressed in H.R. 2200.
    To the private sector, I want to be sure that a quick 
closing of business doors not happen again. The traveling 
public deserves better. Since the closing of Clear's operation, 
staff has examined what happened at Clear, what TSA was doing 
with the RT program, and how the market was responding.
    To be sure, things are still in flux. When the subcommittee 
sent a letter to Ms. Rossides earlier this summer inquiring 
about the disposition of Clear's customer data and TSA's role 
in it, TSA essentially washed its hands of any involvement or 
oversight.
    Over the course of the last few months, however, TSA seems 
much more engaged in the RT program and that is a welcome 
development. I encourage TSA to make no judgments about the 
future of the RT program until new leadership has the time to 
assess the path forward.
    I am thankful, however, to Secretary Napolitano for her 
response earlier this month to the letter Ranking Member King 
and I sent to her in August requesting that TSA rescind its 
order to AAAE demanding that its RT customer information be 
deleted. This was a clear demonstration that the Secretary 
wants to keep options open, and I look forward to continuing 
our dialogue. I look forward to the discussion of our two 
panels today.
    I now yield to the Ranking Member of the subcommittee, Mr. 
Dent, for an opening statement.
    Mr. Dent. Thank you, Mr. Chairman. Good afternoon.
    I would first like to thank all the witnesses for being 
here today.
    Mr. Sammon, good to see you again.
    First, I am very glad to hear the President has nominated 
someone for the TSA administrator. We look forward to getting 
to know Mr. Erroll Southers, and pending his confirmation in 
the Senate I hope we can have some strong collaboration, as we 
did with his predecessor, Kip Hawley.
    Mr. Sammon, I would be remiss in my duties if--to the other 
Members of this subcommittee if I didn't highlight the fact 
that--and our rules are pretty strict about the presentation or 
submission of testimony 48 hours in advance, and, you know, it 
could result in the exclusion of your testimony from the 
record, barring the opening statement. Now, we are usually 
pretty lenient in this subcommittee, but getting the testimony 
a minute or 2 before a hearing that you knew was coming for a 
few weeks is a little frustrating. I guess the only thing I 
would ask is if we could have maybe Mr. Sammon read through his 
testimony so we get a chance to understand it.
    Mr. Thompson. Without objection.
    Mr. Dent. Thank you, Mr. Chairman.
    We are here today to discuss the future of the Registered 
Traveler program. The program, as we all know, was created 
pursuant to an act of Congress, specifically the Aviation and 
Transportation Security Act, which gave TSA the authority to 
establish trusted traveler programs and use available 
technologies to expedite the security screening of passengers 
who participate in such programs.
    The concept envisioned by the Congress was to allow 
individuals at no cost to the Government to voluntarily undergo 
background checks and in return receive expedited screening. 
This would allow limited Government resources to instead be 
focused on those passengers at the checkpoint of whom little is 
known.
    Since its creation in 2003, DHS and its components have 
rightfully taken a risk-based approach to homeland security 
issues, and we see this concept incorporated into the many 
aviation security layers TSA already has in place. The concept 
of the Registered Traveler program falls right in line with TSA 
and the Department's approach, but unfortunately, TSA has never 
embraced the RT program.
    In the words of my good friend, Mr. Lungren, at a recent 
TSA budget hearing: Registered Traveler? Congress likes the 
idea. Congress says it likes the idea. Congress repeats it 
likes the idea. Congress puts it in the legislation. TSA says, 
``What?'' What does it take for Congress to convince TSA and 
whatever administration it is that we are serious about 
Registered Traveler? Those are Congressman Lungren's words.
    You know, we could sit here and debate the Registered 
Traveler program, you know, public partnership--public-private 
partnership that went wrong. Perhaps it was TSA's concern for 
clean skin terrorists, those people who might slip through a 
background check because they have no derogatory information at 
that point. Maybe it was simply a clash of personalities 
between TSA and the private sector service providers.
    Regardless, we need to focus on how we move forward, 
because let me be very clear that Congress intends for the 
Registered Traveler program to move forward. In fact, 4 months 
ago H.R. 2200, the Transportation Security Administration 
Authorization Act of 2009, passed this subcommittee and the 
full committee unanimously. It overwhelmingly passed the House 
by a vote of 397 to 25 last June.
    The act included a bipartisan provision on Registered 
Traveler directing TSA to report on how the Registered Traveler 
program could be integrated in the risk-based aviation security 
operations. Additional provisions were included that built upon 
the RT platform to provide expedited screening for military 
personnel and for people with security clearances.
    As we know, this past June, Clear, a subsidiary of Verified 
Identity Pass, ceased its operations. Clear was the largest RT 
service provider, operating at 18 of the 22 Registered Traveler 
airports.
    On one hand this was shocking news, but on the other hand 
it really wasn't. Clear and the other service providers, like 
FLO, who is represented here today, had been operating without 
any real support from TSA despite Congress' mandate. With TSA 
opposing the program at every turn, it really was only a matter 
of time before the service providers ran into trouble.
    After Clear ceased operations, TSA was quick to ensure that 
all biographic data and personally identifiable information of 
registered travelers was secure, but it was disheartening to 
learn that TSA almost took action to delete and dismantle the 
Central Information Management System that enabled sharing 
between various registered traveler providers. This was a show, 
in my view, of bad faith and just underscored TSA's lack of 
support for Registered Traveler.
    Fortunately, Chairman Thompson and Ranking Member King 
wrote Secretary Napolitano their concerns, and to date TSA has 
not deleted any information. I hope we can all learn from what 
happened with Clear.
    I am encouraged by the appearance of Ms. Alison Townley, of 
Henry Incorporated. I understand Henry--the Henry company--is 
in negotiations with Clear to purchase some of Clear's assets, 
potentially succeed it in the registered traveler business.
    TSA must remember that the private sector is an asset that 
should be leveraged as often as we can to help us secure our 
homeland. The Government can't do it all; its resources are not 
infinite.
    The Registered Traveler program was envisioned as a public-
private partnership so TSA could leverage the technology and 
ingenuity of the private sector, and I would like to hear today 
that TSA is willing to turn the page on Registered Traveler and 
that TSA is committed to moving forward with this very 
important program. I look forward to the testimony we are going 
to hear today, and at this time I yield back the balance of my 
time.
    Thank you, Mr. Chairman.
    Mr. Thompson. Thank you very much.
    Other Members of the subcommittee are reminded that under 
committee rules, opening statements may be submitted for the 
record. I now ask unanimous consent that Ms. Lofgren be allowed 
to sit as a Member of the subcommittee, in that she is a Member 
of the full committee.
    Without objection.
    I welcome our first panel of witnesses: Mr. John Sammon, 
assistant administrator for Transportation Sector Network 
Management at TSA. Our second witness, Mr. Carter Morris, is 
vice president of transportation policy at the American 
Association of Airport Executives.
    Again, Mr. Sammon, one of the penalties for not getting 
your testimony in to the committee is that we won't have 
actually read it, because we just received it. Clerk just 
passed it out. Our rules of the committee clearly indicate that 
we should have had this information 48 hours ahead of time, and 
I would hope that when the administrator is confirmed he will 
assure this committee that such lack of timeliness will only--
will not be on his official watch. So if you would, please read 
your statement for the subcommittee.

      STATEMENT OF JOHN SAMMON, ASSISTANT ADMINISTRATOR, 
   TRANSPORTATION SECTOR NETWORK MANAGEMENT, TRANSPORTATION 
                    SECURITY ADMINISTRATION

    Mr. Sammon. Again, good afternoon, Chairman Thompson, 
Representative Dent, and the distinguished Members of the 
subcommittee. It is my privilege to appear today before you to 
discuss the Registered Traveler program.
    An overview of the history, as Representative Dent went 
over, the Aviation and Transportation Security Act authorized 
TSA to establish requirements to implement trusted passenger 
programs and use available technologies to expedite the 
security screening of passengers participating in such systems, 
thereby allowing security screening personnel to focus on 
passengers who should be subject to more extensive screening.
    Based on this legislative mandate, TSA undertook Federally-
funded pilot programs to explore new technologies, the needs of 
passengers and shareholders--stakeholders--and opportunities 
for private collaboration in order to develop a comprehensive 
RT program. TSA worked with private industry to roll out an 
expanded public-private partnership, test interoperability 
among multiple service providers. Private sector partners acted 
swiftly to move the program forward and establish 
interoperability standards that were approved by TSA in May 
2006.
    Following the approval of standards, TSA developed a 
comprehensive set of guidance documents allowing the private 
sector to implement the interoperability pilot phase. 
Implementation of the Registered Traveler Interoperability 
Pilot began with the release of the RTIP fee notice in the 
Federal Register. This expanded pilot was designed to test the 
interoperability of biometric cards among multiple service 
providers at different airports across the country.
    Three RT----
    Mr. Thompson. Excuse me. Excuse me. Are you reading the 
testimony?
    Mr. Sammon. Yes, sir.
    Mr. Thompson. That is not the testimony we have.
    Mr. Sammon. I am reading an oral.
    Mr. Thompson. Are you reading the testimony?
    Mr. Sammon. No, sir. I am not reading the testimony.
    Mr. Thompson. You need to read the testimony that we just 
received, all right? Read the testimony. The only reason you 
have to do it, we just got it, so we are looking at it at the 
same time.
    Mr. Sammon. An overview of the Registered Traveler program: 
The Aviation and Transportation Security Act authorized TSA to 
establish requirements to implement trusted passenger programs 
and use available technologies to expedite the screening of 
passengers participating in such programs, thereby allowing 
security screening personnel to focus on those passengers who 
should be subject to more extensive screening.
    Based on this legislative mandate, TSA undertook Federally-
funded pilot programs to explore new technologies, the needs of 
passengers and stakeholders, and opportunities for private 
collaboration in order to develop a comprehensive RT program.
    During the summer of 2004, the Registered Traveler pilot 
program was initiated at five airports on a staggered basis 
around the country. In 2005, TSA initiated a new pilot, known 
as the Private Sector Known Traveler program, at Orlando 
International Airport to test the feasibility of a public-
private partnership model for the RT program.
    Following the Orlando pilot, TSA worked with private 
industry to roll out an expanded public-private partnership 
pilot to test interoperability among multiple service 
providers. The RT interoperability pilot was fee-funded.
    The prospect of a terrorist not identified on a watch list 
raised questions about the viability of an RT program. This 
scenario was made abundantly clear in July 2005 when such 
terrorists attacked the London Transit System. Accordingly, TSA 
decided to devote its resources to other security-focused 
initiatives.
    Given the public interest in the program, however, TSA 
decided to partner with private sector entrepreneurs, airlines, 
and airports to facilitate a market-driven RT program provided 
such a program would not create any security risk to the 
system. This led to the formation of a private sector-led 
program announced in February 2006.
    Private sector partners acted swiftly to move the program 
forward and establish interoperability standards that were 
approved by TSA in May 2006, giving RT and TSA access to 
interoperable biometric credentialing systems that had been 
constructed in less than a year. Following the approval of 
standards, TSA developed a comprehensive set of guidance 
documents allowing the private sector to implement the 
interoperability pilot phase.
    Implementation of the Registered Traveler Interoperability 
Pilot began with the release of a fee notice in the Federal 
Register. The initial fee of $28 per participant covered TSA's 
costs for vetting and program management.
    Any additional services or costs associated with the pilot 
were established by the vendor who, in turn, charged the 
participant for those services. This expanded pilot was 
designed to test the interoperability of biometric cards among 
multiple service providers at different airports across the 
country.
    Three RT vendors participated in the RT pilot at 
approximately 23 airports. After an evaluation of the results 
of the pilot, TSA issued a notice in the Federal Register on 
July 30, 2008, announcing the conclusion of the pilot.
    TSA determined that this private sector program did not 
provide any additional level of security. TSA determined that 
the security threat assessments were not a value added to the 
security process, and therefore, the $28 fee to conduct them 
was not good stewardship of the taxpayer dollars. As a result, 
TSA ceased conducting the STAs, or background checks, on RT 
participants while enabling RT to continue as a private sector 
customer service program without the TSA fee or STA.
    By July 14, 2009, three vendors participating in the 
pilot--Unisys Corporation, Fast Lane Option Corporation, 
otherwise known as FLO, Clear Verified Identity Pass, and 
Vigilant Solutions--had ceased operations. This prompted the 
need for TSA to ensure the appropriate handling of participant 
information that RT vendors had collected and stored throughout 
the program's duration.
    Accordingly, TSA instructed sponsoring airports and 
airlines, the entities with which TSA has a direct RT 
relationship, to ensure that RT equipment and customer 
information complied with the security and privacy requirements 
set forth in the TSA RT standards for security, privacy, and 
compliance guidance.
    In addition, during the course of the pilot TSA used two 
systems, one managed directly by TSA for watch list checking 
and one operated by the Association--the American Association 
of Airport Executives, AAAE, under a transaction agreement with 
TSA to support interoperability containing personally 
identifiable information.
    Since one system was directly managed by TSA and AAAE 
system, interfaced with its TSA system to submit information 
for STAs, TSA has been responsible for ensuring that these two 
systems operate in a secure manner consistent with the 
requirements of the Federal Information Security Management 
Act. Among other things, this act requires agencies to secure 
information maintained in information technology systems.
    The data in the system owned and operated by TSA was 
deleted on August 1, 2009, consistent with the applicable 
records retention schedule approved by the National Archives 
and Records Administration, otherwise known as NARA.
    The other system, which was operated by AAAE, is referred 
to as the Central Information Management System, CIMS. While 
TSA immediately ceased collecting information from program 
applicants at the conclusion of the pilot in 2008, TSA also 
provided a 12-month transition period to allow participants who 
enrolled immediately after--immediately before TSA ended the 
pilot to continue to enjoy the benefit of using their RT card 
at all locations regardless of the vendor.
    The CIMS system continued to facilitate this 
interoperability during the 12-month transition period. 
However, with the conclusion of the pilot and the 12-month 
transition period, TSA is reviewing its legal obligations, 
including those under the Privacy Act, the Federal Information 
Security Management Act, and the agreement with AAAE regarding 
the information contained within the CIMS system, the Central 
Information Management System.
    DHS will continue to encourage interested vendors to work 
directly with airports, airlines, and TSA to identify and 
implement worthwhile concepts that will provide registered 
travelers a benefit while still maintaining both the level of 
security needed to ensure the safety of our transportation 
system as well as the confidentiality of personally 
identifiable information. As with any transportation security 
program, TSA will maintain regulatory oversight role for any 
such concepts adopted in the RT program.
    In conclusion, thank you for the opportunity to discuss the 
future of the RT program. We look forward to working with 
Congress and other stakeholders on the future of this program 
and other programs that will enhance security for the traveling 
public while improving the travel experience.
    I would be pleased to respond to any questions.
    [The statement of Mr. Sammon follows:]
                   Prepared Statement of John Sammon
                           September 30, 2009
    Good afternoon Chairwoman Jackson Lee, Representative Dent, and 
distinguished Members of the subcommittee. It is my privilege to appear 
before you today to discuss the future of the Registered Traveler (RT) 
Program from the perspective of the Transportation Security 
Administration (TSA).
            registered traveler: an overview of the history
    The Aviation and Transportation Security Act (ATSA) authorized TSA 
to ``establish requirements to implement trusted passenger programs and 
use available technologies to expedite the security screening of 
passengers who participate in such programs, thereby allowing security 
screening personnel to focus on those passengers who should be subject 
to more extensive screening.''
    Based on this legislative mandate, TSA undertook Federally funded 
pilot programs to explore new technologies, the needs of passengers and 
stakeholders, and opportunities for private collaboration in order to 
develop a comprehensive RT program. During the summer of 2004, the 
Registered Traveler Pilot Program was initiated at five airports on a 
staggered basis around the country. In 2005, TSA initiated a new pilot, 
known as the Private Sector Known Traveler, at Orlando International 
Airport (MCO), to test the feasibility of a public-private partnership 
model for the RT program. Following the Orlando pilot, TSA worked with 
private industry to roll out an expanded public-private partnership 
pilot to test interoperability among multiple service providers. The RT 
Interoperability Pilot (RTIP) was a fee-funded program.
    The prospect of a terrorist not identified on a watch list raised 
questions about the viability of an RT program. This scenario was made 
abundantly clear in July 2005, when such terrorists attacked the London 
transit system. Accordingly, TSA decided to devote its resources to 
other security-focused initiatives. Given the public interest in the 
program, however, TSA decided to partner with private sector 
entrepreneurs, airlines, and airports to facilitate a market-driven RT 
program, provided such a program would not create any security risk to 
the system. This led to the formation of a private sector-led program 
announced in February 2006.
    Private sector partners acted swiftly to move the program forward 
and established interoperability standards that were approved by TSA in 
May 2006--giving RT and TSA access to an interoperable biometric 
credentialing system that had been constructed in less than a year.
    Following the approval of standards, TSA developed a comprehensive 
set of guidance documents allowing the private sector to implement the 
interoperability pilot phase. Implementation of the Registered Traveler 
Interoperability Pilot (RTIP) began with the release of the RTIP Fee 
Notice in the Federal Register. The initial fee of $28 per participant 
covered TSA's costs for vetting and program management. Any additional 
services or costs associated with RTIP were established by the vendor, 
who, in turn, charged the participant for those services. This expanded 
pilot was designed to test the interoperability of biometric cards 
among multiple service providers at different airports across the 
country. Three RT vendors participated in the RTIP at approximately 23 
airports.
    After an evaluation of the results of the RTIP, TSA issued a Notice 
in the Federal Register on July 30, 2008, announcing the conclusion of 
the pilot. TSA determined that this private-sector program did not 
provide any additional level of security. TSA determined that the 
security threat assessments (STAs) were not a value-add to the security 
process and therefore, the $28 fee to conduct them was not good 
stewardship of taxpayer dollars. As a result, TSA ceased conducting the 
(STAs) on RT participants, while enabling RT to continue as a private 
sector customer service program without the TSA fee or STA.
         registered traveler: an overview of the current status
    By July 14, 2009, the three vendors participating in the pilot--
Unisys Corporation/Fast Lane Option Corporation (FLO), Clear/Verified 
Identity Pass (VIP), and Vigilant Solutions--had ceased operations. 
This prompted the need for TSA to ensure the appropriate handling of 
participant information that RT vendors had collected and stored 
throughout the program's duration. Accordingly, TSA instructed 
sponsoring airports and airlines--the entities with which TSA has a 
direct RT relationship--to ensure that RT equipment and customer 
information complied with the security and privacy requirements set 
forth in the TSA RT Standards for Security, Privacy, and Compliance 
guidance. In addition, during the course of the RTIP, TSA used two 
systems--one managed directly by TSA for watch list checking and one 
operated by the American Association of Airport Executives (AAAE) under 
an Other Transaction Agreement (OTA) with TSA to support 
interoperability, containing personally identifiable information (PII). 
Since one system was directly managed by TSA and AAAE's system 
interfaced with TSA's system to submit information for STAs, TSA has 
been responsible for ensuring that these two systems operate in a 
secure manner consistent with the requirements of the Federal 
Information Security Management Act (FISMA). Among other things, FISMA 
requires agencies to secure information maintained in information 
technology (IT) systems. The data in the system owned and operated by 
TSA was deleted on August 1, 2009, consistent with the applicable 
records retention schedule approved by National Archives and Records 
Administration (NARA).
    The other system (operated by the AAAE) is referred to as the 
Central Information Management System (CIMS). While TSA immediately 
ceased collecting information from program applicants at the conclusion 
of the pilot, TSA also provided a 12-month transition period to allow 
participants who enrolled immediately before TSA ended the pilot to 
continue to enjoy the benefit of using their card at all RT locations 
regardless of the vendor. The CIMS continued to facilitate this 
interoperability during this 12-month transition period. However, with 
the conclusion of the RTIP and the 12-month transition period, TSA is 
reviewing its legal obligations, including those under the Privacy Act, 
FISMA, and the OTA with AAAE regarding the information contained within 
the CIMS system.
                   registered traveler: looking ahead
    DHS will continue to encourage interested vendors to work directly 
with airports, airlines, and TSA to identify and implement worthwhile 
concepts that will provide registered travelers a benefit, while still 
maintaining both the level of security needed to ensure the safety of 
our transportation system, as well as the confidentiality of personally 
identifiable information. As with any transportation security program, 
TSA will maintain its regulatory oversight role for any such concepts 
adopted in the RT program.
                               conclusion
    Madam Chairwoman, thank you again for the opportunity to discuss 
the future of the RT program. We look forward to working with Congress 
and other stakeholders on the future of this program and other programs 
that will enhance security for the traveling public while improving the 
traveling experience. I would be pleased to respond to any questions.

    Mr. Thompson. Thank you.
    We now yield to Mr. Morris for 5 minutes to summarize his 
statement.

