[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]



 
        DEPARTMENT OF HOMELAND SECURITY APPROPRIATIONS FOR 2013

_______________________________________________________________________

                                HEARINGS

                                BEFORE A

                           SUBCOMMITTEE OF THE

                       COMMITTEE ON APPROPRIATIONS

                         HOUSE OF REPRESENTATIVES

                      ONE HUNDRED TWELFTH CONGRESS
                             SECOND SESSION
                                ________
                    SUBCOMMITTEE ON HOMELAND SECURITY
                  ROBERT B. ADERHOLT, Alabama, Chairman
 JOHN R. CARTER, Texas              DAVID E. PRICE, North Carolina
 JOHN ABNEY CULBERSON, Texas        LUCILLE ROYBAL-ALLARD, California
 RODNEY P. FRELINGHUYSEN, New JerseyNITA M. LOWEY, New York
 TOM LATHAM, Iowa                   JOHN W. OLVER, Massachusetts      
 ANDER CRENSHAW, Florida            
 CHARLES W. DENT, Pennsylvania      
                                    

 NOTE: Under Committee Rules, Mr. Rogers, as Chairman of the Full 
Committee, and Mr. Dicks, as Ranking Minority Member of the Full 
Committee, are authorized to sit as Members of all Subcommittees.
               Ben Nicholson, Jeff Ashford, Kris Mallard,
            Kathy Kraninger, Miles Taylor, and Cornell Teague
                            Staff Assistants
                                ________

                                 PART 3
                     DEPARTMENT OF HOMELAND SECURITY
                                                                   Page
 National Protection and Programs Directorate.....................    1
 U.S. Coast Guard.................................................  119
 Federal Emergency Management Agency..............................  177

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                                ________

         Printed for the use of the Committee on Appropriations
                                 PART 3

                                 NP&PD

                                  USCG

                                  FEMA

        DEPARTMENT OF HOMELAND SECURITY APPROPRIATIONS FOR 2013
                                                                      ?

        DEPARTMENT OF HOMELAND SECURITY APPROPRIATIONS FOR 2013

_______________________________________________________________________

                                HEARINGS

                                BEFORE A

                           SUBCOMMITTEE OF THE

                       COMMITTEE ON APPROPRIATIONS

                         HOUSE OF REPRESENTATIVES

                      ONE HUNDRED TWELFTH CONGRESS
                             SECOND SESSION
                                ________
                    SUBCOMMITTEE ON HOMELAND SECURITY
                  ROBERT B. ADERHOLT, Alabama, Chairman
 JOHN R. CARTER, Texas              DAVID E. PRICE, North Carolina
 JOHN ABNEY CULBERSON, Texas        LUCILLE ROYBAL-ALLARD, California
 RODNEY P. FRELINGHUYSEN, New JerseyNITA M. LOWEY, New York
 TOM LATHAM, Iowa                   JOHN W. OLVER, Massachusetts      
 ANDER CRENSHAW, Florida            
 CHARLES W. DENT, Pennsylvania      
                                    

 NOTE: Under Committee Rules, Mr. Rogers, as Chairman of the Full 
Committee, and Mr. Dicks, as Ranking Minority Member of the Full 
Committee, are authorized to sit as Members of all Subcommittees.
               Ben Nicholson, Jeff Ashford, Kris Mallard,
            Kathy Kraninger, Miles Taylor, and Cornell Teague
                            Staff Assistants
                                ________
                                 PART 3
                     DEPARTMENT OF HOMELAND SECURITY
                                                                   Page
 National Protection and Programs Directorate.....................    1
 U.S. Coast Guard.................................................  119
 Federal Emergency Management Agency..............................  177

                                   S

                                ________

         Printed for the use of the Committee on Appropriations
                                ________
                     U.S. GOVERNMENT PRINTING OFFICE
 74-438                     WASHINGTON : 2012

                                  COMMITTEE ON APPROPRIATIONS

                    HAROLD ROGERS, Kentucky, Chairman

 C. W. BILL YOUNG, Florida \1\      NORMAN D. DICKS, Washington
 JERRY LEWIS, California \1\        MARCY KAPTUR, Ohio
 FRANK R. WOLF, Virginia            PETER J. VISCLOSKY, Indiana
 JACK KINGSTON, Georgia             NITA M. LOWEY, New York
 RODNEY P. FRELINGHUYSEN, New JerseyJOSE E. SERRANO, New York
 TOM LATHAM, Iowa                   ROSA L. DeLAURO, Connecticut
 ROBERT B. ADERHOLT, Alabama        JAMES P. MORAN, Virginia
 JO ANN EMERSON, Missouri           JOHN W. OLVER, Massachusetts
 KAY GRANGER, Texas                 ED PASTOR, Arizona
 MICHAEL K. SIMPSON, Idaho          DAVID E. PRICE, North Carolina
 JOHN ABNEY CULBERSON, Texas        MAURICE D. HINCHEY, New York
 ANDER CRENSHAW, Florida            LUCILLE ROYBAL-ALLARD, California
 DENNY REHBERG, Montana             SAM FARR, California
 JOHN R. CARTER, Texas              JESSE L. JACKSON, Jr., Illinois
 RODNEY ALEXANDER, Louisiana        CHAKA FATTAH, Pennsylvania
 KEN CALVERT, California            STEVEN R. ROTHMAN, New Jersey
 JO BONNER, Alabama                 SANFORD D. BISHOP, Jr., Georgia
 STEVEN C. LaTOURETTE, Ohio         BARBARA LEE, California
 TOM COLE, Oklahoma                 ADAM B. SCHIFF, California
 JEFF FLAKE, Arizona                MICHAEL M. HONDA, California
 MARIO DIAZ-BALART, Florida         BETTY McCOLLUM, Minnesota         
 CHARLES W. DENT, Pennsylvania      
 STEVE AUSTRIA, Ohio                
 CYNTHIA M. LUMMIS, Wyoming         
 TOM GRAVES, Georgia                
 KEVIN YODER, Kansas                
 STEVE WOMACK, Arkansas             
 ALAN NUNNELEE, Mississippi         
   
 ----------
 1}}Chairman Emeritus    
                                    

               William B. Inglee, Clerk and Staff Director

                                  (ii)


        DEPARTMENT OF HOMELAND SECURITY APPROPRIATIONS FOR 2013

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                                           Thursday, March 1, 2012.

              NATIONAL PROTECTION AND PROGRAMS DIRECTORATE

                                WITNESS 

RAND BEERS, UNDER SECRETARY FOR THE NATIONAL PROTECTION AND PROGRAMS 
    DIRECTORATE AND COORDINATOR FOR COUNTERTERRORISM

                   Opening Remarks: Chairman Aderholt

    Mr. Aderholt. The hearing is called to order this morning. 
And today we will discuss the Department of Homeland Security's 
National Protection and Programs Directorate, NPPD. To help us 
better understand these programs, we welcome NPPD Under 
Secretary Rand Beers.
    Secretary Beers, this meeting will be more informal than 
our usual hearings. So I understand you have a few basic 
prepared remarks that will give us an overview, and then of 
course I will allow Members to ask questions. Also, votes are 
probably going to be--we will probably have an hour before 
votes. I think we will have at least a good hour before we have 
to leave to go vote, so that should give us time to have a 
meaningful hearing.
    Of course, let me remind everyone that there are no 
electronic devices allowed--BlackBerrys, cell phones, iPads. If 
someone has inadvertently brought one in, then one of the staff 
can take it and stow it outside.
    While there are many topics we want to discuss today, or 
need to discuss today, I think there are two things that are 
first and foremost on our plate. First, the Chemical Facility 
Anti-Terrorism Standards, commonly known as CFATS. In December, 
a very disturbing internal report was leaked to the media 
concerning the management of the CFATS program.
    The second is cybersecurity. The importance of 
cybersecurity becomes more and more apparent each day, as we 
read more and more reports of breaches in our private sector 
and our government networks. The President's budget request 
includes $769 million for the National Cyber Security Division, 
an increase of $325 million above fiscal year 2012. This 
includes an unprecedented $202 million for the Department of 
Homeland Security to transfer to other agencies and departments 
to fund projects that may reduce their cyber risk. This request 
also includes a significant increase in other cyber programs.
    However, DHS has not provided a clear, complete cost or 
schedule information to justify either of these increases. 
Secretary Beers, we need a justification for these funds, as 
this Congress can no longer provide blank checks, no matter the 
importance of the programs.
    Additionally, Secretary Beers, we would again welcome a 
quick update on the threats to our cyber and critical 
infrastructure. So, given the breadth of these topics and their 
relevance to nearly every aspect of our daily lives, we will 
clearly have an interesting discussion today. So if you will 
summarize your comments and hit the high points, then we will 
allow time for exchange of questions and answers between the 
Members.
    But before we begin, I would like to recognize Ranking 
Member Price for his opening remarks.
    [The information follows:]

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                 Opening Remarks: Ranking Member Price

    Mr. Price. Thank you. I will be very brief, Mr. Chairman, 
because I know we want to get on with the initial presentation 
and then probably break for votes and come back, hopefully, for 
a more extended discussion.
    I want to also welcome the Under Secretary and his 
associates here.
    I think you very effectively highlighted the likely focus 
of this morning's discussion. We do want to know more about 
what it is going to take to develop a robust chemical security 
program. We want to explore some of the delays in the ammonium 
nitrate program. We will have a chance to talk about that in 
the discussion to follow.
    You are one of the few agencies, Mr. Beers, who actually 
has an increase in the current fiscal year. It is not an 
increase on paper, but when you take account of the US-VISIT 
transfer, it is indeed an increase--a modest one, but one that 
underscores the importance of this cybersecurity issue.
    I, too, will want to get a better understanding of the way 
this is going to work and particularly the proposed transfer of 
$202 million to other Federal agencies to strengthen their 
cyber networks. We are meeting in a classified setting, so we 
need to have a good understanding of the current assessment of 
these threats but also the rationale behind this kind of 
interagency effort that you are envisioning.
    So we look forward to your presentation.
    [The information follows:]

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    Mr. Aderholt. Okay. Secretary Beers, thank you for being 
here again, and we look forward to your comments.

                Opening Statement: Under Secretary Beers

    Mr. Beers. Thank you, Chairman Aderholt and Ranking Member 
Price and other distinguished members of the committee. I will 
limit my remarks, in the interest of getting to the question-
and-answer session, and focus specifically on cybersecurity and 
chemical security issues.
    I have here with me staff who have detailed knowledge and 
insights into each of these programs. And, as this is an 
informal session, I may, on occasion, ask them to make some 
additional remarks in addition to my own.
    As you know, cybersecurity has become a fundamental issue 
with respect to both the economic and the national security of 
this country. We have a vast array of independent and 
interdependent networks that are critical to communications, 
travel, powering our homes, and running our economy.
    But the efficiencies that we realize by this networked 
society have also created vulnerabilities, and they are 
frequently exploited by theft for both money and intellectual 
property. These vulnerabilities also represent or create the 
potential for cyber attack, to cause physical damage that 
disrupts and destroys parts of our critical infrastructure that 
we rely on every day--for example, the electrical grid or our 
water supply.
    This threat set involves nation-states, in particular 
Russia and China, but it also involves criminals and just plain 
old hackers, like the Anonymous group. The highest-quality 
tools and attacks that we see certainly come from nation-
states. But I think everybody needs to understand here that, as 
those tools appear in our networks, they also appear on the 
view screens of criminals and hackers. And so, to simply say 
that nation-states have corralled all of the most sophisticated 
tools doesn't recognize the fact that there is a proliferation 
of those very tools into the hands of criminals who may, in 
fact, be associated with nation-states or may be independent of 
nation-states and are just plain old hackers who, for whatever 
purpose, would simply seek to do harm and disrupt the 
functioning of our networks.
    So these risks require, I think, prudent investments, 
prudent investments that can deliver results. The fiscal year 
2012 appropriations, which came with the leadership of this 
Committee, provided a strong increase to prior-year funds. And 
the President's 2013 budget asks for an additional increase, 
specifically a 70 percent increase for our National Cyber 
Security Division, over the fiscal year 2012 funds. We 
recognize that this is being done in a time when difficult cuts 
have to be made and found elsewhere in the government, but we 
believe that this is a prudent and necessary approach and that 
the increase is absolutely necessary.
    Let me just briefly touch on some of the things that we 
have done with the funding that you all have given us. In 
fiscal year 2011, we were able to execute 98 percent of the 
funds on time. And we will continue our commitment to 
obligating prudently but in a timely fashion so that those 
funds don't carry over.
    NPPD has four roles that I want to emphasize here in 
cybersecurity. We lead the Nation's cybersecurity awareness and 
education efforts for the Federal Government. We coordinate the 
Federal Government's national response to major cyber 
incidents. We also protect Federal civilian networks. And we 
work with owners and operators of critical infrastructure to 
secure their networks.
    Over the last fiscal year, fiscal year 2011, US-CERT 
received over 106,000 individual reports of incidents from 
Federal agencies, from critical infrastructure, and from our 
industry partners. And we issued over 5,200 cyber alerts as a 
result of this that were used by the private sector, by our 
government, and by network administrators to protect their 
systems.
    We requested $93 million in fiscal year 2011, and that is a 
$13.9 million increase, so that US-CERT can respond to this 
growing number of Federal civilian and critical infrastructure 
network intrusions.
    Let's be clear: This is going to increase, the number of 
intrusions are going to increase, and we need to be in a 
position to respond. So this $13.9 million will add 
approximately 23 additional persons on top of the number that 
we expect at the end of fiscal year 2012 to help us deal with 
the increased workload that US-CERT is going to have to deal 
with.
    In addition to specifically protecting Federal civilian 
agency systems, we are, as you know, deploying the Einstein 
technology to detect and block intrusions of these networks in 
collaboration with our partners in the Department of Defense. 
We have requested an increase of about $117 million to 
accelerate this deployment of our system.
    But let me be clear here: Neither Einstein nor any other 
technology by itself, neither ours nor NSA's, is going to be 
able to deliver entirely a solution to this problem. This is a 
much broader, more complicated, and more sophisticated system 
that we need to build. So while we need to have the money in 
order to deploy the Einstein systems, we also have other 
requirements. And that is what I want to talk about next.
    As you know, we have requested a significant increase of 
$202 million for Federal network security. And this is intended 
to provide DHS with greater visibility into the vulnerabilities 
that need to be addressed in Federal networks. So as Einstein 
tells us what we see coming in, in terms of threats, this 
request is designed to allow us to see on a continuous-
monitoring basis what the vulnerabilities within the other 
departments and agencies actually look like, so that when we 
see the threat coming, we can produce a response that quickly 
seals off the problem that we face, but we can also see, in 
advance of the arrival of those threats, where those 
vulnerabilities are and to provide guidance and direction to 
departments and agencies so that they can do a better job of 
securing their own networks.
    This is a program which allows us to have continuous 
monitoring of departments and agencies. It is something that we 
need to do our job as the managers of compliance with respect 
to the Federal information security requirement that OMB has 
passed on to this.
    With respect to critical infrastructure, we work with the 
private sector to help secure the key systems upon which all 
Americans and indeed the Federal Government rely, such as the 
financial sector, the power grid, water systems, and 
transportation networks. In particular, we pay attention to 
industrial control systems, which control processes at power 
plants and transportation systems.
    Last year, we deployed seven response teams to such 
critical infrastructure organizations at their request in 
response to cyber intrusions. In fiscal year 2011, we conducted 
78 voluntary proactive assessments of control systems entities, 
and we made recommendations to those companies on how they can 
provide their cybersecurity. We distributed 1,150 copies of our 
cyber evaluation tool, and we conducted over 40 training 
sessions, all of which makes owners and operators better 
equipped to protect their networks.
    In fiscal year 2013, we have a request for $62.8 million 
for our Critical Infrastructure and Cyber Protection Awareness 
branch. This includes $6.5 million which will expand our effort 
with the Multi-State Information Sharing and Analysis Center to 
30 States. The funding for the CICPA program will enhance our 
ability to increase the number of onsite assessments that we 
are able to conduct to evaluate the resilience of critical 
infrastructure. Given the importance of this program to the 
Nation's cybersecurity, I want to pledge to you that we will 
continue to work with you on this funding, and we expect to be 
held accountable on this investment.
    With respect to chemical facilities, we also recognize the 
need for accounting to you the problems we face and the plan of 
action that we have in terms of moving forward. We have asked 
for $74.5 million to develop and implement mechanisms that will 
assess high-risk chemical facilities and ensure that these 
facilities meet the risk-based performance standards that we 
have. This funding will support the development and 
implementation of mechanisms to regulate the sale and transfer 
the Nation's supply of ammonium nitrate, as well.
    We have done a lot of work over the past few years to 
establish and implement an unprecedented regulatory program, 
but as you know from the leaked report, these challenges 
remain. I asked the Director and Deputy Director--the new 
Deputy Director and Director of this program to provide me with 
a report last summer. They provided that to me in November of 
this year. It was a clear indication that we had some serious 
problems that we have to take into account, but it also 
outlined in a lengthy plan of action a number of steps, 103 
different issues that we needed to address and an indication of 
the way that we need to address them.
    And we have made progress with respect to this already. For 
example, we had only 10 site security plans that were 
authorized for an inspection; we are up to 55 now. That was 
done as a result of a surge effort to go through those plans 
and not to approve them just to get them out the door, but to 
make sure that what we were authorizing, in fact, were plans 
that deserved that authorization. And we will now conduct the 
inspections necessary.
    We expect to complete the review of all of the site 
security plans in the Tier 1 category, the category with the 
most vulnerabilities, in the next several months. We will begin 
the process of issuing authorizations on Tier 2 facilities 
during this fiscal year. And we expect to be in a good position 
to move on to Tiers 3 and 4.
    We have also changed our training effort, and we are 
reclassifying a number of positions to ensure that the 
personnel and the job requirements are a better match.
    The Department, NPPD, and I personally take these 
responsibilities seriously, and we are moving forward quickly 
to address the challenges before us. We believe that CFATS is 
making the Nation safer, and we are dedicated to its success. 
We will meet the necessary course corrections and improve the 
program to better protect the Nation.
    We expect to have gone through almost all of the items in 
the plan of action, as it is currently stated, by the end of 
the year. But let me be clear: This plan is not a static plan. 
This plan is going to be an evolving document. As we get to 
solutions with respect to what the action items are now, we 
expect that we will have other issues that we will need to deal 
with. And we will keep this committee informed fully of our 
progress with respect to that plan.
    Thank you all very much, and I look forward to your 
questions.
    Mr. Aderholt. Thank you, Secretary Beers.
    [The information follows:]

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            CHEMICAL FACILITY ANTI-TERRORISM STANDARDS: ISCD

    Mr. Aderholt. And I thank you for your comments on the 
Chemical Facility Anti-Terrorism Standards program. And that is 
what I want to start out with as my first question.
    NPPD recently provided the Subcommittee with the internal 
memorandum entitled, ``Challenges Facing ISCD and the Path 
Forward,'' which, of course, discusses the challenges that the 
Infrastructure Security Compliance Division has encountered as 
it implements the CFATS program. These challenges include 
hiring a management of staff; delays developing, implementing, 
and managing the inspection processes; complications defining 
and articulating program missions and goals; and difficulties 
with internal processes to minimize the risk, fraud, abuse, and 
mismanagement.
    The action plan that was included in the memo to address 
this problem contains 91 specific actions, none of which are 
prioritized. Additionally, there are no timelines, there are no 
milestones or specific resources associated with the action 
plan.
    My question to you is, how can we have confidence that the 
resources are being used effectively for the program and that 
measurable improvements will occur if there is no priority or 
no timeline for the 91 separate actions?
    Question: When can you provide the Committee with an action 
plan that sets up these priorities, that includes these 
milestones and these timelines?
    Mr. Beers. Sir, we are working on that specific question, 
and we will have something for you--let's see, today is the 
first of March--by the end of March, that will be an update.
    One of the things I want to be clear, though, as we move 
through this action plan--and we want to keep you fully 
informed--we also want time, at least some time, to pass so 
that we can actually accomplish the improvements that are 
necessary.
    But with respect to the hiring of the management staff, we 
expect that to be completed in April of this year. The 
inspection process is being redefined now. We expect that by 
the end of March.
    So we have some specific timelines. But when we gave you 
the plan in early January, we hadn't had an opportunity to put 
all of those milestones and timelines into the plan.
    Mr. Aderholt. Regarding the challenges, what barriers do 
you see in overcoming some of the challenges that are discussed 
in the memorandum?
    Mr. Beers. Well, let me just give you one--actually, two 
specific examples.
    One, there was a problem with respect to the training 
officials within ISCD being properly trained and qualified for 
those positions. This was a result of a problem that existed 
throughout the Department, with an expectation that training 
would be controlled and run out of headquarters. What we have 
done now is broken through that logjam and are in the process 
of hiring qualified training people to do that.
    Secondly, with respect to ensuring that all of the 
positions within ISCD are appropriate to the job that they are 
being asked to do so that we can match qualified people with 
the skill set required, we have deployed from NPPD headquarters 
to ISCD some human capital, people, to help them move through 
this as quickly as possible.
    So what we are trying to do--and those are two examples of 
obstacles that existed before that we are trying to fix so that 
ISCD is in a much better position to carry out the mission that 
you all have assigned it.
    Mr. Aderholt. How can we be assured that this type of 
mismanagement and dysfunction is isolated in the CFATS program 
and not an issue that affects the other organizations?
    Mr. Beers. So, as a result of the discovery within the ISCD 
program, we have had town-halls and training sessions and 
discussions with all of the Senior Executive Service members of 
NPPD to talk about this problem and the need to look at it.
    In particular, as a result of the discovery last summer 
that the tiering process had been done incorrectly and that it 
appears that people knew about it earlier and didn't inform 
senior management of the problem, we have also, on a repeated 
basis, said that we do not want to be shielded from bad news. 
We would rather hear the bad news sooner so that we can deal 
with the problems. And don't assume that you can spend time 
fixing it and then tell us that you have identified a problem 
but you have also fixed it. Let us help you fix those problems, 
because sometimes we have access to different resources and 
different perspectives at senior management levels that might 
help you to do that job more quickly, but you have to tell us.
    So I have said that throughout my leadership, but this was 
a teaching moment that I have taken advantage of within the 
organization to remind people how serious it is when you don't 
tell people of problems that might be fixed.
    Mr. Aderholt. In December, after reviewing the internal 
memo, the Subcommittee requested that GAO examine the 
memorandum and the NPPD's efforts to address the problems 
identified. Can the Subcommittee anticipate your organization's 
full cooperation, including complete and timely access to 
documents and access to officials involved in addressing these 
problems?
    Mr. Beers. Yes, sir, without question.
    And as I mentioned to you last night, the other thing we 
want to try to do is, because another committee of this body 
had requested an IG inspection that appeared to overlap, we 
have asked the two investigative organizations, GAO and DHS's 
IG, to talk to one another so that we can support both of them 
but preferably not doing exactly the same thing.
    We will do whatever we have to do. But I just want you to 
be aware and the committee to be aware in this session that 
there are two investigations that, on the surface, might look 
like they are duplicative. I don't think that will be the case, 
but I just want you to know it. But whatever we do, you and 
others will have our full support.
    Mr. Aderholt. Okay. We are working with GAO on that to make 
sure that that is not the case.
    Mr. Price.

              CYBERSECURITY: CONTINUOUS MONITORING PROGRAM

    Mr. Price. Thank you, Mr. Chairman.
    Mr. Beers, I would like to switch to cybersecurity. Before 
the morning is out, I want to ask you to walk through with us 
the way this interagency effort is going to work exactly, how 
this $202 million that you have requested will be deployed, and 
why you have chosen this model, this kind of setup for 
administering those funds. I do think we need to have a better 
understanding of that.
    But, first, I would like to take advantage of the fact that 
we are in a classified setting here to take a few steps back 
and ask for your assessment of the kind of threat we are facing 
and the shape of that threat. Recent reports about intrusions--
we have our own list, of course. There have been well 
publicized cyber attacks at several Federal agencies--Justice, 
Commerce, Census in the last 30 days alone. In the private 
sector, hackers breached data last summer in over 100 million 
Sony music and gaming accounts, shut down those systems for 
days. We have seen recent breaches at Epsilion, Citibank, 
Boeing, Google. We have seen attacks from authenticated users 
at Lockheed Martin and RSA. Those, of course, are much more 
difficult to detect and stop, since it appears to be legitimate 
users that are accessing areas that they typically don't need 
to be into.
    So we would be interested in any current information you 
have that would augment this list. But beyond that, what do you 
make of this pattern? These attacks obviously are becoming more 
commonplace.
    I know you have been brought in with other Federal agencies 
to secure their system. You were brought into that Justice 
Department attack as it was ongoing. What about Commerce, what 
about the Census attacks? Can you say a little bit more about 
the kind of efforts you have under way with those agencies or 
others to secure their networks?
    And then, also, if you would address the private sector. 
You are not always notified of cyber attacks in the private 
sector. Are you satisfied that you are learning about most of 
them? And, of course, private-sector firms may not want to make 
others aware of their vulnerabilities. That is an obstacle I am 
sure you have to overcome. What do you think you can do to 
encourage the private sector to inform you fully so that you 
can be fully informed as we attempt to develop a defensive 
strategy?
    Mr. Beers. Wow. That is a pretty broad question. Let me----
    Mr. Price. I am not attempting to script this. I am just 
trying to lay the predicate for letting you economize a bit in 
bringing us forward on these matters.
    Mr. Beers. I understand.
    So, as I mentioned briefly in my remarks, we have three 
sets of actors that we deal with now: Nation-states, their 
efforts seem primarily to be what we would call reconnaissance 
as opposed to actually attacking and taking down systems.
    We have criminals who seem to be primarily interested in 
going after information that will allow them to suck money out 
of financial institutions or individual bank accounts.
    And we have hackers. As a general proposition, I would say 
that the preponderance of the stuff that you read about in the 
newspaper, particularly the denial-of-service attacks, have 
tended to come from the hacker community, including Anonymous, 
which has been particularly troublesome to both the government 
and to private-sector entities.
    You are right, I think, to focus in particular on the RSA 
breach and the fact that that allowed certificates to be stolen 
and used--perhaps to be used. We had another incident that we 
participated in that occurred in the Netherlands to a firm 
called DigiNotar where we helped them deal with that particular 
problem.
    In addition, there is this curious overlap between what I 
would call nation-state activity and private criminal activity 
in terms of the theft of intellectual property. In some cases, 
it is intellectual property that is very clearly associated 
with national security, as the plans for the Joint Strike 
Fighter. In other cases, it it intellectual property that may, 
in fact, be stolen for economic purposes, whether it is for a 
nation-state or for an individual private entity.
    Because what we see here clearly is that the line between 
nation-state and criminal activity is not a clear dividing 
line. There is overlap. [REDACT] But at least some of that 
apparent criminal activity is, in fact, guided by nation-
states.
    So, in terms of the problem you pointed out about the 
access to knowing whether or not there has been a breach, that 
is a serious problem. Part of our desire with the $202 million 
is to erect a system that would allow us better to know what 
might be happening within the Federal Government networks so 
that we can deal with that.
    The private sector is, in fact, a different problem. They 
in some cases come to us and tell us; in other cases, we don't 
know. And we literally don't know what we don't know in this 
particular area. We do believe that the legislative proposal 
for information-sharing that the Senate and the House are both 
working on represents an opportunity to have that kind of 
information-sharing without holding the firms up to possible 
liability. It represents an opportunity to try to close the 
information gap. But that is going to be one of the major 
things that we are going to be working on.
    Greg, do you want to add anything to that?
    Mr. Aderholt. Time is up right now. Maybe we can come back 
to that.
    Mr. Beers. Okay.
    Mr. Price. Mr. Chairman, this is an informal briefing. And 
I really think if we could cut him a little slack and get a 
little fuller account here of the answer to a multifaceted 
question, that would be good.
    Mr. Aderholt. Greg? Or Mr. Frelinghuysen?
    Mr. Frelinghuysen. Well, you are the chairman.
    Mr. Aderholt. Well, the only reason I am doing that is I 
know we have a call for votes and I know some people won't be 
coming back, and that is why I was--but if Mr. Frelinghuysen--
is fine, then, yeah, go ahead.
    Mr. Schaffer. Yes, sir. Thank you.
    The only additions I would layer on is that what we are 
seeing from a trend perspective is a focus on aggregators. So 
where you saw----
    Mr. Dicks. What is an aggregator?
    Mr. Schaffer. An aggregator is an entity that has access to 
the data of many different individuals as opposed to the 
endpoints, which is what we would have seen in the past.
    So if there are attacks to get identities stolen from 
individuals, we are now seeing a trend to go after people who 
have lots of accounts, so data warehouses where accounts are 
stored or a place like [REDACT] which is a company that 
provides the security certificates. It is like what is stored 
on your PIV card. It is the data that is used to decide whether 
or not you are allowed into a certain Web site. If you can 
steal all of the information that allows you to use everybody's 
card as opposed to trying to steal an individual card, you are 
in a much better position to take advantage across a wide array 
of individuals.
    The hack into RSA was similarly an attack against an 
aggregator. It was someone that provided security for many, 
many companies in many different sectors, and it could 
potentially facilitate attacks not just against one entity but 
against many entities.
    That trend is troubling because it means that the 
sophistication of the threat actors is increasing and their 
interest in being able to broadly get at many in government, 
industry, and the financial assets spaces is growing. And so 
that trend is certainly something that we see quite a bit.
    In terms of the private-sector engagement with us, I think 
it has improved dramatically over the last several years, but 
we still have significant progress to make. Those who are 
engaged with us are very engaged, but it is a percentage of the 
larger population.
    So we have many actors who are very much involved with us. 
We are growing the number of players who are even putting 
resources on the National Cybersecurity and Communications 
Integration watch floor. But that is not all of critical 
infrastructure; that is a subset of players who are interested 
in participating. And if we are really going to secure the 
entirety of critical infrastructure, we need to have all of the 
players participating and playing a significant role.