      STATEMENT OF CARTER MORRIS, SENIOR VICE PRESIDENT, 
    TRANSPORTATION POLICY, AMERICAN ASSOCIATION OF AIRPORT 
                           EXECUTIVES

    Mr. Morris. Thank you, Mr. Chairman, Members of the 
subcommittee, for holding this important hearing on Registered 
Traveler, and we appreciate your continued interest in the 
program. I would like to emphasize just a few key points from 
our written testimony.
    Undertaking efforts to enhance security and efficiency at 
screening checkpoints, which is exactly what the Registered 
Traveler promises to do by better aligning resources with the 
greatest potential threats, will become more important as 
traffic returns to the aviation system. It is only a matter of 
time before congestion checkpoints and associated safety, 
security, and convenience issues reemerge.
    Our thanks to the committee for the provisions that were 
included in TSA authorization legislation to fortify the 
Registered Traveler program, including enhancing background 
screening for enrollees and the prospect of expedited 
checkpoint processing for program participants. In our view, 
these steps will help the program reach its full potential.
    Many of the program enhancements envisioned in H.R. 2200 
are in line with what airports and industry have long supported 
with trusted traveler programs, namely interoperability, 
utilization of biometric verification tied to enhanced 
background checks for enrollees, screening benefits, and a 
robust airport-driven private program with TSA oversight.
    Looking forward, it is clear that these key elements are 
necessary for a robust future trusted traveler program, and 
while there may be varying degrees of interest in programs that 
contain only some of these items, the more you chip away at 
these core elements the less attractive the program will be to 
travelers and to airports.
    Reducing key program elements will also result in fewer 
opportunities to create real operational partnerships between 
airports and the Government that enhance security and 
efficiency at the security checkpoints.
    The good news is that at this point we have a firm 
understanding of the key program elements that are necessary 
for a viable trusted traveler program as well as the technical 
expertise to make such a program work. AAAE has played a key 
role in that regard through its work with Registered Traveler 
Interoperability Consortium and with the development of the 
Central Information Management System, or CIMS.
    Working with more than 60 airports, 30 biometric and IT 
management companies, and with TSA oversight, the RTIC produced 
a 158-page consensus document that forms the technical 
foundation of the Registered Traveler program, which grew to 22 
airports served by four unique TSA-certified Registered 
Traveler service providers.
    The CIMS is the world's most advanced interoperable 
information management system of travelers' biometric data, and 
as part of RT the CIMS has been responsible for several key 
functions, including processing all records for program 
enrollees, interfacing with the TSA for background checks, 
ensuring an unbreakable chain of trust from vetted enrollments, 
to issued credentials, to the revocation of those credentials.
    CIMS is the critical engine that ensures interoperability, 
meaning that participants who sign up in San Francisco with one 
service provider are guaranteed, recognized, and accepted that 
they can travel to other airports that have chosen to 
participate in the program and receive the same services and 
benefits.
    The CIMS should and can play a key role in any future 
trusted traveler program and has maintained, in strict 
accordance with TSA requirements and oversight as well as 
contractual obligations with service providers, data from 
program participants.
    There are policy decisions that must be made as to whether 
or not that data should be maintained and leveraged as the part 
of a future program. In our view, it would be a step backward 
to delete such data, a move that would force reenrollment for 
all travelers, and with that said, we are obligated to comply 
with TSA's orders in this area and we look forward to working 
with the agency and this subcommittee to devise a course that 
makes sense for the future of a robust trusted traveler 
program.
    Madame Chairwoman, while the experiences with Registered 
Traveler have been far from perfect to this point, much 
progress has been made to create the foundation for a viable 
future trusted traveler program from a technical and 
operational standpoint. If you would consider that, over 4 
years, the Registered Traveler program facilitated unique new 
layers of security and convenience to over 250,000 travelers 
who use the aviation system the most--they volunteered to 
participate, were vetted against Government terrorist 
databases, and used one of the world's most secure credentials 
issued to the public.
    Many expedited passenger programs, in fact, around the 
world have used the U.S. Registered Traveler program as a 
template for similar traveler security and border crossing 
programs. With that foundation and with the clear guidance and 
support from Congress and TSA, we remain convinced that we can 
make the promise of this program a reality.
    We look forward with working with the agency and this 
subcommittee to that end, and I thank you for your time.
    [The statement of Mr. Morris follows:]
                  Prepared Statement of Carter Morris
                           September 30, 2009
    On behalf of the American Association of Airport Executives (AAAE) 
and the thousands of men and women the Association represents who 
manage and operate primary, commercial service, reliever, and general 
aviation airports across the country, I want to thank the subcommittee 
for the opportunity to reflect on the future of Registered Traveler 
(RT). We remain grateful for your long-standing interest in and support 
for this important program.
    The imperative to move forward with some sort of ``trusted 
traveler'' program will only increase as traffic begins to return to 
the aviation system, which most analysts agree will happen in the near 
future. Prior to the economic downturn, the situation at many airports 
was approaching unbearable with growing lines at screening checkpoints 
frustrating passengers and creating a dangerous safety and security 
situation. While the temporary downturn in traffic has pushed many of 
these problems to the back burner, there is little doubt that they will 
soon return--making it all the more important that we are here today 
discussing a concept that holds tremendous promise in enhancing 
security while improving efficiency in the airport environment.
    I also want to take the opportunity to recognize and thank this 
subcommittee and the full committee for the provisions included in TSA 
reauthorization legislation--H.R. 2200--aimed at fortifying the RT 
program and the trusted traveler concept. In our estimation, the 
approach you have taken as part of that legislation to enhance the 
background screening process for enrollees and to evaluate program 
improvements, including the possibility of expediting the screening 
process for program participants, are extremely helpful and important. 
We firmly believe that those changes can and should be integrated into 
risk-based aviation security operations at airports.
    The changes you have advocated in H.R. 2200 would bring the program 
in line with what airports and our industry partners have recommended 
since the earliest days of discussion regarding the program. As you 
know, many of these key elements--including security threat assessments 
for enrollees and the utilization of technology to provide screening 
benefits for program participants--were present in the early days of 
the program. Unfortunately, these benefits eroded and disappeared over 
time, lessening the value of the program and its attractiveness to 
airports and the traveling public. The good news is that with many 
important pieces in place and with many lessons having already been 
learned, a successful trusted traveler program is well within our 
reach.
 airports have long supported trusted traveler concept and development 
                                 of rt
    AAAE and the airport community have long supported the ``trusted 
traveler'' concept as an innovative security layer that focuses limited 
Federal resources on the areas of greatest impact within the aviation 
system.
    AAAE President Chip Barclay (along with Southwest Airlines 
executive Herb Kelleher and law enforcement veteran Ray Kelly) was a 
member of the high-level airport security Rapid Response Team created 
in the immediate aftermath of 9/11 by then-DOT Secretary Norman Mineta 
to deliver detailed recommendations for improving security within the 
National aviation system. In its report issued in October 2001, the 
Rapid Response Team determined that ``There is an urgent need to 
establish a nationwide program of voluntary pre-screening of 
passengers, together with the issuance of `smart' credentials, to 
facilitate expedited processing of the vast majority of air travelers 
and to enable security professionals to focus their resources more 
effectively.''
    The concept subsequently received the strong endorsement of the 9/
11 Commission and has been advocated by numerous others. The trusted 
traveler concept allows for intense focus on individuals who, at no 
cost to Government, voluntarily provide biographic and biometric 
information, freeing resources at screening checkpoints to focus on 
those for whom little is known. The result is enhanced security and 
improved efficiency at screening checkpoints.
    Working closely with TSA, airports, and the technology community, 
AAAE has taken a leadership role over the years in championing the 
concept and pursuing its Nation-wide implementation with the Registered 
Traveler (RT) program. Although not directly responsible for processing 
passengers at screening checkpoints, airports long ago recognized that 
there was great potential value in terms of enhanced security and 
efficiency with the deployment of a Nation-wide, interoperable RT 
program. Airports also understood that they were uniquely situated to 
bring interested parties together to chart a course that would result 
in the successful deployment and operation of the program.
    In June 2005, AAAE--at the urging of several of our airport 
members--formed the Registered Traveler Interoperability Consortium 
(RTIC). The goal of the RTIC was to establish common business rules and 
technical standards to create a permanent, interoperable, and vendor-
neutral RT program. In addition to nearly 60 airports, RT service 
providers and leading biometric and identity management companies were 
active participants in the consensus-driven process as was the 
Transportation Security Administration, which played a critical role in 
establishing and ensuring compliance with stringent Federal security 
standards. AAAE appeared before this subcommittee in November 2005 to 
detail the work of the RTIC and airport efforts to pursue a Nation-
wide, interoperable RT program.
    Throughout 2006, the RTIC worked aggressively to define, develop, 
and implement the RT program at interested airports. In 2006 alone, the 
group dedicated more than 500 work hours to create the RTIC Technical 
Interoperability Specification, a detailed, 158-page technical 
standards document approved by the TSA that serves as the technical 
requirements for the interoperable RT program that eventually grew to 
more than 20 airports prior to the recent cessation of the program. The 
RTIC technical specification has been updated numerous times since it 
was first created and serves as a living document that can be altered 
to reflect future program requirements.
    While there have certainly been challenges and frustrations along 
the way--many of which are being explored as part of this hearing--the 
experiences with the RTIC make clear that the best path forward for the 
RT program--or any subsequent trusted traveler concept--is one in which 
Federal resources and standards are combined with the knowledge, 
expertise, and creativity of airports, airlines, and aviation-oriented 
businesses. That approach led to the successful launch of RT as a 
secure, interoperable, Nation-wide program, and we remain convinced 
that the future of the program depends on effective partnerships 
between the Federal Government and the private sector.
      the central identity management system (cims)--security and 
                            interoperability
    In addition to facilitating the development of the business rules 
and technical standards that proved critical to getting RT off the 
ground, AAAE's owned and operated Transportation Security Clearinghouse 
developed and runs a TSA-certified and audited centralized identity 
management system known as the Central Information Management System or 
CIMS.
    The CIMS is the world's most advanced interoperable information 
management system of travelers' biometric data. The first of its kind, 
CIMS enables verification of registered individuals with two types of 
biometrics by any certified operator at any participating airport with 
the very highest level of accuracy and security. As part of RT, the 
CIMS has been responsible for several key functions, including 
processing all records for program enrollees, interfacing with the TSA 
for background checks, ensuring an unbreakable chain of trust from 
vetted enrollments to issued credentials, to revoking credentials. 
Notably, the CIMS is capable of accommodating multiple biometrics, 
including fingerprints and iris. 

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    The CIMS, which is capable of processing literally millions of 
enrollments from independent locations across the country, served as 
the critical engine that facilitated interoperability at various 
airport locations among multiple vendors. A key component of the RT 
program and of any trusted traveler program going forward is 
interoperability, meaning that participants who sign up in Phoenix must 
be recognized and accepted as they travel to other airports that have 
chosen to participate in the program, be it Denver, Atlanta, Washington 
or other airports throughout the aviation system. CIMS, through its 
standards-based and vendor-neutral architecture, provides the back-end 
security and technology that enables interoperability. As a result of 
the CIMS, the RT cards issued to over a quarter of a million 
participants in the RT program are among the most secure and 
interoperable non-Federally issued credentials issued to the general 
public.
    The CIMS was built with strict oversight from TSA and has been 
audited by the agency repeatedly to ensure full compliance with the 
broad array of Federal security requirements pertaining to privacy and 
data protection, among others. Last year, the CIMS was recognized by 
the National Electronic Commerce Coordinating Council (eC3) as the 2008 
Excellence Award winner for innovation in protecting the privacy and 
integrity of citizen information.
    I would note that since the RT program ceased earlier this year, we 
have taken every precaution to continue to protect enrollee data in 
strict compliance with TSA requirements. We have been in constant 
contact with the agency and stand ready to comply with any future 
demands pertaining to such data.
    We are proud of the CIMS and firmly believe that it holds 
tremendous value as part of RT or any future trusted traveler program. 
From a technical standpoint, the CIMS has proven itself invaluable, 
serving as the critical hub for facilitating interoperability among 
service providers and at airports across the country and for processing 
necessary checks and security controls. In its 3 years in operations, 
CIMS supported a system of four independent service providers at 22 
airports with more than 250,000 actively enrolled participants. 
Whatever shape a future trusted traveler program may take, it is clear 
that the CIMS can and should continue to play a central role in 
performing key functions.
   airports stand ready to support a future trusted traveler program
    As is evident by today's hearing, there are a number of policy 
questions regarding the future of the program that must be answered by 
TSA in collaboration with the Congress. Among other things, 
policymakers must consider the specific role of TSA with the program, 
whether it will serve as a ``front-of-the line'' service or a security 
program with a resumption of security threat assessments or other 
checks, and whether or not program participants should be afforded 
screening benefits, such as leaving shoes on or laptops in their cases 
as they are processed through checkpoints.
    While airports may have differing views on some of these key 
questions, there is broad agreement that any future trusted traveler 
program must function primarily to enhance security and expedite the 
travel experience. Those two pillars are the primary values that the 
Nation's frequent air travelers want as well and that each of you as 
policymakers rightly will demand. By enhancing efficiency at airport 
screening checkpoints, TSA screeners will be able to better focus their 
limited resources on the critical task of providing more rigorous 
screening to individuals about whom we know less than those who have 
voluntarily submitted their background for extensive vetting and 
clearance.
    The unique operational relationships between airports and TSA 
forged through this program can also serve as a platform for process 
and technology innovation at checkpoints. Emerging detection and 
surveillance technologies can be tested as a part of the trusted 
traveler process with less risk and more impact than with isolated 
pilot programs.
    As each Member of this subcommittee knows as a frequent traveler, 
every airport is unique. A successful, long-term trusted traveler 
program depends on the implementation of a technical, operational, and 
business model capable of supporting individual airport needs, while 
providing the common infrastructure that allows passengers to use this 
capability at any airport Nation-wide. In recognition of that fact, it 
is critical that any future program continue to be airport-driven and 
run outside of Government with careful and consistent Government 
standards and oversight.
    In terms of specifics, many of the initial principles outlined by 
airports and our partners working with the RTIC arguably remain as 
valid today as they did some 3 years ago. At that point, RTIC members 
agreed to support a system where:
   Qualified applicants in the RT Program will agree to 
        voluntarily provide TSA-specified personal data, both 
        biographic and biometric, which will be used by TSA to assess 
        the security threat of each participant.
   Service providers will be responsible for enrollment 
        operations, including collection and verification of personal 
        data of eligible applicants. Service providers must protect and 
        maintain all personal data related to an applicant in a secure 
        manner and prevent the unauthorized disclosure of the personal 
        data.
   Service providers must securely transmit valid application 
        enrollment data to the Central Identity Management System 
        (CIMS). The CIMS will receive enrollment data from the RT 
        service providers and will validate and perform duplicate 
        checking of received enrollment data and forward data to the 
        TSA for security threat assessments.
   The TSA will conduct the security threat assessments and 
        return results daily.
   On receipt of notification of an acceptable security threat 
        assessment for an applicant, the CIMS will notify the RT 
        service provider for that applicant of the updated status of 
        the applicant and will forward the applicant's credential 
        information to the service provider.
   The credential information sent to the service provider will 
        include a digitally signed biometric template generated by the 
        CIMS which will ultimately be placed on RT participants' cards. 
        The central issuance of the biometric template ensures 
        technical interoperability but also importantly provides a 
        chain of trust between an individual's biometric and the same 
        individual's vetted identity.
   Service providers will issue and deliver participants' 
        membership cards (e.g. smart cards). Service providers must 
        notify CIMS of any future changes in the status of their 
        participants, such as lost or stolen cards. Service providers 
        are also responsible for customer service, including 
        communicating with applicants regarding their approval status 
        and responding to applicant and participant inquiries.
   Service providers may not unnecessarily disclose biographic 
        and/or biometric data required for the purpose of the RT 
        Program and collected by the service provider from RT Program 
        applicants or participants. Service providers may not sell or 
        disseminate any biographic and/or biometric data required for 
        the RT Program and collected by the service provider from RT 
        Program applicants or participants for any commercial purposes 
        without the approval of the airport.
   Participating traveler processing will occur at the 
        airport's security checkpoints. The placement of the RT 
        screening stations will be located in front of the TSA 
        passenger screening areas. Passengers that are not enrolled in 
        the RT Program or are not approved when presented at the RT 
        processing area will use the normal TSA security lines/lanes. 
        Passengers that are enrolled and approved will use the 
        designated RT security screening lines/lanes.
   Biometric technology will be used for traveler identity 
        verification at the RT screening stations. Once a participant 
        presents their membership card, fingerprint, and iris biometric 
        features will be used to verify passenger identity. Proposed 
        biometric systems shall be currently operational, highly 
        accurate, cost-effective, and capable of confirming the 
        identities of large populations within short time constraints.
   Service providers will operate the RT screening stations, 
        including the timely update of system and card revocation 
        status to ensure fast, secure, and reliable verification and 
        status-checking at the airport checkpoint.
   Service providers are responsible for installing, 
        furnishing, integrating, operating, and maintaining all of 
        their required equipment and systems.
   The RTIC will create and maintain the technical and business 
        rules for the RT Program. The RTIC will operate a certification 
        program for RT service providers to validate the conformance of 
        their systems, service levels, and processes with the RT 
        Program rules. Service providers will be required to undergo an 
        annual re-certification and auditing of their systems and 
        processes.
   Service providers will market the RT program to potential 
        applicants and will use standardized RT Program logos and 
        signage within their marketing.
    While some adjustments to this model may be necessary and 
appropriate, it is clear that the basic framework outlined here offers 
a roadmap for a re-constituted program that offers great prospects for 
sustainability. We believe that these principles are in line with those 
outlined by the subcommittee in H.R. 2200.
    In closing, I would emphasize the tremendous work that has been 
done to this point to get a viable, interoperable trusted traveler 
program off the ground with RT. With all of the pieces in place from a 
technical and business process standpoint, the only thing missing is 
clear direction and certainty as to what a future program may entail. 
The interest level of the traveling public will undoubtedly increase as 
traffic returns to our Nation's airports as will the imperative to have 
a workable program in place.
    AAAE and the airport community remain committed to working with our 
industry partners, with Congress, and with TSA to make the promise of a 
trusted traveler program a reality. Thank you very much for the 
opportunity to appear at this important hearing.

    Ms. Jackson Lee [presiding]. Let me thank the witnesses for 
their testimony, and let me place on the record that a bill 
that I co-authored was on the floor of the House and we were 
debating it. I thank the Members of the committee and the 
Chairman of the full committee and the Ranking Member and 
Members for their indulgence.
    I would like to yield now for 5 minutes for his questions, 
Ranking Member of the subcommittee. Mr. Dent.
    Mr. Dent. Thank you, Madame Chairwoman.
    Mr. Sammon, again, thanks for joining us today. I have a 
series of questions that are pretty much yes or no that I would 
like to get through first. From that I would like to engage you 
in a little bit of dialogue.
    First, GAO has used red teams in the past to test TSA's 
screeners, have they not?
    Mr. Sammon. Yes.
    Mr. Dent. Does TSA have its own internal red teams?
    Mr. Sammon. Yes.
    Mr. Dent. Have TSA screening personnel failed these red 
team inspections in the past?
    Mr. Sammon. Yes.
    Mr. Dent. So to protect the American public, TSA has 
implemented several layers of security, both seen and unseen, 
such as behavioral detection officers, document checkers, 
terrorist watch lists, air marshals, hardened cockpit doors, 
and armed pilots----
    Mr. Sammon. Yes.
    Mr. Dent. So I struggle with the TSA's repeated opposition 
to their, you know, to the Registered Traveler program. Why are 
you less concerned with the vetted flight mechanic or baggage 
handler placing a bomb into the belly of an aircraft than a 
vetted traveler?
    Mr. Sammon. We are not opposed to it. When we looked at the 
security benefit that was being provided, the terrorist watch 
list essentially is the same check that you get when you buy a 
passenger ticket. So the registered traveler coming to the 
checkpoint had no increased benefit, from a security 
standpoint, than the passenger who purchased a ticket.
    Mr. Dent. Yes. I understand TSA, as I think you mentioned 
in your testimony, charged $28 to conduct a criminal background 
check for RT registrants. Our witnesses in the second panel 
submit that those checks were never done. Were criminal 
background checks ever done?
    Mr. Sammon. The checks that were done were CIMS--NCIC 
checks, which essentially are watching warrants checks, which 
are the same checks that an officer might do for a person who 
is stopped for a traffic violation. It is a name-based check, 
yes.
    Mr. Dent. So that is where the money went to pay for those 
checks?
    Mr. Sammon. Well, it also paid for the watch list checks 
and vetting of people who were submitted for the Registered 
Traveler program, the names that had to be vetted and also 
disputes resolved, and so on and so forth.
    Mr. Dent. Thank you. When Clear ceased operations, Members 
of the committee were deeply troubled to learn that there was a 
movement at TSA advocating for and directing that all biometric 
data and personally identifiable information of RT program 
participants be deleted from the RT Central Information 
Management System, CIMS, database. What can you tell us about 
that situation?
    Mr. Sammon. Well, I think after the companies had ceased 
operations, we were concerned about what would happen to the 
privacy information and the privately-provided information. We 
contacted these sponsors for all the vendors and went through 
the procedures and processes under the Privacy Act under the 
security agreements, in terms of dealing with the data, making 
sure that there were not laptops left at kiosks, that the data 
left in the open was secured and clean.
    Upon further review, as required by the Privacy Act and 
other information security acts, we took actions to secure the 
data that was out there, including CIMS.
    CIMS was originally put together for interoperability. 
Since there was on one operating and it was no longer providing 
a Federal function--Federal Government function--TSA felt that 
there was a risk--though it may not be a large risk, but still 
a risk that if the data was released that that privacy 
information would get out. So that was our concern about 
leaving a database out there that was not being used and 
functioning.
    Mr. Dent. Did you engage legal counsel--did legal counsel 
advise TSA on this situation when it came up?
    Mr. Sammon. TSA legal counsel and privacy counsel, yes.
    Mr. Dent. Which statutory requirements did they--was it the 
Privacy Act that you----
    Mr. Sammon. Yes. It was the Privacy Act and the Federal 
Information Security Management Act, and also under our 
agreement with AAAE there were requirements for protecting data 
if the data was not going to be used. So----
    Mr. Dent. Did they think that the statutory requirement 
required that the data be deleted immediately?
    Mr. Sammon. I believe that they were simply moving ahead to 
make sure that the data--at that time it did not look like 
anyone was resuming operations, and they wanted to protect the 
data and protect any leaks of that data.
    Mr. Dent. My final question: Our former TSA administrator, 
Kip Hawley, whom we had a tremendous respect for, was never 
very fond of the RT program. Mr. Hawley was concerned about 
what he called ``clean skin terrorists.'' Can you walk us 
through TSA's definition of what a clean skin terrorist is?
    Mr. Sammon. Yes. For instance, the terrorist who were 
involved in the London subway bombings, the people who attacked 
the Velasco Airport--if you ran their names on a terrorist 
watch list you wouldn't find them.
    Mr. Hawley, if you go back to the testimony in July 2007 on 
this very subject, Mr. Hawley expressed a concern that if we 
established, particularly to look at the security benefits--say 
we said that registered travelers would be provided the 
security benefit, say, of not taking your shoes off. This 
concern would be that the terrorist would look to recruit 
people who did not have a--who did not appear on watch lists 
and then who could take advantage of that security loophole, 
namely with shoes, because everyone else would have their shoes 
checked.
    So what he was referring to as a ``clean skin'' was someone 
who would not show up on a watch list. Once you provide a 
loophole in the security system, whether it is you can walk 
through with your shoes or you can do something else, your 
opposition starts about to game the system, just like when we 
looked only for explosives--traditional explosives, they went 
to liquids; We looked for guns, they went to box-cutters. So 
when you put the rules up, and if you put a loophole, people--
your opposition is going to try to game that. That was his main 
concern.
    Mr. Dent. But you feel that there are always going to be--
there are always going to be clean-skinned individuals out 
there who are going to try to do harm to our Nation?
    Mr. Sammon. Yes, sir.
    Mr. Dent. You know, Alder James, Robert Hanssen----
    Mr. Sammon. Right.
    Mr. Dent [continuing]. You know, didn't both of these 
individuals go through far more extensive security background 
checks, and didn't that also result in American casualties and 
deaths?
    Mr. Sammon. Yes. I have a top secret clearance, and I go 
through the same security checks that everybody else does.
    Mr. Dent. Thank you.
    I yield back to the Chairwoman. Thanks.
    Ms. Jackson Lee. Thank you very much.
    Yield myself 5 minutes, and I will offer my opening 
statement at the beginning of the second panel.
    Mr. Sammon, thank you for being here, but the Registered 
Traveler program is on life support. Clear and FLO failed its 
passengers, and this hearing is to determine what our next 
steps are.
    So I am interested in just what TSA can and expects to do 
as we move forward. Can TSA commit to reassessing whether to 
provide a security benefit to the RT program?
    Mr. Sammon. We are awaiting the speedy nomination of our 
nominee and expect that he will, once he gets into that and 
evaluates the benefits and what kind of security benefits can 
be provided, and we will work closely with him and DHS, yes, 
ma'am.
    Ms. Jackson Lee. For the edification of all of us, we are 
delighted that there is a nominee, and do you want to update us 
as to whether or not he has had a Senate hearing?
    Mr. Sammon. He has not yet had a Senate hearing, no, ma'am.
    Ms. Jackson Lee. I look forward to engaging.
    Do you think there is a role for TSA in the RT program?
    Mr. Sammon. We do believe there is a role. We work with the 
airports closely on all security measures and all of these 
programs. We think that there is a security role, and we look 
forward to working with vendors and people who want to continue 
to come forward with new and better ideas to how to make it 
work.
    The concept is a great concept if we can provide a benefit 
for people we know more about, and the trouble we have had is 
just trying to make that--what is a proper amount of 
information about a person that will allow you to give them the 
security benefit?
    Ms. Jackson Lee. Well, I think RT collapsed when TSA walked 
away from conducting the security threat assessment on RT 
passengers in 2008. Why did you do that?
    Mr. Sammon. We looked at the pilot, examined what was 
happening in the pilot, and we compared the security benefit 
that they were--that RT was providing versus the security that 
every other airline passenger has in a watch list check. We 
concluded that there was little additional benefit, and we 
thought that it did not make sense to continue charging 
passengers and the vendors for another watch list check that 
they would get every time they purchased a ticket.
    Ms. Jackson Lee. But if we wanted to add that security 
benefit, TSA, under a new administrator, would be prepared to 
look at it?
    Mr. Sammon. We would be happy to explore alternatives, yes, 
ma'am.
    Ms. Jackson Lee. Does Clear or FLO, in order to restart, 
have to get permission from TSA?
    Mr. Sammon. I believe they need to resubmit an application, 
yes, ma'am.
    Ms. Jackson Lee. How did AAAE acquire the contract for the 
CIMS database?
    Mr. Sammon. Ma'am, I am not completely sure.
    Ms. Jackson Lee. Can you provide in writing as to whether 
or not it was through a competitive process?
    Mr. Sammon. Yes.
    Ms. Jackson Lee. Thank you.
    Mr. Morris, AAAE met with my staff several times this 
summer to discuss the RT program. One briefing was held in 
August--August 5. At that time nor in the days following the 
company did not notify us that TSA had instructed you to 
provide a plan for data deletion from CIMS the day before, 
August 4. Whey did you not notify the subcommittee of this?
    Mr. Morris. Yes, ma'am. We were up here talking to the 
staff and were in the middle of on-going conversations with the 
agency throughout August. As soon as we became aware and 
received a letter from TSA that they were interested in 
decommissioning the CIMS system we passed that along to 
committee staff and engaged in----
    Ms. Jackson Lee. What date was that?
    Mr. Morris. That would have been--August 17 is when we 
received the TSA letter and submitted the revised plan and 
would have had a conversation on August 18.
    Ms. Jackson Lee. I don't know if you have that letter or if 
we have that letter, or I hope my staff will present it to me. 
If not, if you would, I would just encourage you if you were in 
discussions, we are all on the same team, to at least allow us 
that information.
    Very quickly, how did AAAE acquire the contract for the 
CIMS database?
    Mr. Morris. We actually worked through the Registered 
Traveler Interoperability Consortium to bring together airports 
and service providers around a Registered Traveler model that 
TSA had insight into but did not directly participate in. It 
was the recommendation of the RTIC that AAAE's transportation 
security clearinghouse serve as the Central Identity Management 
System, and then TSA endorsed that and engaged in another 
transaction agreement with AAAE.
    Ms. Jackson Lee. Do you have a quick vision for RT?
    Mr. Morris. Yes. The vision for RT and many airport members 
who participated in the RT program would be that it serve as a 
platform--not just a technology and operational platform, but 
also a relationship platform, where airports and TSA can work 
together to increase both the efficiency and the security at 
the checkpoints in hundreds of airports around the system.
    Ms. Jackson Lee. I am going to go to Mr. DeFazio, Mr. 
Olson, because I reordered the schedule of time by yielding to 
Mr. Dent first. So I will be going to Mr. DeFazio for 5 
minutes.
    Mr. DeFazio. Thank you, Madame Chairwoman.
    You know, I am probably the only Member of the committee 
who was a principal on the aviation committee in creating the 
TSA and was involved in the very early discussions of some sort 
of known traveler, trusted traveler, or whatever you want to 
call it. At the time the idea was, we didn't have an 
integrated, comprehensive terrorist watch list, so we didn't 
have anything to check, you know, tickets against or people's 
IDs against.
    The idea was, let us try and lessen the burden on the 
system by having some people subject themselves voluntarily to 
this process; then we will know that, you know, they are, you 
know, they are travelers who can move through the system. There 
was never any idea that they would avoid any part of the 
security screening, and that is the--I don't see how we are 
going to ever get to the point--and to Mr. Sammon, again, just 
on the clean-skinned terrorist. We now have, since the 
development of this program, dramatic evidence that people 
without being on a watch list, without criminal backgrounds, 
have committed horrific acts. Is that correct?
    Mr. Sammon. Yes, sir.
    Mr. DeFazio. So then at what point would the TSA feel 
comfortable in degrading or eliminating portions of the 
passenger screening--the physical screening--with this trusted 
traveler program?
    Mr. Sammon. At this point, we are not.
    Mr. DeFazio. Can you envision anything that would lead us 
to that point?
    Mr. Sammon. There may be technologies that come along. 
There may be other things that develop. I think combinations of 
technologies, combinations of improved behavioral detection. I 
think there are a number of things that possibly could be put 
together.
    But again, as I refer to looking back at the testimony in 
2007, Administrator Hawley stated that the vendors associated 
with the program did not want to go beyond the watch list 
check. So I think you have to look at a broader list of 
background information. You need to look at other kinds of 
things than have been put in the initial pilot.
    Mr. DeFazio. There will be subsequent testimony from Alison 
Townley, when she talks, and I will--if I am here I will ask 
her, but I want to know if you are familiar with it. Talking 
about something that would allow same-day in-airport sales and 
more pricing options and provide non-security-related 
experiences, streamlined staff--how could--what would that be?
    I mean, basically we are just looking at many airports of 
their own volition, I think, in order to help facilitate 
business travel and stop the hemorrhaging of business travelers 
who are not super rich or with big, rich corporations, to give 
them more certainty they have established lines for frequent 
travelers, then the airports check the ID. What function other 
than that does, you know--I mean, the Registered Traveler 
program is essentially just another place where people can get 
to the front of the line, and people are paying for that.
    Mr. Sammon. Yes. I think if you look at the total amount of 
time people spend in lines, particularly in years past, most of 
the time was not the screening itself, it was actually standing 
in line. I know that some vendors have provided--packaged that 
with other services, such as concierge services, special rooms, 
parking, and so on and so forth. So, I mean, it can be packaged 
into a whole series of travel options, I guess.
    Mr. DeFazio. Right. My concern has been, since the 
inception of the program and the innovative idea that Clear had 
to revenue-share with the airports, that the airports might 
then be tempted to degrade the lines for the frequent business 
travelers who haven't paid extra for the card and therefore 
given a share of revenue to the airport. Are you aware of 
anywhere where that happened?
    Mr. Sammon. I am not, but I think any one of these market-
based solutions--the airports are marketing services and the 
vendors are marketing services--different combinations will 
result.
    Mr. DeFazio. Right. Like, so Mr. Morris, right now at 
Portland Airport, for free, I and other frequent business 
travelers get to go to the 1K line, or whatever your 
affiliation is with an airline, and you get to bypass the huge, 
you know, other line there. You know, what would be--and 
Portland did not participate in this program. Are you aware of 
any airport that either eliminated or degraded service to non-
participants?
    Mr. Morris. I am not aware.
    Mr. DeFazio. Okay. This is a tremendous concern I have, 
that basically we are blackmailing people into buying these 
cards from a private, for-profit vendor, tacking on some other 
services they really don't want or need, but they are desperate 
to have more predictability in the airport. I would rather 
focus on the throughput of all Americans in an efficient way.
    Mr. Sammon, when are we going to get the multi-perspective 
of, you know, devices? To me I think one of the biggest slow-
ups I see in the airport is, I put down my briefcase, it goes 
through, there is an opaque object. They say, ``Excuse me, sir. 
May we take your briefcase, walk it back around the machine and 
turn it a different way?''
    I say, ``Yes.'' They stop the line; they take it back. The 
whole thing slows everybody down.
    But that doesn't happen when you come in here because we 
have multi-perspective machines. I have been arguing for years 
you need them. When are we going to get those deployed in 
airports?
    Mr. Sammon. Well, I think part of it is part of the ARR 
grants, and also the regular capital program. We are buying 
more and more of the AT X-rays; we are trying to get all of 
those deployed, I think by the end of next year, because that 
makes a big difference.
    The other thing we have done to improve the line throughput 
is by separating the families, which, again, most of the family 
time is taking things out, checking things, is just as you 
describe, goods that get through and then have to be rechecked, 
and putting them in a line that makes them more comfortable and 
ensures space for businessmen who are in a hurry. So we have 
taken operating changes, but in addition to that we are very 
high on the multi-view X-rays to eliminate those kinds of 
redundant activities.
    Mr. DeFazio. Great, thank you.
    Thank you, Madame Chairwoman.
    Mr. Olson. Thank you, Madame Chairwoman. I greatly 
appreciate the recognition.
    Mr. Morris, prior to the RT program ceasing operation in 
June, only 22 airports had contracts with RT service providers, 
and what, in your opinion, is necessary to gain future airport 
interest in the RT program?
    Mr. Sammon. A bigger cut.
    Mr. Morris. I would say that as the program advances many 
airports, in looking at a new iteration of trusted traveler or 
looking at what the screening and security benefits could be 
that would be a part of that program. As Mr. Sammon mentioned, 
that would not be necessarily limited to the proposition that 
just because we know something more about travelers who use the 
system the most that we do less in the way of screening that is 
already being experienced.
    But it becomes a platform that potentially can be exciting 
at this important part of the airport to deploy new technology, 
whether that is shoe scanners, whether that is behavior 
detection, there is always going to be a new technology that is 
going to bring efficiency into that business process. The 
Registered Traveler program, just because of how it is set up 
as a public-private partnership, aligns the incentives of 
airports and TSA to work together to drive those efficiencies 
and increase security.
    Mr. Olson. Thank you very much. So you are saying that 
working together, the airports working together with the TSA 
and the RT program is what we are looking for? I mean, you 
outline the process undertaken by the private sector in your 
testimony regarding the Registered Traveler Interoperability 
Consortium, and to make the RT program workable from a 
technical perspective. So again, that sounds like what you are 
saying is, working together--private sector, public sector--
that is how we can see the benefit and get this program 
working?
    Mr. Morris. Yes, sir.
    Mr. Olson. Okay. Thank you very much.
    I have a question for you, Mr. Sammon, and then I think we 
will be done.
    We have got some votes, Madame Chairwoman, so I will be 
very quick.
    But the 9/11 Commission, Mr. Sammon, recommended that 
programs to speed known travelers through should be a higher 
priority, I mean, permitting inspectors to focus on greater 
risks. The daily commuter should not be subject to the same 
measures as first-time travelers. An individual should be able 
to pre-enroll with his or her identified, verified in passage, 
and this Registered Traveler program does just this.
    Please describe for the subcommittee your thoughts on what 
the benefits are--the security benefit the Government gets from 
conducting security background checks on frequent flyers as 
envisioned in the original Registered Traveler program.
    Mr. Sammon. Based upon the original Registered Traveler 
program, the amount of security benefits that were received 
from those background checks was not sufficiently greater than 
the background check that we receive for every passenger who 
buys a ticket. So therefore, we did not see, as it was 
originally constructed, a significant difference for the 
registered traveler versus the every other day airport 
traveler.
    Mr. Olson. Thank you very much.
    I yield back my time, Madame Chairwoman.
    Ms. Jackson Lee. I thank the distinguished gentleman.
    Let me ask the--we have got voting logistics that we are 
addressing. Let me indicate to this panel, I would like you to 
stay. We will adjourn.
    I am now going to read my opening remarks, and you can stay 
at the table and listen when I adjourn. There are Members here 
who may have questions. If you would have the kindness to stay, 
we will start it with the panel for any Members that come back, 
and then we will move to the second panel.
    I will begin, now, my remarks for the record. The 
subcommittee is meeting today to receive testimony on the 
future of the Registered Traveler program. Our witnesses today 
will help us assess the state of the Registered Traveler, or RT 
program, and discuss the path going forward.
    Before I provide some thoughts and background on the issue 
at hand, I want to make several items clear: First, 
notwithstanding our work over the past several months, we are 
still trying to acquire information about what RT will look 
like going forward. Second, we are eager to work with the 
incoming TSA administrator, the recently nominated Erroll 
Southers to develop an RT program that works for everyone. I do 
believe, having listened to Mr. DeFazio, there are some very 
valid points being made, but I want TSA to make its case.
    Third, we are not here today to promote any single service 
provider. Instead we want to hear from providers about the 
development of a business solution that will ensure that future 
RT subscribers are not deprived of the services for which they 
have paid.
    That is what happened this summer: Clear failed its 
customers, and other RT providers, such as FLO, failed their 
customers because they were too reliant on Clear. Today this 
panel will lay a marker for all stakeholders as the process for 
resuscitating RT moves forward, and we expect to remain an 
integral part of the on-going RT in a dialogue.
    In the Aviation and Transportation Security Act, Congress 
encouraged TSA to implement a trusted passenger program through 
which the administrator could establish expedited security 
screening procedures for passengers who were vetted through 
background checks and deemed to be a low security risk. As 
envisioned by Congress, the security benefits of such a program 
was clear: TSA could focus precious resources on high-risk 
unknown passengers and potentially test new screening 
technologies on those known travelers.
    To carry out its duties under ATSA, TSA worked with 
industry to establish technical and interoperability standards 
for service providers such as Clear, and that is extra. 
However, after these initial actions TSA dropped conducting 
security threat assessments and criminal history background 
checks from participating RT passengers.
    Without these threat assessments to determine lower-risk 
passengers, TSA effectively rendered this risk-based security 
program impotent. Lacking the security threat assessment 
component, critics call RT a head-of-the-line program, 
accurately so.
    Nevertheless, even without an expedited security screening 
aspect, we now understand that several firms are interested in 
reestablishing RT operations at airports regardless of whether 
RT eventually functions as a true risk-based security program. 
It appears that the private sector is poised to engage in this 
market.
    In light of these developments, I would like to make two 
comments. First, I hope that TSA is responsive to Congress' 
request, as outlined in H.R. 2200, that we make a good-faith 
effort to explore a security benefit for RT. Second, I strongly 
encourage the private sector to create an RT model that can 
support a security benefit, but which does not rely on one. 
This will protect consumers.
    We have much to discuss today, as we have already begun to 
discuss, including what the role of TSA should be in any future 
RT program and whether the program can be leveraged or adapted 
to follow a risk management approach to security screening. We 
also need to understand if the program will benefit customers 
as the traveling public cannot understand or cannot afford to 
endure the events of this summer a second time.
    This hearing provides us with a forum to articulate our 
concerns about RT and discuss ideas for the path ahead. I am 
looking forward to the discussion that has already pursued, and 
I do think it is extremely important that we take into 
consideration TSA's comments, but also that we look forward to 
the new TSA administrator engaging in a vigorous discussion on 
an important security issue.
    This hearing is in recess. Thank you.
    [Recess.]
    Ms. Jackson Lee. The hearing is now resumed. I recognize 
the gentleman from Missouri for 5 minutes for questions.
    Mr. Cleaver. Thank you, Madame Chairwoman. I don't think I 
will take 5 minutes.
    I am interested, Mr. Morris, in the suspension TSA--you 
have already suspension, the deletion of personal records from 
the Central Information Management System, CIMS. Is there a 
plan in place to allow individuals to choose to have their 
records deleted, that they no longer want to participate in the 
RT program? Would that plan be at the behest of TSA?
    Mr. Morris. It could be at the behest of TSA or it could be 
at the behest of the individual service providers. The CIMS has 
a relationship directly with TSA and directly with the service 
providers, but no direct relationship with the individual 
customers themselves, and so while CIMS adheres to the highest 
security standards from TSA and privacy standards that the 
service providers committed to their customers, there doesn't 
exist a relationship directly between those travelers and our 
system.
    Mr. Cleaver. So all individuals who participated in this 
program can feel comfortable that the optimum level of privacy 
will be guaranteed?
    Mr. Morris. Yes, sir. Our system, a part of--and John 
alluded to this in his testimony--a big part of the 
relationship between CIMS and TSA was around the information 
security standards that the CIMS needed to adhere to as defined 
by TSA and audited by TSA.
    Mr. Cleaver. The relationship between the American 
Association of Airport Executives and TSA, with regard to the 
RT--was that relationship beneficial?
    Mr. Morris. Was it beneficial to--in serving the interest--
--
    Mr. Cleaver. Yes.
    Mr. Morris. [Off mic.]
    Mr. Cleaver. What is the future with that relationship?
    Mr. Morris. Well, we would hope that we could continue on 
with that relationship with TSA. There is certainly a 
significant portion of policy decisions that TSA needs to make 
on their part to decide how to interface with Registered 
Traveler program moving forward, but we are very open to that 
and we see that relationship as adding a great deal of value to 
the program.
    Mr. Cleaver. Thank you.
    I yield back the balance of my time.
    Ms. Jackson Lee. I thank the gentleman very much.
    Let me pose two questions, one to Mr. Morris. It seems that 
AAAE was in a solid position this summer to follow former Clear 
customers to allow--excuse me, former Clear customers to easily 
switch to another provider. Is AAAE supportive of this?
    Mr. Morris. I think technically it is possible to move the 
individuals who had enrolled through one service provider over 
to another service provider, but it wouldn't honor the 
agreement in place that we had with the--that we continue to 
have with the individual service providers.
    Ms. Jackson Lee. What do you mean it wouldn't honor the 
agreements in place?
    Mr. Morris. So individual registered travelers sign up with 
a service provider and become their customer, and in turn their 
enrollment information is sent to CIMS to facilitate 
interoperability in any contemplated security threat 
assessment. But what it doesn't do is allow other service 
providers to gain access to the customer information. What it 
does is it creates this interoperability where the card can be 
accepted by both of the service providers. So for us to take--
--
    Ms. Jackson Lee. So someone new wouldn't have that scheme, 
that structure? Someone totally new----
    Mr. Morris. Correct. Correct, in addition to the fact that 
we have the information--the enrollment information--on the 
250,000 individuals who are actively enrolled in Registered 
Traveler from all service providers at the cessation of 
operations this past summer.
    Ms. Jackson Lee. What would happen if the Clear customers 
made the request themselves?
    Mr. Morris. Well, I think that is something that we could 
look at. Our relationship is with Clear as an on-going concern, 
and the any agreement that Clear would have and privacy 
standards that would follow, we would be more than willing to 
look at that and do that in accordance with whatever policy 
view TSA has on the transfer of that information, and of course 
any advice or input from your subcommittee.
    Ms. Jackson Lee. So what posture do you find yourself in 
right now with respect to RT?
    Mr. Morris. We find ourselves in the position of having the 
parts of the Registered Traveler program in place that could 
restart the program, either in the previous iteration or in 
some new iteration of the system that could be more or less 
from an operational standpoint turned on at a moment's notice, 
engaging with TSA, engaging with the committee on what the 
policy direction would be for the program moving forward, and 
then ensuring our airport members the viability of the program 
and that those standards are adhered to to enable that 
important interoperability really is the key focus for us right 
now.
    Ms. Jackson Lee. With respect to a security benefit, if it 
was ultimately decided by TSA and moved forward on, you could 
work with that structure as well?
    Mr. Morris. We could, and have.
    Ms. Jackson Lee. Mr. Sammon, what posture do you find 
yourself in at TSA, putting aside that you do not have an 
administrator? What is TSA's present position reflected upon 
its position over the last 2 years as it relates to RT?
    Mr. Sammon. We are, again, we are examining our current 
legal requirements regarding the data in the CIMS system----
    Ms. Jackson Lee. You have possession of the data?
    Mr. Sammon. No, we do not. AAAE does. If another operator 
were to come forward and want to resume operations as they had 
been back in July, we would be happy to entertain that, so that 
would be something that if they wanted to turn back on, conduct 
the activities they were conducting before we would be happy to 
see that happen.
    Ms. Jackson Lee. So there are two prongs. One prong is that 
you would be happy to be a facilitator if someone rose to the 
occasion to fill in where the others failed.
    Mr. Sammon. Yes, ma'am.
    Ms. Jackson Lee. The second question is whether or not you 
find it beneficial to provide the security benefit----
    Mr. Sammon. Yes, ma'am.
    Ms. Jackson Lee [continuing]. Giving it a greater status, 
of sorts. It appears that you believe that RT may be more of a 
convenience than a role that TSA should play?
    Mr. Sammon. As it is presently configured, it is more of a 
convenience, and I think that of the three things--convenience, 
security, and efficiency--we always put security first. But I 
do believe, and I believe that the Secretary is open, and I 
would guess that the new administrator would be open to 
exploring developments in behavioral detection technology and 
so on and so forth to see if there are some configurations that 
may afford a security benefit. But right now we haven't seen it 
in the past program, but we would be happy to discuss with the 
staff and with you, as time goes on, to see what kind of 
configurations they may be.
    Ms. Jackson Lee. Well, we do have a second panel. I know 
that time going on can be going on for a long time. I will make 
a suggestion on the record that we follow this up with meetings 
where we can actually provide even more enhanced discussions as 
to where we are.
    I think we need to assess the viability of the program once 
and for all and to determine what approach this program will 
take, whether it takes a direction that it now presently is 
with new providers, or we add the additional security benefit 
to it. I think we are all better off if we have a finality in 
that particular situation.
    Ranking Member Dent, did you have any further questions?
    Let me thank both Mr. Sammon and Mr. Morris.
    Mr. Sammon, let me, for the record, have you take note: 
There was a written statement from TSA and that statement has 
been submitted into the record, as well as read. Is that 
correct?
    Mr. Sammon. Yes, ma'am.
    Ms. Jackson Lee. Thank you very much.
    We now call on the second panel, please? Thank you.
    As these panelists come forward, I want to thank the 
witnesses as they leave the room or as they leave the table for 
appearing before us today. Members of the subcommittee may have 
additional questions for the first panel. We ask that you 
respond to them expeditiously in writing.
    We now welcome our second panel to the witness table.
    Welcome our second panel of witnesses. Our first witness is 
Ms. Alison Townley, a principal at Henry Incorporated, which 
has a letter of intent with Clear and Morgan Stanley to 
recommence Clear's operations. Ms. Townley has over 15 years of 
experience launching new brands, revitalizing flagship brands, 
and executing significant corporate change.
    Our second witness is Mr. Fred Fischer, a principal and 
managing partner at FLO, a certified RT provider. Mr. Fischer 
will discuss why FLO had to stop providing services after Clear 
ceased operations, whether FLO will be restarting, how to 
ensure its operations will not cease again, and how TSA and 
Congress can help keep RT functioning.
    Our third witness is Mr. Mike McCormick, executive director 
of the National Business Travel Association. Mr. McCormick has 
more than 20 years of travel industry experience, most recently 
as managing partner of a travel industry advisory firm.
    Without objection, the witnesses' full statements will be 
inserted in the record. I now ask each witness to summarize his 
or her statement for 5 minutes.
    Let me also, with respect to Mr. Townley--Ms. Townley, 
excuse me--and Mr. Fischer, I think it is important if your 
statement does not reflect it to specifically tell us what you 
do and why your involvement with--in your instance, you are 
taking over a company. What expertise do you bring to the table 
to take over the company?
    This is Registered Traveler; this is serious, if you will, 
and if we are asking TSA to consider a security benefit I think 
it would be helpful to me to understand what your role is and 
what you bring to taking over this company, and you might 
comment on its failure as it stands in your remarks.
    Mr. Fischer, likewise, you are the managing partner of FLO, 
and I think you will express what FLO does and also why you 
stopped service.
    So we will begin our testimony with 5 minutes given to Ms. 
Townley.
    Ms. Townley, you are recognized for 5 minutes.
    Ms. Townley, would you please turn on your microphone?