                    CYBERSECURITY: DHS COLLABORATION

    Mr. Aderhott. Mr. Frelinghuysen.
    Mr. Frelinghuysen. Mr. Beers, you have had a pretty amazing 
career since you graduated from Dartmouth: a Marine and Foreign 
Service, served several Presidents.
    I am not quite sure where you fit in the overall scheme of 
things. Do you report to Napolitano? I am a little bit 
concerned. I see a lot of acronyms here. I see references to, 
you know, Department of Defense. I don't see any reference--I 
don't know where you fit under the--are you under the DNI? Is 
there any relationship?
    I am a little bit confused as to where you--I know you are 
doing good work, but, briefly, where do you fit in the overall 
scheme of things here? We have a lot of people doing a lot of 
great things here, but I am not quite sure where you fit in.
    Mr. Beers. Sir, as an Under Secretary in the Department of 
Homeland Security, I report directly to the Secretary of 
Homeland Security. We have, obviously, cooperative 
relationships with other parts and pieces of the U.S. 
Government and we have outreach to the private sector, but I 
work for Secretary Napolitano.
    Mr. Frelinghuysen. So how do we get any assurances that 
what you are doing isn't potentially being done by somebody 
else?
    Mr. Beers. That is why we have the relationships with other 
parts and pieces of the U.S. Government. For example, we have a 
relationship with the National Security Agency, where we have 
people who are actually resident in Fort Meade and they have 
people who are resident in our cybersecurity function within 
DHS, within NPPD, people who are on the watch floor or are 
adjacent to the watch floor.
    So we have knit both with people and with systems the 
ability to exchange information on a realtime basis. We are 
definitely moving to ensure that our effort and the efforts of 
our partners at NSA are in sync with one another. We have a 
memorandum of understanding with them.
    Mr. Frelinghuysen. Mr. Dicks and I serve on Defense. We 
also serve on Intel. And I must say, there is nothing wrong 
with redundancy, but it is a little unclear as to exactly who 
is doing what.
    Just in the issue of cybersecurity, do you have a piece of 
that action? I mean, I----
    Mr. Beers. Sir, we are----
    Mr. Frelinghuysen. I read in the newspaper the other day, 
you know, that General Alexander was sort of upbraided, you 
know, on some issues that he--some comments he made before some 
sort of a group, that the Department of Justice sort of weighed 
in and suggested that perhaps, you know, he couldn't make such 
statements.
    Are you guided by all sorts of Presidential directives and 
authorities that limit your ability to operate in certain areas 
and then those other areas and targets are turned over to other 
agencies? Or how would you clarify exactly where you are in the 
overall cyber mission?
    Mr. Beers. All right. So the dividing line between 
ourselves and NSA with respect to the Federal Government is 
that the National Security Agency is responsible for protecting 
what we refer to as the dot-mil domain----
    Mr. Frelinghuysen. Yeah.
    Mr. Beers [continuing]. And we are responsible for what is 
described as the dot-gov domain, which is the Federal civilian 
part of our government.

   CHEMICAL FACILITY ANTI-TERRORISM STANDARDS (CFATS): TIERING ISSUES

    Mr. Frelinghuysen. Yeah, I ask that respectfully. I will 
give you an example. I will ask you a question. We had Steve 
Chu in the other day. We had Tom D'Agostino, who heads up NNSA 
and has responsibility for a whole slew of national 
laboratories, some dealing with nuclear issues and some dealing 
with, shall we say, traditional R&D.
    Do you grade those laboratories in the Department of Energy 
as to what the hell they are doing in terms of some of the 
issues that you have within your portfolio?
    Mr. Beers. The short answer to that is ``yes.'' What we do 
with respect to our responsibilities under the Federal 
Information Security Management Act is to look at each of the 
departments and agencies which are within the dot-gov domain--
--
    Mr. Frelinghuysen. Which would be the Department of Energy, 
for example.
    Mr. Beers. Which would include the Department of Energy.
    Mr. Frelinghuysen. Do they have a grade? Have you given 
them a grade?
    Mr. Beers. We have----
    Mr. Frelinghuysen. Are they Tier 1 or Tier 2? You referred 
to something. I would think they would be Tier 1 because----
    Mr. Beers. You mean in terms of priority?
    Mr. Frelinghuysen. Well, the nuclear stockpile is a 
priority.
    Mr. Beers. Yes. Well, as a priority----
    Mr. Frelinghuysen. Have they been graded by you?
    Mr. Beers. Yes, sir. I am looking at my chart here.
    As with most of the Federal Government at this point in 
time, distinguishing between red, green, and yellow--that is 
the Federal Government----
    Mr. Aderholt. Can we see a copy of the chart?
    Mr. Beers. Yes, sir.
    [REDACT]
    Mr. Frelinghuysen. So the significance of the colors----
    Mr. Beers. Is a rough----
    Mr. Frelinghuysen. But just for our purposes, since I have 
about 1 second, are they in the good, the high--have they done 
a good job doing what they are doing for your purposes, or are 
they down in the ``yet to be decided'' category?
    Mr. Beers. Greg.
    Mr. Schaffer. Yes, sir. There are a series of criteria that 
we use to judge----
    Mr. Frelinghuysen. So, to answer my question, where is the 
Department of Energy?
    Mr. Schaffer. They are making progress----
    Mr. Frelinghuysen. I want you to tell me. I don't want to 
look at that list.
    Mr. Schaffer. No, understood. They are making progress. 
Like all of the departments and agencies, there are certain 
things that they have not gotten to yet, and there are certain 
things that we are trying to help them to expedite.
    That is a big part of what we are asking for with respect 
to the funding increase, so that we are in a better position to 
know what they truly have. Right now, what we can tell you is 
what they have reported to us. We would like to be in----
    Mr. Frelinghuysen. Well, I hope you have an audit of what 
they report to you.
    Mr. Schaffer. Well, we would like to be in a position to 
have continuous monitoring, which is a visibility into their 
networks on a continuing basis. It would give us the ability to 
know what is happening on their networks and to adjust----
    Mr. Frelinghuysen. Are they Tier 1?
    Mr. Schaffer. They are definitely at the top of----
    Mr. Frelinghuysen. Okay. So they will be one of the ones 
that are getting the constant scrutiny.
    Mr. Schaffer. Yes, sir.
    Mr. Frelinghuysen. Okay. Thank you, Mr. Chairman.
    Mr. Aderholt. Ms. Lowey.
    Mrs. Lowey. Thank you.
    And, certainly, looking at your career, it gives me great 
confidence that perhaps we are a little safer than some of us 
think we are. And we thank you for your service.
    Before I get to my question, I just want to make a point on 
the last question. I was pleased to see increased funding 
levels for cybersecurity in the fiscal year 2013 budget.
    As we all know, there is a great deal of concern about 
Anonymous, the hacking collaborative that attacked the Tel Aviv 
Stock Exchange, threatened to launch a cyber attack on the New 
York Stock Exchange. As a New Yorker representing New York, we 
know that the Nation's economy depends on the health of our 
financial system and the free flow of credit and capital, and a 
successful cyber attack on America's financial systems could 
have devastating effects on our economy.
    I will save those questions because you did quite a 
thorough job. And I have a feeling, Mr. Price, we are going to 
continue this discussion at some point.
    But I have been concerned about the interoperability in the 
Office of Emergency Communications. The NPPD has jurisdiction 
over the Office of Emergency Communications, which I would like 
to say I helped to establish. And the fiscal year 2013 budget 
request includes $38.7 million for the OEC, an 11 percent 
decrease from fiscal year 2012.
    As you well know, OEC supports communications between 
emergency responders during manmade natural disasters. Quite 
frankly, the work of the OEC is too important to face such 
severe cuts, in my judgment. If you could, first of all, 
address the funding for this important program and how will the 
needs of emergency responders be met without the assistance of 
the OEC.
    And, additionally, I was dismayed to learn that the 
administration's fiscal year 2012 budget requested the 
elimination of dedicated funding for this mission by merging 
the interoperability grant program into the State Homeland 
Security Program within FEMA, and this dedicated funding stream 
has been zeroed out.
    Could you discuss with us, how would limited resources on 
the State and local level by reducing funding for the 
Interoperability Grant Program impact your ability to ensure 
that localities are building networks to the necessary 
technical specifications?
    It seems to me, your work is absolutely critical. But we 
want to be sure that down on the local level, we have the 
resources to do the job. So if you can share with me your 
concerns or non-concerns and give me confidence that that cut 
isn't going to make a difference.
    Mr. Beers. Yes, ma'am. So the principal reason for the cut 
is that we have, in cooperation with you and as part of an 
ongoing program to be as efficient as possible, created or 
found some efficiencies in terms of our technical assistance 
contracting. And so some of this is simply a straight 
efficiency that we should do under any circumstances but 
particularly in this austere fiscal environment.
    We also had a $4.8 million--we had a--part of this 
reduction is based on a historical carryover from the preceding 
fiscal year that we are using in this year's budget to make 
sure that we can effectively obligate the funds that you all 
have appropriated to us.
    But the main point I want to make here is, we have found 
some efficiencies in the way we are doing our technical 
contracting, and that is really the basis for doing that. It is 
in no way an indication of a lack of commitment to the Office 
of Emergency Communications. In fact, as a result of the 
deliberations of the Congress in the creation of the broadband 
for public safety effort, we are going to have more work to do, 
and we are going to step up to do it, in combination with our 
National Communications System and our Office of Emergency 
Communications.
    Mrs. Lowey. I will save the other question because I know 
we are running out of time and my colleagues may want to ask 
some quick questions. Thank you.
    Mr. Aderholt. Mr. Dent.

                        CFATS: PERSONNEL SURETY

    Mr. Dent. Thanks, Mr. Chairman.
    Secretary Beers, good to be with you this morning.
    I want to kind of change subjects here to go to the 
personnel surety issue. This keeps coming up within the CFATS 
program, as you know--personnel surety. And this requires 
industry to submit names of folks who work with chemicals to 
DHS to make sure they are not on watchlists.
    It is my understanding that a final rule or a policy is 
with the OMB. Industry experts on the ground who have committed 
time and money toward meeting CFATS deadlines continue to 
express to me concern over the path the Department is pursuing 
on this whole issue. Specifically, they are concerned that they 
will not be notified if a person is listed on the terrorist 
screening database. Additionally, some have suggested CFATS use 
TWIC cards. But instead, the administration is proposing to 
create an entirely new system that is going to cost a lot of 
money.
    Secretary Beers, if industry submits a name to DHS and that 
name appears on the terrorist screening database, how are you 
going to notify them? Because, as I understand it, the draft 
policy is for DHS not to notify industry, which means that 
someone with intent to cause harm may be allowed to work in a 
chemical facility. So how would you notify them?
    Mr. Beers. So, as a general proposition, sir, the 
notification process here involves work that is being done by 
the Federal Bureau of Investigation, which has the 
responsibility for conducting investigations against 
terrorists, not DHS. And it is their view that, in order not to 
disrupt an investigation by notification outside the boundaries 
of the investigation, that information will be preserved by the 
FBI until it is appropriate to tell the firm.
    This puts a great deal of responsibility on the Bureau. 
Let's be clear about that. But rather than giving up the 
investigation by the notification, they don't want to do that. 
In some cases, we will get to that point, and in some cases, 
there will be a notification. But that is the challenge or the 
problem in association with that.
    On the TWIC card, sir, we want to use the TWIC card.
    Mr. Dent. Well, that is good. That is encouraging.
    Mr. Beers. The issue here that we need to resolve is that 
the TWIC card was created for transportation workers, and not 
everybody who is within the boundaries of a chemical facility 
qualifies as a transportation worker. We are looking at a 
possibility--obviously, it will require a legislative process 
in order for the administration to make such a recommendation.
    Mr. Dent. Well, I would love to work with you on the 
legislative side, because I think TWIC has been pretty 
effective.
    Mr. Beers. So do we.
    Mr. Dent. And I think----
    Mr. Dicks. Would the gentleman yield?
    Mr. Dent. I would be happy to yield to my friend.
    Mr. Dicks. Thank you.
    We understand that the TWIC cards are not looked at. All 
they do is they show the TWIC card, it doesn't go into the 
machine, and you don't get a reading on the history of the 
people. So I think that is--I can't believe that. Why is that?
    Mr. Beers. Sir, it has----
    Mr. Dicks. I mean, that is outrageous.
    Mr. Beers. Yes, sir. It has to do with the requirements for 
the capability of the card reader in an austere, particularly 
here, a maritime port environment, so the water, the saltwater, 
the corrosive effect of that. And we, quite frankly, have 
struggled with this issue.
    Mr. Dicks. There is----
    Mr. Beers. You are right, it is disturbing.
    There are obviously readers that are available, but the 
government has to certify a reader as being the appropriate 
reader. And that is the challenge that we are engaged with 
right now, sir.
    This is not my area of responsibility, but I am aware and 
troubled, as you are.
    Mr. Dent. If I could reclaim my time.
    Mr. Dicks. Sure.
    Mr. Dent. It just seems to me right now that industry is 
not going to be notified if somebody is working in a plant who 
has a problem. And it is on the FBI, you are right. And there 
are liability issues to the operator of that chemical plant. I 
just thought this TWIC personnel surety issue might help us get 
to a better place. And I would be happy to work with you on 
that point, because I think it is really very important that we 
give some guidance and some certainty to people who are trying 
to comply.
    And with respect to CFATS, I know the chairman has already 
gone into some of those issues. But, you know, you have talked 
a little bit about that memo. And it is quite clear to me that, 
you know, we just haven't--I guess we have had over 4,000 of 
those site plans submitted, and none have been approved or 
reviewed, I guess.
    When was that memo prepared? And to what extent were senior 
officials at NPPD aware of potential problems before you 
requested that memo?
    Mr. Beers. The two individuals who prepared the memo--David 
Wulf, who is here and is the Deputy Director of that office; 
and Penny Anderson, who is the Director--came onboard in July.
    We had had several indications of problems within the 
program dealing with: an administrative issue about whether or 
not individuals were paid appropriate to the locality in which 
they were operating; a problem with the authorization of the 
site security plans; and then, finally, a problem with the 
tiering, where we had run programs and put companies in 
particular tiers when the data in the program was not the 
correct data to establish that.
    And so, with those three issues, we knew that we needed a 
thorough look. We had already commissioned a review of 
administrative practices within the CFATS program as a result 
of the issue with respect to locality pay. That all came 
together in the report that they prepared, including the review 
that we had done with our Office of Compliance and Security to 
look at administrative practices.
    So we knew that there were problems. This was a look that 
indicated that they were deeper than we had anticipated in the 
report but, fortunately, with a good plan of action to resolve 
them.
    Mr. Dent. Well, I mean, I guess the issue--I mean, I keep 
hearing stories about inadequate training and inappropriate 
transitions for new hires, that people aren't capable of doing 
these types of assessments, and I am just--I think we all want 
CFATS to work, and there was a lot of talk around this building 
about using inherently safer technologies. I did not think 
anybody over there was able to deal with that issue, and that 
is not part of this process, but, you know, are we committed to 
CFATS, making this work, because I know a lot of people spent 
time and money to comply and submit their plans.
    Mr. Beers. Sir, NPPD and ISCD are fully committed to making 
this program work. We have made a lot of progress. We have a 
lot of challenges ahead, but we do not think they are 
insurmountable.
    Mr. Dent. I would like to work with you on this TWIC issue 
at the proper time.
    Mr. Aderholt. Mr. Dicks.

              CYBERSECURITY: PRIVATE SECTOR COLLABORATION

    Mr. Dicks. Again, our staff just says that this process on 
the TWIC reader has been going on for 5 years and that they 
have just finally figured this out. I would just tell you, 
there is technology out there, I know it for a fact, that can 
read these things in a port environment, and I am surprised 
that it has taken 5 years to get this done.
    Now, tell me, you talked about the cybersecurity threat, 
and your responsibility for the rest of the government, and you 
have given us a chart here, but also you have responsibility 
for the private sector, and there is a lot of concern. Now, I 
understand that the administration is supporting the Lieberman 
legislation in the Senate. Can you tell us why, what additional 
things that legislation will give to you?
    Mr. Beers. There are two major things that I want to 
emphasize, and there are a lot of other parts, but the two 
major ones I think are germane to this conversation. The first 
one, which I had mentioned earlier, is the ability of the 
private sector to share information about breaches and other 
issues with the Federal Government in a way that it is both 
protected and they are given some liability protection for 
providing that information, so that will reduce the number of 
unknown unknowns that we have to deal with right now.
    Mr. Dicks. Is this voluntary?
    Mr. Beers. In terms of the provision of that information, 
there is an aspect of it that is required, and that is related 
to the second part that I want to mention, which is the 
requirement for a light form of regulation that is embedded in 
that bill. Basically what it means is that the Federal 
Government, working with industry, would identify those 
companies or networks which are critical to our cybersecurity. 
We and industry would then set up some standards against which 
to measure cybersecurity protections. Those companies would 
then put together security plans which would be looked at not 
by the Federal Government but by accredited auditors in the 
private sector who would make the judgment as to whether or not 
those plans are acceptable. We would have the opportunity to 
review them, but they would be the certifiers of those plans.
    Mr. Dicks. Do those people exist today? Are they out there?
    Mr. Beers. There is a vibrant consulting industry out 
there, sir, that knows a whole lot about cybersecurity, and we 
certainly think that they will have a major role in this 
process. Then if there is a breach, those entities are required 
to report those breaches to us, so that----
    Mr. Dicks. Required?
    Mr. Beers. Required to report those breaches.
    Mr. Dicks. Because some people do not even know they have 
been breached.
    Mr. Beers. Well, that is part of what we would do in terms 
of the cybersecurity plans that would be developed, so that 
they would have a higher level of awareness of the breach. But 
I also have to be candid, sir, this is not something where you 
can say tomorrow when you turn a switch that you are going to 
have 100 percent awareness of things that are happening on your 
networks. That is part of the challenges that we all face and 
part of the effort that is involved in what we at US-CERT do 
and what we do in conjunction with our law enforcement 
partners, Secret Service and ICE, within DHS and FBI and with 
NSA.
    Mr. Dicks. Well, what about utilities? That is the one that 
worries me a great deal, our electrical power utilities, if 
they get shut down that could cause a tremendous impact to our 
financial institutions. You know, a lot of people out there 
say, you know, we as an industry or as a group of companies, 
whatever, have to come up with a plan, and then that plan is 
reviewed and goes to FERC or whatever. How do you see that?
    Mr. Beers. [REDACT] The interdependency here is huge, so 
the financial sector depends upon electricity, electricity 
depends upon water, and so on. We have to deal with these 
things and be careful not to say this is the most important or 
that is the most important, but, yes, sir, electricity is a 
very serious problem, and we have seen some efforts on the part 
of adversaries to look at industrial control systems that are 
associated with the electrical sector. Our Industrial Control 
System Cyber Emergency Response Team is working with the 
private sector on these issues and looking a solutions that 
will enhance this, but, quite frankly, the industrial control 
system set of controls were not envisioned originally as 
requiring the kind of security when they were built. They are 
systems which last for 20 or more years. The replacement of 
these or the patching of these is going to be a major issue 
that we are going to have to deal with.
    Mr. Dicks. Thank you, Mr. Chairman.
    Mr. Aderholt. What I would like to do is come back for 
another round after the vote, so we will suspend for a few 
minutes for votes, and we will be back in probably around about 
30 minutes. Thank you.
    [Recess.]

              CYBERSECURITY: CONTINUOUS MONITORING PROGRAM

    Mr. Aderholt. Okay, I think we are finished with votes for 
the day, believe it or not, so we may have some more Members 
that will be joining us here in a few minutes because the votes 
just ended 3 or 4 minutes ago. Let me turn to an issue that has 
already been asked about but from a little bit of a different 
angle.
    I discussed in my opening statement, Secretary Beers, about 
the budget including an unprecedented $202 million for the new 
cyber initiative to help reduce other departments and agencies' 
cyber risk levels. While I understand and support efforts that 
allow DHS to quickly address gaps in the government cyber 
posture, we do have grave concerns about the precedent that 
this would create. Over the last few weeks we have asked 
repeatedly how you will execute the program, but thus far no 
plan or schedule has been provided. In today's fiscal climate 
Congress cannot provide funds based on vague sentences, we need 
a plan that shows us how you are going to spend these funds and 
why these funds need to be in the overall budget, and not 
within the budgets of the departments that are at risk. Without 
this type of in-depth information, quite honestly this proposal 
appears to be a last minute idea that may look great on paper 
but could lack the rigor and proper structure to be successful.
    Secretary Beers, what are your specific plans for executing 
the program and is this simply an attempt to move forward in 
lieu of the authorizers that you have previously requested but 
have not yet addressed by Congress?
    Mr. Beers. Sir, first of all, let me say yes, this was a 
late-developing effort on the part of the administration, and 
we certainly do owe you a plan for how it will be spent. I 
think we are pretty clear on why it needs to be spent and have 
talked today and yesterday about this. As you saw from the 
chart that we passed out earlier on in terms of the areas of 
concern in the departments and agencies, this particular chart 
and that scoring is self-reporting on the part of departments 
and agencies. We are in the process independent of a set of 
software and hardware to have real time continuous monitoring, 
requiring that this reporting be done on a more frequent than 
annual basis in order to get the clearest indication about how 
departments and agencies are addressing their own security 
within their own networks.
    The basis here of this particular $202 million program is 
to allow us to have fidelity in what departments and agencies 
are doing to protect their own cybersecurity and to have it in 
real time. This gives us an opportunity to do two things. One, 
it gives us an opportunity to be able, as a general guidance 
matter, to direct them to deal with the priority issues that 
are embedded within that chart; and, in terms of incident 
response, it gives us a better ability to help them produce the 
kinds of mitigation measures that would be necessary in the 
event of a serious attack. How we execute that, as you say, is 
what we owe you.
    Mr. Aderholt. Are there some other methods that you have 
considered that would achieve the goal of reducing our risk, 
and position DHS as the appropriate accountable cybersecurity 
manager for the civilian government, that do not require new 
programs?
    Mr. Beers. Sir, the legislative proposal that is before the 
Congress that we put forward and included in some of the bills 
that have been put forward give DHS, which is at this 
particular point one among equals in Cabinet, responsibility 
for supervising the activities of other departments and 
agencies within the U.S. Government. While there is a 
presidential directive that makes this our responsibility, this 
legislative proposal would make it stronger and give DHS much 
clearer authority to direct departments and agencies to take 
actions with respect to cybersecurity.
    Mr. Aderholt. Okay, we may have some follow-up on that. Let 
me go ahead to Mr. Price.
    Mr. Price. Well, let me follow up on the Chairman's line of 
questioning and just give you a chance to elaborate a bit. The 
Chairman said this is in some ways operating in lieu of a full 
authorization. That is true. I mean, the OMB has made a certain 
call here, and you are tasked with setting this up with DHS in 
the role that you have described.
    There are alternative models. These funds could be 
appropriated directly to the agencies involved, presumably with 
less coordination, less oversight, less standardization 
perhaps. I do not know the full range of possibilities that you 
considered, but I understand here that we do not have clear 
authorizing language, and we are dealing in an area of high 
national priority. This is very important to get ahold of this 
and to improvise ways that give us the maximum ability to 
detect and to respond.
    I understand that this $202 million transfer is not a 
conventional proposal. I understand that there was a good deal 
of internal discussion before you put it forward, but I would 
like to take advantage of this hearing to have you flesh this 
out further in ways that would anticipate the fuller plan that 
the Chairman is asking for.
    What does this case look like for proceeding in this 
fashion? You have talked about a three-legged stool in this 
cybersecurity area, the US-CERT operation, the successive 
Einstein plans, and now this. This is new capacity. This deals 
with intrusions in another dimension, so give us the rationale.
    Mr. Beers. All right, sir. Let me start and ask my 
colleague, Mr. Schaffer, to continue. The first thing I want to 
say is, as we have begun to articulate what this proposal 
entails, I want to make sure that you understand that we want 
to create a system that allows DHS, in its responsibilities for 
cybersecurity for the civilian side of the Federal Government, 
to, in fact, be able to execute on that, and being able to 
execute on that requires us to have continuous monitoring. So 
that is sort of the general proposition.
    Now, let me analogize for a moment. As we have deployed 
Einstein 2 and as we envision employing Einstein 3, we have 
continuous monitoring on the incoming, on the threats. What we 
want, in parallel with that, is continuous monitoring on what 
departments and agencies are doing within their own networks so 
that we can match the ability to see the threats with the 
ability to see the vulnerabilities and to make judgments and 
provide guidance and direction, including the need to focus 
funding on a particular area of vulnerability in their budgets 
with their resources. This will give us that ability as we play 
this out. That is what we are trying to do. So it is not, it is 
not us spending money in their budgets. It is us having a 
system to monitor them. They get a benefit out of it, and there 
is no question about that. They will see their own systems 
better as well. But it is for us to manage the entire 
enterprise, not for any individual department and agency to 
have the ancillary benefit of having a better visibility into 
their own systems.
    Greg, what would you add to that?
    Mr. Schaffer. I think the Under Secretary has given you the 
flavor of where we are trying to go with this. Our 
responsibility is to do risk management across the Federal 
enterprise. Right now we have limited data with which to make 
good decisions about what we should be asking departments and 
agencies to prioritize. We have one piece of the puzzle, as the 
Under Secretary said. We, through the Einstein solution, can 
see what is being thrown at these departments and agencies. It 
is like having cameras on the outside of a physical facility, I 
can see what is coming to the fence line. What I have no idea 
about in the current arrangement is what is actually deployed 
within the fence line to deal with something if it gets inside, 
and the continuous monitoring piece really advances DHS's 
mission to understand what the risks and vulnerabilities are to 
the Federal enterprise and then to make recommendations or make 
requirements for Federal departments and agencies to augment 
what they are currently doing using their own budgets. So while 
this will help them to know their own networks better, its 
primary goal is to help us prioritize their activities, and so 
it really is in our mission space and advancing the 
responsibilities of DHS that this $202 million is focused.
    The challenge with respect to getting continuous monitoring 
deployed is that, as a technology, it is not like the Einstein 
solution. Intrusion detection sits on the outside of someone's 
network, all the traffic goes through it, and you can 
understand what is being focused on that entity from this piece 
that sits outside their domain. Continuous monitoring requires 
you to get information from each desktop computer, each server, 
each router. You need to actually have information flowing from 
many, many devices inside their network. You need to know how 
many devices they have, you need to know where these need to be 
deployed, and there is different types of technology that has 
to be there. So it needs to be a partnership between DHS and 
the departments and agencies in figuring out how to get this 
done in an effective way in order to advance DHS's mission. We 
will not be buying the solutions for them like antivirus, but 
we will know through this solution whether or not they have 
antivirus deployed and turned on within their networks.
    Mr. Price. Help us get our mind around what this is going 
to look like in practice. I understand the distinction you are 
making between the Einstein function and this internal 
function. What do these dollars buy? Explain this very 
concretely. What would you expect this operation to look like? 
Maybe take a given department and walk us through what kind of 
capacity they are going to have. To what extent is this a 
matter of new technology, to what extent is it a matter of new 
personnel, to what extent is it a matter of explicitly setting 
up a kind of interagency capacity to monitor and to advise and 
to oversee?
    Mr. Schaffer. Yes, sir. I suspect--although as the Under 
Secretary said, we are in the process of trying to define all 
of the details, and we are very anxious to work with you as we 
go through that process, but I think there is probably three 
pieces to this puzzle. The first piece is a contracting piece, 
which is we figure out the best suite of technologies that can 
be deployed to meet the needs of continuous monitoring, and 
start working with the providers of those capabilities to get 
some kind of contract together, as we do with our Information 
Systems Security Line of Business set where we put things on 
GSA contracts that departments and agencies can buy. So we will 
do that researching and start to figure out what the suite of 
solutions is.
    Mr. Beers. You used an acronym.
    Mr. Schaffer. And I would have defined it except I never 
remember what this one is. It is the information security line 
of business, but there is another S in there. I apologize. It 
is a program under FNS, Federal Network Security, that 
essentially selects security solutions for departments, and 
agencies' use. They put it on a GSA contract, and they get it 
into a position where people can buy off a schedule much more 
easily, knowing that the suite has been selected by DHS, 
vetted, and the contracts provide everything that they would 
need. So this would, I think, have a component that would be 
similar to that.
    The second piece is working with the department and agency, 
like we are doing now. We are meeting with the Chief 
Information Security Officers, we are meeting with the Chief 
Security Officers, with the Chief Information Officers to 
figure out what the shape of their network is, what they have 
already deployed that can be used for continuous monitoring 
purposes, and like most departments and agencies, they will 
have different tool sets in different parts of their ecosystem. 
We will have to figure out which of these tools that we think 
will work fits in that environment, and then you would have to 
get a suite of solutions deployed, and then you have to build 
the connection between those solutions and what we will be 
building at DHS in order to accept that data and to use that 
data in an effective way in combination with the data that we 
get from the Einstein solution and the data that we generate 
from the private sector feeds that we have from the Multi-State 
Information Sharing and Analysis Center (MSISAC), from others, 
the goal being to get to a place where we will see the attacks 
coming in, we will know exactly which departments and agencies 
are vulnerable to those attacks, where on their network we need 
to apply our mitigation strategies and our incident response, 
and we will be able to do that in a much more efficient way. 
That is the incident response piece of the puzzle.
    The other benefit that you get out of this is we will also 
be able to see what the vulnerability space looks like and work 
with them to prioritize what they need to do on their own 
network with their own spending in order to buy down risk, and 
right now we are, you know, we are doing that, but we are doing 
it without the benefit of actual visibility into their network.
    In my experience, private sector, as a consultant at 
PriceWaterhouseCoopers, in my role as a Chief Information 
Security Officer, and in my role with DHS, most organizations 
know only about 70 percent of what their network is. They 
literally do not know the full shape and scope of their 
network. This helps them to understand that, and it helps us to 
then make good risk management recommendations or issue good 
risk management requirements so that they can get the risk down 
as quickly and effectively and efficiently as possible.
    Mr. Price. Well, thank you. That is helpful. Mr. Chairman, 
I appreciate your line of questioning. I hope this complements 
it because it does seem to me that we are going to need to 
evaluate this as a DHS appropriation, and a rather 
unconventional one at that, but one that I am open minded about 
in terms of how best to get this kind of interagency function 
accomplished. It seems to me that if we were looking at simply 
doling out funds with even very detailed directives to 
individual agencies on how to deal with this, that would have 
its own set of problems. That would have its own sets of 
questions in terms of coordination and oversight and so forth. 
So that is helpful to me, anyway, and we are, of course, going 
to need for this to be elaborated and put in a form where we 
can assess it more fully, but thank you.

 CHEMICAL FACILITY ANTI-TERRORISM STANDARDS (CFATS) PROGRAM CHALLENGES

    Mr. Aderholt. Let me turn back to the CFATS issue again. 
Many of the problems identified in your internal memorandum on 
CFATS relate to challenges involved in the hiring and 
development of staff to implement the program, including how 
inspections are conducted and the lack of policies and 
procedures to guide staff efforts to do their job.
    My question would be, do you agree with this assessment, 
and can you describe for us how those have been problem areas 
in the CFATS program?
    Mr. Beers. Yes, sir. Let me respond. The program was 
enacted 5 years ago roughly, and we have gone from zero, if you 
will, to where we are today through a lot of difficult and 
challenging efforts. First of all, who were we regulating, what 
were we regulating them about, which is what were the chemicals 
that we were concerned about, why were we concerned about them, 
what were the facilities that possessed these chemicals that we 
were concerned about, how much did they have, and what kind of 
security did they have around those?
    We have gone from defining the problem to getting an 
inventory of those who appeared to fall within the boundaries 
of this concern. We have refined our ability to know precisely 
that level of holding and our concern, we have had meetings and 
seminars and advisory efforts to build all of this to the point 
that they then began to produce their site security plans, and 
we began to receive them. As we began receiving them, we also 
discovered that we did not get as much information as we, in 
fact, needed and had to seek more information from all of them.
    I am saying this in order to get to today because at each 
one of those steps we had to create the ability to execute 
either in the development of the tool and in the knowledge of 
the inspectors and the entire staff of ISCD of what it was we 
were trying to look at and measure, and that has been a growing 
process along the way.
    So as we look at where we are today and we look at where we 
have to go and defining that in the most graphic sense is we 
need to be authorizing the site security plans, we need to be 
looking at the site to make sure that the plan matches the 
physical layout and procedures at that particular site. We then 
need to approve those plans where they are appropriate to be 
approved, and we need to come back around and do compliance 
inspections. We have not done compliance inspections, and we 
need to build a workforce that understands how to do that.
    We have begun the process of doing the authorization 
inspections. They are really in a nascent stage themselves, so 
when Penny Anderson and David Wulf laid out this effort, what 
they are trying to do is to say we need to have a workforce 
that, in fact, knows how to do what it is we have to do, and 
they are in the process of defining that. So there is right now 
a working group that is going on that is supposed to be 
finished by the end of this month with the appropriate 
requirements that we will need to train our workforce against 
in order to accomplish the last two stages of this process. 
That is what we are committed to doing, and we are committed to 
turning out the workforce that can do that. They have been 
trained to do what they are supposed to do now. We need to 
train them to do what they need to do going forward as well, 
and that is what we are about right now.
    Mr. Aderholt. Let me ask you about the programs and the 
staffing problems that were allowed to develop in the first 
place, just your thoughts and your observations on how it is 
that staffing problem was allowed to get started from the 
beginning?
    Mr. Beers. Sir, I think that the basis of the problem from 
the beginning was that the people who were responsible for this 
program in its initial phase did not clearly appreciate or 
articulate what it was that the program was supposed to do, and 
the most graphic example of that is in the initial stage of 
program development and in the initial stage of the training of 
the inspectors, there was a thought, presumption, notion that 
they might also have to be some kind of first responder in the 
case of a catastrophic event at one of the plants.
    As we have worked our way through understanding what it is 
we need to be doing, that particular requirement turns out not 
to have been an appropriate requirement, and so we have stopped 
doing that, we have taken the equipment that we purchased in 
order to do that and transferred it to another part of NPPD, 
the Federal protective service, who in fact has some need of 
that equipment. The training that was done in association with 
that is not entirely wasted training, but it would not have 
been--there was not--we would not do it now, let me put it that 
way. So I think it is the learning process that has occurred 
along the way of the development of this program from nothing 
to where we are today, and our clear understanding of the need 
now, with a more mature program, to ensure as we go forward 
that the requirements and the training requirements and the 
hiring and the matching of positions to qualified people is 
done more deliberately and with greater knowledge as we go 
forward.
    Mr. Aderholt. Give us your thoughts on to what extent the 
staffing challenges and lack of program guidance has impeded 
progress implementing CFATS and the ammonium nitrate programs.
    Mr. Beers. With respect to the implementation of the CFATS 
program, I do not want to say that there has been no impact on 
the speed with which it was developed, but I think it is fair 
to say that all of the steps that we took had to be taken and 
all of the learning that we have done had to be learned in this 
process, and I think we have built a real foundation going 
forward. Almost all of the training that we have done up to 
this point in time has been necessary training, and the 
individuals who are trained against those requirements will 
continue to use that training in their jobs going forward. What 
we have to define is the additional training.
    Can I ask David Wulf to comment further on that?
    Mr. Aderholt. Please, yes.
    Mr. Beers. David.
    Mr. Wulf. Yes, sir. We are--as the inspector tools working 
group, which the Under Secretary referenced, completes its 
work, which we are anticipating to happen at the end of this 
month, we are going to roll that group's findings into the 
training we are going to hold--we are looking at a May/June 
time frame--for inspectors, after which we are going to roll 
into authorization inspections for the facilities whose SSPs we 
have authorized, and that number has gone up in the last 3 
months from 10 to 55. Yeah, we are also moving forward in an 
effort to more closely align different parts of the 
organization. We are involved in a realignment right now, we 
are hoping to move through that process in the next couple of 
months as well, and looking also to fill many of our leadership 
positions. We find ourselves in a position in which all of our 
leadership positions except for mine and our director Penny 
Anderson's are filled by actors right now, so we are looking to 
get some permanent leadership in our branches and to sort of 
stabilize the organization in that way.
    Mr. Aderholt. Let me go back just briefly before I turn it 
back over to Mr. Price. As far as the damage, just your 
assessment overall, just what do you think the damage has been 
because of the staffing challenges and the lack of program 
guidance?
    Mr. Beers. As I said, I do not think we can ignore the fact 
that we have suffered from not having figured out all these 
things in advance, but this process, as I have tried to 
indicate, was always going to take a certain amount of time to 
proceed through, and I am hard pressed to tell you that we lost 
a month here or lost a month there as we have moved through 
this process, but I certainly cannot stand here and say we have 
not lost any time at all. I just do not have the ability at 
this point to do it. But the main thing is, all of these steps 
had to be taken, and they had to be taken in the order in which 
we took them in order to get to where we are today and in order 
to have the foundation to move forward.

  CHEMICAL FACILITY ANTI-TERRORISM STANDARDS (CFATS) HIRING INSPECTORS

    Mr. Aderholt. A little bit earlier you mentioned building a 
workforce. Do you mean hiring more inspectors?
    Mr. Beers. We have additional vacancies for inspectors 
within the chemical facilities program, we have a plan for some 
inspectors with the ammonium nitrate program whom we have not 
hired yet because we are not in a position to hire against that 
requirement until we get the final rule. We do not want to 
repeat the problems that were manifested in this report with 
respect to the hiring of those inspectors until we have defined 
precisely what this program is going to look like. The ammonium 
nitrate notice of proposed rulemaking has gone out. We have 
closed the comment period in December, we have a hundred or a 
hundred-plus formal requirements that we are in the process of 
adjudicating as well as meetings and discussions more generally 
with people in order to proceed forward to the final rule, but 
as I am saying, what we do not want to do is begin hiring 
inspectors until we know what we are hiring against and we know 
what we need to train them in order to do.
    Mr. Aderholt. So how many do you expect to hire?
    Mr. Beers. What is the number, David?
    Mr. Wulf. For ammonium nitrate we have slated 19, 19 
additional.
    Mr. Aderholt. What about total?
    Mr. Wulf. I think total it is a little tough to project. I 
think we are going to learn a lot as we get into a more regular 
cycle of authorization inspections and as we get down the road 
and see what it looks like, you know, with 4,000-plus 
facilities hopefully with approved site security plans, we will 
be in a regular cycle of actual compliance inspections, doing 
authorization inspections for new facilities that come into 
play, and working through the universe of ammonium nitrate, I 
think it is going to--our understanding of what the full 
resource requirement will be on the inspector side will be 
evolving.
    Mr. Aderholt. I have been too long. Mr. Price.

               CYBERSECURITY: DEPLOYING EINSTEIN 2 AND 3

    Mr. Price. Thank you, Mr. Chairman. I just have one quite 
focused set of concluding questions. Back to the three-legged 
stool with respect to cybersecurity and the Einstein capacity. 
You have referred to this in passing. I just want to make sure 
we are clear on how that is unfolding and what kind of timeline 
you are working with here. The Einstein 2 intrusion detection 
capability, as I understand, is now deployed at 17 of 19 
departments and agencies. The remaining two are USDA and 
Justice.
    Mr. Beers. No, HHS and Justice.
    Mr. Price. I am sorry, all right, HHS and Justice. I 
understand there are privacy and legal challenges. I just 
wonder what it is going to take to surmount those and what kind 
of time frame you are anticipating for having 19 out of 19 
covered. And then Einstein 3, which is, of course, the 
intrusion prevention capability, we are now being told the 
timeline on that is probably 2018. That seems like a long time. 
Why will it take this long? What vulnerabilities are going to 
be there until Einstein 3 is fully deployed, and how can those 
be mitigated in the meantime?
    Mr. Beers. So with respect to the Einstein 2, we just 
signed a memorandum of agreement with the Department of Justice 
which I think will mean that this program can move forward. We 
are working with HHS on their particular problems. The first 
had to do with Justice particularities, and the HHS has to do 
with privacy concerns. So we are heavily committed up to and 
including the Secretary of Homeland Security pushing these 
departments and agencies to get to a ``yes'' arrangement with 
respect to that.
    [REDACT]
    But let me turn to Greg to go into some more detail on 
either of those, but in particular on the last point.
    Mr. Schaffer. Yes, sir, thank you. As the Under Secretary 
mentioned, I do think that we have made significant progress 
with respect to Einstein 2. The only remaining department or 
agency that we haven't finalized with is the HHS folks, and 
they have a very specific legal issue that they believe may 
require a statutory fix, and so what we have talked to them 
about, although we haven't finalized with them, is trying to 
move forward in other parts of their network, putting to the 
side the piece that they have this very specific statutory 
issue with.
    With respect to Einstein 3, as the Under Secretary 
mentioned, the program plan calls for the deployment of, 
initial deployment of government-furnished equipment for the 
initial sensor capability. Those sensors get deployed into what 
we call nests. They are aggregation points within the network 
that are built to separate the government traffic from the rest 
of the traffic that an Internet service provider has because 
unlike Einstein 2, which is deployed at the boundary between 
the department or agency's network and the Internet, the 
deployments for Einstein 3 are actually deployed in the 
Internet service provider's network itself. So they still need 
to only apply these to the government traffic, and therefore 
they need to separate the government traffic from the rest of 
the traffic. So we have already let those contracts to build 
the nests for the first, I believe, four of the deployments. 
That is the first piece of the puzzle. Then we would deploy in 
the plan the government equipment which comes, as the Under 
Secretary said, from NSA, but the ultimate goal is to allow the 
ISPs to tell us how best to achieve complete coverage within 
their networks of government traffic, and they may be able to 
do that more efficiently and effectively. Indeed, we think they 
will be able to, as do our partners at NSA, and so the goal is 
to shift to a managed security service in 2013. We would be 
both deploying the government equipment and maintaining four of 
the five ultimate deployments of government equipment while 
developing with the Internet service providers the managed 
security service solution.
    Mr. Price. All right, so is----
    Mr. Beers. Which should allow us to have more coverage 
quicker.
    Mr. Price. Well, that is my question. To what extent is 
this third phase also going to be a matter of rolling 
deployments over several years or to what extent are you 
talking about developmental work that is really going to have 
to play out before any system is deployed?
    Mr. Schaffer. [REDACT] providers will, knowing their 
networks better than we do, have a more efficient way to get 
this done and may, in fact, be able to do it more quickly than 
we could do it by deploying our equipment into their networks. 
I cannot give you a sense of how much faster that would be 
because we haven't gotten to that point yet, but we are 
confident that the Internet service providers will be able to 
give us a good sense of what that schedule and timeline would 
be, and then we will have to make a decision as to whether we, 
in fact, do fully shift or there is some combination of 
government equipment and managed security services.
    I will point out that not all of the Internet service 
providers have the same level of capability with respect to 
this kind of solution, and so we just need to do that research 
in order to get to clarity.
    Mr. Beers. The RFPs and the RFIs that we have out now.
    Mr. Schaffer. [REDACT]
    Mr. Beers. But our general presumption here, and this is 
not us alone, this is us in conjunction with NSA, is we have 
collectively come to the conclusion that we are ultimately 
going to have to be in a managed security service environment, 
that the expansion of traffic is so huge and so growing that we 
do not have a government solution. We do not have a government 
solution as it exists today that is going to solve this problem 
down the road. So. we have to get to a managed security service 
solution, and the people who know the most, as Greg said, about 
their networks are the telecoms, and they spend $6 trillion on 
their networks. That is a lot more money than we can ever bring 
to bear on this. And why do they do that? Because that is their 
business model. Their business model is to move the traffic.
    Mr. Schaffer. [REDACT]
    Mr. Price. Thank you, Mr. Chairman.

          GREG SCHAFFER'S DEPARTURE AND STATE OF CYBERSECURITY

    Mr. Aderholt. Thank you. Before we end today, I would like 
to recognize Greg Schaffer, who of course has been speaking, 
but of course he currently serves as the Assistant Secretary 
for Cyber Security, and we understand you are going to be 
leaving tomorrow?
    Mr. Schaffer. Yes, sir.
    Mr. Aderholt. We will miss your candid views on 
cybersecurity, telling us where we are, where we need to go, 
and we do thank you for your service, and we are going to be 
entering something in the record for your service, but before 
you leave, is there any comment or anything you want to make as 
far as your views on cyber that you would like to leave with 
us?
    Mr. Schaffer. Thank you, sir. I really do appreciate that. 
What I would say is, I have been in this space for the better 
part of 15 years, I have done it as a prosecutor at the 
Department of Justice, I have done it as a consultant working 
with some of the largest companies in the country, I have done 
it as a CISO and a Chief Security Officer and Chief Risk 
Officer, and then in this role. We have never been in as good a 
place as we are now in terms of the coordinated efforts across 
government to address these issues, and yet the problem is also 
getting more serious in that the attack space is enormous. We 
are attaching more to the Internet than we ever have before. 
The control system space in particular needs to be thought 
about.
    We have made enormous progress in the last 3 years at DHS, 
just the size of the program, going from just over 100 people, 
119 I think, when I first got here to close to 400. We will 
continue to grow. We have got a lot of momentum in the 
interagency, with the law enforcement community working hand in 
hand with DHS and with the intelligence community. The 
relationship between NSA and DHS, while there are always these 
moments that I am sure you hear about, it is far better than it 
has ever been before, and we are working closely on a whole 
range of things. When incidents happen, the capability to bring 
a whole of government approach is by far the best I have seen 
in any circumstance in the past because you have got someone 
that can focus on mitigation and addressing the challenges for 
the whole community when something new is discovered in DHS, 
you have got a law enforcement community that can go chase the 
threat actors in a very serious way, and the resources at the 
FBI and the Secret Service and other investigative agencies, 
and you have got NSA and the intelligence community and all of 
the history and background of technical capability backing up 
the resources in both the law enforcement community and 
mitigation community. That is the way this should work, and we 
need to invest in that tripartite approach, and we need to 
bring the private sector as much as possible into that as is 
being done at the NCIC through the efforts of the whole 
community.
    So I think we are in a good place, but this is a moment 
where if we do not get this legislation or some legislation, 
you know, we have pushed this rock to the top of the hill. We 
have been talking about doing something more serious on cyber 
as long as I have been in this space, and you all have done the 
work with these hearings and with the very serious focus over 
the course of the last 3 years. If we do not push this rock 
over the top of this hill, it is going to roll back and crush 
us all, and I really mean that. We are on the cusp of really 
addressing this problem in a serious way, and the problem is on 
the cusp of really causing us enormous societal problems, and 
we have just got to decide, are we pushing this rock over the 
hill or are we letting it go? And I hope that we are pushing it 
over the hill.
    Mr. Aderholt. We wish you the best. Thank you for those 
comments.
    And at this time the hearing will be adjourned.

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                                            Tuesday, March 6, 2012.

                            U.S. COAST GUARD

                                WITNESS

ADMIRAL ROBERT J. PAPP, JR., COMMANDANT, U.S. COAST GUARD

                   Opening Remarks: Chairman Aderholt

    Mr. Aderholt. Good morning. The Subcommittee will come to 
order.
    It is good to have you here, Admiral Papp. Thank you for 
being here.
    First let me say that we were all made painfully aware last 
week that the Coast Guard is inherently dangerous work. We all 
mourned the tremendous loss of the brave helicopter crew in 
Mobile Bay that occurred last Tuesday.
    Lieutenant Commander Dale Taylor, Lieutenant Junior Gray, 
John Cameron, Chief Petty Officer Fernando Jorge, and Petty 
Officer Andrew Knight, they are far from being forgotten.
    And, Admiral, I understand there is a memorial service on 
Thursday that you will be attending and please let the family 
members know our thoughts and prayers are with them here in 
Washington.
    But we are not defined by the shadow of this tragedy. 
Rather, the Coast Guard best honors the memory of their fallen 
brothers by resolutely carrying out its vital mission in 
protection of this great Nation.
    In fact, last week was visibly bittersweet for the Coast 
Guard. Just days after that unexplained loss, the Coast Guard 
celebrated the production of its newest class of cutters, the 
fast response cutter, a modernized patrol boat that represents 
the strength of American craftsmanship and the future of the 
world's most capable Coast Guard.
    I was joined at that ceremony by some very proud American 
shipyard workers, and bold and active-duty service members, and 
by a man who is both grieving, yet also proud, Admiral Papp, 
who, as I say, is with us today and the Commandant of the 
United States Coast Guard.
    Admiral, again, we are very sorry for the loss of the 
service members and we thank you for being here to discuss the 
fiscal year 2013 budget. And, again, our thoughts and prayers 
are with all the family members of those that lost their lives 
last week.
    No one can doubt your dedication to service, Admiral, or 
that of the active military and civilians that you command. But 
our chore here today is a challenging one. We are trying to 
make sense of the Coast Guard's latest budget request, a 
proposal that, one, cuts over 1,000 active-duty billets and 
decreases the military in strength to just over 41,000, 
decommissions two high endurance cutters, decommissions three 
110-foot patrol boats, and terminates the high tempo patrol 
boat program, largely championed by this Subcommittee.
    It delays the acquisition of several key assets and 
squanders $30 million in savings by dragging out the 
acquisition of two FRCs, fast response cutters, funded by this 
Subcommittee last year.
    In addition, the Coast Guard continues to assert that its 
eight-year-old mission need statement is the basis for 
requested investments even though neither the budget for fiscal 
year 2013 nor the Coast Guard's funding profile in the out-year 
supports the requirements developed back in 2004.
    So instead of the Administration's claimed support for 
front-line operations or for building capacity towards steady 
mission requirements, this budget submission diminishes current 
near-term and future capabilities.
    To put it mildly, this is a budget that is challenging for 
us to accept. We full well understand the difficulty you are 
facing balancing a shrinking budget while also trying to take 
care of the Coast Guard families, sustaining operations with 
aging assets, and recapitalizing for the future.
    This is no small task in today's fiscal environment. But 
the Congress has never supported a plan that so bluntly guts 
operational capabilities. Rather, we have repeatedly funded a 
rationalized modernization program that minimizes gaps by 
phasing out antiquated cutters and aircraft while at the same 
time bringing new assets on line.
    I believe what is at stake is no less than the future of 
our Coast Guard. You appear to have arrived at a tipping point 
between the Coast Guard that you assert is needed and the 
agency this Administration is actually willing to support.
    In my view, the Coast Guard cannot be short-sighted in its 
approach to this challenge. Instead the service must approach 
these issues strategically by applying an updated look at 
capabilities and requirements within the confines of the budget 
proposed and its new realities.
    Admiral, we know you have a tough job. This is precisely 
why we are relying on you to explain how this budget meets our 
Nation's needs for both fiscal discipline and robust security.
    Before I turn to the Admiral for his comments this morning 
and for his opening statement, first I would like to recognize 
the distinguishing ranking member, Mr. Price, for a few remarks 
that he may have to make.
    [The information follows:]

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                 Opening Remarks: Ranking Member Price

    Mr. Price. Thank you, Mr. Chairman.
    I, too, want to begin this morning by expressing my 
sympathy, the good wishes of this Subcommittee and the Nation 
to the Coast Guard and its families for the tragedy suffered 
last week in Mobile Bay.
    One of the pillars that makes America strong is that we are 
blessed by men and women in uniform who volunteer to safeguard 
us every day. To the Coast Guard and the men and women of the 
Department of Homeland Security, we offer our thoughts and 
prayers for the loss of these four individuals and our thanks 
for their brave service to the Nation.
    Today we are glad to welcome back the Commandant of the 
Coast Guard, Admiral Robert Papp, to discuss his agency's 
budget request for fiscal year 2013. The Coast Guard is 
requesting $8.3 billion. This does not factor in $254 million 
in overseas contingency operations that are included as a 
permissive transfer in the Navy budget. However, even when you 
factor that in, this request is lower than the current fiscal 
year.
    Like the rest of the Federal Government, you are being 
asked to do more with less. Your budget reflects your heavy 
reliance on human capital for all your activities. Sixty-five 
percent of your request is tied to people and you will be 
letting about 1,070 personnel go in 2013.
    Admiral, in a recent speech, you stated that about two and 
a half billion dollars is required to properly replace the 
Coast Guard's aging stock of ships, aircraft, and other 
property, yet the budget requests far less than that amount, 
$1.43 billion to be precise.
    Within this amount, you have had to make some tough 
decisions on which assets you need to keep on track by 
providing a healthy amount of funding this year, which ones can 
be delayed, requiring your personnel to continue to operate on 
aging and delapidated vessels or aircraft, and which new 
procurements will be added and which acquisitions you are 
holding outright. They are not easy choices.
    I am pleased to see the Coast Guard beginning the 
procurement of a new heavy icebreaker and requesting sufficient 
funds to complete the sixth National Security Cutter. But I am 
disappointed by a lack of funding for the seventh or eighth 
National Security Cutter, the lack of the advanced funding on 
those items.
    No doubt, you are well aware of the uproar this decision 
has caused and I, too, question it. If no additional national 
security cutters are procured after number six, we are 
effectively halving the Coast Guard's largest cutter fleet at 
the same time that you plan to place one of the new national 
security cutters in Alaska for up to six months of the year, 
meaning you are going to have fewer cutters operating 
elsewhere.
    This certainly was not the plan when Deep Water was 
originally envisioned and a smaller national security cutter 
fleet was justified to Congress. So I expect we will want to 
delve into this topic today.
    Similarly, I have concerns about delays in the Fast 
Response Cutter. Your budget essentially overrides 
congressional direction. In 2012, it requires you to procure 
six of these ships eliminating $30 million in cost savings that 
we anticipated.
    This change coupled with the decommissionings of three 
patrol boats in 2013 will result in approximately 13,000 fewer 
patrol boat operating hours next year. This is a troubling 
decrease that this Committee must weigh carefully the 
implications of, particularly as we see vast amounts of 
narcotics coming up through the Carribean and instability in 
Mexico as the Calderon administration comes to a close.
    Admiral, we value the work of the Coast Guard day in and 
day out. Many times we watch in amazement as you complete a 
tough rescue operation or an exceedingly difficult operation 
such as the break-in by an icebreaker to provide Nome, Alaska 
with the fuel they needed to last through the winter.
    And our hearts go out to you when we experience a tragic 
accident like the one last week. We hold the men and women of 
the Coast Guard in the highest regard on this Subcommittee.
    Our job here today and through the appropriations process 
is to ensure that you have the resources necessary to fulfill 
your mission and that taxpayer dollars are allocated wisely.
    Admiral, I have no doubt that you share this point of view 
and look forward to working with you again this year.
    Thank you, Mr. Chairman.
    Mr. Aderholt. Thank you, Mr. Price.
    Admiral Papp, we look forward to your comments.