   STATEMENT OF ALISON TOWNLEY, PRINCIPAL, HENRY INCORPORATED

    Ms. Townley. First-timer.
    Ms. Jackson Lee. Thank you. That is all right.
    Ms. Townley. Okay. I will start over now that people can 
hear me.
    Okay, so Chairwoman Jackson Lee, Ranking Member Dent, and 
Members of the committee, thank you very much for inviting me 
here today to participate in this important discussion about 
the future of Registered Traveler in the United States. I am a 
principal at Henry, Inc., which has signed a letter of intent, 
as you mentioned, to purchase certain assets and liabilities of 
the Clear Registered Traveler program from Verified Identity 
Pass and Morgan Stanley, the senior lender.
    Per your request, Chairman--Chairwoman Jackson Lee, my 
background and why I am here today is business. So we believe 
when we went to evaluate the Registered Traveler program and 
Clear, we believe that there is a real, viable opportunity for 
the private-public partnership to provide a very important 
service to this country.
    But first and foremost, as we all know, Registered Traveler 
is a voluntary program. So my background and expertise really, 
in a way, is understanding the consumer and what they are 
looking for.
    Now, in my past I have run businesses, but really what I 
look at is, to be successful I have surrounded myself with 
experts in each of the various elements that I am running. So 
in grant management, I was the hub of a wheel of many disparate 
parts, really just kind of bringing together the experts that 
need to be there to succeed, and that is how I approach this as 
well. I am not an expert in security.
    So to back up, again, as I mentioned, why do we want to 
invest in Clear? As I said, we think this is a real, viable--
can be viable public-private partnership in a business. Over 
the past few months we have studied the Registered Traveler 
program and Clear, and we believe to have a successful 
Registered Traveler program is a winning proposition on many 
fronts.
    A successful Registered Traveler program will deliver 
increased aviation security, increased checkpoint throughput, 
increased airport revenue, and increased traveler convenience, 
not to mention it creates jobs, and this is all at no cost to 
the taxpayer.
    So how will a Registered Traveler program be successful? 
First, we must build a substantial base of volunteer customers. 
More people who are willing to register as travelers, be 
registered travelers, the more secure we believe our airways 
can be. To do this we must deliver on a promise to these 
consumers, and at the moment that promise is convenience. 
Congress, DHS, TSA, the airports, the technology community, and 
the RT industry must work together with the common goal of 
improved airline security and consumer convenience, or customer 
convenience.
    My analogy is the sport of rowing, or crew. I represented 
the United States in two Olympics in the sport of rowing, and 
crew is probably one of the most team sports you will ever 
find. All team members must compete in complete synchronicity 
and harmony to achieve success. That is how we feel; that is 
our mission for relaunching a successful Registered Traveler 
program.
    So what is our plan? Our plan is to restart Clear as soon 
as possible. We are already talking with the DHS, the TSA, the 
airports, and with the technology community.
    We are gratified that the DHS and the TSA are taking a 
fresh look at how RT can enhance aviation security and the air 
traveler experience. We are grateful to this committee for the 
leadership on RT.
    We have heard loud and clear from air travelers and from 
airports that they want this service back. Clear conducted a 
survey in which 90 percent of their 200,000 customers said they 
were interested in joining a new Clear.
    For the existing customers of Clear--those who want to 
return to a new Clear--first and foremost, we will make good on 
their contract or on the term of their membership. So what was 
left on the term of their membership we will make good. If 
someone had 6 months left when Clear shut down, we will extend 
their membership 6 months at no cost to them.
    For those who do not want to join the new Clear, we will 
destroy all of their data. So we will ask specifically each old 
Clear member if they want to participate in a new program, and 
at their exact discretion we will handle their data and their 
membership.
    So there is a strong feeling that there is a need for this, 
and we feel that we can really develop a strong program that 
will benefit both aviation security and customer convenience 
through this base of consumers. To respond to this demand, to 
keep this momentum moving, and to address some key barriers to 
enrollment that the old Clear experienced, we plan to launch on 
two parallel paths.
    First, we will launch a streamlined process that serves 
consumers now and airports' needs now. In that process, we will 
have our concierge service, which--we did numerous--or Clear, I 
shouldn't say we, but Clear did numerous studies over the 
length of the business to find that when the concierges help 
the consumers through the checkpoints the speed of throughput 
increased 30 percent. So if there is an increased speed of 
through the checkpoints, it really benefits all that are moving 
through the checkpoints.
    So at first we will launch a program in which we can have a 
concierge service and help our consumers move quickly, and why 
this is important is because the larger base of consumers who 
sign up for this program, that then becomes a platform by which 
we can incorporate the true Registered Traveler security 
measures.
    So simultaneously, while we are launching this first path, 
we will have a second path, and that will be to work with our 
partners in the Registered Traveler industry--that includes 
Congress, DHS, TSA, the technology community, and the 
airports--to determine what is the best, most robust form of 
Registered Traveler. We believe that there is technology to 
make the airways safer, but to make it a viable business that 
we can sustain, the consumer has to come on board in a large 
number.
    Thank you very much, and I would be happy to take 
questions.
    [The statement of Ms. Townley follows:]
                  Prepared Statement of Alison Townley
                           September 30, 2009
    Chairwoman Jackson Lee, Ranking Member Dent, and Members of the 
committee: Thank you for inviting me here today to talk about the 
future of the Registered Traveler (RT) program. Thank you, too, for 
your continued leadership on RT.
    I am a principal at Henry Incorporated, which has an agreement (the 
Letter of Intent) with Verified Identity Pass, Inc. (Verified) and 
Morgan Stanley, as Verified's senior lender, to purchase from Verified 
certain assets and liabilities associated with the Clear RT program. My 
background is in business and--specifically--launching, relaunching, 
and running successful consumer brands at L'Oreal, MasterCard, Chevron, 
and Nestle (Haagen Dazs). My partners and I strongly believe that the 
new Clear will become a successful business, because our marketing and 
technology expertise and ideas will effectively build on the progress 
made by Clear to date to meet a very real and often-expressed consumer 
need for air-travel convenience. There is a large and vocal population 
of travelers who are seeking this kind of opportunity right now. Among 
them are Clear members who are asking for the service to come back.
    Of course, more registered travelers means greater aviation 
security, which is a common goal of everyone involved in Registered 
Traveler--from travelers to Government to airports to companies like 
Clear. Because this program is purely voluntary, we must attract 
members by delivering a program that is both compelling and economical. 
This is best accomplished through a robust public/private partnership. 
We do not want or need Government funds, but we are eager to work with 
the TSA and our technology partners to deliver a program that is easy 
to join and even easier to use, while advancing aviation security. This 
is a win-win.
    Notwithstanding the economic downturn--indeed, perhaps because of 
it--RT makes more sense than ever. First, RT can improve aviation 
security. With resources scarce, RT should be--at no cost to the 
Government--an important tool for advancing risk management, by 
increasing the number of individuals passing through Transportation 
Security Administration (TSA) checkpoints who represent lower risks 
because their identities have been positively verified and because they 
have been vetted. No other program offers the same potential for 
accountability and certainty of those passing through checkpoints--all 
on a voluntary basis. Second, Clear serves a consumer demand. Even with 
air travel down (a trend which will necessarily reverse course as the 
economy improves), travelers still want the convenience. Just last 
month, Clear conducted a broad survey of existing customers and found 
that 70% of customers would return to the service when re-launched and 
an additional 20% would return depending on which airports were 
reopened. That's a remarkable total of 90% of customers who expressed 
interest in returning to the program upon re-launch. Understandably, 
many of them were frustrated about Clear's shutdown in June, but 
ultimately they want it back. Third, Clear delivers revenue to airport 
partners. RT can continue to be a valuable source of revenues for the 
Nation's airports at a time when concessions revenues are harder to 
come by and bond coverage ratios are under pressure. Through the 
history of the program, Clear has paid over $6 million to airports, and 
we intend to continue as a very pro-airport company focused on traveler 
conveniences that are consistent with increased overall security.
    Given that the case for RT continues to be a strong one, how do we 
work together to make it succeed? Most importantly, we must do exactly 
that: Work together. We are eager to work together with Congress. 
Without the authorization provided by Congress in the Aviation and 
Transportation Security Act in the immediate wake of 9/11, there would 
be no RT. And, this Committee's continued bi-partisan leadership on RT, 
as legislatively expressed most recently in the strong RT provisions of 
H.R. 2200, the TSA Authorization Act, is absolutely vital.
    We are also eager to continue working closely with Secretary 
Napolitano and, subject to his confirmation, the incoming TSA 
Administrator Erroll Southers, as well as their staffs. The Secretary's 
vision of an aviation security system that is made ever more secure and 
simultaneously more pleasant and convenient for the air traveler, 
achieved through the application of technology where possible, is a 
perfect fit with RT. Technological innovation is at the core of the new 
Clear's DNA. We have already identified areas where new technology can 
make the new Clear a more economically viable company, and a key part 
of our mission is to leverage the latest technology to deliver on our 
promise of security and convenience. That being said, the risk 
management potential of RT can only be realized with TSA's full 
embrace. We are grateful that the Department of Homeland Security (DHS) 
and TSA are engaged in a fresh look at RT's potential to help realize 
the Secretary's vision, and we have offered to support that effort in 
whatever way would be valuable to DHS and TSA.
    We are also eager to work together with our airport partners, 
almost all of whom have given us positive feedback as we have met with 
them to discuss the re-launch of Clear. Those airports saw Clear in 
operation every day and heard from many of their customers--both before 
and after Clear shut down--that Clear was a service they valued. After 
all, Clear lanes were used more than 3 million times before operations 
ceased. And, airports saw that Clear made checkpoints more efficient 
for all travelers, not just registered travelers. Clear was able do 
that because its concierges, both before and after the magnetometer, 
were able to speed throughput by as much as 30 percent at Clear's 
lanes. So Clear not only gave its members a predictably fast 
experience, but also made the lines slightly shorter for everyone else. 
This faster throughput, I should add, is what makes RT much more than a 
so-called ``front of the line'' program. In short, a happy Clear 
customer makes for a more satisfied airport customer, and we're 
committed to re-establishing that connection.
    And, perhaps most importantly, we are eager to work together with 
Clear's customers (both existing and new). Let me address first how we 
are proposing to work with existing Clear customers, so many of whom 
are interested in joining a re-launched Clear program. We recognize the 
imperative to protect our members' personal identifiable information 
(PII). To that end, the PII of existing Clear members (including their 
biometrics) will only be transferred to the new Clear program with the 
express consent of existing Clear members--otherwise, they may choose 
to have their PII destroyed by Lockheed Martin's secure data storage 
facility (which is where Clear member PII is today, and was 
historically, stored). In addition, all existing Clear members who 
choose to continue with the re-launched program will be able to use at 
no additional cost the balance of the term of their membership that 
remained unused when Clear ceased operations in June. In other words, 
if a member had a year remaining on her membership when operations 
ceased, she will be able to use the new Clear service for a year at no 
charge before coming up for renewal.
    Now, let me address how we're going to work with customers more 
broadly. It goes without saying that the success of RT on all fronts--
public and private--is driven by customers. The more users, the more 
benefits will accrue to the benefit of aviation security. RT's 
potential as a powerful risk management tool for TSA depends on a 
critical mass of travelers volunteering to participate in the risk 
management process of RT, as that process is ultimately defined by DHS 
and TSA. And, RT's potential as a good business (that also allows for 
it to be cost-free to the Government) depends on a critical mass of 
travelers volunteering to pay a reasonable fee to participate.
    Before ceasing operations, Clear had made substantial progress 
towards the goal of a critical mass of customers, with nearly 200,000 
active members whose satisfaction with Clear was demonstrated by 
remarkable renewal rates in excess of 80% even after the economic 
downturn took hold. Even with available airline seats down over 30%, 
Clear's subscriber base increased over 50% in the year before shutdown, 
and the old Clear was nearing break-even. But, the market is much 
bigger. The key to attracting new customers is to deliver a compelling 
value proposition. That means continuing to provide a fast and 
predictable experience at airport security, while aligning the nature 
of the enrollment and membership verification process (and the 
associated costs) with the nature of the service we're able to provide.
    How do we do that? First, I return to the imperative of a close 
partnership with TSA, DHS, and Congress. We are, of course, eager to 
move RT to a new level by working with TSA and DHS, for example, on the 
development of an enhanced voluntary background check and vetting 
process for RT members and the continuing development of new, enhanced 
screening technologies at RT lanes, all at no cost to the taxpayer. The 
goal would be additional enhanced throughput benefits or conveniences 
at our lanes--beyond what Clear concierges can already provide. This is 
precisely the type of risk management to enhance checkpoint security 
that the 9/11 Commission called for.
    And, we are also eager to work with DHS, TSA, and other Government 
agencies like the Department of Defense (DOD) on leveraging the power 
of RT's biometric platform and the biometric platforms of other 
Government agencies. We look forward to working with DHS to harmonize 
trusted traveler programs across the Department. And, we look forward 
to working with all interested Government agencies to harmonize RT with 
appropriate credential programs across agencies, so that--for example--
a DOD credential holder with top secret security clearance could access 
the Clear lane, just as H.R. 2200 envisions.
    However, we recognize that the important analytical work at DHS and 
TSA to support the vision of RT as a valuable risk management tool, 
including appropriate enhanced throughput benefits from TSA for RT 
members, will not take place overnight. We stand ready to support this 
analytical work in whatever way we can--and believe we have much to 
offer.
    In the mean time, because it is vital for us to maintain the 
momentum of Clear by re-launching the program, re-engaging existing 
customers and attracting new customers, we plan to pursue two parallel 
paths. On one path, we will ready ourselves to install and implement 
the secure biometric infrastructure required to support a robust, risk 
management vision. Simultaneously, we intend to launch a streamlined 
``fast pass'' process which would allow innovations like ``same day'' 
in-airport sales and more pricing options, while still providing 
certain non-security-related conveniences for members.
    The parallel introduction of this streamlined ``fast pass'' process 
will address one of the most frequent complaints Clear received from 
potential customers and actual customers alike--``why can't I sign up 
immediately?'' Now, potential customers (like the approximately 30,000 
travelers who had signed up for Clear but hadn't yet completed the 
challenging multi-step enrollment process at the time that Clear ceased 
operations) will be able to sign up immediately. And, once they sign up 
for a ``fast pass'', it will become much easier to invite them to join 
the secure, biometric risk management program and to take the 
additional enrollment steps that entails.
    And, that brings me to the role of technology. Both immediately and 
going forward, we believe that there are terrific opportunities to 
leverage technology to make the process at the RT checkpoint easier, 
more convenient, and just as secure, if not more so. Wearing our 
Silicon Valley hats, we are excited by the prospect of identifying 
those technology opportunities and then incorporating them, to the 
benefit of customers, airports, as well as our partners at DHS and TSA.
    Members of the committee, thank you for your interest in Registered 
Traveler. We ask for your continued support and engagement as we pursue 
the promising initiatives that I've described in order to make RT a 
valuable security and facilitation programs to respond to the challenge 
of 9/11.

    Ms. Jackson Lee. Thank you for your testimony. I now 
recognize Mr. Fischer for 5 minutes, if he would summarize his 
statement for the record as well.