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                   Opening Statement: Commandant Papp

    Admiral Papp. Thank you, Mr. Chairman and Mr. Price.
    And I am going to divert from my notes here for just a 
moment and give you a sincere thanks for the expressions of 
sympathy for the crew of the 6535.
    You know, there are times when there is only one person in 
the Coast Guard who can take on certain duties. One of those is 
when we lose members of our family.
    I went over to Mobile on Friday afternoon and I met with 
the parents of Lieutenant Commander Taylor and Lieutenant 
Junior Grade Cameron, hugged their moms. Everybody shed a few 
tears. We chatted a little bit and then I went around and spoke 
to the shipmates of Chief Petty Officer Jorge and Petty Officer 
Knight as well.
    I will return there on Thursday to speak at the memorial 
service when I will see Mrs. Taylor and her two sons, age 7 and 
4, remainders of the families and other representatives and 
also our greater Coast Guard family in the Mobile area.
    There is only one person who can do that. There is only 
person who is called upon to do that in times of stress and 
passion and emotion and that is the Commandant of the Coast 
Guard who speaks in those events.
    Likewise, there is only one person who can come up here and 
tell you what my service needs are and that is the Commandant 
as well.
    And the emotion and the passion that I feel for my service 
is only strengthened by those events of the last week and 
redoubles my commitment to come up here and give you candid 
assessments of what I can do within the limits of the budget, 
what my best advice is for spending every nickel of that budget 
to provide the best services possible for our country.
    For 222 years, the Coast Guard has faithfully served this 
Nation and we have weathered many storms in the past and we 
have adapted to operate at times of peace and conflict and 
continually respond to meet emerging maritime challenges.
    Today is no different. The Coast Guard men and women are 
confronting a diverse array of challenges in the maritime 
environment, whether it is transnational smuggling, illegal 
fishing on the high seas, increasing human activity driven by 
economic opportunity of an ice-diminished Arctic Ocean, and 
piracy to name a few.
    Just over this past weekend, Coast Guard Cutter Northland 
was on patrol off South America when its embarked helicopter 
sighted a vessel with three outboard engines and numerous bales 
visible on deck.
    We call that a go fast vessel. It is a smuggling method, 
and it refused to stop even after the helicopter fired warning 
shots. The helicopter gunner then fired into the go fast 
engines to disable it and the cutter Northland's boarding team 
went aboard and recovered 1,600 kilos; that is nearly 2 tons, 
of pure cocaine worth an estimated street value of $42 million.
    If we had not interdicted this cocaine, it would have made 
its way into South America and through Mexico and would have 
been broken down in much smaller loads for transport and sale. 
It makes that significantly harder for land-based law 
enforcement to interdict.
    And as it travels north through Central America and Mexico, 
it creates a cascading wave of destabilization, crime, and 
social harm that spills across our southwest border and into 
our streets.
    [Chart]
    Admiral Papp. I placed a paper chart up there that shows 
the threat vectors and the maritime trade routes that approach 
our country, a maritime Nation that depends upon those trade 
routes for 95 percent of our trade, about $700 billion of our 
gross national product.
    As you can see, illicit trafficking is just one of the many 
maritime threats that our Nation is facing. And if we do not 
have the tools to confront these threats, they pose a 
significant risk to our economic prosperity.
    This is why responsibly rebuilding the Coast Guard and 
providing our hard-working Coast Guard men and women with the 
tools they need to do the job remains my top budget priority.
    Now, the good news is that since 9/11, because of your 
support, we have undertaken numerous steps to mitigate the risk 
in our ports and our inland waterways and along the coast, the 
near shore region as I refer to it.
    We have heavily invested in new small boats, more capable 
aircraft, and the personnel to operate them. We have also 
deployed Rescue 21, the distress communications system, through 
the continental United States.
    We have unified our field commands through the creation of 
separate commands to bring together our response and prevention 
activities. We have enhanced our regulatory inspection and 
compliance programs and we have built out highly effective, 
deployable specialized forces that can deploy between the ports 
for security.
    We have also strengthened our partnerships with many 
federal, state, and local agencies that we operate alongside.
    In other words, although there is always more work to do, 
in my nearly 40 years of service, I am proud to say that our 
shore, boat, and patrol forces in our ports and along the coast 
are in the best shape that I have ever seen them.
    But the last place that we want to confront maritime 
threats is in our ports or near our coast. We prefer to push 
those threats out in the offshore region, as far off our coast 
as possible. There is only one agency within the United States 
Government that has the authorities and the capabilities to do 
that and that is the United States Coast Guard.
    So back to the Cutter Northland, which is an example of 
that. The condition of our offshore forces, especially our 
major cutter fleet, is a much different story than our shore-
based forces. Despite the best efforts of our crews and the 
support of this committee, the state of our major cutter fleet, 
most of which is in excess of 40 years of age, is deeply 
concerning.
    Our legacy high-endurance cutters are only achieving 70 
percent of their programmed underway hours and more than 50 
percent of the time, they are sailing with debilitating 
casualties.
    Compounding this challenge is that the United States Navy, 
whom we partner with to patrol the offshore regions like the 
transit zone, is also reevaluating its fleet size.
    Navy ships such as the Perry class frigates have served us 
well in the past in the counter-drug mission, but they are 
leaving the service. This is also a cause for concern because 
the key to interdicting threats offshore is maintaining a 
persistent presence with cutters.
    If we do not have major cutters that are capable of 
operating independently in the transit zone and along the trade 
routes, we cannot mount a response. It is that simple.
    Last year, more than 700 metric tons of cocaine moved 
through the western hemisphere transit zone, but despite having 
actionable intelligence, almost once per week, the drugs were 
on the water en route to Central America. We lacked an 
available major cutter to disrupt and interdict these 
smugglers.
    Other maritime threats are on the rise. The expanding 
global population is placing pressure on our fishing stocks and 
increasing the demand for fossil fuels. As a maritime Nation 
and an Arctic Nation, we require major cutters to patrol and 
ensure the stewardship of these and other deep sea resources.
    This is why we must continue to build major cutters such as 
the sixth National Security Cutter, which is in this budget, as 
quickly as possible. And I am extremely grateful to the 
Secretary and the President for giving their support for number 
6 in this budget.
    Doing this lowers our costs, maintaining momentum that has 
allowed us to put National Security Cutters 4 and 5 on contract 
for nearly the same price.
    There are at least two other reasons why our recent 
acquisitions have been very successful: your strong support and 
our highly capable acquisition workforce.
    Today we are poised to build ships and aircraft like never 
before. And many of our acquisition programs are mature. We 
have overcome learning curves, taken advantage of 
opportunities, and are reaping the benefits of a refined 
production process and trained builders.
    In order to deliver our new assets as fast and 
inexpensively as possible, we must keep these production lines 
going.
    Beyond major cutters, we have also delivered the first Fast 
Response Cutter and we have 11 more on order. We have delivered 
13 maritime patrol aircraft. At least two arrived ahead of 
schedule. And we have also delivered 83 of our new medium-size 
response boats.
    The ships and aircraft we are building today will define 
the Coast Guard's capability for the next 50 years, the 
capability we need to remain true to our motto, Semper Paratus, 
always ready, as we enter our third century of service to the 
Nation.
    So thank you for the opportunity to come up here and 
testify this morning and I look forward to answering your 
questions.
    [The information follows:]

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                 CAPITAL INVESTMENT PLAN, SUBMISSION OF

    Mr. Aderholt. Thank you, Admiral Papp.
    Let me start off with the fiscal year 2012 conference 
agreement, which of course, as you know, directed the 
submission of the capital investment plan with the submission 
of the fiscal year 2012 budget.
    However, as we sit here today, almost a month after the 
budget was submitted, we still have not seen the Coast Guard's 
investment plan. The requirement for the CIP, or the capital 
investment plan, was in bill language. That was signed into law 
by the President. It was carried in both houses, the House and 
the Senate bill, and certainly did not appear just out of thin 
air.
    The requirements were not new or overly burdensome. They 
are, in fact, requirements for information that you as the 
Commandant should already have in order to provide the needed 
oversight for your acquisition program.
    Admiral Papp, I must be honest. The failure is unacceptable 
to this Subcommittee.
    Why has the Coast Guard failed to comply with the law and 
right now this morning, we need to know when we can receive 
this report?
    Admiral Papp. Sir, I take responsibility for that failure. 
You are absolutely right. It is relatively new for us, but that 
is not an excuse. I have discovered that it is still within my 
headquarters and I commit to you to have it out of Coast Guard 
headquarters by the end of the week for review by the 
Administration.
    Mr. Aderholt. Okay. So when do you expect that we can 
receive it?
    Admiral Papp. Well, we will have to work with the 
Administration to see how quickly we can push it through there. 
But we will wrap it up in terms of my portion of it and forward 
it on within the next week.
    Mr. Aderholt. And there is $75 million that is withheld 
from the operating account, from your operating account, until 
the report is submitted.
    So you can assure us your commitment to take the statutory 
requirements very seriously and submit the report and also 
avoid that something like this would happen in the future?
    Admiral Papp. Yes, sir. That $75 million certainly is a 
great incentive for me because we need each and every nickel 
that we have in our budgets. And I commit to you to do a better 
job on it and get it to you as soon as possible.
    Mr. Aderholt. Thank you, Admiral.
    The President's budget includes funding for the sixth NSC 
which has been referred to earlier, but that does not provide 
any funding in the out-years for the NSC number seven and 
number eight, nor does the funding profile show the shutdown of 
costs associated with the program.
    Is the program of record for eight NSCs still a relative 
requirement?
    Admiral Papp. Yes, sir. And I have confirmed that with our 
Secretary. She has stated that it is still the program of 
record.
    This year, our acquisition budget, our acquisition portion 
of the budget--although our overall budget is reduced by about 
4 percent--the 2013 budget represents a 20 percent reduction in 
our acquisition monies.
    That has caused us to look across our entire portfolio. 
And, quite frankly, we are ordering the minimum production 
level in almost every project that we have including the 
National Security Cutter.
    I acknowledge right up front that in the 5-year plan, there 
are zeros next to seven and eight, but the Secretary remains 
committed. That is the program of record.
    And I think given the constraints of the Budget Control 
Act, we are going to have to look at each and every asset in 
every portfolio in each and every year as we go forward and 
work doubly hard to justify whatever we can get to spend on 
those projects.

                 NATIONAL SECURITY CUTTERS: PRODUCTION

    Mr. Aderholt. In order to maintain the current production 
rate, when does the Coast Guard need funding to begin 
construction of the NSC 7?
    Admiral Papp. NSC 7 would be within the 2014 budget, which 
is what we had programmed in order to keep the flow at the 
shipyard in proper sequence and to get the--under the original 
construct, if you go back to the 2012 budget submission, we 
were looking at year 2014 and 2015 for NSCs 7 and 8 in order to 
keep the flow going and also make room in the budget for 
starting the Offshore Patrol Cutter.
    I would like to add that I am a fairly optimistic guy, so 
as I look at the plan, one of the things I have been talking in 
many venues about is the need for recapitalizing our icebreaker 
fleet as well. So a positive note in looking ahead is that we 
are starting to get money now to recapitalize our icebreaker 
program.
    But there are a lot of portfolios there. There are 
diminishing resources in the acquisition fund and in our 
budget. And as we go from year to year, I suspect it is going 
to be a battle to look at each and every one of those items and 
either justify or reprioritize spending within any given budget 
year.
    Mr. Aderholt. Where would the number seven and number eight 
NSCs be located?
    Admiral Papp. The hulls themselves?
    Mr. Aderholt. Yes.
    Admiral Papp. My planned lay-down or at least the plan that 
I have approved within Coast Guard headquarters for planning is 
NSCs 1 through 4 are going to be in Alameda, California. Let me 
correct that. NSCs 1 through 3 are in Alameda, California. Then 
we go to 4 and 5 in Charleston, South Carolina. NSC 6 goes back 
to Alameda. Then NSCs 7 and 8 go to Honolulu for the lay-down.

            NATIONAL SECURITY CUTTERS: OPTIONS IF NOT FUNDED

    Mr. Aderholt. I know my time is running out, but let me ask 
you one last thing. If you do not get the funds for the NSC 7 
and 8, what will that mean for your legacy fleet?
    Admiral Papp. Well, we would have to look at all the 
options that are available. One option might be keeping some of 
the 378-foot, high-endurance cutters on active duty. That 
presents a challenge.
    Just 2 years ago, I am sorry, 3, 4 years ago now, when I 
was the Atlantic Area Commander, I had to shut down both Dallas 
and Gallatin, the two ships that are home ported in Charleston. 
We found major structural problems in both ships that made them 
unsafe to go to sea.
    The Commandant at the time and under my recommendation, 
decided to reactivate those ships. It took us $20 million and 2 
years to get Gallatin back into shape. If I was confronted with 
that decision today as Commandant, we would not spend the 
money. We would just decommission the ship or lay it up because 
it is just unsafe to send people to sea in.
    The remainder of the ships that we have in service right 
now are rapidly approaching that as well. We only get about $1 
million per year in sustainment funds for each one of those 
ships. If you spend $20 million on one ship or you spend $2 
million on one ship, it comes at the expense of other ships and 
other programs, which worsens their condition as well.
    So it is a risky proposition going forward trying to keep 
the Hamilton class 378-foot, high-endurance cutters in service 
because they are just increasingly expensive each year.
    But if the NSC program is curtailed, I need to look at what 
the options are to keep some of those ships in the budget, 
which would push them up into the 50-year range by the time we 
probably look at decommissioning them.
    Mr. Aderholt. Thank you.
    Mr. Price.

                       BUDGET CHALLENGES, MEETING

    Mr. Price. Thank you, Mr. Chairman.
    Let me continue to ask you a few questions about the 
national security cutter and in particular what some of the 
budget tradeoffs are that you have been dealing with.
    This is a real quandary. You have put the production funds 
in for number six. Number seven and eight are deferred. That is 
something like $1.6 million that would be required for those 
remaining two cutters.
    I assume there is a tradeoff here against the procurement 
of a heavy icebreaker against the investments in fast response 
cutters.
    What kind of decisions have you had to make as you consider 
these competing needs and then related to that, of course, is 
what this does to your missions?
    Obviously when you combine the at least temporary halt in 
procurement with the decision to operate in Alaska with one 
cutter up to six months a year, you are talking about fewer 
cutters working and a reduced number of operations.
    Are we crossing the line here between the increased 
efficiency, of course, that we have been looking for with 
really a smaller fleet that is not able to carry out essential 
missions?
    Admiral Papp. Mr. Price, there is no doubt there are 
challenges there. My job, however, is twofold.
    First of all, I have looked at the--well, actually, three, 
but the second two are sort of combined. My first thing is to 
look at our current threats.
    And as I said in my opening statement, ``Where are the 
current threats?'' We have illegal migration, threats to our 
fisheries, illegal drugs, all things that need to be 
intercepted and dealt with on the high seas. There is only one 
agency in the government that can do that, that has the legal 
authorities and the capability to do that. That is the United 
States Coast Guard.
    In order to do that, you need sturdy ships that can be out 
there on a sustained basis. That is why I continue to say that 
my highest risk is on the high seas and having major cutters to 
be able to deal with that.
    The second and third thing is ``What are future threats 
going to be?'' That is a little harder to analyze, but I think 
that given our 200-year history, if you look back, there are a 
lot of the same threats, whether it is piracy, smuggling, or 
other things. They are consistent in the maritime environment 
and I suspect that for the next 40 years, they will remain that 
way, too.
    So as you look out for 40 years, what do you give priority 
to build out over in the near term that is going to last us for 
the next 40 years because I am not building just for the next 
budget year? My responsibility as Commandant is to build for 
the next 40 years.
    Another emerging threat is the Arctic. I have said that in 
many venues around town and around the country. We need to 
recapitalize our icebreaker program as well.
    So as a, once again, relatively optimistic guy, I am 
looking at the fact that we have acknowledged that the program 
of record is eight national security cutters. We are getting 
money for an icebreaker and I think rightly so.
    Each and every year, the Secretary and I are going to have 
to look at the--next year or this coming year, we are going to 
have to look at the 2014 budget and decide what we can do.
    And I have not gotten my budget guidance yet, but I will 
express my concerns, give her my best professional advice as 
the Commandant, and we will work our way forward in future year 
budgets.

           POLAR ICEBREAKERS: PLAN FOR OPERATIONAL ADDITIONS

    Mr. Price. Those arctic priorities obviously loom very 
large. Could you spell that out a bit exactly what the 
dimensions of that task are, the work we are going to be doing 
in the arctic? What is impacting that? What is creating this 
situation? What kind of change is underway here in terms of the 
way we should assess our arctic mission?
    Admiral Papp. Yes, sir.
    You know, a lot of people think because of whatever your 
opinions on global warming are, you know, there is more open 
water, but the ice refreezes just as we saw this year. And 
actually it makes it a little more dangerous because we are 
getting increased human activity up there.
    But there is still ice and there will be for the 
foreseeable future. Nome is a great example of that. They 
waited too long to get the fuel shipment in there and then the 
ice started forming. And we needed our only national icebreaker 
to break in the fuel tanker to get into Nome.
    I find myself, I am sorry--I find our country at risk by 
only having one operational icebreaker right now. So we within 
the Coast Guard are working as hard as possible to get Polar 
Star back on line in 2013, which will give us two operational 
icebreakers. And then we have probably a 10-year window to 
proceed with starting to recapitalize with a replacement 
icebreaker and perhaps another one in the future.
    But my responsibility is to meet the immediate threat, 
which we have done by keeping Healy operational and restoring 
Polar Star. And now I have to be thinking about the future, 
which is building a new icebreaker that will last us another 40 
years.
    Mr. Price. And international presence in the arctic, is 
that a factor you are thinking?
    Admiral Papp. Yes, sir. As we look at all the activity up 
there, the North Sea Route above Russia is going to become more 
useable than the Northwest Passage over the North American 
continent sooner rather than later.
    There are already Russian ships that are going to be 
transiting through the Northern Sea Route coming down through 
the Bering Strait.
    The Chinese are constructing icebreakers. And if you read 
any of their literature, there is an intention on them to 
assert that they have some claim up there on behalf of the rest 
of the world.
    So the United States needs to be able to maintain a 
sovereign presence. And I think the Navy would postulate that 
they have submarines that can go underneath the ice cap. But at 
the end of the day, you need someone on the surface. You need 
an icebreaker that can be able to operate up there as we 
increase our human activities and respond to challenges and 
emergencies that might come up similar to Nome.
    Mr. Price. Thank you, Mr. Chairman.
    Mr. Aderholt. Mr. Carter.
    Mr. Carter. Thank you, Mr. Chairman.
    And, Admiral, I thank you for being here. You have got 
tough decisions ahead of you to make.
    You know, we have a saying in Texas that when it comes to 
ham and eggs, the chicken is involved, but the pig, he is 
committed.
    Admiral Papp. Right.

                           DRUG INTERDICTION

    Mr. Carter. And we are pretty committed to being involved 
in what is going on with the border. And, you know, our 
governor has put state resources on the border as have many of 
the other governors for that matter.
    And I have been very involved with the Coast Guard and I am 
impressed with the Coast Guard. And I have seen their 
operations in drug interdiction down there.
    The way I view what is happening on the border, especially 
with this cocaine war that you just described for us just a few 
minutes ago with those tons of cocaine that come into this 
country is that, you know, the border patrol is playing defense 
and it is hard, tough defense.
    You guys are our offensive weapon that are going down 
there. And you are in the field and you are doing a good job at 
it.
    And I am very concerned about these cuts that we are 
talking about that both the chairman and the ranking member 
have already brought up, the high-endurance cutter, the 
terminating patrol boat, high tempo, high maintenance program. 
These things concerns me in that we are losing our offense in 
the drug war. We are going to be restricted in our offense in 
the drug war.
    And I have got some familiarity, thanks to this committee 
going to Alaska. We were able to see the top end of this war 
that is going on, and what you have to face with these people 
that are taking a high-risk doing this Northwest Passage 
cruises up there in the north.
    And when we were in Alaska, we were told this is dangerous 
business. Our cutters were weak. If something happened and one 
of the cruise boats got caught in the ice, response would be 
almost impossible. We do not have the either air or sea assets 
to reach them.
    We saw what happened in Nome, which, by the way, you are to 
be congratulated on. I think you did a great job pulling that 
off.
    And I recently was with a Coastguardsman who took my 
daughter to the White House Christmas party and several of the 
folks from Alaska came up to him and thanked him for what the 
Coast Guard accomplished in Nome. So you are to be commended 
for that operation. You did a good job in a tough situation.
    But reducing these assets like this, to me it is a mistake. 
And so let's start with the drug interdiction.
    Do you think we have the resources in 2013 and the next few 
years to continue our operations at the level we have been 
doing it so that we can effectively have an offense against the 
enemy, and in my opinion, the most important war we are 
fighting?
    Admiral Papp. A qualified yes, sir. And I qualify that by 
saying, for instance, we are down on the maritime border, both 
on the California side and the Texas side where Mexico meets 
the United States.
    In fact, yesterday, we interdicted two Mexican launches. 
The 87-foot patrol boat Albacore stopped two launches. They 
were carrying marijuana.
    And, frankly, all we are seeing for the most part on the 
California side and the Texas side are marijuana shipments by 
the maritime. We are not picking up any of these small cocaine 
loads.
    Where the cocaine is coming across is on the border, on the 
land border. In fact, as a stark contrast, I was in El Paso 
just a few weeks ago. I went down to the border crossing. And 
they were celebrating because they had just stopped a car and 
found a brick of cocaine in a rocker panel, a brick of cocaine. 
And that was cause for celebration.
    Well, we found 54 bales of cocaine, which has about 50 
bricks each in this stop by the Northland I was telling you 
about.
    So what is the more effective way of stopping cocaine 
coming into our country? It is pushing it offshore, pushing it 
down toward South America when we can intercept the multi-ton 
loads before they get broken down into rocker panels inside 
cars coming across the border, which is a much harder solution 
to stopping the drugs.
    We stop somewhere between 100 and 150 tons of pure cocaine 
in the maritime transit zone. The entire U.S. law enforcement 
establishment across all the lower 48 states picks up about 40 
tons in a given year. That is millions of people picking up 
about 40 tons, a couple Coast Guard cutters stopping 100 or 
more tons.
    So our patrol boat hours, I am concerned about them. But to 
be truthful, by the end of 2013, we are going to have seven of 
our new Fast Response Cutters. We will be back up. We will 
close that gap on patrol hours over the course of the year.
    But in order to fit within this budget, we have eight FRC 
crews onboard already. We have the people already. And in an 
ideal budget environment, I would love to have those new crews 
while we still have the old crews and then wait until those new 
crews are in the boats and actually out there. Then we could 
decommission the ship.
    I do not have that luxury anymore, so I have to let some of 
them go so we can hold the ones we have for the new patrol 
boats. And by the end of 2013, we will be back up there.
    In fact, as we speak today, we have 114 total patrol boats 
out there. By the end of 2013, we will have 118 patrol boats 
out there and seven of those will be our new Fast Response 
Cutters, which we are going to get 20 percent more underway 
opportunities with.
    So is it a risk? There is always a risk, but I am 
comfortable absorbing that risk in the patrol boat arena. But, 
once again, the big risk is the large offshore cutters, which 
are becoming increasingly unreliable and which pick up those 
multi-ton loads.
    Mr. Carter. Well, I for one, as the other gentleman here 
explained, I am concerned about this. I have always thought 
since I have been on this subcommittee since 2004, that the 
Coast Guard was the shining light in the Homeland Security 
Department. And I want to keep it that way.
    I think we have got to start squeezing this thing and try 
to figure out a way to keep our Coast Guard well equipped and 
current.
    Admiral Papp. And, sir, if I could qualify. I want to say 
one of the good things about this Department is the fact that 
CBP [U.S. Customs and Border Protection] and the Coast Guard 
work together. I am not diminishing what they do at the border.
    Mr. Carter. I know you are not.
    Admiral Papp. They do a great job at the border, but that 
is their challenge. They are more challenged because they get 
those loads that come into Mexico and consequently we have it 
pretty well covered because if they are not bringing the 
cocaine around by the maritime route, they are trying to bring 
it across the land border.
    Mr. Carter. Well, according to the fiscal year 2013 budget, 
the Coast Guard will be at a five-year low for drug 
interdiction capability. We have to get that up. That is the 
war that 40 to 50 thousand people have lost their lives over 
the last ten years in Mexico. Now, they may not be U.S. 
citizens, but they are still human beings. And each one of 
those lives lost matters to me. They are my neighbors.
    And this is a serious fight. And if you can stop it down 
close to its source, like you said, it will maybe lighten the 
load that we have to carry on the border and hopefully start 
saving some lives.
    I am for getting as many assets in the hands of the Coast 
Guard as we can.
    Thank you, Mr. Chairman.
    Admiral Papp. And, sir, we are not carrying out this battle 
by ourselves either. Yes, I want to have the ships to be able 
to do that, but I have met with Admiral Sinez in Mexico to 
continue working together and cooperatively.
    I am going down to Colombia this month to meet with the 
Colombian Navy. I went to London and met with the First Sea 
Lord because they provide assets down there.
    We are trying to leverage our partners as well as we can, 
but all of them are facing budget constraints. England is going 
to take their ships out of there. Of course, Colombia and 
Mexico are stretched as well and we are losing our Navy assets.
    So we may end up being the only ones holding the bag down 
there. That is why I am so insistent that we need to 
recapitalize our major cutter fleet.
    Mr. Carter. I thank you, sir.
    Mr. Aderholt. Mr. Dent.