STATEMENT OF FRED FISCHER, PRINCIPAL AND MANAGING PARTNER, FLO 
                          CORPORATION

    Mr. Fischer. Thank you, Chairwoman Jackson Lee, Ranking 
Member Dent, distinguished Members of the committee. I am 
honored and privileged to appear before you today representing 
FLO Corporation, the only surviving RT provider today, where I 
am currently a principal and managing partner.
    I have been involved with Registered Traveler over the past 
5 years, including senior executive positions with FLO and 
Verified Identity Pass and 35 years as a travel industry 
executive. I have been on the front lines working with 
corporations, travel management companies, airports, airlines, 
hotel chains, other industry providers, and your constituents 
to implement and grow the RT program.
    Since its inception, 250,000 travelers have found the RT 
program to be the best aviation enhancement to come along in 
years. RT has enhanced our Nation's aviation security screening 
system and has provided predictability and convenience to the 
airport screening process that is neither predictable nor 
convenient.
    We are now at the crossroads with the RT program and have 
the experience and knowledge from lessons learned over the past 
several years to move the program forward in an effective 
manner. The failure of Clear and their shutdowns June 22 came 
as a shock to the 250,000 RT members Nation-wide, to Clear's 
competitors, us, FLO, and Digital Solutions, and to all who had 
invested in RT.
    As FLO prepares to relaunch the program in the next 30 
days, we see Clear's unfortunate demise as the unique 
opportunity to fix what was wrong with RT in the past and focus 
on all the things that were right. Please allow me to share 
with the committee my views on where--on RT and where in 
partnership we need to proceed to provide all the stakeholders 
with an RT program that works.
    Congress, in passing the Aviation and Transportation 
Security Act of 2001, authorized the TSA to administer and 
oversee what was called initially a trusted traveler program, 
which later was approved to run under a public-private sector 
partnership. To date, the private sector has invested over $250 
million and upheld its side of the partnership. The TSA has 
not.
    While Congress had envisioned the TSA implementing the use 
of biometrics for primary and positive form of identification, 
the use of background screenings to vet those utilizing the RT 
lanes, and the use of advanced screening technology to allow 
additional screening benefits has not been fulfilled.
    Identification: While biometrics provide the best 
identification available today, the TSA still required a 
secondary photo ID. Vetting: To my knowledge, not a single--
single--RT applicant was ever vetted using a criminal history 
records check, even though for the first 2 years of the program 
applicants were charged $28 per enrollment by the TSA for such 
background checks.
    The committee is well aware of the trials and tribulations 
of Clear's attempt to implement their now infamous shoe 
scanner. The TSA has told us on many occasions that the 
technology that could allow travelers to leave their shoes and 
coats on and keep their laptops in their bags does not exist. 
The fact that more than 90 percent of the world's airports 
utilizing the latest technology do not require such divesting 
is evidence that that technology does exist.
    In 2001, in forming DHS and TSA, the administration 
promised that the Department of Homeland Security will ensure 
appropriate testing and piloting of new technologies, calling 
it a national vision. The TSA has not lived up to that promise.
    Since the inception of the RT program, TSA has been 
constantly challenged, undermined, bullied, and publicly 
berated by FLO's competitors, including some testimony in this 
room. Understandably, this created a partnership that was, at 
best, strained. This has resulted in the TSA having an 
unfavorable opinion of both RT and its providers and has 
compromised TSA's support for this essential program.
    RT provides many benefits to the TSA, but the most critical 
is expediting passengers from the unsecure area of the airport 
to the secure side of the airport. Empirical data shows that 
the RT lanes process upwards of three times as many passengers 
as the general population lanes. This alone should garner TSA's 
interest.
    TSA's support is critical for relaunching the RT program 
that your constituents are demanding. Congress is urged to 
require TSA to relaunch RT as the program Congress intended: 
Under the current standard, under artic, with biometrics for 
primary identification, with enhanced security benefits with 
tested and proven technology, and with RT members being fully 
vetted.
    An additional consideration should be interoperability with 
DHS's Global Entry program, also referred to International RT. 
Both programs should run in parallel because most of the 
components are under the--honor the same and offer exceptional 
benefits for the frequent traveler.
    Two-hundred-fifty thousand members bought into RT in a 
great part because it was TSA-sponsored. Their trust in the TSA 
is now in question.
    Let me talk a little bit about Clear's failure. Clear's 
failure, in our view, was brought on by a number of issues: 
Overstaffing at the airport, exorbitant overhead, excessive 
advertising, unreasonable revenue-share components that were 
not required, but primarily used to discourage and eliminate 
competition. In the end it was not a lack of capital that 
killed Clear, it was poor management and an unsustainable 
business plan.
    Of all these issues--all these issues can and will be 
addressed and controlled under a relaunch by FLO or any of our 
competitors. FLO has secured significant financing since 
Clear's failure and plans to relaunch a National program with 
or without the TSA at multiple airports in the next 30 days, 
with former RT airports and new airports to RT eagerly awaiting 
relaunch of this program.
    It is our understanding that multiple parties, including 
FLO, are analyzing the RT market. In Ms. Townley's comments I 
would like to add that we have submitted a proposal to Morgan 
Stanley, and at the end of this hearing today we will be 
discussing that proposal moving forward and acquiring some of 
Clear's former assets.
    FLO has agreed to partner with a service provider that will 
give us 1,000 enrollment locations across America, solving what 
was a serious barrier to its greater adoption. Individual and 
corporate interest in the program has not diminished. The 
future of RT is bright and the demand for its offerings remains 
strong.
    In closing, the ultimate success of RT is the 
Congressionally-mandated, TSA-sponsored program with biometric 
security benefits and vetting under the current, common, artic 
standard with consideration given to global opportunity--global 
entry. I thank you for the opportunity today.
    [The statement of Mr. Fischer follows:]
                   Prepared Statement of Fred Fischer
                           September 30, 2009
    Chairwoman Jackson Lee, Ranking Member Dent, and distinguished 
Members of the committee, I am honored and privileged to appear before 
you today representing FLO Corporation (FLO), the only surviving 
Registered Traveler (RT) provider, where I am currently a principal and 
managing partner. I have been involved with the Registered Traveler 
(RT) Program for the last 5 years, including senior executive positions 
with FLO and Verified Identify Pass (Clear) and 35 years as a travel 
industry executive. I have been on the front line working with 
corporations, travel management companies, airports, airlines, hotel 
chains, other industry providers and your constituents to implement and 
grow the RT Program.
    Since its inception, 250,000 frequent travelers have found the RT 
program as the best aviation enhancement to come along in many years. 
RT has enhanced our Nation's aviation security system and helped to 
provide predictability and convenience to the airport screening process 
that is neither predictable nor convenient.
    We are now at a crossroads with the RT Program and have the 
experience and knowledge from the lessons learned over the last several 
years to move the program forward in an effective manner. The failure 
of Clear, and their shutdown June 22 came as a shock to the 250,000 RT 
members Nation-wide, to Clear's competitors (FLO and Vigilant 
Solutions) and to all who had invested in RT. As FLO prepares to re-
launch the RT program in the next 30 days, we see Clear's unfortunate 
demise as a unique opportunity to fix what was wrong with RT in the 
past and focus on all the things that were right.
    Please allow me to share with the committee today my views on RT 
and where, in partnership, we need to proceed to provide all 
stakeholders with an RT program that works.
                                  tsa
    On September 3, 2004 in a speech at Reagan National Airport 
announcing the launch of the Registered Traveler Pilot Program, 
Secretary Ridge described the program as a ``twenty-first-century 
security measure, designed to improve both customer service and airline 
security,'' adding that ``the use of biometrics will add another layer 
of security that will certainly enhance the checkpoint experience.'' 
Congress in passing the Aviation & Transportation Security Act of 2001 
authorized the TSA to administer and oversee what was called initially 
a ``Trusted Traveler'' program which was later approved to run under a 
public/private sector partnership. To date, the private sector has 
invested over $250 million and upheld up its side of the partnership. 
The TSA has not. What Congress had envisioned the TSA implementing, 
i.e. the use of biometrics as primary and positive form of 
identification, the use of background screening to vet those utilizing 
the RT lanes and the use of advanced screening technology to allow 
additional screening benefits have not been fulfilled.
    Identification.--While biometrics provide the best identification 
available today, the TSA still required a secondary photo ID, such as a 
drivers license.
    Vetting.--To my knowledge, not a single RT applicant was ever 
vetted using a criminal history records check, even though for the 
first 2 years of the program, applicants were charged $28 per 
enrollment by the TSA for such background checks.
    Technology.--The committee is well aware of the trials and 
tribulations of Clear's attempt to implement their now infamous shoe 
scanner. The TSA has told us on many occasions that the technology that 
could allow travelers to leave their shoes and coats on and keep their 
laptops in their bags does not exist. The fact that more than 90% of 
the world's airports, utilizing the latest technology, do not require 
such divesting is evidence that technology does exist. In 2002, in 
forming DHS and TSA, President Bush promised that ``the Department of 
Homeland Security will ensure appropriate testing and piloting of new 
technologies'' calling it a ``National Vision.'' The TSA has not lived 
up to that promise.
    One solution is FLO's proposal for the TSA to test new technology, 
utilizing the RT program at Reagan and Dulles for those Government 
employees with top-secret clearance (such as employees of DoD, NSA, 
FBI, CIA, FAMS). This would allow the TSA to test equipment in a live 
environment without concern for the background of the travelers. This 
would be a major step in adding security benefits to the program. Of 
note, a number of air carriers have indicated they will move forward in 
partnership if RT is more than just a ``front of the line'' program.
    Since the inception of the RT program, the TSA was constantly 
challenged, undermined, bullied, and publicly berated by one of FLO's 
competitors. Understandably, this created a partnership that was at 
best strained. This has resulted in TSA having an unfavorable opinion 
of both RT and its providers, and has compromised TSA's support for 
this essential program.
    RT provides many benefits to the TSA, but the most critical is 
expediting the passage of passengers from the unsecure area of an 
airport to the secure area. Empirical data support that RT lanes 
process upwards of three times as many passengers as the general 
population lanes. This alone should garner TSA's interest.
    TSA support is critical for re-launching the RT program that your 
constituents are demanding. Congress is urged to require TSA to re-
launch RT as the program Congress intended, under the current standard, 
with biometrics for primary identification, with enhanced security 
benefits with tested and proven technology and with RT members being 
fully vetted. An additional consideration should be interoperability 
with DHS's Global Entry program, also referred to as International RT. 
Both programs should run parallel because most of the components are 
the same and offer exceptional benefits for the frequent traveler.
    Two-hundred-fifty thousand members bought into RT in great part 
because it was TSA-sponsored. Their trust in TSA is now in question.
                         clearinghouse services
    AAAE has been providing clearinghouse services under a sole source 
TSA contract and license to individual RT providers since the inception 
of the RT program. Under this arrangement, RT providers pay AAAE for 
each applicants processing and for RT providers to have 
interoperability. In re-launching the program, to help ensure that RT 
providers have access to the most cost-effective services, we suggest 
that TSA move forward expeditiously with open competition and allow RT 
providers to select from other vendors approved to provide 
clearinghouse services.
                              data privacy
    From its inception, the protection of the personal information and 
data of the program's participants has been a priority for everyone 
involved. Each provider was required to pass a rigorous screening and 
certification process to insure the safety and security of its systems 
and the data in question. This process took nearly 12 months and well 
over a half million dollars to complete. A consortium including dozens 
of private companies, over 70 airports and several Government agencies 
participated in the security, privacy, interoperability, and functional 
design of RT. This was critical and, in many ways, unprecedented work. 
We should not now abandon this approach as we move forward. In fact, it 
is this careful planning which has kept member data safe throughout the 
recent transitions, changes, and shutdowns which have so greatly 
impacted the program. This is a critical component that should not be 
overlooked and all new vendors should be held to the same standards for 
security, privacy, and interoperability to uphold and preserve the 
public trust.
                            clear's failure
    Clear's failure, in our view, was brought on by a number of issues: 
Overstaffing at airports, exorbitant overhead, excessive advertising, 
and unreasonable revenue share components to airports including 
National revenue share, local revenue share, and minimum annual 
guarantees that were not required but used primarily to discourage and 
eliminate competition. In the end, it was not a lack of capital that 
killed Clear, it was poor management and an unsustainable business 
plan.
    All of these issues can and will be addressed and controlled under 
a re-launch by FLO, or any competitor.
                      the future of the rt program
    FLO has secured significant financing since Clear's failure and 
plans to re-launch a National program, with or without TSA, at multiple 
airports in the next 30 days, with additional former RT airports and 
airports new to RT eagerly awaiting re-launch of the program. It is our 
understanding that multiple parties, including FLO, are analyzing the 
RT market. It is likely that one of us may ultimately look to acquire 
certain assets of Verified Identity Pass, Inc. including the CLEAR 
brand, membership lists, and equipment.
    FLO has agreed to partner with a service provider that will give us 
1,000 enrollment locations across America, solving what was a serious 
barrier to greater adoption. Individual and corporate interest in the 
program has not diminished. The future of RT is bright and the demand 
for its offerings remains strong.
    In closing, the ultimate success of RT is a congressionally 
mandated, TSA-sponsored program with biometrics, security benefits, and 
vetting under the current common standard, with consideration given to 
interoperability with Global Entry.
    Thank you for the opportunity to appear before you today. I 
appreciate your time and your continued support for this important 
program that offers benefits to our Nation's frequent travelers and an 
important and critical risk management tool for the TSA.

    Ms. Jackson Lee. Thank you for your testimony.
    I now recognize Mr. McCormick to summarize his statement 
for 5 minutes.

    STATEMENT OF MICHAEL W. MC CORMICK, EXECUTIVE DIRECTOR, 
              NATIONAL BUSINESS TRAVEL ASSOCIATION

    Mr. McCormick. Thank you.
    Madame Chairwoman Jackson Lee and Ranking Member Dent, I 
appreciate the opportunity to appear before your subcommittee 
today to discuss the importance of facilitating business travel 
and really represent the business traveler at large.
    National Business Travel Association has worked closely 
with the full Committee on Homeland Security and with your 
subcommittee over the last several years on a wide range of 
important policy issues. I recently assumed the position of 
NBTA's executive director and chief operating officer in late 
August, and I am looking forward to continuing our productive 
relationship in the years to come.
    NBTA is the world's premier business travel and corporate 
meetings organization. NBTA members, numbering more than 4,000 
in 30 nations, include corporate travel, Government travel, and 
meetings management executives as well as travel service 
providers. They collectively manage and direct more than $200 
billion of global business travel and meetings expenditures 
annually on behalf of more than 10 million business travelers 
within their organization.
    This year has been a very difficult year for business 
travel, in part because businesses have cut their travel 
expenditure in the face of political and media pressure. 
However, business travel is an essential part of economic 
recovery, new jobs, and corporate productivity.
    NBTA and IHS Global Insight recently released a landmark 
study indicating that businesses realized more that $15 in 
profit for every $1 wisely spent in business travel. This 
groundbreaking research shows that companies will potentially 
lose out on more than $200 billion in gross profits in this 
year alone because they will not fully realize the strategic 
value of business travel.
    While 2009 has been challenging for the travel industry, 
the sudden demise of the Registered Traveler program in June 
was an unnecessary and unfortunate development. It has hindered 
business productivity; it has been a major frustration for 
NBTA's members and allied providers. We are grateful that this 
committee has stepped forward aggressively to defend RT both as 
operationally and as a policy matter while new TSA can arrive 
to review the program and hopefully give it the support it 
truly needs.
    Throughout the public policy debate on RT, NBTA has 
consistently advocated six points which we believe are the keys 
to success: One, voluntary participation; two, broad 
availability; three, collaboration between airports and RT 
providers; four, expedited screening provided in a designated 
lane that doesn't slow other travelers; five, robust protection 
for data collected as part of the RT enrollment; and six, 
public understanding of the benefits, costs, and security 
offered by RT.
    NBTA was pleased to see these points contribute to the 
program's growth, and with approximately 250,000 individuals 
enrolled in at least one of the service providers and a 
valuable network of 21 airport locations, included crowded hubs 
such as Atlanta and New York's LaGuardia.
    Business travelers were very disappointed when, with only 
several hours' notice, VIP's Clear terminated service and two 
other smaller players were forced to suspend operations within 
VIP's airport--with VIP's operations default. This development 
was a sudden and unfortunate blow for business travelers.
    NBTA was besieged with member inquiries, asking what they 
could do to restore the program. We immediately wrote to each 
airport operating RT asking them to work to restore the program 
with willing providers. We further asked DHS and TSA to protect 
the RT database to maximize the chance that a next-gen program 
would be successful.
    So moving forward, NBTA urges Congress to enact the RT 
provisions in Section 234 of H.R. 2200 in the House-passed TSA 
reauthorization as amended by Transportation and Infrastructure 
through your leadership. TSA should reinstate security threat 
assessments and background checks for RT participants and 
review screening protocols that would help RT become a true 
risk management tool to secure an efficient air traveler, 
especially for frequent business travelers.
    With the recent announcement by President Obama that he 
intends to nominate Erroll Southers for the position of TSA 
administrator, NBTA is hopeful that DHS and TSA will take a 
fresh look at how RT may improve TSA's efficiency, strengthen 
security, and facilitate frequent travelers. Even as 
legislation is further considered in Congress, TSA has its own 
authority under the Aviation and Transportation Security Act of 
2002 to implement a robust RT program if they choose to do so.
    NBTA has been a staunch supporter of Global Entry. NBTA was 
very enthusiastic about the recent expansion of the Global 
Entry Pilot program to offer the program at 20 U.S. airports 
serving international destinations.
    NBTA has heard repeated requests from Global Entry members 
and their travel managers that DHS should integrate Global 
Entry and domestic RT Certainly any applicant who passes the 
stringent entry requirements for Global Entry should be 
eligible for domestic RT.
    So in closing, RT was popular among our membership and the 
travelers they represent. Time is money for corporate 
travelers, and the RT program makes air travel more efficient, 
predictable, and convenient while enhancing security for all 
Americans.
    Thank you for the opportunity to appear before this 
committee today, and I look forward to answering your questions 
as well.
    [The statement of Mr. McCormick follows:]
               Prepared Statement of Michael W. McCormick
                           September 30, 2009
                              introduction
    Madame Chairwoman Jackson Lee and Ranking Member Dent, I appreciate 
the opportunity to appear before your subcommittee today to discuss the 
importance of facilitating business travel. The National Business 
Travel Association (``NBTA'') has worked closely with the full 
Committee on Homeland Security and with your subcommittee over the 
pasts several years on a wide range of important policy issues. I 
recently assumed the position of NBTA's Executive Director and COO in 
August and am looking forward to continuing our productive relationship 
in the years to come.
    NBTA is the world's premier business travel and corporate meetings 
organization. NBTA and its regional affiliates--NBTA Asia Pacific, the 
Brazilian Business Travel Association (ABGEV), NBTA Canada, NBTA 
Mexico, and NBTA USA--serve a network of more than 15,000 business 
travel professionals around the globe with industry-leading events, 
networking, education & professional development, research, news & 
information, and advocacy. NBTA members, numbering more than 4,000 in 
30 nations, are corporate and government travel and meetings managers, 
as well as travel service providers. They collectively manage and 
direct more than U.S. $200 billion of global business travel and 
meetings expenditures annually on behalf of more than 10 million 
business travelers within their organizations.
    2009 has been an extremely challenging year for the business travel 
industry. Amid the general economic downturn, business travel has also 
suffered under simultaneous attacks--one man-made and one born of 
nature.
    Earlier this year, business travel came under fierce attack by 
politicians and the media as a frivolous expense in a time of corporate 
belt-tightening and Federal assistance to struggling industries. The 
so-called ``AIG effect'' led corporations, worried about being 
scapegoats for conducting business travel, attending conferences, or 
rewarding employees with incentive travel, to scale back their business 
travel far beyond cuts in other core business functions such as 
advertising, employees benefits, or information technology. In a study 
conducted in February 2009, 43% of NBTA travel buyers indicated that 
they had cut back on spending on travel in part due to perception 
issues. As discussed later in the testimony, NBTA has recently released 
research demonstrating that cutting business travel too aggressively 
can have serious negative impacts on corporate productivity and 
revenues.
    Simultaneously, the advent of the H1N1 flu strain has scared 
potential travelers and required expensive precautionary measures to be 
implemented by governments, airlines, and other travel providers. The 
dramatic fall-off in travel to Mexico and a warning by the European 
Union not to travel to North America earlier this year may be portents 
of things to come. NBTA applauds the proactive nature of the Obama 
administration, working with health authorities and foreign 
governments, to combat H1N1. Over-reaction to this flu could hinder 
economic recovery so we look forward to close collaboration with the 
Government during the upcoming flu season.
   house committee on homeland secrurity's leadership on registered 
                                traveler
    While 2009 has certainly seen some bright spots in the travel 
landscape, including new investments in infrastructure in the Recovery 
Act and decreases in travel delays due to lighter travel volumes, the 
sudden demise of the Registered Traveler program in June was an 
unnecessary and unfortunate development that has hindered business 
productivity and been a major disappointment to NBTA's members and 
allied providers.
    We are grateful that this committee has stepped forward 
aggressively to defend RT, both as a policy matter and operationally, 
while a new TSA leadership can arrive to review the program. In 
addition to holding this oversight hearing, the committee has played an 
invaluable role in ensuring that data provided by individuals enrolled 
in RT has been protected from improper disclosure. The committee has 
also helped protect a future RT program by convincing the 
Transportation Security Administration not to order deletion of 
customer information while new vendors seek to restart the program. 
Most importantly, the committee included valuable language in its 
Transportation Security Administration Reauthorization bill (H.R. 2200) 
to require TSA to evaluate how RT may be utilized as a risk management 
tool to increase TSA's efficiency, improve aviation security, and 
facilitate travel for frequent air travelers.
                 nbta's support for registered traveler
    NBTA has been a staunch supporter of RT since it was first proposed 
in the aftermath of the new aviation screening protocols necessary 
after 9/11. NBTA testified in support of the program on at least three 
occasions before this committee and the Senate Commerce Committee. 
Until recently, we believed that 2009 was going to be the year when RT 
hit critical mass where it could provide great benefits to our members 
and the general traveling public. In our 2009 Government Affairs 
Agenda, we included RT as a policy priority: ``Building on increased 
support from Congress and the executive branch, TSA should resume and 
expand the security threat assessments for RT members to allow for 
security checkpoint benefits.''
    The premise behind RT is simple but powerful. In allocating 
significant and ultimately limited resources available to screen 
aviation passengers for threats to passenger aircraft, the Government 
must make decisions on how to allocate their resources. NBTA believes--
as has the 9/11 Commission, the Congress, and numerous security 
experts--that TSA and the private sector should work cooperatively to 
provide incentives for frequent travelers to provide advance 
information sufficient to identify them as low-risk, provide tamper-
proof identification verification equipment to confirm enrollees, and 
provide reasonable security benefits commensurate with the reduced risk 
of enrollees.
    As recommended by the 9/11 Commission: ``[P]rograms to speed known 
travelers should be a higher priority, permitting inspectors to focus 
on greater risks. The daily commuter should not be subject to the same 
measures as first-time travelers. An individual should be able to pre-
enroll, with his or her identity verified in passage. Updates of 
database information and other checks can ensure on-going 
reliability.'' (The 9/11 Commission Report, p. 388).
    Moreover, even beyond the security aspects of RT, the 
predictability of very short RT wait times generated significant 
productivity gains for NBTA members and the employees they support. 
While wait times have declined in the past several years due to high 
TSA screener numbers and declines in aviation travel, business 
travelers unwilling to risk missing a flight have been forced to plan 
around worst-case TSA wait-time scenarios. So a traveler repeatedly 
must spend an extra 20-40 minutes in the sterile area of the airport, 
on the off-chance that the TSA screening line might be long that 
particular day. Multiply those less-productive minutes across millions 
of trips, and business travel productivity suffers greatly. While wait 
times have decreased in past year due to declines in travel and 
improvements in TSA processes, NBTA hopes the committee and TSA will 
look to RT as a powerful tool when the economy recovers and our 
airports and skies are more crowded than ever before.
    Throughout the public policy debate on RT, NBTA has consistently 
advocated 6 key points which we believe are the keys to success:
   Voluntary participation (opt-in);
   Broad availability;
   Interoperability between airports and between RT providers;
   Demonstrably expedited screening provided in a designated 
        lane without slowing other travelers;
   Robust protection of data collected as part of RT 
        enrollment;
   Public understanding of the benefits offered by RT, the 
        costs associated with participation, and the security check 
        process.
    NBTA was pleased to see the program grow under these principals 
throughout the past several years up until this summer. At its peak 
this year, approximately 300,000 individuals had enrolled with one of 
the service providers, and a valuable network of 21 airport locations 
had come on-line. These airport locations included crowded hubs such as 
Atlanta, Boston, Denver, Orlando, New York LaGuardia, New York Kennedy, 
Washington Reagan, and Washington Reagan. Renewal rates were high and 
satisfaction with the program's operation was solid.
    One of the main attacks on RT is that the program represents 
``Lexus Lanes.'' However, Registered Traveler makes airport security 
lines more efficient for ALL travelers. In Orlando, RT lanes regularly 
processed up to 15% of the passengers moving through the airport, using 
just 10% of the TSA checkpoint lanes. RT not only gives its members a 
fast, predictable experience when they arrive at airport security, but 
makes the lines for everyone else shorter too. The correct analogy here 
is electronic tolling (like E-Z Pass) on highways: As long as the 
electronic lanes and non-electronic lanes are apportioned correctly, 
everyone now goes through highway tolls faster than before electronic 
tolling was invented. Similarly with RT, assuming airports correctly 
deploy equipment to meet RT demand, TSA will need to use fewer 
screeners, less equipment, and reduced screening space for the 
remaining passengers.
    In addition, NBTA has found that RT has been a welcome complement 
to other concepts meant to speed travelers through security. Many 
airlines now utilize preferential security queuing for first-class 
passengers or premiere ``frequent flyer'' members. RT, however, can be 
used across airlines and by ``road warriors'' who must purchase coach 
tickets based on price, rather than by accumulating miles on a 
particular airline. In addition, TSA has deployed ``Black Diamond Self 
Select Lanes'' at many airports where ``expert'' travelers can choose 
one lane and slower travelers such as families and individuals with 
disabilities can choose another lane. However, while this concept 
benefits many business travelers by giving them a faster checkpoint 
process, it has no security component and essentially reorganizes 
traffic rather than streamlining it.
    However, the program was operating with one flaw that became 
impossible for investors to ignore. The TSA itself pulled back in 2008 
from the security side of the program, leaving the program as solely an 
airport initiative with no security aspects. The name-based security 
background check was discontinued. The biometric-based security 
background check, entirely possible with enrollee fingerprint data, was 
never initiated. TSA argued that it could not ensure that a ``clean 
skin'' terrorist would not identify the program as a security weakness, 
by exploit any changes to screening protocols to sneak weapons or 
explosives on an aircraft.
    After the TSA and DHS leadership ended the security aspects of RT 
in July 2008, the new administration has not conducted a major review 
of the program while it has considered possible candidates for the TSA 
Administrator position. As month after month went by with RT acting 
essentially as a competitor ``front-of-the-line'' program to airline 
first-class and TSA experienced traveler offerings, investors 
supporting RT vendors opted to pull their financial support for the 
largest RT vendor, Verified Identity Pass, in June 2009. With only 
several hours notice, VIP's CLEAR service was terminated, and the two 
other smaller players could were forced to suspend operations with 
VIP's airport operations defunct.
    This development was a sudden and unfortunate blow for business 
travelers. NBTA was besieged with members asking what they could do to 
restore the program. We immediately wrote to each airport operating RT, 
asking them to work to restore the program with willing providers. We 
further asked DHS and TSA to protect the RT database to maximize the 
chance that a next generation program would be successful. And we 
worked with the Congress to have committees, such as this one, and 
Members express their support for RT to the TSA.
                 moving forward on registered traveler
    (1) NBTA urges Congress to enact the RT provisions in the House-
passed TSA Reauthorization. Section 234 in H.R. 2200 as amended by 
Transportation and Infrastructure Subcommittee Chairwoman Sheila 
Jackson Lee (D-TX) and Subcommittee Member Daniel Lungren (R-CA) will 
enhance RT's risk management and traveler facilitation potential. 
Specifically, the provision would require TSA to consider how RT can be 
integrated into ``risk-based aviation security operations,'' to 
reinstate security threat assessments and background checks for RT 
participants, and to review screening protocols ``to realize the full 
potential of the Registered Traveler Program.'' NBTA believes that the 
amendment would help RT become a true risk-management tool for secure 
and efficient air travel, especially for frequent business travelers. 
RT was popular among NBTA members and the travelers they support: Time 
is money for corporate travelers, and the RT program can make air 
travel more predictable and convenient, while enhancing security for 
all Americans.
    (2) With the recent announcement by President Obama that he intends 
to nominate Erroll Southers for the position of TSA Administrator, NBTA 
is hopeful that DHS and TSA will take a fresh look at how RT may 
improve TSA's efficiency, strengthen security, and facilitate frequent 
travelers. Even as legislation is further considered in the Congress, 
TSA has its own authority under the Aviation and Transportation 
Security Act of 2002 to implement a robust RT program.
    The unwillingness of TSA to utilize risk management at the 
passenger checkpoint stands in stark contrast to nearly the entire rest 
of the post-9/11 homeland security agenda. Consider:
   The State Department and DHS manage the Visa Waiver Program, 
        under which half of international travelers are not 
        fingerprinted until they arrive in the United States, while 
        half undergo visa interviews and fingerprint checks before 
        travel;
   Homeland security grants are largely distributed based on 
        risk-based criteria;
   Cargo containers are each scored for risk factors to 
        identify which require more intensive screening;
   TSA allows airport workers and other transportation workers 
        access to sensitive areas such as airport tarmacs and 
        transportation hubs if they have passed a background check 
        similar to that rejected for RT applicants by TSA;
   TSA's fellow DHS agency, U.S. Customs and Border Protection, 
        has forged ahead with a myriad of trusted traveler programs, 
        including Global Entry, NEXUS, SENTRI, and FAST, that provide 
        streamlined entry into the United States for pre-vetted 
        populations.
    Ironically, the reluctance of TSA to support the RT program came 
during a time when TSA made great strides in strengthening the other 
aspects of its layered security regime for aviation. Thus, RT 
applicants still would be operating in a universe where TSA was 
deploying a myriad of counter-terrorism programs including: Secure 
Flight pre-flight watchlist reviews, behavorial profiling teams, 
checkpoint security equipment, baggage screening equipment, canine 
teams, air marshals, trained flight attendants, strengthened cockpit 
doors, and armed pilots. The RT security background check would be just 
one aspect of vetting RT applicants before they board a plane.
    To drill down one layer deeper, we encourage Congress and the TSA 
to make the following comparison. There are millions of Americans who 
have undergone rigorous background checks to ensure they can be trusted 
in sensitive locations or with sensitive information. These individuals 
include:
   Government employees and contractors with full security 
        clearances;
   Active members of law enforcement and the military;
   Transportation workers screened under the Transportation 
        Worker Identification Card program;
   Aviation workers screened for access to sensitive areas of 
        the airport; and
   Individuals enrolled in other DHS trusted traveler programs 
        such as Global Entry, SENTRI, NEXUS, and FAST.
    Currently, when these individuals fly, they normally receive the 
exact same screening as individuals about whom all TSA may know. In 
fact, an airport worker could end a work day with direct, unsupervised 
access to an airplane, but be subjected to same checkpoint screening as 
everybody else if he or she wanted to fly commercial on that same plane 
30 minutes later.
                     coordination with global entry
    NBTA has been a staunch supporter of the CBP trusted traveler 
program, Global Entry. Pushed for the creation and funding of the 
international registered traveler Global Entry Program. In 2007, we 
urged successfully that language be included in the annual DHS 
appropriations bill for the creation of the program. The following 
year, our efforts helped the program receive $10 million in funding to 
buy and deploy enrollment and verification equipment. NBTA was the 
first organization to utilize CBP's Global Entry Mobile Enrollment Unit 
at the NBTA Leadership Summit in November 2008. NBTA again led the way 
as the first organization to host Global Entry enrollment at a major 
trade show, during the 2009 NBTA Convention. Global Entry provides low-
risk, pre-approved travelers expedited entry into the United States. 
Program participants bypass regular passport control and proceed 
directly to Global Entry Kiosks, where their identity is confirmed 
using biometrics.
    NBTA was very enthusiastic about the recent expansion of the Global 
Entry pilot program to an additional 13 U.S. international airports: 
Boston, Dallas, Detroit, Ft. Lauderdale, Honolulu, Las Vegas, Newark, 
Orlando, Philadelphia, Sanford (Orlando), San Francisco, San Juan, and 
Seattle. Combined with the 7 airports already operating (New York's 
John F. Kennedy, Bush Intercontinental in Houston, Washington Dulles, 
Los Angeles, Hartsfield-Jackson Atlanta, Chicago O'Hare and Miami), 
Global Entry is now operational at the Nation's top 20 international 
arrival airports.
    NBTA has heard repeated requests from Global Entry members and 
their travel managers that DHS should integrate Global Entry and 
domestic RT. Certainly, any applicant who passes the stringent entry 
requirements for Global Entry (including biometric and biographic 
checks, a personal interview, and a thorough criminal check) should be 
eligible for domestic RT.
    Discussions between CBP, TSA, and RT vendors before the collapse of 
the program this summer were unproductive to date. NBTA strongly 
believes that an integrated DHS looking to maximize low-risk travel and 
present an unified approach to the public needs to offer an unified 
application and fee process for Global Entry and RT.
                      the value of business travel
    As mentioned above, 2009 has been a difficult year for business 
travel, in part because businesses have cut travel in the face of 
political and media pressure. However, business travel is an essential 
part of economic recovery, new jobs, and corporate productivity. NBTA 
and HIS Global Insight recently released a landmark study indicating 
that businesses can realize more than $15 in profits for every $1 spent 
on business travel. The groundbreaking research shows that companies 
are potentially losing out on nearly $200 billion in 2009 in additional 
gross profits because they are not optimizing their investments in 
strategic business travel.
    The analysis shows a clear link between travel spending and 
corporate profits, with the return on investment varying across the 15 
industries examined. The study also illustrates that for each industry 
there is a point at which increasing business travel spending begins to 
cut into profits. Among the study's key findings:
   Business Travel Contributes to Sales.--A significant and 
        measurable relationship exists between business travel 
        expenditures and sales volumes.
   Sizeable Returns on Investment.--An average return on 
        business travel investment of 15-to-1.
   Returns on Investment Vary by Industry.--Returns on 
        investment vary across each of the 15 industry segments in the 
        study.
   $193 Billion in Profits at Stake.--Companies within most 
        industry segments are not operating at optimal travel 
        expenditure levels and collectively could realize $193 billion 
        in additional profits.
   Massive Stimulative Effect on the U.S. Economy.--Increasing 
        travel expenditures to optimal levels could create 5.1 million 
        new jobs, generating more than $101 billion in tax revenue.
    The study examines 10 years of data for 15 industry sectors 
covering the U.S. economy, analyzing industry-level data on business 
travel, business expenses, revenues and profitability in order to 
establish a link between business travel and corporate profits.

    Ms. Jackson Lee. I thank all the witnesses for their 
testimony, and I would like to remind each Member that he or 
she will have 5 minutes to question the panel.
    I now recognize myself for questions, and we will then 
recognize Mr. Dent, and we will recognize Mr. Cleaver and thank 
them for being here. Let me also acknowledge, present was Mr. 
Thompson, Mr. Massa, Mr. Lungren, and Mr. Olson, and Mr. 
Austria, who were present at our hearing today.
    Let me--and I think I laid the groundwork for this question 
earlier--ask you, Ms. Townley, clearly and straightforwardly, 
why did Clear fail and how will you ensure that that does not 
happen again?
    Ms. Townley. Well, first and foremost, I wasn't part of the 
old Clear, but when we did our due diligence, we believe that 
there is a much more economic and economically-viable way to 
run the business. I think the beauty of our position and moving 
forward is that we will benefit from 4 years of experience that 
Clear did.
    I mean, really, when Clear launched, as you all know here, 
it was completely a new concept, and it was mentioned many 
times here today, the private sector took this on with a 
passion and went very fast and furious to put in----
    Ms. Jackson Lee. But excuse me, in determining to buy the 
assets----
    Ms. Townley. Why did we----
    Ms. Jackson Lee. Excuse me.
    Ms. Townley. I am sorry.
    Ms. Jackson Lee. In determining to buy the assets of 
Clear----
    Ms. Townley. Yes.
    Ms. Jackson Lee [continuing]. You had to look at its 
business plan or its format.
    Ms. Townley. Yes.
    Ms. Jackson Lee. Why did they fail?
    Ms. Townley. Well, we think we--can I address why we think 
we will succeed?
    Ms. Jackson Lee. No. I would like to know why they failed. 
You might lead into why you will succeed.
    Ms. Townley. Okay. Why they failed was that they were 
unable to rebalance their balance sheet. I mean, they couldn't 
come to terms with their own financials and their balance 
sheet.
    So we feel that we have already restructured the balance 
sheet and the company. We have already raised substantial 
money. We have a list of very passionate customers.
    So our plan is to relaunch the service in a way that is 
more economic. So back to my testimony, that is why I think it 
is very important that when the Registered Traveler program 
starts again that we do this in a clear partnership with the 
TSA, the Department of Homeland Security, and our airports to 
make sure that this won't fail again and that there really is a 
value to the consumer and that it is economic.
    Ms. Jackson Lee. We appreciate very much your enthusiasm, 
and you can understand our disappointment in the program 
failing. So let me pursue this line of questioning.
    You have a very large investment house that is investing 
with you. What is the role of that investment house and what 
effect are the pending lawsuits going to have on your 
reorganizing of this company?
    Ms. Townley. Well, we have to address all of those, and we 
have a court hearing to address that. I can't go into all the 
detail on that right now. I actually don't feel 100 percent 
comfortable doing that, but I would be happy to follow up 
later.
    I can say that in terms of the consumer, our plan is to 
make good on the terms of their contracts, so where the service 
stopped we will, at no cost to them, restart their service and 
extend the terms in the new Clear.
    Ms. Jackson Lee. Do you plan to settle the claims that 
airports have against Clear?
    Ms. Townley. We have each airport--we are having 
conversations with each airport, so we would prefer not to go 
into bankruptcy, and we would prefer to find a way that we can 
move forward with a new Clear.
    Ms. Jackson Lee. Have you consulted with TSA on your plans?
    Ms. Townley. Yes, we have. We have----
    Ms. Jackson Lee. Have you asked them for a security 
benefit?
    Ms. Townley. We ultimately would like to get to a place 
where we have a security benefit, yes.
    Ms. Jackson Lee. Mr. Fischer, I am asking you the same 
questions. What did FLO--or why did FLO cease operations this 
summer, and how will you be sure that that will not happen 
again? Maybe you can expand on competitors calling in to TSA or 
being the reason for your demise.
    Turn on your mic, please.
    Mr. Fischer. My apologies. FLO, as a corporation, has not 
failed. It is operating exactly as it was prior to Clear's 
shutdown.
    We suspended operations in consultation with the TSA upon 
Clear's failure. This is because we sold a card that was 
interoperable, and nationally our card--our FLO card--could be 
used in any lane around the country.
    With a majority of the lanes shut down, it wasn't in our 
best interest to move forward in selling new cards and we 
decided to suspend operations. We are planning to relaunch in 
the next 30 days.
    How do we ensure that it won't happen again? The best 
answer I can give you is competition.
    There was no competition in the space because it was 
hampered by Clear's efforts at airports. Every airport that we 
tried to bid on in joint with Clear, the number was raised into 
the millions on millions minimum annual guarantees that no----
    Ms. Jackson Lee. Why is that?
    Mr. Fischer [continuing]. That no competitor could afford. 
Clear wanted to outprice themselves in the industry. They 
bought airports--and that is part of the reason for their 
failure. They failed because they paid millions of dollars to 
airports that wasn't necessary. They did it to beat us in 
competition.
    So if an airport came out and said, ``We have a bid for 
Registered Traveler. We would like for you to offer some 
revenue share schemes,'' in most of those bids we offered a 
higher revenue share scheme. Clear came up with a scheme that 
said, ``We are going to pay you $1 million guaranteed whether 
we sell cards or not,'' and that is part of Clear's failure. 
They found markets specifically--Little Rock, Albany, Salt Lake 
City, Westchester County--where they guaranteed airports 
guarantees every year and they couldn't sell enough cards to--
--
    Ms. Jackson Lee. So how do you think anyone is going to 
settle a claim if they owe airports such as those that you have 
named for a million dollars and have not been paid yet?
    Mr. Fischer. The airport that I operate in Reno, I had no 
guarantee.
    Ms. Jackson Lee. No, sir.
    Mr. Fischer. Yes.
    Ms. Jackson Lee. How do you think a company that is 
guaranteed $1 million--how do you think a company that is 
guaranteed $1 million, that is a outstanding claim, can--how 
can that be paid off?
    Mr. Fischer. I don't have that situation. I can't answer 
that for Clear.
    Ms. Jackson Lee. It seems to be challenging.
    Mr. Fischer. It should have never been proposed in the 
first place.
    Ms. Jackson Lee. But it seems that it will be a 
challenging----
    Mr. Fischer. It will be very challenging. I----
    Ms. Jackson Lee [continuing]. Proposition.
    Mr. Fischer. I don't think those airports are ever going to 
be paid, my opinion.
    Ms. Jackson Lee. Let me, very quickly, Mr. Fischer, do 
your--excuse me, Mr. McCormick, excuse me, do your travelers 
and members believe that the security benefit that TSA could 
provide is important to the RT program?
    Mr. McCormick. Yes. It is an important component of it, but 
it is not required in our minds for this to, you know, begin 
again.
    Ms. Jackson Lee. They would be comfortable as it is 
presently structured?
    Mr. McCormick. Yes.
    Ms. Jackson Lee. So we need to look at it from the overall 
perspective of whether or not the security benefit is a value 
to the overall security of this Nation?
    Mr. McCormick. Correct.
    Ms. Jackson Lee. Thank you.
    I recognize the gentleman from Pennsylvania, Mr. Dent, for 
5 minutes.
    Mr. Dent. Thanks, Madame Chairwoman.
    Mr. McCormick, you drew an analogy in your testimony that 
Registered Traveler lanes is like E-Z Pass lanes, in that they 
allow for all passengers to go through security faster. Can you 
explain this concept, and how can a speed lane for paying 
customers actually decrease the wait times for nonpaying 
customers?
    Mr. McCormick. Well, it is really an issue of accomplishing 
two things. I mean, of course our primary objective is, you 
know, the need for the business traveler, and particularly the 
frequent business traveler, and having them have a better, more 
efficient experience at the airport. But when you take those 
travelers and you put them into the special lane, it basically 
allows TSA resources to focus on the first-time or infrequent 
travelers who, frankly, need more time.
    You know, it is all part of an overall solution that we 
feel is, you know, optimal for accomplishing the objective to 
get people safely through the airport and on their way.
    Mr. Dent. Your testimony also included examples of how the 
Department has generally embraced risk-based processing. One 
example you note, TSA allows airport and other transportation 
workers access to sensitive areas such as airport tarmacs and 
transportation hubs if they have passed a background similar to 
that rejected for RT applicants by TSA.
    If TSA conducted a similar background check as they do for 
SIDA badges for RT applicants, in your estimation would 
travelers be willing to undergo such a check?
    Mr. McCormick. I think they would. Speaking, again, for 
myself and on behalf of frequent business travelers, if it 
helps you get through, you know, Chicago O'Hare on a Friday 
afternoon and get you home to your family faster, if it allows 
you to get out on a Monday morning in virtually any airport in 
a more efficient fashion, you would be willing to do it, for 
those that are serious about, you know, their time and the 
importance of it.
    Mr. Dent. So why do you think the TSA has rejected such a 
background check for--in the past?
    Mr. McCormick. I can't speak for TSA, and certainly being 
new in my role I haven't had an opportunity to speak with them 
directly or understand why they have taken on the policy 
approaches they have. But again, back to the need, the need is 
there and the support of our organization, and again, over 10 
million business travelers behind this effort.
    Mr. Dent. Thank you.
    Ms. Townley, you had testified that the Henry Company will 
restart the Clear Registered Traveler program. What actions 
should be taken by TSA and any successor to Clear to ensure 
that the program is a viable risk-based security program?
    Ms. Townley. Well, first of all I think that we have to 
partner on what the end objective is, so ultimately I think 
that if we all agree that Registered Traveler provides greater 
security in this country, so if there is--it is all about risk 
management, so increasing risk management. So the more people 
we have going through Registered Traveler, the more people who 
volunteer to be registered travelers, it will reduce risk.
    But the bottom line is, to get people to do that we have to 
make it attractive to them. So I think that we, coming from 
basically Silicone Valley, coming from the Bay Area, are 
already talking to technology--the technology community and 
technology companies on what is the next generation? What can 
we do together that will meet the standards that we need for 
security but will also provide convenience so that more and 
more people will be willing to do this?
    Mr. Dent. Have you spoken with any Clear airports?
    Ms. Townley. Yes, we have.
    Mr. Dent. What is their perspective on your company 
potentially or possibly succeeding to their business?
    Ms. Townley. Most of the airports we have spoken to are 
very positive. They were rightly frustrated and discouraged 
about what happened. They understand that we are a completely 
new company. But they see the need for this and they see the 
benefit of it, so our plan is to be very transparent and to 
partner with them and really provide this new generation of RT 
to be a success.
    Mr. Dent. I think you might have addressed it with 
Chairwoman Jackson Lee, but you have had some dialogue with TSA 
and DHS on this?
    Ms. Townley. Yes, we have.
    Mr. Dent. Can you restate, you know, what their thoughts 
are?
    Ms. Townley. Well, I would feel uncomfortable restating 
their thoughts, but my impression is that we are in line, or in 
the sense that we believe that we can enhance aviation security 
and customer convenience with the right application of 
technology, that there is--we can do that working together. So 
we feel very--that they have been very open to us.
    Mr. Dent. Thank you.
    I will yield back. Thank you.
    Ms. Jackson Lee. Thank you very much, Mr. Dent.
    Now I am happy to yield 5 minutes to the gentleman from 
Missouri, Mr. Emanuel Cleaver, Congressman Cleaver.
    Mr. Cleaver. Thank you, Madame Chairwoman.
    Mr. Fischer, I am concerned that maybe Clear was too big to 
fail. Are you?
    Mr. Fischer. No. I don't agree with that at all.
    Mr. Cleaver. Okay. They fail, everybody else leaves. Same 
thing that happened to the banks. Tell me the difference.
    Mr. Fischer. Well, we haven't left.
    Mr. Cleaver. So you are in full operation?
    Mr. Fischer. No, we are not in full operation.
    Mr. Cleaver. Okay, then you left.
    Mr. Fischer. The network needs to be rebuilt, and we are 
planning on rebuilding the network.
    Mr. Cleaver. Yes, okay.
    Mr. Fischer. Sir, if I sold you a card that was operable in 
21 airports and now it was operable in one airport, that 
doesn't leave me much room to operate a program.
    Mr. Cleaver. That is not the point I am trying to make. You 
are making another point, and it is a good point for somebody 
else.
    But the point I am trying to make is, Clear goes out of 
business and then all operations across the country--the 20 
airports, 20, 21 airports, whatever it is--they cease. Am I 
right about it?
    Mr. Fischer. That is----
    Mr. Cleaver. Somewhat true.
    Mr. Fischer. Yes.
    Mr. Cleaver. Okay. Where is it not true?
    Mr. Fischer. Well, we could have stayed open and----
    Mr. Cleaver. No. Okay. Are there any open?
    Mr. Fischer. No. There are none open.
    Mr. Cleaver. Okay. So you said it is almost true?
    Mr. Fischer. Well, we shut down our operations. Vigilant, 
who is another operator, who operated Jacksonville and 
Louisville, Kentucky, had financial problems and shut because 
of financial problems.
    Mr. Cleaver. Okay. So Clear was not too big?
    Mr. Fischer. Clear operated 18 of the 21 airports. By 
them----
    Mr. Cleaver. Is that too big to fail? I mean, the point--if 
someone else takes dominance and they should somehow fail, I am 
concerned about whether or not the others will automatically 
fail. I am on the Banking Committee. I have just seen this 
repeatedly and I know that the American public is angry over 
that, and I don't want to see it repeated at the airport.
    Mr. Fischer. Sir, let me take another stab at it, please?
    Mr. Cleaver. Okay.
    Mr. Fischer. In Clear's shutdown we went out to every one 
of the major airports--probably the top 10 that Clear operated. 
We asked them to reopen. They have definite interest in 
reopening their Registered Traveler lanes; they were all 
waiting on TSA to say what they were going to do. TSA has never 
made a statement on the failure of Clear and what the next step 
was going to be.
    So we have airports that are ready to reopen, and we could 
have reopened those 10 if the TSA would have taken a stand. The 
TSA did not take a stand. If the TSA would have said, ``It is 
RT as usual. Go forth and reopen,'' half the network would have 
been reopened within a month after Clear's failure.
    It is like if a bank fails and a bank owns 90 percent of a 
community's branches. Another bank is going to step in.
    Mr. Cleaver. No, FDIC steps in, but the----
    Mr. Fischer. Pardon my ignorance.
    Mr. Cleaver. No, I mean, you don't deal with this every 
day.
    Here is what I know: 165,000 people didn't get their money 
back.
    Mr. Fischer. Okay. That is in the Clear program----
    Mr. Cleaver. Yes. So, you know, of course it is only two, 
so what, $400 or $500?
    Mr. Fischer. Clear was charging $200. We were charging 
$100.
    Mr. Cleaver. Okay. So that is not going to create a lot of 
havoc in people's lives like banks, but the fact is they lost 
their money. Am I right?
    Mr. Fischer. Well, part of the testimony earlier was the 
AAAE whether we could--and we have been trying to get AAAE to 
do this--to roll over a member who was in the Clear program 
that is now defunct into the FLO program without having to 
reregister. That would have taken a large step as to 
relaunching airports also, because the biggest problem, the 
hardest part for somebody to enroll in this program is to go 
out to the airport, give up your biometric, give up you breeder 
documents and become enrolled.
    It would have been simplistic if we could have rolled over 
a Clear member, and we would have honored their memberships. 
That was the plan we presented to TSA and the AAAE and we still 
don't have an answer on that subject. Wasn't that some of the 
questioning earlier?
    Mr. Cleaver. Well, okay, yes. But just you and me.
    Mr. Fischer. I have been ready to relaunch from day 1. 
Airports have said yes, but they are saying, ``Wait a minute, 
we need guidance.'' They have not received the guidance from 
the TSA.
    These airports will start coming. We have two that are 
going to open in the next 30 days; there are more behind that. 
But still, there are a lot of airports holding out.
    The biggest airport in the system was Orlando, with 51,000 
members. Orlando is waiting for TSA to do something, and TSA 
has said nothing since Clear shut down.
    Mr. Cleaver. Ms. Townley.
    Ms. Townley. Thank you.
    Actually, we have been in very good, strong communications 
with Orlando and they are working with us to restart, and they 
want to restart with Clear. I think the other thing that is 
important to note when we restart the Registered Traveler 
program is that the whole interoperability agreement has to be 
economically viable for all participants. Clear is the one, 
really, who went out and invested the most in the 18 airports 
and had the biggest exposure, and in the interoperability 
everyone could use their network.
    So, yes, it makes sense that when they ran into financial 
trouble and couldn't, you know, balance their books they 
weren't--everyone else shut down. You can call it what you want 
to call it, but it shut down.
    So we can't do that again. If we are going to restart this 
it has to be a system where the interoperability is viable for 
all participants.
    Mr. Cleaver. Madame Chairwoman, I know my time is out. Can 
I just----
    Ms. Jackson Lee. Without objection. Gentleman is recognized 
for an additional minute.
    Mr. Cleaver. Thank you.
    Where I am going, and that is, Mr. Fischer, where I was 
trying to go, and I don't know if you were trying to keep me 
from going there or----
    Mr. Fischer. No, sir.
    Mr. Cleaver. No, I am kidding.
    What I want to know is, what is going to happen now to 
prevent all of the airports--the participating airports--from 
losing this fast lane should FLO go out of business?
    Mr. Fischer. What is to prevent it in the future?
    Mr. Cleaver. Yes.
    Mr. Fischer. I think what is to prevent it is the healthy 
interoperable competitive environment where we have multiple 
competitors who work together, who honor each other's cards, 
with a reasonable fee between us to honor each other's cards. 
That is what is going to prevent us from going out.
    Again, I was fully willing and able to reopen those Clear 
lanes, had the capital to do it, and ran into multiple 
roadblocks.
    Mr. Cleaver. All right.
    Thank you, Madame Chairwoman.
    Ms. Jackson Lee. I think the line of questioning of both 
Mr. Dent and Mr. Cleaver have been productive and very 
instructive. Let me conclude with just trying to clear some 
remaining points.
    Ms. Townley, do you believe that you will have to--will not 
have to re-compete for airports under your present venture?
    Ms. Townley. No, I do not believe that. I think it is a 
competitive environment.
    Ms. Jackson Lee. So you believe that you will have to re-
compete?
    Ms. Townley. I think in many cases we will have to prove 
ourselves again and compete for their business and their trust.
    Ms. Jackson Lee. So do you have a structure where you are 
going after the business?
    Ms. Townley. Well, we presently don't own the company yet, 
but we are already working on that, yes--on the plan.
    Ms. Jackson Lee. Okay.
    Ms. Townley. As I said, talking to the airports. Part of 
the due diligence was to make sure that these airports were 
still interested. We wouldn't have pursued this if the airports 
had said, ``No, we are done with you people.'' So----
    Ms. Jackson Lee. Thank you.
    Mr. Fischer.
    Mr. Fischer. Madame Chairwoman, I would say that in answer 
to your question, airports that are going to come up for bid 
again will have to go through a bid process. Because there has 
been a change of entity in Clear the contracts cannot be 
honored, so we will have to get into a bidding process. I see 
that probably that it is going to be a 3- to 4-month process at 
each airport.
    Ms. Jackson Lee. So we are really--well, for lack of--we 
are really on the ground floor?
    Mr. Fischer. Well, not necessarily. Again, I said there is 
going to be two airports that are going to open in the next 30 
days; we think there will be others that will come behind.
    We are in a unique position at FLO because in most of the 
procurement laws around the country and for these aviation 
authorities, we finished second to Clear in these bids, in 
these RT. We do have the right to assume their contract, as the 
second position, so there may not have to be bids in certain 
situations.
    Ms. Jackson Lee. Well, let me tell you that I am--this is 
very fuzzy, and so I know people are sensitive about their 
proprietary information but I would like from the two parties, 
Ms. Townley and Mr. Fischer, to get a written response as to 
the next step of addressing the existing airports in the 
program, what you intend to do.
    Are you going to have a rebidding process? When I say that 
obviously it is the airport as the actor in this. But are you 
going to begin going to airports and seeking, Mr. Fischer, 
representing FLO, what Clear had, or is there a line of 
communication or a line of agreement where Clear keeps what 
they had, or are all of these up for bid?
    The second question is, there are outstanding Registered 
Traveler members who have paid their money. What is happening 
to those members?
    Mr. Fischer. In terms of FLO, I have received two requests 
for refunds and we have granted those refunds.
    Ms. Jackson Lee. All right.
    Mr. Fischer. Only two.
    Ms. Jackson Lee. Ms. Townley.
    Ms. Townley. Well, as I said, as we move forward we will 
honor the terms on their--you know, when we finalize the deal 
and move forward we will honor the terms on the people who want 
to move forward, and the people that don't want to move 
forward, we are not in a position to refund them in the new 
corporation.
    Mr. McCormick. If I may, on behalf of NBTA, with both these 
organizations, and frankly any organization that was going to 
advance the cause, we are happy to work with them and with our 
membership to communicate any kind of conversion program that 
they wish to put in place to bring those members on to, you 
know, a new platform or into their respective companies. It is 
all in our best interest.
    Ms. Jackson Lee. So did you give them the list? Did they 
buy the list from you, of your members?
    Mr. Fischer. No.
    Ms. Jackson Lee. Okay.
    Have you bought the list? Do you have the list that Clear 
had? I assume that is one of the assets you purchased?
    Ms. Townley. Well, that will be part of the closing of the 
deal.
    Ms. Jackson Lee. Or is it the AAAE that has the database?
    Ms. Townley. The list of Clear members is still an asset of 
the company, so we haven't gotten to that position yet. But it 
is an asset of the company.
    Ms. Jackson Lee. Right. It is something that you have 
purchased.
    Ms. Townley. Right. That we would purchase, yes.
    Ms. Jackson Lee. Would purchase. So if they wanted their 
refund, or those that have lawsuits, let me get back again, you 
will address those questions.
    Ms. Townley. Yes, we will. We will address that with a 
judge.
    If I may also add, we will also ask each of them, even when 
we have their names and numbers and everything, we will ask 
them explicitly if they want to continue to participate in it, 
and if they don't then, you know, obviously we will destroy 
their data.
    Ms. Jackson Lee. You will refund--destroy their data and 
refund their money, or look at----
    Ms. Townley. At the moment we are not buying that 
liability.
    Ms. Jackson Lee. Pardon me.
    Ms. Townley. At the moment we are not buying that 
liability. That has to be decided with a judge, and we have a 
hearing to do that.
    Ms. Jackson Lee. I see. Who will run this new effort that 
you have?
    Ms. Townley. It will be run by Kurtis Fechtmeyer and 
myself.
    Ms. Jackson Lee. That gentleman is--who is that?
    Ms. Townley. Kurtis Fechtmeyer is my partner at Henry----
    Ms. Jackson Lee. So it will be your company?
    Ms. Townley. Well, and with a group of investors.
    Ms. Jackson Lee. Okay. Again, let me respect the 
proprietary information, but are you bringing anyone to the 
table with expertise in the traveling public?
    Ms. Townley. Yes. We have already have contracts with a 
number of the original Clear core team, so we have a very 
strong technology team, we have both an operations team from 
core, and we have additional new staff from the industry.
    Ms. Jackson Lee. Mr. Fischer, with FLO do you expect to be 
cooperating with this newly-reorganized company?
    Mr. Fischer. We do. We believe interoperability is the core 
of the success of the program.
    Ms. Jackson Lee. But you will be looking to secure more 
airports. How many did you have before?
    Mr. Fischer. We had one previously.
    Ms. Jackson Lee. What are you attempting to do at this 
point?
    Mr. Fischer. We have proposals out to 11 currently.
    Ms. Jackson Lee. Well, let me----
    Mr. Fischer. May I, for a second?
    Ms. Jackson Lee. You certainly may.
    Mr. Fischer. With regards to the privacy of the Clear data 
and the selling of the Clear data, the Clear privacy policy, 
which I was a member, which the committee has----
    Ms. Jackson Lee. The Clear, I am sorry----
    Mr. Fischer. Clear privacy policy when you sign up as a 
member of Clear, which the committee has a copy of, clearly 
states that the membership data can only be sold to another 
operating RT providing. In this case, we are the only operating 
RT provider, and in our view, probably challengeable in the 
courts, we are the only ones that can acquire that data.
    Ms. Townley. We are going through the process to also be 
recognized as a registered RT provider. We started this process 
2 months ago, so please forgive me if I am not as, you know, 
adept at some of these questions as my partner here.
    Ms. Jackson Lee. When do you----
    Ms. Townley. We acknowledge that.
    Ms. Jackson Lee. When do you expect to be in status to 
acquire----
    Ms. Townley. Well, we are moving very quickly and we have a 
very good and strong agreement with Morgan Stanley and our 
other investors, and it should happen very quickly. We assume 
that we will be up and running in airports this winter.
    Ms. Jackson Lee. Right.
    But Mr. Fischer, what point are you making? That you are 
ready now?
    Mr. Fischer. We are ready now.
    Ms. Jackson Lee. Are you suggesting that you are being 
blocked from getting that data?
    Mr. Fischer. Absolutely not. Like I said earlier, we have a 
proposal in to Morgan Stanley that we submitted yesterday and 
having a further conversation this afternoon, so we may be able 
to buy that data, and I am saying there is a possibility we 
may. But the point is, nobody should be able to buy that data 
that not approved vendor, and right now there is no approval 
process by the TSA. They have hands off right now.
    Ms. Jackson Lee. But you are an existing approved vendor.
    Mr. Fischer. So according to the policy of Clear, we are 
the only ones that can buy that data. That is certainly 
challengeable in court.
    Ms. Jackson Lee. Let me just--to both of you, do you want 
the RT program to be a security program? Ms. Townley.
    Ms. Townley. Yes.
    Ms. Jackson Lee. Mr. Fischer.
    Mr. Fischer. Absolutely.
    Ms. Jackson Lee. So you are looking for TSA to work through 
its concerns and provide the security benefit?
    Mr. Fischer. Yes, ma'am. But we will launch without the 
TSA.
    Ms. Jackson Lee. Well, you will just have the RT and----
    Mr. Fischer. Front-of-line customer experience, yes.
    Ms. Jackson Lee. Using the scheme that we have?
    Mr. Fischer. Correct.
    Ms. Townley. But it won't be RT? Is that what you are 
saying?
    Mr. Fischer. No, we will use biometrics; we will continue 
under the arctic spec under the program that was in place 
before.
    Ms. Jackson Lee. Ms. Townley, you are not disadvantaged by 
the fact that you are just approaching this and putting your 
proposals together. We don't operate that way. We appreciate 
your being here for us and answering our questions to the best 
of your ability, as Mr. Fischer and Mr. McCormick.
    You can imagine that you are leaving us with somewhat, 
however, of an empty plate. I cannot pretend to participate in 
business workings, but I would say to you that time is of the 
essence for whatever structure is to be achieved.
    I know that there are representatives, though they are not 
on the panel as we speak, but there are representatives from 
TSA, and among the many issues that we have I would say to the 
note-takers and representatives from TSA that there needs to be 
an answer as to if not the benefit aspect, the posture that TSA 
is taking. I would ask that that response come to me, as 
Chairperson, and this committee in its entirety.
    So I would expect that committee staff will be back in 
touch with TSA for us to get an understanding on the question 
raised. We have not heard from TSA.
    I think what this hearing has demonstrated is that there is 
a great deal of confusion, and that we need a robust dialogue 
that includes Congress. We need to reanalyze, in the coming 
months, just what we wish to accomplish.
    There are many Americans who believe in the RT program, and 
we are told by the traveling public that it is a viable 
program. Far be it from the Government to be interested in 
undermining what may be viable.
    But I do believe there needs to be clarity, and I frankly 
know that all of you would acknowledge, so I will say it for 
you, you disappointed the traveling public during the summer 
months, and I am not sure how you will secure their confidence 
again, but I think it is important for the private sector to 
attempt to do that.
    As a city that has a major airport, among many other 
cities, I am somewhat baffled by promises of large sums of 
money beyond revenue and beyond the traveling percentages. It 
is an enormously confusing structure.
    I think, Ms. Townley, you will have to explain that 
business structure even as you are in court or out of court, in 
a manner away from this hearing room if that will help you, 
because if this is going to be the same structure again, then 
we are fearful that we will again misrepresent to the traveling 
public.
    So I am very grateful for your presence here today, and I 
do appreciate the interest of preserving this program. So you 
are complimented for being here and for helping us think 
through how we will reserve--or preserve, excuse me--the 
traveling program that many would like to have in the 
Registered Traveling program.
    With that in mind and the Ranking Member having no further 
questions, and ready to move, let me thank all the Members for 
their testimony and let me likewise indicate that we may have 
further questions. Members of the subcommittee may have 
additional questions for you and we ask that you respond to the 
expeditiously in writing. As well, we hope that we will begin 
to have answers that we can utilize.
    Recognizing that there are no further questions, this 
hearing is now adjourned.
    [Whereupon, at 4:44 p.m., the subcommittee was adjourned.]