  TRANSITIONAL WORKER IDENTITY CREDENTIALS: USE AT CHEMICAL FACILITIES

    Mr. Dent. Thank you, Mr. Chairman.
    Thank you, Admiral Papp, for being here.
    And I have always said, you know, the Coast Guard does 
remarkable work given the limited number of assets and 
resources it does have. You and everybody certainly in the 
Coast Guard really deserve to be commended.
    Unlike my colleague from Texas, I do not have any clever 
bacon and eggs metaphors today that we are dealing with, cannot 
think of one, but, nevertheless, thanks for your service.
    I want to talk about TWIC. I am sure you are aware that 
some of the chemical industry have advocated the use of TWIC, 
Transportion Worker Identification Credential, for their 
personnel requirement under the CFATS program.
    We have been asking for the Administration's position on 
this proposal and I have asked and I have offered to work with 
DHS on legislation should it be necessary.
    One question we have been asking, though, is how many 
employees at these facilities actually have a TWIC card 
already. I do not know. And you may not be able to answer that 
at this point.
    Admiral Papp. I cannot. I am sure we can trace that down. I 
know the numbers of facilities. I certainly do not know the 
numbers of workers, but we could probably figure that out.
    Mr. Dent. If you could find that out, that would be very 
helpful for the committee if you could.
    Admiral Papp. Certainly.
    [The information follows:]

    Response: MTSA facilities are statutorily exempt from CFATS and the 
Coast Guard does not perform inspections on non-MTSA CFATS-regulated 
facilities. The Coast Guard has no means to confirm how many workers 
are employed at chemical facilities covered under CFATS and who 
currently hold a valid TWIC card. The CFATS program is managed by the 
Infrastructure Security Compliance Division in the National Protection 
and Programs Directorate's Office of Infrastructure Protection. I've 
been advised by NPPD that they do not maintain a registry of the number 
of employees at CFATS-regulated facilities who hold a TWIC card. An 
extensive data collection effort would be required to gather this 
information.

              CHEMICAL FACILITIES: OVERLAPPING REGULATIONS

    Mr. Dent. But to put some scale on this whole situation, do 
you know how many chemical facilities covered under CFATS are 
also covered under the Maritime Transportation Security and 
Safe Ports Act? Do you have any idea what percentage?
    Admiral Papp. I do not. I know there is an overlap and we 
are continuously working to diminish that overlap. In fact, the 
Infrastructure Security Compliance Division has granted almost 
400 exemptions to CFATS facilities that are also MTSA 
facilities.
    They come to us to gain verification and we are working as 
hard as we can to eliminate that redundancy where we can and 
just to keep them pure MTSA facilities. So that work is 
ongoing.
    Mr. Dent. Yeah. I would be curious if your staff could also 
follow-up on that.
    Admiral Papp. Yes, sir.
    [The information follows:]

    Response: Facilities that are regulated under the Maritime 
Transportation Security Act (MTSA) are exempt from the Chemical 
Facility Anti-Terrorism Standards (CFATS) regulation. Thus, there are 
no facilities where CFATS and MTSA apply to the same footprint of a 
facility. In some cases, there may be an area of a chemical facility 
that is engaged in maritime activities and that is regulated solely 
under MTSA. Some of these facilities, however, may have other non-
maritime areas outside of the MTSA footprint (i.e., that are not 
regulated under the MTSA regulations), and that may be regulated under 
the CFATS regulations. Through our harmonization work with the 
Infrastructure Security Compliance Division in the National Protection 
and Programs Directorate's Office of Infrastructure Protection, we 
jointly estimate that there may be as many as 400 facilities where some 
portion of the facility is regulated under MTSA and another portion of 
the facility is covered by CFATS.

           TRANSITIONAL WORKER IDENTITY CREDENTIALS: READERS

    Mr. Dent. That would be very helpful to the committee as 
well.
    I also understand that a good number of TWICs are going to 
be expiring, meaning that all those maritime employees will 
then go back to enrollment sites and enroll as if they are 
first-time applicants.
    Given that the readers are still not deployed, is the 
Administration looking at anything to address that situation?
    Admiral Papp. Yes, sir, absolutely. Mr. Pistol from TSA 
[Transportation Security Administration] approached me probably 
about 2 months ago now and we identified the problem. We have 
put together a working group.
    In the Coast Guard, we are extremely concerned over our 
mariners and not creating duplicative, redundant processes for 
them, and we are going to try to work toward a solution that 
will minimize the impact on those people who have to go in for 
the renewals.
    Mr. Dent. Understood. And without these readers, 
essentially TWIC is--it really is not much more than just a 
flash pass and it is a pretty expensive one, too, at that.
    Do you have any idea what the time line is for the TWIC 
reader rule?
    Admiral Papp. Yes, sir. We just got the reader report and 
now we are in the process of coming up with the regulation and 
the proposed rules. And that is going to be about a year 
process to work that through Coast Guard headquarters and then 
through the Administration.
    Mr. Dent. Thank you for that.
    And the reader pilot started in August of 2008. That was 
about a year later. The final rule was supposed to be published 
by August 2010.
    Can you give us any sense of the timing on that issue?
    Admiral Papp. As I said, my most recent read on it is now 
that we have the report, we are working through the final rule, 
and that process should take about a year to get completed.
    Mr. Dent. Port security TWIC reader projects is going to 
expire as I understand it. TWICs are expiring. Are we looking 
at another five years?
    Admiral Papp. For the----
    Mr. Dent. For the expiring TWICs.
    Admiral Papp. I do not know, sir. We will provide you an 
answer for the record on that.
    Mr. Dent. And, finally, I guess my time is about up, can 
you help us understand some of the challenges to finalizing 
this rule and if you can tell us when it is going to be done?
    Admiral Papp. Now that we have the reader report, there is 
no obstacle for us proceeding forward. It is just the time 
involved and writing the final rule and getting that through 
the Administration and published.
    Mr. Dent. Thank you, and appreciate your service and 
everybody in the Coast Guard.
    Admiral Papp. Thank you, sir.

                   MISSION NEED STATEMENT, UPDATE OF

    Mr. Aderholt. Thank you, Mr. Dent.
    Admiral, the budget you have presented to us today claims 
to support the 2004 mission need statement. This study was 
conducted over eight years ago when Deep Water was the plan for 
recapitalizing the aging Coast Guard fleet. And program funding 
was plentiful.
    Since then, many things have changed. Deep Water as a 
single program no longer exists and the fiscal reality of 
record deficits has forced our Nation to refocus on needs 
versus our wants.
    Other departments, such as Defense, have taken this to 
heart and made an attempt at resetting the future. While we may 
not totally agree with what their proposals are, at least they 
do have a plan. It is imperative that the Coast Guard do the 
same.
    Even Secretary Napolitano has stated in front of this 
Subcommittee just a few weeks ago that the 2004 mission need 
statement needs to be updated.
    This is not a call for more studies that detail the mix of 
fleet. You have done many of those over the past few years. 
This is a new look at the mission's requirement that the 
various studies build for.
    When do you plan to follow the Department of Defense 
example by laying out a new strategy for the future to reflect 
today's fiscal realities?
    Admiral Papp. Well, we have taken three looks at the fleet 
mix over the last couple of years. We have Fleet Mix Analysis 
I, which was in an unconstrained environment. We did Fleet Mix 
Analysis II, which was a more constrained fiscal environment. 
And then we just recently completed the Department of Homeland 
Security Cutter Study.
    Each and every one of those studies comes back. I would 
interpret it to be validating the fleet mix that we designed, 
that we came up with in the mission need statement, in other 
words, the eight National Security Cutters and the 25 Offshore 
Patrol Cutters.
    There is nothing that invalidates that. You can look at 
different ways of spending different mixes between the ships. 
The challenge that I am confronted with right now is when you 
look at those different mixes of ships, you are looking at an 
Offshore Patrol Cutter that we do not know what it is going to 
be right now.
    We do not know what the funding will be 5 or 6 or 10 years 
from now. We do not know what that ship is going to turn out to 
be. We are very hopeful that it will be a very capable ship.
    The only thing that we know for sure right now is what the 
National Security Cutter is, which is a stable, predictable 
project that we have met the learning curve on. We have a 
stable price on it and we know that the ship is performing. We 
have three of them out there that are doing an outstanding job. 
It is an outstanding ship.
    So we will continue to work with the Secretary. If we go 
back to looking and revising the mission need statement, it has 
to be based upon our strategy.
    The Secretary recently signed off on a Department of 
Homeland Security white paper that talks about the strategy, 
talks in broad terms about what the Coast Guard does in terms 
of providing layered security.
    We have further amplified that with a document that I 
signed off on just a couple of weeks ago: our Coast Guard 
publication 3.0, which is how we conduct Coast Guard 
operations.
    Because we build multi-mission units, what we end up doing 
is within our strategy. What we have to do is we take those 
resources that we are able to get and then we apply them 
against the highest need, the highest priority mission on any 
given day.
    So at the end of the day, it is resources against the 
priorities. A for instance is these cutters that I talk about 
that are down there interdicting drugs. If we just need them 
for interdicting drugs, that would be one thing.
    But when we have something like the Haitian earthquake, 
humanitarian response, these cutters get diverted to do that as 
well. If we have a mass migration from Haiti or from Cuba, 
those cutters get diverted and are able to operate there as 
well.
    So I do not think we have ever been in a state in the Coast 
Guard where we have enough resources to do everything that is 
called upon within our strategy. What we need to do is balance 
those resources that we have asked for within our portfolios 
against the highest threats on any given day.
    Mr. Aderholt. Does the Coast Guard plan to look at 
requirements? Again, the studies did not address requirements 
for missions.
    Admiral Papp. I am not sure what is meant by that 
statement, sir.
    Mr. Aderholt. As far as the plan to look at what is 
actually required for the long term.
    Admiral Papp. Well, I think the 2004 mission need statement 
looked at all the mission requirements that we had, the numbers 
of hours, number of ships, aircraft time, et cetera, and then 
came up with a plan, a balanced plan of fleet production and 
mission requirements.
    I have nothing that has diminished any mission requirements 
that we have, so I would say from my professional view, the 
requirements in the mission need statement should still 
adequately fulfill those requirements that we have out there.

                     FLEET INTEROPERATION WITH NAVY

    Mr. Aderholt. I think the concern is because of eight 
years. Let me go on.
    The Secretary in her budget hearing and the budget 
justification for the Department of Homeland Security 
submitted, suggested that future strategy for the Coast Guard 
is dependent upon the Navy's force lay-down which we have 
already known includes the decommission of all the frigates.
    If this is truly part of the Coast Guard's plan, how are 
you engaging the Navy on Coast Guard requirements and how many 
of these decisions impact the future of Coast Guard 
acquisitions?
    Admiral Papp. Going back even further, we have a national 
fleet plan. The successive Commandants and Chiefs of Naval 
Operation have looked at our ship building programs.
    At a time when budgets were rising, it was a little easier 
to look at that and now I think both the Chief of Naval 
Operations and I have to take a strong look.
    I think what the Secretary has suggested is a good 
stewardship issue. Under Title 14, she and I both share a 
responsibility to make sure that the Coast Guard fleet is 
adequately prepared to interoperate with the Navy when called 
upon.
    So it is right for her to go to Secretary Panetta and 
Secretary Mabus, for me to meet with the Chief of Naval 
Operations and make sure that we are not building ships or 
other assets that are duplicated by the Navy.
    Now, I meet regularly with the Chief of Naval Operations, 
sometimes a couple times a week, and we also have Navy/Coast 
Guard staff talks that look at these things.
    The Navy provides us support on each and every one of those 
ships. I think it is something, to the tune of about $50 
million per National Security Cutter, that they provide 
equipment on those ships that helps to make us interoperable 
with the Navy and they provide annual funding to us for the 
support and maintenance of that equipment as well, as well as 
updates as the ship ages.
    So this is an ongoing discussion that we have had with 
regularity in the past. It is becoming more important now as we 
are facing constrained budgets. And I applaud the secretary for 
wanting to step forward and meet with the Navy and with the 
Secretary of Defense to make sure that as both of us expend our 
funds, we are spending it on the right resources.
    Mr. Aderholt. My time has expired.
    Mr. Price.

                 AVIATION SAFETY ASSESSMENT ACTION PLAN

    Mr. Price. Thank you, Mr. Chairman.
    Commandant, I would like to turn to the area of aviation 
and safety, obviously an area that you have given very intense 
attention to since you became the commandant.
    Between 2008, 2010, the Coast Guard had a series of 
accidents resulting in a loss of 14 aviators and marine safety 
and security team members. That was a high and unprecedented 
accident rate.
    You have focused on this very sharply when you came on 
board. You required an aviation stand-down to review safety 
operations and you have implemented recommendations from these 
assessments.
    For a year and a half, the Coast Guard did not have major 
mishaps. However, we are all aware that last week we had 
another tragic incident in Mobile Bay with four aviators 
perishing.
    I wonder if you could review for us this morning briefly 
the findings from the aviation safety assessment you completed 
in 2010 and tell us what progress to date you have made in 
implementing these recommendations and also based on your 
initial reviews what you can tell us about the crash last week.
    Was the cause in any way similar to what you had found in 
earlier crashes when you conducted the stand-downs? How does 
this incident compare with those to which you have been 
attending?
    Admiral Papp. Thank you, Mr. Price, and let me address the 
Aviation Safety Assessment Action Plan, the ASAAP as we call 
it.
    And I commissioned that just shortly after becoming 
Commandant and put two of our most senior aviators in charge of 
that, people that I trust without a doubt.
    And what we found was that each one of the accidents that 
occurred, and we lost 14 people over 2 years in five 
accidents--each accident was different, but there were some 
consistent themes. And a lot of it went to the heart of our 
aviation community.
    The differences over the last 10 years as opposed to the 
history of our aviation program is that we went in our aircraft 
because we started getting a lot of money post 9/11; we started 
upgrading our aircraft. We went from a basic H65. We are up 
to--alpha, bravo, charley. We are now up to a delta model and 
the H60, we are up to tango model.
    So there were rapid changes in technology that our pilots 
were adapting to. There were rapid additions of mission sets. 
In other words, we did not do as much airborne use of force, 
rotary wing air intercept.
    In the past, before 9/11, all they did was search and 
rescue for the most part: go out, hover, rescue swimmers, bring 
back. We increased their mission set as well.
    And I think because of the high tempo--what I have 
interpreted the report to say, because of the high tempo of 
operations, our pilots tended to get complacent during routine 
operations.
    If you look at the consistencies between a lot of our 
accidents, it is in transits. It was either during training, 
which perhaps it took a little bit of an edge off because it 
was not a real-world crisis, search-and-rescue case or moving a 
helicopter from point A to point B.
    That is very troubling to develop complacency. And that all 
leads you back to a question of leadership, involvement by the 
commanding officers at the air stations, involvement by the 
senior aviators in terms of mentoring the newer aviators, and 
also crew resource management within the aircraft when they are 
in flight.
    And we are confident that those were the issues and we have 
gone through an education process, sending out our senior 
leaders to each and every air station, and promulgating new 
guidance for our leadership in terms of what we are looking for 
in our leaders and our commanding officers and their 
responsibilities and holding people accountable for those 
actions as well.
    And as you note and as I am very pleased, it has actually 
been closer to 19 months since our last accident and I am 
grateful for that because we never want an accident in any way, 
shape, or form.
    As far as the CG-6535 accident of last week, it would be 
premature of me to comment at this point because we simply do 
not know.
    We had one of our most experienced instructor pilots from 
the training center at Mobile flying that night. He was 
training a new pilot, but the new pilot was at the end of his 
syllabus, was doing his last test flight before transitioning 
to this aircraft.
    We do not know whether it might be mechanical, whether it 
was pilot error. We just do not know at this point. There is a 
full range of possibilities, but it would be unfair for me to 
make a judgment on what it was in this particular case.
    Suffice it to say we are looking at this very, very 
closely. We first of all want to make sure that there is no 
mechanical issue that might be fleet wide that we would be 
concerned about.
    But we have a great team of experts down there who have 
been put together to analyze this completely. We will 
reconstruct the aircraft. We have recovered about 90 percent of 
it right now. But our most urgent mission right now is finding 
the fourth member of the crew, Petty Officer Knight, who is 
still missing down there.
    Mr. Price. Thank you.
    Thank you, Mr. Chairman.
    Mr. Aderholt. Mr. Carter.

          POLAR ICEBREAKERS: ADDRESSING NEEDS WITH SMALL FLEET

    Mr. Carter. Thank you, Mr. Chairman.
    Admiral, as I said, I had the pleasure of going up and 
being with the Coast Guard in Alaska. And we discussed this 
icebreaker situation and that we currently have one operational 
icebreaker.
    And from what I understand, the presence that we need to 
have in the Arctic Ocean is an important presence to the 
national security of this country, but it also has implications 
because a lot of people believe there are an awful lot of 
petroleum assets up there in the north.
    And the competition between the Russians, potentially the 
Chinese, and others to try to lay claim to the whole Arctic by 
their presence is part of international law. As I understand 
it, if it is undefined, you can claim it by presence.
    And the Russians are putting a lot of presence right now up 
in the Arctic Ocean; isn't that right?
    Admiral Papp. Well, sir, that would be true under what we 
used to call customary international law, which is what we all 
operated under one time. But since the enactment of the Law of 
the Sea Treaty, which we have not acceded to, all the other 
countries have acceded, all the other maritime countries in the 
world have acceded and signed on to this treaty. So what Russia 
is doing up there is they are operating under the concepts of 
that treaty, and they are doing bottom surveys and other things 
so they can lay claim, under the treaty, to extended outer 
continental shelf claims.
    Now, we're doing similar things right now. In fact, that 
was what Healy was doing up there last summer, along with the 
Canadian icebreaker, Louis St-Laurent. They were surveying the 
bottom, and mapping it out so that at such time as we accede to 
the treaty and we have proper venue to be able to lay a claim, 
we can establish our claim for the outer continental shelf, as 
well.
    But what Russia's doing right now is in compliance with the 
Law of the Sea Treaty,----
    Mr. Carter. Oh, I understand that. But, I guess the 
question is, they're up there with adequate icebreaker 
capacity. We actually had to call on them for assistance, as I 
understand it, and along with the Swedes from time to time, to 
get icebreaker capacity up in the Arctic. They're not the most 
reliable partners in the world. Is relying on foreign nations 
for polar icebreakers a good policy, in your opinion?
    Admiral Papp. Well, I don't want to point fingers at 
anybody. It would be easy to, but some of the fingers would 
come back to the Coast Guard, as well. The deplorable state 
that we find our icebreaker fleet in is a combination of 
things, some of which was transferring the operational money 
for the icebreakers out of the Coast Guard to the National 
Science Foundation, and the National Science Foundation thought 
that their money was better spent leasing foreign icebreakers.
    The first year they leased a Russian icebreaker and it 
broke down. We had to send Polar Star, one of our polar 
icebreakers, down to break it out. Consequently, our two major 
polar icebreakers have atrophied. They are inactive right now, 
inoperable. Polar Star is being restored, but it will take us 
still a number of months before she's ready.
    This year, they went to lease an icebreaker from Sweden 
called the Oden, and they were going to use that to break out 
McMurdo, down at the South Pole. At the last moment, Sweden 
came through and said,``No, we need Oden for our own duties 
back home,'' and they were left without an icebreaker.
    The National Science Foundation came to me and asked for 
Healy. I refused because Healy is the only icebreaker that we 
have that's operational, and she's actually in pretty good 
shape, and was committed to operations in the Arctic. And I 
wanted to make sure if something came up, I didn't know if Nome 
was going to come up at the time, but if something came up we 
would have our one operational icebreaker available. I was just 
lucky on that particular one.
    So, Healy's okay. She's been up there for almost 8 months 
now, and is going to need a good yard period to get her back 
into shape. She'll be back up there next summer. Then Polar 
Star will be ready in 2013, and that will give us a bridging 
strategy for the next 10 years.
    So, that's why I'm encouraged that we see funding coming up 
for an icebreaker, but I'd like to make the case, and this is 
Papp's opinion, that an icebreaker ought to be a shared cost 
across the government. The National Science Foundation needs 
it. The Department of Defense, from time to time, needs it. 
Yes, the Coast Guard needs it, but this is something that 
really begs for an across-government response and I would say 
sharing, as well. Maybe even industry needs it, which gains the 
benefit of having those icebreakers up there to provide 
security and sovereignty.
    Mr. Carter. That's a pretty good concept. I'd like to 
explore that a little bit because we can't operate if we get 
any emergencies up there that we can't respond to, and just the 
fact that people are, we just had two, two cruise ship 
disasters in the last month and a half, two months. One of 
them, all of the electricity went out. That wasn't as near as 
bad as the one that flipped over on the side.
    But, those people are driving those cruise ships through 
that Northwest Passage now.
    Admiral Papp. Oh, yes, sir.
    Mr. Carter. And that's an awful lot of people. We could 
have in an awful lot of trouble.
    Admiral Papp. Yeah. We focused on icebreakers. But to be 
truthful, sir, I'm more concerned about the short sight 
infrastructure. I've been up to Barrow twice now. I actually 
stayed in Barrow overnight last year. There's no infrastructure 
there. We couldn't find; I had a travel party of 12. We 
couldn't find hotel rooms. We stayed in a dormitory, that old 
dew line station up there that the Air Force runs.
    Plus, if you want to do search and rescue, you've got to 
position some helicopters up there. There's no hangar space for 
my helicopters right now. There's no VHF communications, no 
distress monitoring system up there. People who go up there 
don't understand how little there is in terms of infrastructure 
to support them.
    Now, next summer Shell is going to be up there with about 
600 people on 33 ships and two drilling rigs. That's going to 
be an increase of 600 people and 33 ships over what was up 
there last summer. That creates challenges for me: search and 
rescue, potential for pollution, the potential for security. 
There are environmentalist groups that will seek to disrupt 
Shell's operation. These are all mission sets for the United 
States Coast Guard. There's no other agency that can do it, and 
we don't have any shore infrastructure up there.
    So, if you don't have shore infrastructure, what do we do? 
Just like I said. You send a major cutter to Haiti for the 
earthquake. You're going to send a major cutter up there, which 
gives us a mobile command and control platform, a flight deck 
that can launch helicopters, and a stern ramp that can launch 
boats. And we have what amounts to a Coast Guard sector right 
there, except it's afloat.
    Mr. Carter. We've got a lot of work to do.
    Admiral Papp. Yes, sir.
    Mr. Carter. Thank you, Admiral.

               NATIONAL SECURITY CUTTERS: FY 2013 BUDGET

    Mr. Aderholt. It is obvious that you have no intention to 
fully fund the NSC. The budget cuts, the planned buy for the 
FRC from the six that was appropriated in FY 12, to just four, 
which actually squanders $30 million in savings. The FY 13 
budget only requests two cutters, again, delaying the 
capability and the squandering of savings.
    The question to you, Admiral, is how do you justify losing 
the savings, and delaying the Navy capacity, when you're also 
decommissioning patrol boats and plan to terminate the high 
tempo high maintenance program?
    Admiral Papp. The only way I can explain it, sir, is just 
like my wife and I have a budget and we've got to live within 
it, the Coast Guard's got a budget and we have to find a way to 
live within it. I'm using my best judgment on each and every 
one of those projects on how to keep them going.
    Now, as I said, I don't characterize it as canceling others 
in order to build the National Security Cutter. We need the 
National Security Cutter, as well, and if we push that off--one 
estimate we did last year, if you push it off as much as a 
year--you increase that by about $50 million on that ship if 
you push it off.
    So, I'm intent on getting number 6 in the 2013 budget. What 
that requires is to go to minimum ordering in each one of the 
approved acquisition projects that we have, including the 
National Security Cutter, and that's the best I can do. That's 
my best recommendation on how to keep our acquisition projects 
going within the constraints that we find ourselves.

                   POLAR ICEBREAKERS: FY 2013 BUDGET

    Mr. Aderholt. It was mentioned, and it has been mentioned 
several times here this morning, but the FY 13 budget includes 
$8 million to initiate the acquisition of the polar icebreaker. 
What does the $8 million fund? What is the acquisition 
strategy?
    Admiral Papp. The $8 million will be basically the start. I 
mean, we have no staff on board right now devoted to designing, 
building, and acquiring an icebreaker. So the first thing you 
have to do is you have to bring on, I mean, we have program 
staff. In other words, the people who develop policy can't 
start developing the requirements that we have. But then you 
have to have an acquisition staff that starts setting up and 
complying with all the many, many Federal acquisition rules 
there are in order to get this project going, and that's the up 
front money to start the project.