                           A P P E N D I X  I

                              ----------                              

 Statement Submitted For the Record by Ben C. Bishop, Chief Executive 
                   Officer, Travel Card Services, LLC
                           September 24, 2009
    The Registered Traveler Program was established by the U.S. 
Transportation Security Administration (``TSA'') under the 
Transportation Security Act of 2003. The Registered Traveler Program 
was designed to identify airline passengers who posed a minimal 
security risk, and then provide those passengers access to faster and 
simpler processing at airport security checkpoints. The TSA was 
responsible for setting the program's standards, compliance, and 
regulations. The private sector was and is responsible for enrollment, 
enrolled customer verification, and related services. Technical 
operability is the key to deploying a national interoperable Registered 
Traveler Program across multiple airports. The Registered Traveler 
Interoperable Consortium (RTIC) was formed at the inception of the 
Registered Traveler Program and makes specific technical 
recommendations on: System messaging, ensuring a chain of trust, 
optimizing the use of biometrics, leveraging Smart Cards, ensuring 
system security, protecting privacy, and ensuring cross-provider 
interoperability.
    In July 2009 both Clear (Verified Identity Pass, Inc.) and Vigilant 
Solutions, LLC (PreferredTraveler) unexpectedly closed their Registered 
Traveler operations. The exit of Clear's Verified Identity Pass and 
Vigilant's Preferred Traveler card from the Registered Traveler Program 
has created what we believe to be a vacuum that has been created in 
airports across America. Currently, there has been a displacement of 
more that a quarter million Registered Traveler customers. As a result 
of the recent closure of Registered Traveler operations at the 21 
airports, the National Business Travel Association (NBTA), the world's 
premier business travel and corporate meetings organization, has 
expressed disappointment, and has urged the Transportation Security 
Administration (TSA) and U.S. airlines to revitalize the Registered 
Traveler program to provide greater efficiency and security to business 
travelers, specifically ``to keep the program alive and make certain it 
becomes a true risk-management tool for secure and efficient air 
travel.''
    The RT program: The technology, processes, and procedures that were 
developed, piloted and implemented in this first proven public/private 
endeavor of its kind was a success. Travel Card Services, LLC strongly 
believes that staying true to the approved and proven platform is 
critical for Service Providers, Airports, and the traveling public. 
Since there remain questions about TSA's continued involvement, DHS's 
oversight and potential for security benefits in the future, we would 
ask for your continued support in maintaining the implemented 
requirements for existing and future RT Service Providers. It is 
concerning to imagine what could happen without controls or oversight 
in place to protect the highly sensitive data collected and maintained.
    Changes in how and what information is collected and the medium 
used, would go against many years of developing, with Government 
oversight and approval, the fine-tuning of the criteria required, the 
security measures put in place and the security of members, collected 
data; not to mention interoperability among providers and the real 
potential of additional benefits and venues for the platform. The RT 
program is more secure than Global Entry, where DHS continues to expand 
the risk-based international RT program. The spirit of the program is 
the same, a risk-based domestic Registered Traveler program as Congress 
mandated in the original Aviation & Transportation Security Act of 
2001.
    Travel Card Services, LLC was formed to fill this void and has 
developed its business plan to provide the Registered Traveler Program 
at airports. The program will continue to maintain and be answerable to 
all of the proven procedures, technology, and safeguards of the 
original program. Currently Travel Card Services, LLC and FLO Corp. are 
the only two approved RT Service Providers that are operable, 
capitalized, and have the proven technology to re-open the RT Platform 
in airports throughout America. TSA support and Congressional oversight 
will ensure that this needed program can be reinstituted and successful 
permanently!
    We would therefore ask that TSA continue its support and oversight 
of the program that it helped create, at the very least that an arm of 
the Federal Government get involved and get behind this proven program 
that can without a shadow of a doubt, prove that you are who you say 
you are.


                          A P P E N D I X  I I

                              ----------                              

  Questions From Chairwoman Sheila Jackson Lee of Texas for Mr. John 
    Sammon, Assistant Administrator, Transportation Sector Network 
           Management, Transportation Security Administration
    Question 1. What is TSA's role in the RT program?
    Answer. Due to the completion of the Registered Traveler (RT) 
Interoperability Pilot on July 30, 2008, the formal transition of RT to 
a fully private-sector model, and completion of the year of Federally 
guaranteed interoperability announced at 73 Fed. Reg. 44275 (2008), the 
Transportation Security Administration no longer directly regulates the 
RT business model.
    Section 567 of the Fiscal Year 2010 Department of Homeland 
Appropriations Act Conference Report states:

`` . . . any company that collects and retains personal information 
directly from individuals who participated in the Registered Traveler 
program shall safeguard and dispose of such information in accordance 
with the requirements in: (1) The National Institute for Standards and 
Technology Special Publication 800-30, entitled `Risk Management Guide 
for Information Technology Systems'; and (2) the National Institute for 
Standards and Technology Special Publication 800-53, Revision 3, 
entitled `Recommended Security Controls for Federal Information Systems 
and Organizations'; (3) any supplemental standards established by the 
Assistant Secretary, Transportation Security Administration.''

    Such companies will be required to provide written certification to 
the TSA Assistant Secretary that such procedures are consistent with 
the minimum standards outlined in sections (1)-(3) above.
    Question 2. If a firm, such as Clear or Flo, wants to restart, does 
it need permission from TSA? What is the process?
    Answer. The Transportation Security Administration (TSA) currently 
does not need to approve any application to be a Registered Traveler 
(RT) service provider if the applicant's intent is to provide expedited 
security line services at airports. At present, all vendors are 
approved to participate as RT service providers provided that they 
enter into an agreement with an airport or air carrier.
    Section 567 of the Fiscal Year 2010 Department of Homeland 
Appropriations Act Conference Report states:

`` . . . any company that collects and retains personal information 
directly from individuals who participated in the Registered Traveler 
program shall safeguard and dispose of such information in accordance 
with the requirements in: (1) The National Institute for Standards and 
Technology Special Publication 800-30, entitled `Risk Management Guide 
for Information Technology Systems'; and (2) the National Institute for 
Standards and Technology Special Publication 800-53, Revision 3, 
entitled `Recommended Security Controls for Federal Information Systems 
and Organizations'; (3) any supplemental standards established by the 
Assistant Secretary, Transportation Security Administration.''

    Such companies will be required to provide written certification to 
the TSA Assistant Secretary that such procedures are consistent with 
the minimum standards outlined in sections (1)-(3) above.
    Question 3. How did AAAE acquire the contract for the CIMS 
database? Was this a competitive process?
    Answer. The American Association of Airport Executives (AAAE) was 
awarded as an Other Transaction Agreement (OTA) for the development, 
deployment, and maintenance of the Registered Traveler (RT) Central 
Information Management System (CIMS) database. This OTA was awarded on 
a single source basis due to AAAE's pre-existing infrastructure and 
relationships within the airports.
    This decision was in accordance with the Section 528 of Pub. L. 
109-90, the Department of Homeland Security Appropriations Act, fiscal 
year 2006, which states:

``The Secretary of Homeland Security shall utilize the Transportation 
Security Clearinghouse as the central identity management system for 
the deployment and operation of the Registered Traveler program and the 
Transportation Worker Identification Credential program for the 
purposes of collecting and aggregating biometric data necessary for 
background vetting; providing all associated record-keeping, customer 
service, and related functions; ensuring interoperability between 
different airports and vendors; and acting as a central activation, 
revocation, and transaction hub for participating airports, ports, and 
other points of presence.''

    Question 4. It seems that there are other, similar models available 
from which TSA can borrow to improve the RT program. Has TSA looked at 
the Global Entry program as a model for implementing a trusted 
passenger program?
    Answer. The Transportation Security Administration (TSA) explored 
the feasibility of incorporating elements of the Customs and Border 
Protection's (CBP) Global Entry program to enhance Registered Traveler 
(RT).
    Global Entry uses an automated kiosk to perform identity 
verification and other checks that meet the requirements for the 
passport control primary inspection performed at a U.S. port of entry. 
This function is substantially different from the security needs at TSA 
security checkpoints due to the differences in the nature of the 
threats that each is seeking to counter. Unlike passport control 
inspection, TSA must perform the physical screening of passengers and 
their carry-on baggage. Consequently, the Global Entry model has only 
limited applicability to the environment in which Registered Traveler 
would operate.
    TSA will continue to coordinate with other components of the 
Department of Homeland Security on potential best practices to apply to 
an RT program. Part of this coordination includes the exchange of 
lessons learned, where applicable, with Global Entry and other trusted 
traveler programs. For example, the programs share information about 
the biometric technologies used to verify identity.
    Question 5. Please explain TSA's roles and responsibilities in 
ensuring that service providers and AAAE properly manage participants' 
personally identifiable information.
    Answer. During the pilot phases of Registered Traveler (RT), the 
Transportation Security Administration (TSA) developed documents and 
policies to safeguard RT customers' Personally Identifiable Information 
(PII) in a manner consistent with the Privacy Act requirements and the 
National Institute of Standards and Technology standards for 
information security. RT service providers (vendors), sponsoring 
entities (airports and airlines), and contracting partners (the 
American Association of Airport Executives (AAAE) as manager of the 
Central Information Management System (CIMS)) subscribed to these 
safeguards in order to participate in the pilots.
    In the RT pilot, airports and airlines served as sponsoring 
entities for the vendors who offered RT services. TSA required the 
sponsoring airports and airlines to ensure the RT vendors' compliance 
with information security practices to protect RT customers from 
unauthorized use or disclosure of the customers' sensitive biographic, 
biometric, and other information. Via the Other Transaction Agreement 
(OTA), TSA required AAAE to meet specific requirements to safeguard 
PII, including complying with the Privacy Act and the Federal 
Information Security Management Act (FISMA), as well as completing 
recurrent privacy training and executing a non-disclosure agreement.
    Question 6. Is there a process for easily transferring Clear 
customers to Flo, upon the request of customers?
    Answer. Such a transaction would be a result of negotiations 
between two private sector companies. Consequently, Transportation 
Security Administration cannot comment on this activity.
    Question 7. Will a reengineered Clear need to re-compete for the 
former Clear's airports?
    Answer. The Transportation Security Administration does not have 
information concerning nor have responsibility for whether sponsoring 
airports or airlines may require any company operating under the 
``Clear'' brand to renegotiate or re-compete to provide renewed 
services.
    Question 8. Please comment on technology that TSA has recently 
looked at in terms of passenger checkpoint screening, particularly in 
terms of expedited screening of shoes, laptops, jackets worn on 
individuals, et cetera.
    Answer. The Transportation Security Administration (TSA) is working 
with industry and other Government components to develop technologies 
for passenger checkpoint screening.
    In the near-term, Advanced Technology (AT) X-ray systems will be 
deployed to checkpoint lanes and will be upgraded with enhanced 
capabilities. The upgrades are planned to include automated detection 
algorithms, multiplexing, and liquid threat detection capability in 
order to better screen laptops and liquids, as well as maintain or 
increase detection abilities.
    TSA has piloted stand-alone shoe-scanning technology in the past, 
and its development remains a priority. Currently, TSA and the 
Department of Homeland Security's Science and Technology Directorate 
are collaborating with vendors to develop technology to meet this goal.
    TSA continues to drive technology development and enhancements 
toward improving security and the passenger experience, while at the 
same time respecting privacy, safety, and health concerns.
    Question 9. With TSA recently conducting more active oversight over 
the RT program, please describe what you have learned in meeting with 
service providers and other industry stakeholders. How has their input 
impacted TSA's decision-making with regard to the future of RT?
    Answer. After Registered Traveler (RT) providers ceased operations 
and following the Transportation Security Administration's (TSA) 
efforts to ensure the security of personal information collected during 
the pilot, TSA has responded to inquiries from potential new RT 
vendors. TSA has stated that it does not need to approve applications 
for an RT service provider if the intent is simply to provide expedited 
security line services at airports. Instead, the sponsoring airport or 
airline would need to reach an agreement with the vendor to provide 
such services.
    The future of RT as a potential security program continues to be 
reviewed within the Department. TSA remains open to receiving feedback 
and ideas from stakeholders.
    Question 10. What does it mean for a service provider to be 
certified in this process? In your opinion, can any service provider 
that is certified commence operations at any willing airport? What 
about service providers that are not yet certified but wanting to do RT 
business; how does TSA interact with them?
    Answer. At present, the Transportation Security Administration 
(TSA) does not need to approve any application to be a Registered 
Traveler (RT) service provider if the intent is to provide expedited 
security line services at airports. Instead, the sponsoring airport or 
airline would need to reach an agreement directly with the vendor to 
provide such services.
    Given these current circumstances, the use of the concept of 
certification is not applicable. There are no certifications for this 
process.
 Questions From Chairwoman Sheila Jackson Lee of Texas for Mr. Carter 
    Morris, Senior Vice President, Transportation Policy, American 
                   Association of Airport Executives
    Question 1. AAAE met with staff several times this summer to 
discuss the RT program. One briefing was held on August 5. At that 
time--nor in the days following--you did not notify us that TSA had 
instructed you to provide a plan for data deletion from CIMS the day 
before, August 4. Why did you not notify the subcommittee of this?
    Answer. As was highlighted in the question, AAAE was notified 
verbally by TSA on August 4 that the agency would require the 
decommissioning of the CIMS. In the immediate aftermath of that 
notification, AAAE was intensely focused on assessing the association's 
options and determining its obligations to TSA as well as to RT service 
providers with whom AAAE had contractual arrangements regarding RT 
customer data. AAAE remained in contact with TSA following the August 4 
verbal directive and suggested a number of modifications pertaining to 
the TSA-proposed notification and consultation period with service 
providers and other technical requirements.
    The official notification from TSA directing AAAE to decommission 
the CIMS (attached to this document as requested below in question 3) 
did not follow until August 14. At that point, AAAE had developed a 
detailed decommissioning plan in recognition of the fact that TSA had 
clear legal authority to order the decommissioning of the CIMS. I had a 
conversation with subcommittee staffer Tom McDaniels on August 18 
detailing where things were in the process at that point. I 
subsequently followed up with Mr. McDaniels via email and shared with 
him the decommissioning plan.
    We greatly appreciate the subcommittee and full committee's 
successful efforts to this point to prevent the decommissioning of the 
CIMS and the elimination of important data.
    Question 2. At the hearing, you mentioned a conversation with staff 
that included said notification weeks later. Who was included in this 
conversation?
    Answer. I had a detailed phone conversation with Tom McDaniels on 
Tuesday, August 18. I followed up on the same date with an email to Mr. 
McDaniels sharing the CIMS decommissioning plan.
    Question 3. Please provide the subcommittee with the letter TSA 
transmitted to you regarding the decommissioning of the CIMS database.
    Answer. The TSA letter dated August 14 is attached.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
    Question 4. How did AAAE acquire the contract for the CIMS 
database? Please provide the process and the opportunities to compete.
    Answer. AAAE operated generally under an Other Transaction 
Agreement (OTA) with TSA that was signed in October 2006 and that 
expired in October 2008. The OTA defined AAAE's role in the RT program 
and specified the requirements that AAAE was compelled to comply with 
in that role. AAAE received no Federal funds for operation of the CIMS.
    The CIMS system and AAAE's specific role in operating CIMS were 
defined and universally supported by all members of the Registered 
Traveler Interoperability Consortium (RTIC). As I mentioned in my 
written testimony, the RTIC was established in 2005 with a goal of 
establishing common business rules and technical standards to create a 
permanent, interoperable, and vendor-neutral RT program. In addition to 
nearly 60 airports, RT service providers and leading biometric and 
identity management companies were active participants in the 
consensus-driven RTIC process as was TSA, which played a critical role 
in establishing and ensuring compliance with stringent Federal security 
standards.
    Throughout 2006, the RTIC worked aggressively to define, develop, 
and implement the RT program at interested airports. The group created 
the RTIC Technical Interoperability Specification, a detailed, 158-page 
technical standards document approved by the TSA that served as the 
technical requirements for the interoperable RT program that eventually 
grew to more than 20 airports prior to the recent cessation of the 
program. Again, the CIMS system and AAAE's specific role in operating 
CIMS were defined as part of that process and universally agreed to by 
RTIC participants. AAAE executed individual but transparent contracts 
with each approved RT service provider to adhere to the RTIC 
specifications and TSA security policies.
    Question 5. Please explain the financial side of the arrangement 
among AAAE, service providers, and airports. In particular, please tell 
us how much money AAAE charges per customer for its clearinghouse 
services.
    Answer. AAAE's financial involvement with the RT program is limited 
to the standard and transparent contracts negotiated with the service 
providers for CIMS services. The fees charged were $1.80 or $2.40 per 
initial enrollment, depending on whether or not the service provider 
chose ``up-front'' payment of certain development costs or annual 
volume based transaction fees. Those decisions were made by each 
individual service provider. These fees were charged to recover the 
costs incurred by AAAE to develop and maintain the system and were 
agreed to through the RTIC consensus process.
    Question 6. Is AAAE supportive of a competitive process for 
awarding the clearinghouse services?
    Answer. AAAE has worked over the course of the past 5 years with a 
broad-based group of airports and technology and service providers 
through the RTIC process to enable an interoperable system that 
provides little to no barrier to entry for RT service providers. Over 
that time, the there was intense discussion among the group about 
whether centralized services were necessary and if so how they would be 
provided. The consensus of the group, through a formal and documented 
process, was that a trusted third party must be used to operate 
centralized services necessary to enable the security, 
interoperability, and TSA vetting portions of the overall RT 
operations. AAAE agreed to provide those services with an understanding 
that contracts from the service providers would be established over a 
sufficient time frame to cover the expense of development and 
maintenance of such a system. The service providers put contracts in 
place with AAAE to develop CIMS, and AAAE met or exceeded all 
commitments made to the service providers. We believe that any future 
competitive process must take into account these standing, mutual 
commitments made among AAAE and industry to establish the RT program.
    AAAE is proud of the CIMS and firmly believes that it holds 
tremendous value as part of RT or any future trusted traveler program. 
From a technical standpoint, the CIMS has proven itself invaluable, 
serving as the critical hub for facilitating interoperability among 
service providers and at airports across the country and for processing 
necessary checks and security controls. In its 3 years in operations, 
CIMS supported a system of four independent service providers at 22 
airports with more than 250,000 actively enrolled participants. 
Whatever shape a future trusted traveler program may take, it is clear 
from our perspective that the CIMS can and should continue to play a 
central role in performing key functions in a way that balances the 
interests of airports, service providers, technology companies, TSA, 
and the traveling public.
    Question 7. AAAE is a leading industry representative for airports. 
Do you think there is a conflict of interest in being a sole provider 
for RT clearinghouse services?
    Answer. No. In fact, AAAE was given its role as the trusted third 
party for centralized services to ensure that the interests of all 
parties--airports, service providers, technology companies, TSA, and 
the traveling public--were balanced. AAAE's role ensures that no single 
entity has undue leverage over the program. Again, the role of AAAE 
with the CIMS was defined by and agreed to by all members of the RTIC 
in recognition of the value AAAE offered as a trusted third-party 
provider of services for the RT program. AAAE's CIMS system ensures 
that the needs of all participants are met and that the program is 
permanent, interoperable, and vendor-neutral. Without a trusted 
centralized network, the complexity and cost of interoperability and 
security would prevent easy entry into the RT business by firms that 
are able and interested to provide the service, resulting in less 
competition and higher costs.
    Question 8. What are your airport members saying to you in general 
about RT and the future of the RT program?
    Answer. A number of airports have long seen the value in a trusted 
traveler concept and continue to see potential value in a future RT 
program, particularly as traffic--and lengthy checkpoint lines--
inevitably return to airports across the country. From the local 
airport perspective, the program must offer adequate choice in 
potential service providers and sufficient flexibility to allow for the 
development of innovative solutions that cater to local needs. To meet 
those needs and gain widespread support from the airport community, it 
is clear that any future program must include several core elements, 
including security benefits, interoperability and an environment in 
which airports can choose from multiple RT service providers that meet 
TSA-established specifications and standards.
    Question 9. What is the nature of AAAE's relationship with the 
various service providers since the cessation of operations at Clear? 
Have you been in contact with any service providers that wish to start 
RT operations?
    Answer. Service providers have been in contact informally with AAAE 
since the cessation of operations by Clear. Several of the previously 
operational and new entrant service providers have expressed interest 
in commencing operations and are looking for AAAE support and the 
continued activity of the RTIC. To date, however, AAAE has received no 
formal requests for the resumption or commencement of operations from 
any RT service provider.
 Questions From Chairwoman Sheila Jackson Lee of Texas for Ms. Alison 
                 Townley, Principal, Henry Incorporated
    Question 1. Please explain how the pending lawsuits against Clear's 
parent company will affect your restart at airports.
    How will Clear settle claims from airports?
    Question 2. Does your plan for Clear rely upon a security benefit 
from TSA?
    Question 3. Have you consulted TSA on your plans? Please provide 
dates and topics.
    Question 4. Explain your recent meetings with TSA and what 
direction or information you have received from the agency in 
accommodating your plans to re-start operations?
    Question 5. As you know, the RT program greatly benefited from the 
fact that participating firms were interoperable. Now that the rule for 
interoperability lapsed this summer, what is your view on whether the 
program should be interoperable going forward?
    Question 6. With the various stakeholders receiving portions of 
revenue, including airports, technical support vendors, and AAAE, can 
the new Clear make money?
    Answer. Thank you for inviting me to testify before the 
Subcommittee on Transportation Security and Infrastructure Protection 
on the future of the Registered Traveler (RT) program. It was my 
pleasure to do so.
    Again, we are gratified by your leadership on RT, as expressed not 
only through hearings like that of last month, but also through 
legislation like the strong RT provisions in H.R. 2200, the TSA 
Authorization Act.
    As you know, we are optimistic about the future of RT. We are 
confident in our ability to build on the successes of Clear, while 
learning from its failures. It is worth remembering that Clear laid a 
great foundation. Clear had approximately 200,000 active customers when 
operations ceased, and approximately 30,000 more people had signed up 
for Clear but not yet completed the cumbersome in-person enrollment 
process. Even after the economic downturn had taken hold, Clear enjoyed 
renewal rates in excess of 80%. There was a reason that Clear lanes 
were used more than 3 million times--members liked the service.
    In short, Clear was nearing profitability but had not yet achieved 
it, and Clear was ultimately unable to restructure its senior lender 
debt, which was essential to securing the new funding that was required 
to continue operations.
    Henry Incorporated now has an agreement to restructure the debt; we 
have committed investors; and we have a new vision of how to: (i) Use 
technology to drive costs down, and (ii) address one of the biggest 
barriers to substantially greater membership--the multi-step enrollment 
process. You have asked whether our plan for Clear relies on a security 
benefit from TSA. The answer is no. You have also asked whether we 
believe the new Clear will be able to make money. The answer is yes. 
Our business plan calls for Clear to become profitable absent a TSA 
security benefit. That being said, we do share Congress' belief that 
the RT program has the potential to be a powerful risk management tool, 
and we are eager to work with TSA on developing RT into a tool which 
will enhance aviation security by allowing TSA to appropriately 
expedite vetted members of the program, so that TSA can apply more of 
its resources to un-vetted travelers.
    Henry Incorporated has spoken several times with representatives of 
DHS and TSA about how we envision the new Clear program operating and 
how we would like to work together with DHS and TSA going forward on 
the development of RT. The three primary discussions took place on 
August 20, September 18, and September 29 of this year. Other less 
formal calls have also taken place over the last 3 months, as well. 
What we have heard from DHS and TSA in our discussions about their view 
of the future of Registered Traveler was consistent with the following 
excerpt from Mr. Sammon's written testimony for the recent hearing:

``DHS will continue to encourage interested vendors to work directly 
with airports, airlines, and TSA to identify and implement worthwhile 
concepts that will provide registered travelers a benefit, while still 
maintaining both the level of security needed to ensure the safety of 
our transportation system, as well as the confidentiality of personally 
identifiable information. As with any transportation security program, 
TSA will maintain its regulatory oversight role for any such concepts 
adopted in the RT program.''

    We believe this is a promising basis on which to move forward. We 
were also gratified by Erroll Southers' recent testimony on RT before 
the Senate Commerce Committee. With respect to the proposed re-Iaunch 
of Clear itself, TSA has provided no specific feedback to this point.
    You have asked how Henry Incorporated is dealing with the airports 
that were operated by Clear. We have had discussions with many of the 
existing Clear airports, and our plans to re-launch Clear at those 
airports have been almost universally well-received. As a general 
principal, we plan to pay Verified Identity Pass' arrears at airports 
where we re-launch Clear. The mechanisms of these relaunches will 
likely vary airport-by-airport. Because our discussions with those 
airports are on-going, I don't have details to provide right now, but I 
will do so as our discussions progress.
    You have asked for our views on interoperability. We believe that 
competition in RT is healthy and that interoperability can facilitate 
healthy competition, provided that service providers negotiate 
appropriate usage fees with each other to prevent ``free riding.'' Once 
TSA refines its views on how the technical and other standards of RT 
are to evolve, we look forward to pursuing interoperabiIity with other 
service providers.
    Let me address, as well, how we are proposing to work with existing 
Clear customers, so many of whom are interested in joining a re-
launched Clear program. We recognize the imperative to protect our 
members' personal identifiable information (PII). To that end, the PII 
of existing Clear members (including their biometrics) will only be 
transferred to the new Clear program after existing members have been 
given both advance notice of the proposed transfer and the opportunity 
to instead have their PII destroyed by Lockheed Martin's secure data 
storage facility (which is where Clear member PII is today, and was 
historically, stored).
    In addition, all existing Clear members who choose to continue with 
the re-launched Clear program will be able to use--at no additional 
cost--the balance of the term of their membership that remained unused 
when Clear ceased operations in June. In other words, if a member had a 
year remaining on her membership when operations ceased, she will be 
able to use the new Clear service for a year at no charge before coming 
up for renewal. We will, of course, respect the decision of existing 
Clear members who choose not to continue with the re-launched program; 
by definition, they will not be moving from Verified Identity Pass to 
Henry Incorporated as part of the transaction, so any financial 
obligations to those existing members will remain with Verified 
Identity Pass.
    You have asked how the pending class action litigation will impact 
the transaction between Verified Identity Pass and Henry Incorporated. 
There is a pending motion by the plaintiffs for a preliminary 
injunction to prevent Verified Identity Pass from transferring member 
PII. Verified Identity Pass has asserted that such an injunction is 
unwarranted, given that (as described above) no member PII can be 
transferred without the consent of the member. Although we are not a 
party to the litigation, this strikes as a sensible position. In any 
case, we will contact your staff after the first conference before the 
presiding judge (which is actually taking place this afternoon), if any 
additional information becomes available.
    Please feel free to contact me at any time with any questions. In 
addition, Charles Simon is always available to you.
  Questions From Chairwoman Sheila Jackson Lee of Texas for Mr. Fred 
        Fischer, Principal and Managing Partner, FLO Corporation
    Question 1. Do you think AAAE plays an important role in the RT 
process?
    Answer. Response was not received at the time of publication.
    Question 2. Do you think AAAE should have a role in RT going 
forward?
    Answer. Response was not received at the time of publication.
    Question 3. What are the concerns of airport operators where you 
have made initial contact for restarting RT?
    Answer. Response was not received at the time of publication.
Question From Chairwoman Sheila Jackson Lee of Texas for Mr. Michael W. 
  McCormick, Executive Director, National Business Travel Association
    Question. Do you think the pricing structure for RT needs to be 
changed to accommodate business travelers? Is the annual fee amount a 
problem?
    Answer. Prior to the discontinuation of services, the biggest 
obstacles of enrollment were the uncertainty of benefits offered by the 
Registered Traveler programs and the relatively limited number of 
locations travelers could use the program.
    NBTA is supportive of the program expanding airport operations and 
have encouraged airports to make it a part of their operations. NBTA 
believes a solid network of lanes across the country would be positive 
factor impacting the business travelers' decisions to enroll.
    In addition to a solid network, the value of the RT programs to 
travelers will increase dramatically if the security component is 
reinstated and background checks are resumed. As travelers were willing 
to pay for a dedicated lane, travelers are likely to pay for the 
conveniences of not removing one's shoes and keeping the computer in 
its bag.
    Should these issues be positively addressed, it will be up to the 
providers to price the product so that the market will bear the costs 
and the service thrives.

                                 
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