           OFFSHORE PATROL CUTTERS: PROJECTED OPERATION DATE

    Mr. Aderholt. The budget again delays the Offshore Patrol 
Cutter, OPC, with estimates that we will not have an OPC 
operational until 2020, 2022, which is, of course, years after 
they started initial planning back in 2004.
    Is there any way to accelerate this program to allow for a 
faster recapitalization of our 18 cutter fleet?
    Admiral Papp. I'd be reluctant to do that, sir, and I've 
talked to my people and I think our projected date now is 
having that ship in the water in 2020. Now, I mean, we may be 
quibbling over terms, whether it's fully ready for operations 
or whatever else. But I'm projecting 2020 for having it in the 
water and we're looking at going into production in 2017, which 
is reflected in the Capital Investment Plan.
    When I came in as Commandant, I realized that this was the 
most expensive project that the Coast Guard has ever taken on 
in history. These 25 ships are a significant investment, and I 
also understood looking out at the horizon and seeing in the 
storm clouds that restricted budget is coming up that we needed 
to build a ship that was affordable. We rescrubbed the 
requirements. We have battled ourselves within the Coast Guard 
to make sure we're asking for just exactly what we need. 
Nothing more, nothing less. And I have said three things to my 
staff as we've gone forward: affordable, affordable, 
affordable.
    And I'm very pleased to say that just last week the 
Department reviewed, and we passed a major milestone with 
acquisition decision event number 2, which validated our 
requirements for the type of cutter that we're looking for, and 
we are ready to go toward preliminary and contract design work 
this next year.

              AIRCRAFT, 21 C-27J: TRANSFER FROM AIR FORCE

    Mr. Aderholt. The Air Force has announced plans that it is 
retiring the brand new fleet of 21 C-27J aircraft, which may 
provide the Coast Guard with affordable options for additional 
medium rights to fly that aircraft.
    Is the Coast Guard reviewing this as another option for our 
maritime surveillance, and are you currently talking to the Air 
Force about a potential transfer?
    Admiral Papp. Yes, sir. I've already started that. I talked 
to General Schwartz, the Chief of Staff of the Air Force, just 
within the last week.
    This is intriguing for me and as soon as I heard that, our 
staff started taking a look at a business case analysis on 
this. Now, historically, the C27 was one of the aircraft that 
Integrated Coast Guard Systems looked at when we started the 
Deepwater project as our medium-range aircraft solution. It, I 
believe, was one of the finalists. It was at the time a 
Lockheed product, and Lockheed was one of the lead system 
integrators. But the solution they came up with was that the 
cost of the aircraft. The HC144, which we bought, actually has 
lower life cycle costs and that's what drove us to buy the 
CASA.
    However, like I told you, my sense of optimism--Sometimes 
things fall in your laps and if we can get free aircraft, 
basically free from the Air Force, we might be able to come up 
with a plan that will allow us a mix of the CASAs, a mix of the 
C27s, and oh, by the way, that might put some extra money in 
our budget that we can devote to some of these other projects.
    So this is very attractive to me, but we're just in the 
preliminary stages right now. The C27 uses the same engines as 
the C130J, so we already have a logistics systems for the 
engines for that aircraft. So there's potential. I'm 
optimistic, and we're going to continue the discussions and I 
have a briefing that's working its way up to me, I think within 
the next week or so, which will present the business case 
analysis.
    Mr. Aderholt. Okay. Mr. Price.

                    AIR STATION CLOSURES, IMPACT OF

    Mr. Price. Thank you, Mr. Chairman. Admiral, your 2013 
budget proposal would close two seasonal air stations, in 
Muskegon, Michigan, and Waukegan, Illinois. As I understand it, 
to compensate for these closures you are proposing to transfer 
three H60 helicopters to Traverse City. Two from Air Station 
Clearwater, and one from Air Station Elizabeth City.
    You've indicated that with the larger helicopters in 
Traverse City you'll be able to respond to all searches and 
rescues in western Michigan and in the Chicago area. I'd like 
to have you elaborate on that. If a critical search and rescue 
event occurs in the Chicago area after you close these two 
nearby seasonal air stations, how quickly can you respond from 
Traverse City, which is something like 224 flight miles away?
    Admiral Papp. Thank you, Mr. Price. I speak on this subject 
with personal experience. I was the Ninth District Commander, 
which is our Great Lakes command, and I was continuously 
challenged year-round by the inability of Air Station Traverse 
City to respond to a lot of the cases that we had to do, 
because it's not just Lake Michigan, it's also Lake Superior. 
They have to fly all the way down to Duluth, and I've flown in 
those small helicopters up there. You have to stop and refuel 
midway before you can get down into lower Lake Superior. In 
fact, when you fly from Traverse City or the Air FACS down to 
southern Lake Michigan, oftentimes you have to refuel because 
they're small helicopters with limited endurance.
    The other challenge is in a major portion of the year, 
you've got icing conditions up there, and the H65, the current 
helicopter, is not designed to deal with icing conditions. The 
H60 is a much more substantial helicopter. It more than doubles 
the search time. It has more on-station time. It can go 
further, and it has deicing to protect my people and to be able 
to respond better operationally. The H60 is a better aircraft 
for Air Station Traverse City, I am convinced.
    The only way you can support that is by eliminating what 
are really redundant Air FACS that are only open for about 3 
months of the year. We used to have Air Station Chicago. It was 
decommissioned because the Navy closed down the field that was 
down there. We chose to set up an air facility at Muskegon, and 
then we were required to open up one at Waukegan as well. 
They're redundant.
    The other thing I would add there is people isolate looking 
at the aircraft response. We also have four Coast Guard boat 
stations in southern Lake Michigan, and we have recapitalized 
them with three quarter of a million dollar boats. Six of them, 
which have very fast response times, can deal with heavy 
weather. In any search-and-rescue case you have a combination 
of surface assets and air assets. So when I look at the lay 
down of the increased capable boats that are down there, plus 
the H60s, I'm comfortable that we can still provide proper 
response time for search-and-rescue cases in southern Lake 
Michigan.
    Mr. Price. So there are variables involved here apart from 
the simple response time?
    Admiral Papp. Yes, sir.
    Mr. Price. What is that simple response time, though? What 
are we talking about in Traverse City?
    Admiral Papp. Our search-and-rescue manual requires us to 
have a helicopter on scene within 2 hours. We can continue to 
meet that. The H60 is a faster aircraft in terms of having 
longer endurance time, and we can continue to meet that 
requirement down in southern Lake Michigan.
    Plus, there are times when you have aircraft in the air 
already that can be diverted for cases, as well. We frequently 
have aircraft out there that are on other missions, and can be 
diverted for search and rescue. We also have the boats that can 
get out there even quicker than the aircraft can from the 
stations.
    Mr. Price. What's the impact, by the way, on Elizabeth City 
to lose one H60? What kind of fleet does that leave there?
    Admiral Papp. It will leave three H60s there, which is its 
basic allocation of aircraft. The extra aircraft that was 
there, the fourth one, was positioned there by my predecessor 
to serve the Maritime Security Response Team. It's their 
offshore team that we used to take down non-compliant vessels, 
and the H60 is not an adequate aircraft for that, nor do we 
have the training in place to be able to do vertical insertion 
with that particular helicopter. So that one helicopter that 
was used solely for training is part of what will go up to 
Traverse City.
    Meanwhile, for the MSRT, I'm talking to the Chief of Staff 
of the Air Force and also General Dapse and the National Guard 
to come up with dedicated Department of Defense resources that 
are trained at vertical insertion and will be able to work with 
that team to take them offshore. We are also developing--As a 
follow along to this document, we're developing the doctrine 
for how we do advanced interdiction at sea.
    Mr. Price. All right. Thank you, Mr. Chairman.

                  POLAR ICEBREAKERS: FUNDING INCREASES

    Mr. Aderholt. We mentioned extensively the polar 
icebreaker, and the funding profile shows $120 million in FY 14 
which is a significant increase from the $8 million you 
requested in FY 13. The funding profile then continues to 
climb, totaling over $800 million through FY 17.
    Does that include incremental funding?
    Admiral Papp. For the construction of the ship itself?
    Mr. Aderholt. Right.
    Admiral Papp. Yes, sir. Absolutely.
    Mr. Aderholt. Does the Coast Guard intend to fund the 
developmental program or get the data from, through the data 
rights from a foreign source?
    Admiral Papp. That will be up to our acquisition folks in 
terms of how we approach this particular project. One of the 
things that we have found recently that works for us is going 
to proven designs that are out there. The Finns are, I think, 
the leaders in the world in terms of ice breaking right now.
    The last icebreaker that we built, which was the Mackinaw, 
up on the Great Lakes, was basically a Finnish design that was 
adapted by Marinette Marine, and I suspect any shipyard in this 
country that will build one will be looking toward designs that 
are overseas right now, rather than going to the drawing board 
coming up with a brand new design.

               AIRCRAFT, 21 C-27J: BUSINESS CASE ANALYSIS

    Mr. Aderholt. Going back to the C-27J aircraft, can you 
provide the Committee with a business case analysis for the C-
27J?
    Admiral Papp. Yes, sir. As I said, it has not been 
presented to me yet so I would be reluctant to commit to you 
when I could provide that, and of course, I would have to brief 
the Department on that, as well. But we would be happy to 
provide that as we go forward and send people up here to do 
some briefings on it.

                  OFFSHORE PATROL CUTTERS: CAPABILITY

    Mr. Aderholt. Okay, and there has been discussion as to the 
capability of the OPC with the objective design being more 
capable than threshold capacity.
    What is the current planned capacity of the OPC, and what 
capability tradeoffs are you considering?
    Admiral Papp. The driving one, as I said, is affordability. 
But having said that, and I'm not trying to be funny here, but 
the sea-keeping capability, being able to operate in sea state 
5, is probably most important to us right now, because with 
fewer National Security Cutters--at least fewer than the High 
Endurance Cutter that we have right now--None of our Medium 
Endurance Cutters, the 210-foot and 270-foot cutters that we 
have, can operate in the Gulf of Alaska and the Bering Sea, and 
they do not have the long legs to be able to send them out on 
some of the longer deployments that we do in the Pacific.
    So it has to be able to launch aircraft and boats in sea 
State 5, which is standard ops up in the Bering Sea, and also 
have endurance that will be able to keep it out there on 
station. I believe it was 45 days we were looking for, without 
refueling.
    Mr. Aderholt. Okay. Mr. Price.

                             PERSONNEL CUTS

    Mr. Price. Thank you, Mr. Chairman. Admiral, let me ask you 
about your personnel reductions that are involved in this 
budget proposal. As I understand, you would be losing about 
1,070 personnel, almost all by attrition if the 2013 budget 
request was passed as is. I know a large portion of those 
attritions are due to the decommissioning of aging assets. That 
leaves uncertain, at least in my mind, about these replacement 
assets coming on the line and how the personnel transfers would 
occur. Also, the reduction eliminates a high tempo crewing 
strategy for the patrol boats, which would result in a dip in 
patrol ladders next year.
    That seems particularly concerning as you redeploy large 
cutter assets to the Arctic and reduce small cutter hours in 
the source of transit zones.
    So, I wanted to ask you a couple of questions about this 
personnel issue. I believe the estimate is that about 500 of 
these reductions would occur as assets are being 
decommissioned. That's the number of Coast Guardsmen that would 
be let go as their assets are being decommissioned. What is the 
potential for redeploying this, these personnel to other assets 
so that we don't have a steep drop in operating hours?
    Secondly, can you address the patrol boat high tempo 
operations? How would eliminating those affect your 
counternarcotics operations in the Caribbean and Pacific, 
because we're seeing lots of drugs still coming in there. In 
fact, an influx of drugs is increasing in some areas, and it 
would seem particularly problematic as the Calderon 
administration nears the end of its tenure in Mexico.
    Admiral Papp. The 1,000-person figure is a little bit of a 
red herring. As I said earlier, actually my count is about 700 
people are lost because of the decommissioning of various 
assets. But on the other hand, as I also stated, we have 
brought on many replacement crews to crew the new assets that 
are coming on. For instance, we only have three National 
Security Cutters right now. But we actually have four crews 
already on the books. That fourth crew, it takes a while to put 
them through industry training, new equipment, everything else, 
to prepare them so that when the ship is delivered they are 
trained up and ready to go. So you ideally like to have those 
crews on in advance.
    We only have one Fast Response Cutter that's actually in 
the water and ready to be commissioned. But we have 10 crews 
already paid for that are awaiting their ships to be able to 
crew them.
    Aircraft, I think we have, of our HC144 aircraft, we have, 
I think, 14 or 16 crews already purchased that are on budget. 
So, we have in advance bought the crews for the new assets that 
are coming on. As I said earlier, as well, ideally in an 
unconstrained budget environment, you'd love to keep all the 
old crews and their assets until you absolutely have that new 
ship and that new crew, or that new aircraft and that crew on 
line and ready to go before you decommission the old ones.
    As a part of the budget constraints that I have right now, 
I no longer have that luxury and I have to let those older 
crews go now, because I already am paying for new crews that 
are on the books that are going to be on those new assets.
    In the FY 2013 budget, yes, we are losing the high tempo, 
high ops patrol boats. We're decommissioning three of the 
patrol boats, and we will have a short-term loss in hours over 
the course of that year. But by the end of the year we'll have 
seven FRCs on line that will take advantage of those crews that 
we've already bought, and they give us an increase of about 20 
percent in terms of underway hours, and we will close some of 
that gap by the end of FY 2013.
    I'm willing to take that risk in the near shore environment 
where the patrol boats operate because I'm not seeing the 
threat there. We're stopping the threat much further offshore 
in terms of migrants and drugs, and so I am comfortable with 
our coverage in the near shore region. Plus, we produced 73 
patrol boats in the last 10 years, our 87-foot patrol boats. It 
wasn't too many years ago that we only had about 75 patrol 
boats total in the Coast Guard and now we're up where we have 
114 patrol boats on hand right now. When we build out the FRC 
fleet ultimately we'll end up with 131 very capable patrol 
boats.
    So once again, where I see the risk is in the offshore. Our 
older, major cutters are out there stopping the threats in the 
offshore, but they're getting increasingly expensive to 
maintain. So that's why I favor devoting my budget authority, 
what head room I have, to continuing the purchase of those 
major cutters.
    Mr. Price. As you describe the situation I realize I'm not 
entirely clear about how the overlap works between these crews 
that have been at work for a long period of time, these assets 
that are being decommissioned and the training of the new 
crews, and how do you achieve at a minimum of personnel loss 
and training loss as you make these transitions? I suppose it's 
obviously desirable that there be a seamless transition to the 
new assets coming on board. But when that isn't the case, 
what's, what kind of approach do you take?
    Admiral Papp. Well, we have personnel policies and controls 
in place that help us deal with that, and I'm confident that 
most of the 1,000 people that we're talking about in terms of 
this reduction, which ultimately will not leave until we're 
into fiscal year 2013, we can deal with through attrition and 
modifying our recruiting in terms of bringing people on.
    So we're not going to kick 1,000 people out on the street. 
This is something that's going to be managed that we will, you 
know--We will reduce the numbers of people who are coming into 
our training center at Cape May, at the Coast Guard Academy, 
and that is reflected also as well as we've cut back on some of 
our recruiting billets, simply because we've got people lined 
up, waiting, wanting to come into the Coast Guard. We can 
afford to accept a couple of year reduction in terms of our 
recruiting billets.
    Now there's 220 positions in there that effectively are 
empty, right now. We put a hiring freeze on at Coast Guard 
headquarters because I want Coast Guard headquarters to feel 
some of this pain if we're going to lose people. But the 
reality is many of these are billets that went unfilled for a 
year or more and were not hired into, and we placed a hiring 
freeze in. So we're trimming off what I consider to be some 
excess that we had at Coast Guard headquarters.
    So, this is manageable, this 1,000. Would I love to keep 
the 1,000? Sure, I would. Any Service Chief wants to keep as 
many people and as much money as they want. But, I'm trying to 
live reasonably and responsibly within the budget I've been 
given, and we can manage this.
    Mr. Price. Finally, let me just ask you quickly. There are 
other staffing reductions in other areas as you're beginning to 
tell us. Intelligence staff to the tune of maybe 57 positions. 
Armed use of force missions, air station personnel. Are any of 
those categories that are worthy of special honor that give you 
particular----
    Admiral Papp. Not particularly. Once again, as I said, I'm 
a Service Chief. I'll take anything that anybody gives me and 
will make it work. But, what I've been given is a top line that 
I've got to live within, and we've got 10 years of experience 
since 9/11 right now. Although we built up a lot of areas over 
that 10 years, now is our time to start refining and seeing 
where we have a little put, some puts and takes, whether it's 
intelligent airborne use of force. We've found that we've 
devoted a lot of money and people and resources to that, and 
we're not finding the utility of it in all locations.
    So what we're doing is we're identifying a couple of 
locations where we will train them so that we have them 
available, but we don't need to train every air station to do 
airborne use of force.
    Going back to our discussions on aviation safety, we don't 
want to overburden our aviators with multiple missions that 
we're not getting a return on investment on. So I think it's 
good, after 10 years, since 9/11, to be taking a look at things 
and seeing what we can afford to do, what are the most 
important things for us to be doing, and making those 
responsible decisions.
    Mr. Price. Thank you, Mr. Chairman.
    Mr. Aderholt. Thank you, Mr. Price, and again, thank you, 
Admiral, for being here today, and for your testimony. Again, 
our thoughts and prayers are with the families that lost their 
loved ones last week in Mobile Bay, and we would ask that you 
extend our condolences to them on Thursday.
    So with nothing further on the agenda, we will stand 
adjourned.
    Admiral Papp. Thank you, Mr. Chairman.

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                                          Wednesday, March 7, 2012.

                  FEDERAL EMERGENCY MANAGEMENT AGENCY

                               WITNESSES

CRAIG FUGATE, ADMINISTRATOR, FEDERAL EMERGENCY MANAGEMENT AGENCY
ROSS ASHLEY, EXECUTIVE DIRECTOR, NATIONAL FUSION CENTER ASSOCIATION
JEFF CAYNON, PRESIDENT, HOUSTON, TX, PROFESSIONAL FIREFIGHTERS 
    ASSOCIATION (IAFF LOCAL 341), REPRESENTING THE INTERNATIONAL 
    ASSOCIATION OF FIREFIGHTERS
JOHN M. HOLMES, DEPUTY EXECUTIVE DIRECTOR, PORT OF LOS ANGELES, 
    REPRESENTING THE AMERICAN ASSOCIATION OF PORT AUTHORITIES
JIM MULLEN, PRESIDENT, NATIONAL EMERGENCY MANAGERS ASSOCIATION, 
    DIRECTOR, WASHINGTON DEPARTMENT OF EMERGENCY MANAGEMENT, 
    REPRESENTING NATIONAL EMERGENCY MANAGERS ASSOCIATION (NEMA)
MICHAEL DEPALLO, DIRECTOR AND GENERAL MANAGER, PORT AUTHORITY TRANS-
    HUDSON (PATH) CORPORATION, REPRESENTING THE AMERICAN PUBLIC TRANSIT 
    ASSOCIATION

                   Opening Remarks: Chairman Aderholt

    Mr. Aderholt. The hearing is called to order.
    Good morning. Today we welcome the Administrator of the 
Federal Emergency Management Agency, FEMA, Craig Fugate, to 
discuss his agency's budget request for fiscal year 2013.
    After the conclusion of discussion with Administrator 
Fugate, we will convene an additional panel of stakeholder 
organizations.
    I want to make a brief opening statement in order to allow 
more time for Members to ask questions and to proceed with our 
second panel as well.
    Administrator Fugate, first of all, thank you for the work 
that you do and the hundreds of FEMA personnel who were 
deployed in my home State of Alabama last April and beyond 
following the devastating tornadoes that impacted us. They are 
still there helping our communities pick up the pieces today, 
and we very much appreciate all the work that FEMA and your 
agency has done.
    As recently as this past weekend, we again saw devastation 
that was brought by severe weather. And, once again, we looked 
to FEMA to assist our state and local responders as it is 
needed.
    We thank you, the dedicated folks who are on the ground and 
for all their hard work.
    Before we begin, I want to touch briefly on several issues 
which we will discuss at length a little bit later in the 
hearing.
    With respect to disaster funding, we want to know--will the 
disaster relief fund be solvent through the remainder of this 
year and the next, and will FEMA complete all recovery projects 
for disasters that happened last year before the end of fiscal 
year 2013?
    Grant reform, we want to know--how will grant reform work 
and how will FEMA allocate funding under the new framework? 
Will you provide funding to high-risk urban areas, port 
authorities, and transit agencies as you have in the past or 
will it be provided solely to states for distribution?
    Furthermore, if allocations are dependent upon a State's 
threat and risk assessment, will you provide guidance on the 
process that you announced over a year ago?
    These questions and others must be answered as your 
proposal is considered. And as you continue to engage Congress 
on this matter, I strongly encourage you to reach out to State 
and local stakeholders that will be impacted by these proposed 
changes.
    Mr. Fugate, these are some issues with which you are very 
familiar. You have seen these issues from the local, State, and 
now Federal level. I look forward to your thoughts on these 
problems and what progress you have made in the last year, as 
well as the challenges that remain.
    As your written testimony will be placed in the record, I 
ask you to take five minutes or so to summarize it for the 
Committee. But before you begin, I would like to call upon the 
Ranking Member, Mr. Price, for his opening comments.
    [The information follows:]

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                 Opening Remarks: Ranking Member Price

    Mr. Price. Thank you, Mr. Chairman.
    Administrator Fugate, I am glad to welcome you back to our 
Subcommittee today. The work that the Federal Emergency 
Management Agency does is critical to helping our country 
prepare for, mitigate against, and recover from disasters. In 
2011 alone, we had 99 major disasters, so that is a heavy job 
and one you have performed admirably.
    When you arrived at FEMA, the agency was in a rebuilding 
mode trying to recover not just lost capacity but the lost 
confidence of the American people. Your leadership in this 
critical government function has brought us full circle.
    The contrast between the nearly universal acclaim that FEMA 
has received in the wake of Hurricane Irene and the 
heartbreaking images of Americans left stranded in the wake of 
Hurricane Katrina could not be more striking. This confirms 
that much of the lost capacity we witnessed following Hurricane 
Katrina has been rebuilt and I commend you for these efforts.
    At the same time, FEMA was spread thinly, responding to a 
record number of extreme disasters, and your agency was and is 
facing significant financial challenges. Your chief financial 
officer should be complimented for his efforts to recover money 
from closed-out disasters and to better track expenditures to 
keep the disaster relief fund in the black throughout the end 
of fiscal 2011. As we both know, this was touch and go right up 
until the end. Hopefully with the new disaster funding 
mechanism Congress passed as part of the Budget Control Act, we 
will now have more long-term stability to fund critical 
disaster relief needs.
    Principally we are here today to discuss your 2013 budget. 
The request for FEMA is $10.2 billion of which $6.1 billion is 
for the disaster relief fund. That request is five percent less 
than 2012, largely reflecting a $1 billion reduction in the 
disaster relief fund based on your reduced estimate of 
catastrophic and non-catastrophic needs for 2013.
    Within your budget request, I am pleased to note 
significant increases for FEMA grants, albeit against a base 
which has been significantly reduced in the last two years. 
This funding is tied to a significant reorganization of the 
State and Local Grant Program. Your new national preparedness 
grant proposal has raised many questions as to how it will 
work, how you will award funds to maintain core capabilities 
nationwide, while also bolstering security investments to buy 
down risk and who may be left out. Today I hope you will be 
able to provide more clarity on how you envision this block 
grant to work if approved.
    It also worries me that your request substantially reduces 
funding for the Emergency Food and Shelter Program when states 
and localities remain on shaky financial footing.
    Your request continues to lowball funding in my view for 
the flood hazard mapping and Risk Analysis Program which if 
adopted would cut funding for this program by 60 percent in two 
years when we all know that flooding is the most frequent and 
costly natural hazard in the United States.
    And it eliminates funding for pre-disaster mitigation 
efforts even when this program continues to receive far more 
requests for funding and meritorious requests than has been 
appropriated.
    So, Mr. Chairman, I hope we can work together to address 
these problems as we develop our 2013 funding recommendations.
    And, Administrator Fugate, I want to thank you for your 
service to our country. I look forward to a productive 
discussion today and to continuing to work together to build a 
more resilient Nation.
    Thank you.
    Mr. Aderholt. Thank you, Mr. Price.
    Mr. Fugate, we look forward to your comments and, again, 
thank you for being here.
    [The information follows:]

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                Opening Statement: Administrator Fugate

    Mr. Fugate. Well, thank you, Mr. Chairman and Ranking 
Member Price, Members.
    First, you know, I think this is the fourth time now I have 
presented the budget for FEMA and on the basis of the work that 
was done in the Budget Stabilization Act, we are requesting the 
funding for the DRF [Disaster Relief Fund] on the basis of what 
we estimate our total costs will be including the previous 
catastrophic disasters as well as the activity that we would 
expect in fiscal year 2013.
    The overall budget request again is a reduction. Part of 
that is reflected in what we have looked at to reduce costs of 
the fiscal year 2013 response. That does not do much. We see 
that many of the costs expended in the last year for 2011 on 
the large-scale disasters are those expenses that we expect 
will be paid out in this year, and, therefore, there will be 
further reductions based upon the long-term rebuilding.
    So we are prorating this out on the basis of what permanent 
work we expect to continue in these open catastrophic disasters 
as well as factoring in the cost for the responses that we 
would expect.
    Again, the caveat is that in future catastrophic disasters, 
there may be requirements for additional funds, but this is 
based upon the known universe of open disasters as well as the 
expected reoccurring workload that we would see in a typical 
year.
    So those are rather significant milestones in that area. 
The other part of our budget does show reductions including 
reductions in our base budget, which is actually reflected more 
in the efficiencies that we have been striving to achieve.
    We had to make decisions about programs to reduce or 
eliminate. We took an approach that said that, rather than 
taking percentage cuts across all programs, we would look at 
those programs that would either be eliminated in its entirety 
or significantly reduced while keeping other programs funded to 
accomplish their mission.
    And this will result in some people saying that their 
programs got cut. But an example is pre-disaster mitigation, 
which we have recommended not to fund this year, we currently 
have a backlog of $174 million in open projects that are still 
yet to be completed.
    That does not count the dollars that are out there in 
mitigation on disasters in Section 404, which is also a rather 
significant investment in mitigation.
    So it was not an easy choice to make. But in looking at 
those areas that we felt that we had the need to make 
reductions, given that much of the activities are still moving 
forward on that backlog as well as the 404 dollars that are out 
there, we made that recommendation.
    As far as the consolidation of grants, Mr. Chairman, I am 
not going to spend a lot of time here because I know we want to 
do this as Q and A. We are recommending an increase in that 
from last year, but we are looking at consolidating those 
grants and looking at more flexibility.
    I think we are trying to move a program that oftentimes was 
put into various identified areas of funding that did not 
always necessarily coordinate well or look at what were the 
needs as a Nation.
    And because of the President's issuance of the presidential 
policy directive on a national preparedness in establishing a 
goal, we are looking at how do we fund, not just jurisdiction 
by jurisdiction and the threats they face, but how do we build 
capability to serve the Nation, how do we build capability that 
is a shared responsibility at all levels of government to 
respond to catastrophic incidents.
    And we have seen examples in the recent tornadoes this year 
and last year that show much of that response was contributed 
to by previous investments in Homeland Security, which meant 
that teams available closer to their neighbors could respond to 
their mutual aid--urban search and rescue teams, communication 
vehicles, incident management teams that previously had to come 
from the Federal Government or further away. This both speeds 
up the response but also leaves national resources available 
for the next catastrophic disaster.
    So our strategy here is to change the dialogue from funding 
each jurisdiction on the basis of threats to each State, 
threats to urban security areas, and threats ongoing. We 
recognized that, but how does that contribute to national 
capability because we can look at various scenarios that were 
overwhelmed?
    Even in the best prepared state, the best prepared city, 
where is that help coming from and are we making investment 
strategies targeted toward national preparedness goals and 
those areas that our capabilities that we see as necessary to 
be in a position to prevent an event, or in the event something 
happens, to rapidly stabilize it?
    And so by combining the grants and putting more emphasis on 
the outcomes and using threat-based and hazard-based 
recommendations to look at what capabilities we have and where 
gaps occur and the best strategy to fund that, it does not lend 
itself to each jurisdiction trying to determine itself.
    We need to really look at this more collectively and go 
``How do we build that capability among our shared resources 
and utilize the tools that state governments already have and 
many local jurisdictions participate in, which is the emergency 
management system's contact between states as well as in-state 
mutual aid?''
    So this change is really, I think, starting that dialogue 
of how we build against a national picture versus jurisdiction 
by jurisdiction and then doing that by consolidating the 
grants, putting more emphasis on the outcomes and the measures 
to support those investment strategies that would be more 
directed by a national preparedness goal.
    With that, Mr. Chairman, I will stop because I know we have 
a lot of questions and I want to make sure we have the time as 
you requested.
    [The information follows:]

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                          DISASTER RELIEF FUND

    Mr. Aderholt. Thank you.
    I will start out talking a little bit about the disaster 
relief fund. Your fiscal year 2013 budget includes, as has 
already been mentioned, $6.1 billion for disasters including 
over $3 billion for the cost of disasters that have already 
occurred such as the tornadoes that struck my home State of 
Alabama just this past April.
    I was thinking back just a few minutes ago. Little did we 
know a year ago when you were before this Subcommittee that we 
would be in store for such a difficult year, not only for many 
Members on this Subcommittee but for many other Members as 
well, considering the devastation that occurred. So we actually 
saw each other a good bit after that hearing and talked on the 
phone many times.
    But before we turn to the fiscal year 2013, are you 
sufficiently funded for fiscal year 2012 to complete the year, 
without implementing funding restrictions that limit funding to 
immediate needs?
    Mr. Fugate. Mr. Chairman, on the basis of what we know, 
and, again, the caveat will always be future disasters, on the 
basis of our planned recoveries of about $1.2 billion and what 
we estimate will be expended in the previous disasters, we are 
still projecting to end the fiscal year on September 30th at 
approximately $200 million.
    Now, this again means that we have to still continue to be 
aggressive in recoveries and close out older disasters, which 
when I got here in 2009 was something that was impressed upon 
me: that we had a lot of open disasters, and we were not 
closing them out.
    So since I have been there, we did about $4.7 billion in 
recoveries from open disasters. We are projecting our budget at 
$1.2 billion in recoveries this year from older disasters. 
Obviously if we can find more, we will do that.
    The other thing we are doing is driving the cost of 
response. In many cases, we are finding that by using 
techniques such as not establishing physical presence but using 
virtual presence and working closer with the states, we are 
driving down the cost of the administration of the disaster.
    And all these are pressures on the grant itself, so we look 
at and are holding ourselves accountable not only in the 
recoveries but also in reduction of the cost of administering 
the disasters and finding ways that we can perform the same 
level of performance with our state and local partners without 
the overhead that we may have incurred previously.
    Mr. Aderholt. Also, included in the budget justification 
for fiscal year 2013 is an estimate for anticipated costs in 
the out-years for catastrophic events--which show that you 
anticipate no additional costs for any of the fiscal year 2011 
disasters beyond the end of fiscal year 2013. Is that correct?
    Mr. Fugate. Yes, sir.
    Mr. Aderholt. Will FEMA have fully funded the Stafford Act 
required recovery efforts in Alabama and Missouri due to the 
tornadoes, in the Midwest due to flooding, and the Northeast 
due to Hurricane Irene by the end of fiscal year 2013?
    Mr. Fugate. I would say, sir, we will work toward that. 
There are some based upon my experience and writing project 
worksheets. As soon as we have the projects and are obligated, 
I think that is the real milestone. The work will not 
necessarily have been done, but we have obligated the funds. We 
have the projects, and those are defined.
    Where we may not make that mark is if we have issues about 
insurance and have to reconcile that when we get into certain 
environmental and historical reviews, which may take time to 
get those projects moving.
    So when we look at the obligations occurring when we sign 
off and the state and the local sub-grantees sign off on the 
project worksheets as obligated funds, that may not mean the 
work has been done, but it means the funds have been obligated. 
But knowing that in some of the more technical, more complex 
projects, we may not be completely written because we are still 
working.
    And, again, we have the appeals process when we disagree. 
So not knowing what may be appealed, our goal is to get these 
projects written as quickly as we can to begin the work.
    So I would say that we would have the bulk of them done, 
but experience tells me there may be projects either because of 
the technicality of them or because we are in disagreement. 
Maybe appeals may not be getting written, but our goal would be 
to get those funds obligated so work can start back.
    As you know, I put an emphasis on speed because I feel that 
the quicker we get construction back, the better communities 
are. The faster we get communities back on their feet reduces 
our overall costs and recovery.
    So my goal is to get them written, but there are sometimes 
those outliers that will take longer to get done.

                          DEBRIS REMOVAL: COST

    Mr. Aderholt. Moving on to debris removal costs, as you 
know, part of the cost of responding to disasters is the cost 
of cleaning up the debris. FEMA provides two methods of 
cleanup, as you are well aware. Communities can select the 
Corps of Engineer process of selecting a contractor, or a local 
authority can bid out the process to local and regional 
contractors.
    Recently there has been concerns regarding the cost of 
using the Corps when compared to other private options.
    We included in the fiscal year 2012 conference report 
directions that a report be submitted that requires FEMA in 
conjunction with the Corps of Engineers to explain the 
disparity and the cost factors between the Corps and the 
private option communities have for debris removal.
    I just wanted to check--what is the status of that report?
    Mr. Fugate. It is in process, sir. We are working on that. 
I will tell you what my personal observations are.
    When we have jurisdictions that have the capability to do 
the debris, they have their contracts, and particularly if they 
follow the steps required, it is generally faster and lower 
cost.
    Where the Corps provides a significant advantage, though, 
is in those communities that do not have that capability or 
that have not had those contractors, or when the event is 
bigger than their capabilities to provide the management and 
bring in resources across the Nation.
    So as this report comes up, I think you are going to see 
that, in many cases, we would support local jurisdictions that 
have that capability to manage debris because it is more cost 
effective. We actually get local hires, and we put money back 
in the economy. It is faster.
    But we also recognize there are going to be those events 
where the Corps still provides a service when it exceeds that 
capability or that was not in place prior to the disaster.
    Mr. Aderholt. Thank you. My time is expired.
    Mr. Price.

         URBAN SECURITY AREA AND STATE HOMELAND SECURITY GRANTS

    Mr. Price. Thank you, Mr. Chairman.
    Administrator, I want to focus on the new national 
preparedness grants proposal. Let me lay out just a few 
questions that I hope in the course of walking us through this 
proposal you can address.
    A feature of your budget is the streamlining of these 16 
separate preparedness grant programs into this new single newly 
titled National Preparedness Grant Program. This excludes the 
emergency management performance grants and the firefighter 
grants but not much else. I mean, you have 16 programs 
consolidated here.
    You also lay down a couple of criteria which will govern 
your grant making. One is the utilization of a competitive 
risk-based model for making funding decisions. You are also 
requiring grantees to develop and sustain core capabilities and 
those criteria just on the face of it raise certain issues, I 
think, because you are consolidating programs here that have 
had somewhat different rationales and certainly different 
criteria for funding decisions. The two largest are the State 
Homeland Security Grant Program and the Urban Area Security 
Initiative. These are two very different programs. One is 
intended to build core capacity across the country. The other 
is intended to protect the most at-risk areas of the country.
    So I wonder if you could indicate up front your estimate of 
how much money will go towards those two basic programs and 
then how are some of the current guidelines likely to apply. 
Are you going to still provide, as the 9/11 Act requires, a 
minimum level of funding to each State? Are you going to follow 
the current guidelines? How is that going to work? And then 
after you have allocated funds for these minimums, what is your 
next priority? I presume it is increasing capabilities in high-
risk areas. But how do these two objectives coexist?
    And then finally when we are looking at some of the other 
programs, how are you going to graft on to this the use of a 
competitive risk-based model that has applied to programs like 
the transit and port grants? For example, how would FEMA 
compare a port project to a transit project in a major urban 
area? What criteria would you use to evaluate across these 
areas which previously would have been considered separately 
with a very targeted purpose?
    Mr. Fugate. And probably the shortest answer is to caveat 
that, because there were a lot of questions there, we will 
respond in writing in more detail than I think I could probably 
cover in the time allotted.
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    Mr. Price. That is right. But at the same time, we have a 
process underway this year. You can perhaps answer on the basis 
of the extent to which that pattern would continue.
    Mr. Fugate. Yes, sir. Let's talk about the urban area 
security and the State Homeland Security grants. Other than how 
they are being identified and designated, the activities are 
not that different as to what is eligible.
    And, again, what we found was in looking at requests and 
consolidating down, we are not looking to say that we are not 
going to fund urban area security. But in funding urban area 
security and State Homeland Security, are we getting the 
synergy, and are the investments matching up to what the 
overall needs are?
    And also recognizing that in 16 areas of these different 
funds, which we are putting into one grant with the 
eligibility, the question that we are trying to get to is, when 
we look at jurisdiction by jurisdiction, program by program, 
what are the overlaps?
    And if you actually start breaking it down, what are the 
things you are actually doing? People like to start with the 
money, but I asked, ``What are you actually doing with it? Are 
we building urban search and rescue teams? Are we enhancing 
bomb squads? Are we building fusion centers and maintaining 
those?''
    You find that this money is actually coming back into a lot 
of these areas from different pots of money to achieve that.
    So we asked, ``Would it make more sense to put those grants 
together with those criteria and then administer that as a 
single grant versus what we find a lot of times, which is local 
and states are actually taking different pots of monies to 
build capability because they can take money from here and 
here?''
    So as we started that process, it came back to us looking 
jurisdiction by jurisdiction, literally at a transit grant, a 
port grant, an urban security area, a state, a metropolitan 
medical response team, a citizen core grant.
    And we asked, ``If we are looking at national preparedness 
and we identify gaps, how do we get funds to address those if 
we are so bifurcated in how we are identifying how the money is 
being spent in different programs, which again oftentimes local 
jurisdictions, state jurisdictions are hopefully working 
together already to address these issues?''
    So as we look at fiscal year 2012, we are still funding the 
State Homeland Security grants and the urban security grants, 
and are doing competitive grants for transit and port, which is 
being addressed with our partners at Coast Guard and TSA 
[Transportation Security Administration] for prioritization on 
those grants.
    And as we look at combining those grants, we would see a 
similar process within the overall grant structure but would 
identify in that grant application process the priorities for 
the urban areas and the priorities for those things as a 
national priority, but we would not necessarily put them into 
separate pots of money or identify separate funding streams and 
give more flexibility to the states and their partners to 
address how they would fund that within those jurisdictions.
    Mr. Price. Thank you. I will pick this up on the next 
round.
    Mr. Aderholt. Thank you.
    We will now recognize the chairman of the full committee, 
Mr. Rogers.
    Mr. Rogers. Can you hear me okay?
    Mr. Aderholt. Yes, sir.

                      MAJOR DISASTER DECLARATIONS

    Mr. Rogers. Mr. Chairman, thank you for giving me this 
time. I apologize for being late, but I had another testimony 
to give at another committee.
    But I wanted to be here to plead for a firm commitment from 
the Administrator to help my district and my State given our 
most recent and terrifying few days last weekend.
    As you well know, Kentucky was devastated by very crippling 
storms last weekend, hurricane force winds, flooding, multiple 
tornadoes including one which left a 90-mile trail of 
destruction in Kentucky and West Virginia. Really rare for the 
hills and mountains to have a tornado at all, but certainly at 
this time of year have left many communities in my region 
completely ravaged.
    The towns of West Liberty and East Burnside have simply 
been destroyed, every building destroyed. Martin County, Laurel 
County, Lawrence County, Morgan County, and other counties 
still counting damages all over my district, but there are 
other counties around the State outside of my district also.
    Massive loss of life and injury, some families have lost 
everything, cars, homes, possessions, pictures, family bibles 
gone. And then on top of that, a two-inch snow. My people are 
really hurting.
    And as you can see from the photographs that I think we 
provided, homes have been demolished, businesses torn apart, 
families displaced across the countryside with no 
communication.
    The governor said it looked like a bomb went off. I agree 
with him.
    While the response of Kentucky Emergency Management and the 
Kentucky National Guard and Red Cross, firefighters, police 
groups, church groups, countless volunteers from all over the 
country have been both timely and valued, the damage brought by 
these storms far exceeds the capacity of our local government 
and state emergency response teams to address.
    In fact, in West Liberty, the courthouse and the seat of 
the government was practically destroyed.
    We are trying. I have heard countless of reports of 
volunteers from all over coordinated and alone driving hours to 
help cut trees, remove debris, deliver water, take in a 
homeless family or the like. Work is now being done still on 
the ground.
    I want to thank you at the outset here by saying that the 
FEMA personnel were there immediately and helping coordinate 
efforts all along even before a request from the governor or a 
declaration.
    The numbers are staggering. Twenty-three people lost their 
lives including 18 in just my district. And it is not over yet 
probably. Two hundred and 22 are in the hospital with injuries. 
Forty-eight counties were affected by the storms. Twenty-nine 
have been declared disaster areas by the governor. Fifteen 
hundred are still without power, 260 without any water service.
    Almost 400 guardsmen have been deployed to secure the areas 
hardest hit and to clear routes for emergency responders.
    As I said, in West Liberty, nearly every building in this 
county seat has been destroyed or damaged including the 
courthouse and City Hall.
    There is no police department at City Hall. There will be a 
set of trailers for the foreseeable future. And while my people 
are resilient, and they are, they are clearly in need and are 
overwhelmed.
    On Monday, as you know, I requested the President to 
approve a request by our governor for a federal emergency 
declaration. It seems that FEMA is working diligently to 
evaluate the info at its disposal. And the President made a 
disaster declaration last night, thank goodness, to provide 
individual assistance to seven counties around the region. And 
I want to thank you for that.
    However, there are a number of countries, notably Magoffin 
and Martin, which remain in dire need of both individual 
assistance and public assistance because the devastation has 
torn up the roads, schools, courthouses beyond recognition.
    Can you, Mr. Director, give us any indication on when a 
decision might be made about the remaining counties designated 
by the governor?
    Mr. Fugate. Yes, sir, Chairman Rogers. As soon as the 
President declared--and I have done this in several states and 
it bears explaining--rather than waiting until we had all the 
information, as soon as we saw that we had sufficient damages 
that would recommend in the counties we were in, we were able 
to get that to the President.
    The federal coordinating officer who was appointed by the 
President will be able to add counties for individual 
assistance without that going back to the President.
    So as soon as we can say there is damages warranting it, 
the federal coordinating officer working with the state 
coordinating officer will be able to start adding those 
counties. And we expect that to be a rapid process of not weeks 
but literally within a day or so as we get the information 
supported.
    But we also made a conscious decision with the local 
officials that our priority would be to get the individual 
assistance turned on first, and then we will do a count for 
public assistance because many of those individuals are still 
responding, as you pointed out.
    So trying to go back and find out about insurance and get 
the cost really for that, we are working with the State on 
getting back in there to do public assistance. And as soon as 
we have those numbers, we will process that request as well.
    But we put a premium on the individuals because we know 
right now there is going to be an issue about housing and their 
immediate needs.
    Because we are working closely with the State--and this is 
the good news story, as you pointed out, and I think this goes 
back to some of the investment strategies and Homeland Security 
dollars--there is a lot more capabilities at the state and 
local level than we have had before.
    Friday afternoon I was sitting literally in the FEMA's 
watch as the tornadoes were hitting, and we knew what was going 
on as far as the initial impacts. And we were in contact with 
states and going we are standing by. If you need it, ask for 
it.
    And, again, it pointed out the resiliency that states do 
have these days that they did not have in the past. They made 
it very clear and said, ``You know, we got what we need. We are 
going to need you for recovery, but we do not have any direct 
federal assistance for the response.'' And that was a testament 
to the local officials, to the volunteers, to the national 
guard.
    So we focused on the individual assistance. The federal 
coordinating officer now will add on those counties where we 
have damages based upon the request of the State. And as we get 
the public assistance done, we will process that. We will work 
quickly so we can identify that.
    And, Mr. Chairman, that may also be where we will turn on 
some counties. We may still have counties we are still counting 
in, but we have already seen the State's threshold. But rather 
than wait until they are all done, we will turn on what we have 
and we will keep counting until we get all the damages 
identified.
    Mr. Rogers. Good. Good. Well, I cannot say anything but 
praise so far on the effort that FEMA has done. It is an 
extremely difficult situation because there is no 
communications. The storms took out the towers for 
communications, telephones and the internet. And so it is 
difficult to even contact the county executive or the mayors.
    And besides that, the roads are so clobbered with trees and 
limbs and damage, it has been a remarkable thing that we have 
come this far this quick. But it a devastating time.
    And I really appreciate your commitment and your rapid 
decision making because that is all important given the time of 
year it is down there and wintertime.
    With devastation as widespread as it is and the human 
factor is altogether important here, these people are hurting 
severely. And I appreciate the rapid response that FEMA has 
devoted to this. And I look forward to working with you further 
as we go on down the pike.
    Mr. Fugate. Yes, sir.
    Mr. Rogers. Thank you, Mr. Chairman.
    Mr. Aderholt. Thank you.
    Ms. Lowey.

           NUCLEAR POWER PLANT ACCIDENTS: CLEANUP/EVACUATION

    Mrs. Lowey. Thank you.
    And I, too, want to join my colleagues, Administrator 
Fugate, in thanking you for your service and your important 
contributions.
    Before I get on to another topic, I must tell you you were 
talking about the block grant with a continuing focus on UASI 
does not make any sense to me at all. And I am very concerned 
that efforts such as including UASI under a larger block grant 
could result in a decrease in federal funds while the risk of 
terror events still remains high.
    And I do not understand. And maybe we can have a continuing 
discussion at another time how UASI which is supposed to go to 
the areas most at risk can be protected. There are other funds 
for other areas. Everybody needs it. But putting it all in a 
block grant sends a message to me cut and decrease the 
emphasis.
    So let me turn to Indian Point. I am also troubled by 
reports that the Environmental Protection Agency, the Nuclear 
Regulatory Commission, and the Federal Emergency Management 
Agency have engaged in ongoing discussions to determine which 
agency and with what funds would be responsible for a large-
scale event at a nuclear power plant.
    I have to tell you that sounds like a cartoon which is just 
too serious to be real. While things are going on and 
everything exploding, all these agencies are still deciding 
about who is in charge.
    As you may know, the Indian Point Energy Center is a nearly 
40-year-old nuclear reactor located within 30 miles of Times 
Square. Evacuating 17 million people within 50 miles is 
impossible. The government's response to a possible event at 
Indian Point should be planned, practiced, and ready for 
implementation.
    So who would be responsible for a large-scale evacuation? I 
hope, God forbid it ever happens, you are still not debating 
it. And are discussions over the best practices for a federal 
response to a nuclear cleanup being discussed between FEMA and 
other government agencies?
    Mr. Fugate. Yes, ma'am. The evacuation would be state and 
local supported by the Federal Government. That is the 
direction of the nuclear regs that the local and state 
officials have the authority to order their evacuations, and we 
would support that.
    The discussions we are having----
    Mrs. Lowey. So wait a minute. The reports that the EPA, 
Nuclear Regulatory Commission, and the Federal Emergency 
Management Agency are incorrect that they are talking about who 
would be responsible?
    Mr. Fugate. I have not seen those reports.
    Mrs. Lowey. Okay.
    Mr. Fugate. The discussions that I have been involved in, 
and we have done this as some exercises with the national 
security staff, looking at some of the issues in a post event 
of what would happen to materials to be cleaned up and the fact 
that there are different standards out there for what would 
determine what was permanently cleaned up--you have regulations 
from EPA [U.S. Environmental Protection Agency] for Super Fund 
sites, and you have protective criteria that was issued for 
evacuation decisions. We were working on what would be the 
level of cleanup required before people could resume normal and 
permanent activities.
    We were also looking at what levels would be set for those 
that may have to go back and work in critical facilities if a 
cleanup had not been completed.
    We had in the exercise determined that because different 
programs had different standards for cleanup, we wanted to have 
a consistent approach in a post event and for deciding what 
would be determined as cleaned up versus what the evacuation 
criteria was.
    There is also an undergoing review by the Nuclear 
Regulatory Commission based upon the reviews of what happened 
in Japan, but also facilities here, to look at what additional 
actions and protective measures may be required.
    But not having seen the reports, I do know that those were 
discussions we have engaged in to make sure that criteria such 
as Super Fund were also applied in nuclear power plant 
accidents in a cleanup phase and how we would apply that 
uniformly so we would not have different standards, one for 
evacuation and one for cleanup, which may be confusing or lead 
to issues in trying to make decisions about reentry.
    Mrs. Lowey. Well, I thank you for that thoughtful response. 
I hope we do not have to face that decision.
    But how long is this evaluation and decision making process 
going on?
    Mr. Fugate. Well, this was actually an event prior to what 
happened in Japan and where we picked the criteria that we were 
going to use uniformly across the agencies, and that actually, 
I think, is pretty close to going through the concurrent 
process on which all the agencies are signing off.

                     NUCLEAR REGULATORY COMMISSION

    I would have to defer to the NRC about where they are at in 
their review process. That is an ongoing process that they have 
instituted after the events there to look at other threats that 
we face from nuclear power plants.
    Our role at FEMA as part of that is the area outside of the 
power plant working with state and local governments on 
protective measures, evacuations, and exercise programs based 
upon the criteria that are developed by the Nuclear Regulatory 
Commission.
    Mrs. Lowey. Well, let me just follow up with two other 
quick--oh, is my time up? Sorry.
    Mr. Aderholt. We will go back around.
    Mrs. Lowey. Okay.
    Mr. Aderholt. Mr. Latham.

                    PRE-DISASTER MITIGATION PROGRAM

    Mr. Latham. Thank you very much, Mr. Chairman.
    And welcome, Mr. Administrator. Thank you for what you do 
for a lot of people who have been experiencing real disasters 
out there, one of which was last summer, as you are keenly 
aware.
    The Missouri River flooding in Iowa for months and months--
people were subjected to that. We usually think of a flood as a 
one-time event, but this went on and on for months, as we all 
know. Folks in Iowa are very concerned about your proposal to 
eliminate the Pre-Disaster Mitigation Program.
    Your statement notes that the most costly and frequent 
natural disaster is flooding and that you are going to maximize 
the use of your flood grant portfolio to assist in managing 
risks.
    Could you clarify or translate this into a statement in a 
way that tells the residents of my flood-stricken state and its 
responders and local officials what this actually means, the 
risk managing initiative? How is this going to unfold? What 
does it mean to them?
    Mr. Fugate. Well, we still have programs in the Flood 
Insurance Program such as the Buy-Out Program for repetitive 
loss properties, which is one of the things that is oftentimes 
used to address residential issues after repeated flooding. It 
is oftentimes better to buy out rather than repair.
    And so we also have in that program the ability to fund for 
elevation as well as continuing with the mapping and updates 
there.
    So those specific pieces to that are actually targeted 
toward homeowners and either mitigation of the risks by buying 
out or, in the case of floods, elevating.
    In addition, for those who were impacted by the floods, the 
State has under the Stafford Act additional funds, not just the 
funds they are using for repair, but under Section 404, they 
get additional mitigation dollars to look at these types of 
risks in the State as well.
    The decision to cut pre-disaster mitigation was not an easy 
decision, but it was also reflected across all of our programs 
in looking at where we had other programs that are addressing 
similar issues.
    The fact that we still have about $174 million in 
backlogged projects to be spent, and, again, everybody wants to 
protect their part of the budget, my responsibility was to 
provide recommendations on what we could do with our budget to 
achieve the goals we had.
    And we looked at pre-disaster mitigation. It is a good 
program, but at the cost, can we continue to afford that and 
look at priority funding for other programs?
    Mr. Latham. It seems to me that pre-disaster mitigation is 
cheaper than paying the damages afterwards.
    There is a school of thought among a lot of very 
knowledgeable disaster management officials that says that the 
Pre-Disaster Mitigation Program is on the chopping block 
because it has been ineffectively administered and that there 
is a lot of money left lying around, not because of a lack of 
good projects, but rather the process was very cumbersome, 
oftentimes misguided and that limited the projects that were 
available.
    I do know you would not say to those people that it is a 
more of a management problem than it is a program problem.
    Mr. Fugate. Again, no cut is easy.
    Mr. Latham. Have you ever heard those complaints before?
    Mr. Fugate. I have heard a lot of concerns about pre-
disaster mitigation, how the funds are allocated, the 
difficulties oftentimes in administering the program. And if 
that was the only reason, then I would not have supported that.
    We looked across the programs and said we are going to have 
to make cuts. Do we cut everything a percentage or do we take 
whole programs and cut them and keep other things funded at the 
level they need to operate?
    We looked at what we do in our other programs, in pre-
disaster mitigation with flood and the Flood Insurance Program. 
We looked at the remaining balances in the Pre-Disaster 
Mitigation Program.
    We also looked at the amount of money out there in Section 
404 and said of all the areas, not saying that mitigation is 
not important nor that the investment strategy of pre-disaster 
mitigation is not also important, it was an area where we had 
other programs doing similar work.
    And so we made the decision that this would be a program, 
versus cutting a lot of different things, we would zero out. It 
is not a popular decision. It is not one that I necessarily 
would like to say was something I want to do.
    It is something that on the basis of being pragmatic about 
my budget and making investment decisions, do we cut everything 
a certain percentage or do we make decisions about programs to 
eliminate where other programs provide some if not all of the 
capabilities that we are looking at in support of the overall 
programs?
    Mr. Latham. Is there any way to determine what you save 
avoiding a future disaster? Any kind of cost-benefit analysis?
    Mr. Fugate. I have heard people use $4 to $7 for every 
dollar invested, but that means it gets hit. The problem is 
there is not enough money and would never be enough money in 
pre-disaster mitigation to actually significantly reduce the 
Nation's risk.
    You have got a better chance of getting states to adopt 
building codes and enforce them. That would really save money 
versus a project-by-project strategy that for that project does 
good, but nationally you are not moving the needle. You cannot 
mitigate building by building. You have to look more 
systemically.
    This program, I think, did a lot to get people interested 
in mitigation. It got a lot of people to look at things they 
could do in their communities for disasters. But when you look 
at what we are funding, very good intentions.
    What is the bottom line? Unless that structure is hit, you 
are not going to see the savings. We are not spending and not 
doing enough projects for all those projects to add up. You may 
get one or two here.
    You want to make big changes? We need to look at how do we 
reduce the risk not through paying for it but by building 
better and appropriately so that we reduce those costs on the 
front end.
    Mr. Latham. Thank you, Mr. Chairman.
    Mr. Aderholt. Ms. Roybal-Allard.

            WORKING WITH STATE AND LOCAL GOVERNMENTS, OTHERS

    Ms. Roybal-Allard. Mr. Fugate, first of all, let me begin 
by complimenting you on your leadership in establishing a new 
partnership with the Hispanic Association of Colleges and 
Universities to develop course work for Latino students to 
promote educational opportunities with FEMA in the field of 
emergency management. I think you are setting a very, very 
positive example.
    Recognizing the budget constraints and everything that you 
said in response to some of the other questions, I want to 
raise my concerns about the National Security Grant Program, 
particularly as it pertains to the ports.
    Already ports, security funding is down by 57 percent in 
this current fiscal year. And without a dedicated stream, as 
has been stated, they would have to compete for funding with 
transit system for these states and there is a possibility that 
they would not get the attention that they need.
    And study after study has shown that any kind of a terror 
attack on the ports would be disastrous not only to Los Angeles 
but to the entire country.
    For example, a study called Risk Analysis that was done in 
2007 says that even if the harbor, referring to LA Long Beach, 
were closed for only 15 days, the authors concluded that cost 
to the port would spiral to $150 million while the wider 
economic consequences would be in the billions.
    So this is something, an area that we may not want to leave 
to chance and to state and local governments. Having served in 
local government, there is belief and it could be argued that 
maritime security is really a federal issue, not a local or 
state issue, and the focus has always been from the perspective 
of state government is to deal with state and local 
jurisdictions.
    So there is also the concern that state governments lack 
the personnel and the expertise to evaluate maritime risk or 
determine how ports should be prioritized against other 
Homeland Security priorities.
    So in the event, giving a worst case scenario, that it 
plays and that ports do not receive the attention that they 
need through these grants, do not get that money, given the 
importance of securing the ports, what would be the backup plan 
to make sure that they are protected against a terrorist 
attack?
    Mr. Fugate. Well, I will make myself real popular with a 
lot of folks when I say this. You know, I keep hearing that we 
cannot trust state and local governments and ports and transit 
to work as a team. Yet, in a disaster, that is exactly what is 
going to have to happen.
    But we cannot trust them to work as a team to come up with 
funding strategies. I can assure you that Secretary Napolitano 
is going to make ports a key part of this funding. It is part 
of our global strategy on trade.
    And coming from the State of Florida, we looked at the 
ports as one of our most key transportation assets. The 
question is, if we allocate the money on the basis of each one 
of these groups, are we building national preparedness or are 
we doing things in a singular fashion that do not add up to 
national preparedness?
    And, again, I have seen a lot of arguments back and forth. 
I have seen a lot of money spent. I am not sure the investment 
strategies always led to national preparedness, and I am not so 
sure that it is always going toward those things that we are 
saying it is going to.
    Now, I am not going to single out and say this is in one 
particular area, but quite honestly you saw the articles and I 
have to deal with it. We are buying ice machines, all right, in 
these programs. Is that a national investment strategy?
    So my question is: If we do not trust States and local 
governments and ports and transit and citizen corps and 
everybody else to work together, yet in a disaster that failure 
will be exploited by the terrorists, if giving the funding out 
individually is what has to happen because we cannot work 
together, then I am kind of concerned that if we do work in a 
more leveraged, central fashion by bringing people together to 
work these together, are we really building national 
preparedness or have we merely funded a grant program specific 
to that concern?
    But, again, it is troubling to me, and I understand the 
pressures from everybody looking as though they do not trust 
each other. You just said it. They do not trust local 
officials. They do not trust the state to make it a priority.
    Yet, in a disaster as a Nation and a catastrophic event, if 
we are all getting our grants separately, we are all planning 
separately, and we are all writing our program separately, yet 
we are all dependent upon each other to be successful, can we 
drive that through a grant process to make people work as a 
team and make those prioritizations?
    But I have been on the other side, and I know the power 
arguments. I know people are looking to protect their 
interests, and I am not saying that there may not be a better 
way.
    But I am very concerned when the first thing that comes out 
is we may not be a priority with the State. We may not get the 
attention we need. We may not be able to do what we were doing 
if the funding goes together because we may not be able to 
articulate, compete, or get the issue across.
    Yet, if that disaster occurs and that port is damaged, who 
is going to respond? All the folks who got the separate pots of 
money and were planning separately, trying to build a national 
capability. So I understand the concerns.
    And, Ranking Member Price, I know that, you know, this is 
not something that goes over well, but you guys pay me, the 
public pays me to tell you what I think, not what people want 
to hear. And I have looked at this and looked at this and been 
on the bottom of the beginning of this process.
    And I keep coming back to we do not trust each other, so we 
have got to have our own separate pots of money. We cannot 
depend upon us to prioritize in a way that says these are the 
investment strategies of the Nation. And we have to have the 
separate money, yet in a disaster, we expect all this will come 
together magically and we will work well as a Nation.
    Mr. Carter. Mr. Chairman.
    Mr. Aderholt. Mr. Carter.

                         CENTERS OF EXCELLENCE

    Mr. Carter. Thank you, Mr. Chairman.
    And, Mr. Administrator, welcome. A lot of things you have 
to say about hard decisions are things that I agree with. I 
have a question that I am trying to figure out the answer.
    The DHS budget seeks to fundamentally reform FEMA grant 
structure. I strongly support competition in procurement 
process. And the direction you take in the training grant 
programs concern me in that it negates the significant 
investment Congress has already made in international domestic 
preparedness consortium.
    It seems to me this new direction would create duplicative 
programs rather than bolstering the existing programs. I have 
been told that the current backlog in first responder training 
through the existing program is over 20,000.
    How does this newly proposed structure for training 
partnership grants and your request for $60 million to seek to 
add this backlog and how does it better meet the demands of our 
first responders?
    And in considering, in awarding the funds to this new 
program, participants will have to go through curriculum 
approval as well as undergo significant costs and time 
investments in which to stand up the new program. Won't this 
create a lag in the available training opportunities that we 
have in place at this time?
    Mr. Fugate. I will ask staff to give you the full report in 
writing because a lot of your questions get technical, but here 
is the philosophical question.
    How many Homeland Security institutes can we afford and are 
the programs they are offering, again going back to national 
preparedness, those that we need and are they interchangeable 
with other programs?
    And so part of this was coming back and going we fund a lot 
of centers of excellence. There are so many centers of 
excellence out there that I am not sure what excellence is 
anymore.
    And I am not berating anybody. I am just saying how do we 
make sure that we are investing in institutions providing 
necessary training in a way that we get the return on the 
investment. It is based upon what we see as a Nation we need, 
and that we have the ability to measure what each one of these 
institutions does compared to other ones.
    So this was our attempt to come back and go we recognize 
Congress's authority to specifically say these are things we 
want to do. We came back and said there has been a lot of 
growth here. How do we sustain it, make it more competitive, 
and put more emphasis on it providing what we have identified 
across the enterprise as the training we need for the various 
disciplines?
    Mr. Carter. I get your argument.
    Mr. Fugate. So that is the thing. I know the details, sir, 
and that is what I want to respond in writing.
    [The information follows:]

    Response: Currently, National Domestic Preparedness Consortium 
(NDPC) grants and Continuing Training Grants are being used to train 
and educate first responders and homeland security officials to 
prevent, protect, mitigate, respond and recover from disasters. These 
grants are awarded by FEMA's National Training and Education Division. 
As part of the Department's ongoing effort to streamline grants and 
maximize the effectiveness of the available grant dollars, NDPC grants 
and Continuing Training Grants are being replaced by Training 
Partnership Grants. These grants will continue to be used to train and 
educate first responders and homeland security officials. However, 
under the proposed Training Partnership Grants, funding will be awarded 
competitively to entities (e.g., State, local, tribal, and territorial 
governments; universities and higher education institutions; and 
nonprofits) that have demonstrable expertise and can develop/deliver 
training and education curriculum relevant to the core capabilities in 
the National Preparedness Goal. Other grant recipients (including 
former recipients under the NDPC grants and Continuing Training Grants) 
will be able to compete for the Training Partnership Grants. Facility-
based training and education centers will be awarded multi-year grants 
in order to ensure year-to-year stability in the delivery of training 
and education. As a condition of the award, the grantee will develop or 
offer a training program that is self-sustaining in the outyears. This 
means that the grant funding received will address program start-up 
costs and curriculum development in year one, while over time recurring 
training costs will be reimbursed via training attendees (i.e., 
Federal, State, local jurisdictions will utilize their respective 
program or grant funding to attend the training).
    By incorporating competition and cost reimbursement into the 
training programs in FY 2013, FEMA hopes to encourage greater 
efficiencies as well as new ideas and innovation. FEMA recognizes there 
are hundreds of institutions ready, willing and able to provide 
education opportunities to homeland security and emergency management 
officials.

    Mr. Carter. But as you make that evaluation, more 
importantly the question would have to be is somebody making 
the evaluations of how these centers are meeting the criteria?
    And if I understand this program, the $60 million is to 
allow others to create new centers of excellence, if you want 
to call it that way, and how do you cull out the bad ones when 
you are creating the good ones and how do you know the new guys 
that are seeking these grants are going to do better than the 
people that are failing in their mission if they are failing?
    I certainly have one of the centers in my State and I will 
put it up against anything. We were doing it before FEMA came 
there and we are doing it since. And I feel very confident that 
the center that we have at Texas A&M University is meeting 
their criteria and then some.
    And I would like that evaluation to be looked at and why 
are we spending other money to create new places until we 
evaluated the old places.
    Mr. Fugate. I think the aggies are going to do well. One of 
the things the aggies did for us is they have been a leader in 
our Storm Shelter Program, the engineering and design of that. 
So I think that there are those programs that are of such 
prestige and are established programs that this is not going to 
be as dramatic as they think.
    But we do need to look at if we are targeting the right 
types of training we need based upon what the skill sets are. I 
will give you an example.
    There are a lot of folks my age in my profession who are 
going to be leaving these professions soon. Do we have the new 
capability to train all the new folks coming up? I mean, think 
about all the training we have done in the last 10 years. And 
we are going to have to make sure that we have the 
institutions, the higher level, and also the disciplines to 
continue to train that.
    So this is not an attempt to take those facilities and 
institutions that have done a great job, but it is really to 
kind of come back and go, ``Are we identifying what the 
priorities are, are we investing in the training and the types 
of training, are we identifying needs for training?''
    Look at cyber security. So we know there may be areas where 
we need to develop new centers, but we also have to make sure 
what we have been investing in is giving us that return and it 
is looking at what those needs are as the next generations come 
up. We look at our national preparedness goals and say, ``Hey, 
we are doing pretty good in this area, but we still have lots 
of needs in these areas. Are we getting that funding and the 
right institutions engaged?''
    Mr. Carter. And I agree with that concept.
    Thank you, Mr. Chairman. I think my time is up.
    Mr. Aderholt. Thank you.
    Mr. Dent.

                      NATIONAL PREPAREDNESS SYSTEM

    Mr. Dent. Thank you, Mr. Chairman.
    Mr. Fugate, great to be with you today. In November, FEMA 
submitted the national preparedness system----
    Mr. Aderholt. Mr. Dent, could you turn your mike on?
    Mr. Dent. Let me move over here. Yeah. As I mentioned, in 
November, FEMA submitted the national preparedness system 
description to the President as required by presidential policy 
directive 8.
    And in it, you describe the various components and how 
the--and quote, the various components, quote, and how they 
interact to build, sustain, and deliver core capabilities in 
order to achieve the national preparedness goal, close quote.
    The report describes how these components help us 
understand risk and inform our current and future budget year 
planning and decisions and inform resource allocation plans and 
aid in understanding the progress of the Nation.
    Some of these components already exist, as I understand it, 
and some will have to be developed. What are some of the 
existing programs that will be incorporated in the national 
preparedness system and what gaps do you see out there?
    Mr. Fugate. Well, the most significant one, which was a 
requirement Congress has, is to develop a recovery framework 
for catastrophic disasters. As part of that, we had prepared 
and we are rolling out the national recovery framework, which, 
with the evolution of the presidential directive to develop 
these frameworks, we were able to take and actually move it in 
and roll it out as one of the first frameworks.
    We also have the national response framework, which is 
undergoing review and updating. And then we have preparedness 
mitigation prevention frameworks to build as part of that.
    So we have been working very hard through both our 
interagency but also our partners. In fact, we just placed on 
our Website several of these documents for review by our 
partners and to provide us comments that we can adjudicate.
    So we are on target to meet those goals that the President 
has laid out for us including the national preparedness report, 
which is concurrent, which is another product that I owe 
Congress that will be coming forward.
    So these are moving, and they are again building upon the 
national response framework and the national disaster recovery 
framework, and then building three additional frameworks to 
support the overall national preparedness plan.
    Mr. Dent. How do you see this system informing your budget 
decisions and resource allocations?
    Mr. Fugate. Well, it probably is best to give an example 
because when you try to talk about generalities, you end up 
just saying, ``Well, we are going to do this, this, and this.''
    Let's take urban search and rescue teams. We know that in 
the types of events we face with the building collapses, bomb 
blasts, tornadoes, and other things, response is key. How long 
does it take to get a team there? Just having a team responding 
does not change an outcome.
    So we start with what is the outcome we are trying to 
change? Injured people do not have time. So we start with this 
idea that across the Nation looking at where communities are, 
concentrations of populations. We look at the urban areas, so 
that is where we are based, and we also look at travel times 
going, ``Do we have enough teams?'' ``Where are they?'' and 
``Should we make that a priority in funding for more teams, 
sustaining teams, or training of those teams?''
    Now, until you know how many teams and what area you are 
covering and what your response times are, you do not know if 
you have enough. How do you maintain that?
    But once we are able to do our threat and hazard reductions 
and say this should be the response time across the country, 
this is how many teams would be required in these events, and 
this is the current capability, we may say, ``You know what, we 
are pretty good in search and rescue teams.'' Maybe we ought to 
put more emphasis over here on the prevention side or maybe we 
ought to put more emphasis on the port side.
    But until you know what that number is and you say this is 
what we need as a Nation to respond to these types of events, 
you are not really able to say where you are at.
    So just one example of how these frameworks, as they start 
going through the process, will define not just how we are 
going to respond but for how long it takes to get something 
there. How much capacity is necessary? And this is again why it 
is very difficult to do this jurisdiction by jurisdiction, 
because what if you get the outlier?
    Mr. Dent. Uh-huh.
    Mr. Fugate. Are we just not going to respond because we do 
not have enough stuff or we did not have a plan? And so we are 
looking at very large meta size events, and going there is very 
basic things that have to be done in the first 72 hours, the 
first weeks, the first months to be successful, and then going 
back and going, ``How much of that have we built? How much more 
do we need to build?''
    And, again, we are not necessarily looking at this is going 
to require--that we are going to spend our way out of this. A 
lot of times, it is looking at the private sector, looking at 
volunteers, looking at what the military provides and the fact 
that Congress gave us the authority for the Secretary of 
Defense to call out the reserves now and we have dual status 
commanders to support uniformed, coordinated efforts. What are 
we planning against? What is our target? And where should we be 
investing to get to that?
    Mr. Dent. Well, that is a very comprehensive answer. I 
thank you for that.
    Also, on PPD8, I just want to focus for a second on that 
all Nation approach to disaster preparedness. Specifically, you 
know, what will have to change to fully develop integration 
between Federal Government and state and local government?
    Mr. Fugate. Stop looking at it as state, local, and federal 
and start looking at it as one team. You know, the public could 
really care less who we are as long as somebody shows up.
    Mr. Dent. Right.
    Mr. Fugate. And I think, too, we sometimes focus so much on 
what the Federal Government is going to do that we step all 
over our local and state partners.
    And, again, I have to point this out. In all these 
disasters in the last year and a half, the initial response was 
not even the first responders. It was neighbor helping neighbor 
and then the local responders, then mutual aid and the 
governors and national guard.
    We were able to almost exclusively focus on recovery 
because we have built so much capacity since 9/11 that we 
really shifted the capabilities not in the Federal Government 
but to the local government and state government, which works 
faster and is actually easier and better to maintain.
    So, again, as we look at this, the whole community is not 
just government stopping to break ourselves into little pieces. 
It is like, ``Who feeds us every day in our communities?'' It 
is not government. It is the private sector. Yet, we look at 
the private sector as something that you deal with later 
instead of going, ``Why can't we work together and not 
duplicate what each of us does best?''
    Mr. Dent. How do you incorporate private sector?
    Mr. Fugate. You bring them to the table and you give them a 
seat and you make them part of the team. We do not have a 
contractual relationship. They are part of the team.
    If you can get a grocery store open, and you can get a 
hardware store open, you can get a drugstore open, they can 
meet needs. We focus where they are not. But if we try to 
duplicate that in large-scale disasters, we do not help 
anybody.
    Mr. Dent. Thank you.

                        DEBRIS REMOVAL: ALABAMA

    Mr. Aderholt. Thank you.
    We are going to try to get a second round here before we 
ask for the next panel. But in order to do that, I would like 
to be abbreviated no more than three minutes, just so that 
everyone can have a chance to ask a second round before the 
second panel comes up.
    Let me go back, Administrator, to the debris removal issue 
that I had asked about a little earlier.
    One of the main questions I have after meeting with a lot 
of my constituents after the April 27th tornadoes, and given 
what happened with the contracting with debris removal and with 
the Corps, I come back to you and ask--are you concerned with 
the cost to the taxpayers of cleanup when you mission assign 
the task to the Corps? With limited funds, how can you justify 
the disparity in cost between the reported costs charged by the 
Corps of Engineers and lower costs that communities have 
incurred signing their own contracts for removal? Have you 
provided written criteria and check lists of work that Mayors 
know what they are receiving from the Corps and what they can 
show to other contractors if they choose to do a private option 
for the work?
    Mr. Fugate. Mr. Chairman, first things first. We did 
something in Alabama we had never done previously and that was 
we looked at the debris mission as a housing mission. We 
normally would not go in and take debris wholesale off private 
property and lots. We were not going to do businesses but in 
the homes.
    Because this was relatively new to us, we looked to the 
Corps to help manage that because previously under most of the 
debris, management rules. Local jurisdictions would not have 
been able to go on private property and remove a lot of that 
debris. It would have been almost a case-by-case basis.
    So we were looking at one thing. We knew that housing was 
going to be our biggest issue. The faster we got debris off 
those lots, the quicker people could rebuild. It was a new 
approach. It had not been done before. We had the authorities 
under the Stafford Act, and we used the Corps to help manage 
that.
    Did it cost more? Yes, sir. Have we learned from that? Yes, 
sir. Are we looking at how to reduce that cost in the future? 
Absolutely.
    But we put a premium on speed of that because our primary 
concern in that disaster, as you knew, was we had so many homes 
destroyed that we did not think the way we have traditionally 
done debris would have been fast enough, so we wanted to do 
something faster. It was new, and we utilized the Corps to help 
us manage that.
    Mr. Aderholt. There are numerous communities in Alabama 
right now that are waiting for reimbursement. Are there ways to 
in some way simplify the process while still allowing for 
oversight of the funds? If you could briefly answer that and 
then anything else you want to add for the record than that, we 
will proceed that way.
    Mr. Fugate. Mr. Chairman, it is always case by case. We are 
trying to move this as fast as we can. Again, I want to get 
money in the communities and get rebuilding going. And I will 
go back and see.
    And, again, if your staff could pass on specifics of where 
we are getting hung up, I can go to my staff and say, ``Where 
are we at on this?'' and ``Why is this?'' We are looking at, 
within the authority of the Stafford Act, what steps would it 
take to streamline the process to maintain accountability but 
increase the speed of recovery.
    Mr. Aderholt. Thank you. And we will be happy to work with 
you and get you that information.
    Mr. Price.

                         GRANT FUND ALLOCATIONS

    Mr. Price. Administrator, I want to return to your national 
preparedness grant proposal and make very clear that I share 
your point of view, your desire for a more efficient, more 
targeted, more risk-based way of making these grants available, 
of allocating these funds.
    Now, in the State Program, we do have an allocation formula 
which aims at a certain minimum level of preparedness across 
these jurisdictions and that, too, is a legitimate objective.
    But you are suggesting that a fair amount of special 
pleading might be going on here. Some special pleading might 
have a good warrant and others might not. There are objectives 
we need to make sure are going to be addressed.
    So I want to ask you how you proceed here? And, of course, 
you can elaborate this for the record, but just in terms of 
these two major pots of money, will there be an initial 
determination of how much goes to each and then do the usual 
formulas apply, especially in the State Grant case?
    And then let me just add one other quick question to the 
mix. You are trying to deal here with the backlog and with the 
difficulty of getting some of this money out the door. And your 
way of doing that is that you are going to require grantees to 
complete projects within a shorter designated period of 
performance.
    So what is going to be the practical effect of that? Are 
you going to be, by shortening this time frame, are you going 
to be in effect eliminating certain capital projects, certain 
longer-term projects such as tunnel hardening? There, too, you 
might want to give us some more detailed answer for the record.
    But my main concern here in this open setting is just to 
get a sense of how this is going to work, how your agency is 
going to proceed to take these formerly disparate funding 
streams and to administer them as one.
    Mr. Fugate. Well, Congressman, let me work backward. On the 
$8 billion that is currently outstanding that has not been 
drawn down in disaster grants, I am not sure that we are saying 
we are not going to be granting more extensions. Part of that 
is the authority to grant those extensions and also I found 
that as much as people hate deadlines, it gets stuff done.
    But we also recognize that in giving them the mission to 
get those monies drawn down--and much of this work is already 
under way; it is just getting it drawn down. We looked at what 
was eligible for funding, and where we had inconsistencies, we 
were actually able to go back and provide additional 
eligibility so they can get those funds drawn down on the basis 
of expanding what was eligible in that scope of work.
    So we are doing two things there. One has been working 
really hard to make sure people knew where they were at, what 
their timelines were on those grants, and also looking at--and 
this is based upon their request for more flexibility--we were 
able to go back, and the Secretary authorized us to provide 
that flexibility so that they have more ability to get those 
grants drawn down quicker on that work, but no extensions.
    Mr. Aderholt. Mr. Latham.

                        FLOOD MAP MODERNIZATION

    Mr. Latham. Thank you, Mr. Chairman.
    As FEMA has moved along with its flood map modernization 
efforts, there have been some complaints, of which I am sure 
you are well aware, about the process and the cost to the 
localities to try and meet the standards, especially for the 
levees. And this is a big deal, again, obviously with the 
flooding.
    Can you tell us what some of the complaints are on the 
accreditation? Obviously, the cost is part of it. And tell me 
any suggestions you have or that you have discussed within the 
agency about ways to improve the levee accreditation process 
and lighten the financial burden for these small towns. Some of 
them are being asked to do studies that cost hundreds and 
hundreds of thousands of dollars. And they simply--if you get a 
town of 200 people they do not have the money. How do you 
address that?
    Mr. Fugate. Well currently under our rules, we would only 
recognize a levy that was certified by the standards that the 
U.S. Corps of Engineers set. And we would not recognize 
anything else. So when we did our mapping, we would actually 
zero out anything that was there if it was not an accredited 
levy. We know in many cases those levies may not be accredited 
but still serve and defend these communities against floods, 
and we never gave them any value in our mapping.
    We are, at the direction and request of many folks here on 
the Hill in the rulemaking process, to adjust our rules to 
incorporate levies as built versus those that are accredited. 
We have received thousands of comments in that rulemaking 
process we are adjudicating. It is our goal, though, that when 
we publish this rule, it will recognize levies as built and the 
level of protection they offer, even if it is not optimal, in 
mapping out those communities.
    But you do raise one point, though. Where communities are 
having to demonstrate that those levies are certified, and do 
not have the funds, and this is, you know, this is----
    Mr. Latham. It is a huge problem.
    Mr. Fugate. It is a huge problem. It goes back to--part of 
our challenges with this is managing risk. Where is our 
investment strategy in mapping this and determining the risk? 
And where do we fund the improvements? And as part of this, I 
think we will address through the levies as built. We will 
actually get a better idea of mapping the levies as they are 
there, not necessarily being accredited levies, and see what 
that problem looks like. And that may give us a better idea of 
where we need to invest.
    Some communities may find that, as built, the protection 
there is already adequate. It does not significantly change 
things to move to an accredited levy. Others may find it is a 
very significant difference and that would be targeted where 
they need to invest.
    Mr. Latham. But the problem is they have got to do the 
study to find out, and they do not have the money to do the 
studies.
    Mr. Fugate. Yes, sir. And that is why we go with the levy 
as built, we will take it as it is. Not having it necessarily 
accredited. And then you can map and look at what the risk is. 
In some cases, because it may not have enough elevation. In 
some cases, it may be because of design. But all of those would 
be factored in. And we would actually look at the risk then 
versus them having to look at bringing it up to an accredited 
levy.
    Mr. Latham. Okay. I look forward to working with you. Thank 
you.
    Mr. Aderholt. Ms. Roybal-Allard.

              CATASTROPHIC PLANNING: LOS ANGELES SHELTERS

    Ms. Roybal-Allard. Mr. Fugate, as you know Los Angeles is 
one of the vulnerable cities for an earthquake. And in a 2010 
Red Cross report it said that if a 7.2 magnitude earthquake 
were to strike L.A. approximately 564,000 people would need to 
be sheltered, an additional 2.5 million would require food and 
water. And unfortunately the L.A. metro area has only 341 
shelter facilities with only 84,000 beds. And you were talking 
earlier about working with local jurisdictions to respond. Can 
you tell me what kind of progress has been made since that 2010 
report?
    Mr. Fugate. Yes, ma'am. Working with Jim Featherstone, who 
is the emergency manager for the city, our Region 9 works with 
the State of California. You point out again, if L.A. has this 
earthquake, they are not going to have enough shelters. And the 
question would be, ``Are those shelters even survivable in the 
earthquake?'' So we know we are going to have to depend upon 
surrounding non-impacted communities to shelter that 
population. So we work very closely with California Emergency 
Management Agency on its plans and our ability to support 
literally having to get people to shelters outside of that area 
versus what we can bring in to provide temporary shelters.
    So the plan is always about life safety first and life-
sustaining activities, and then, looking at the temporary 
housing, try to stabilize the population and get them back in. 
But this is a very good example of why only looking at what the 
City of Los Angeles gets for funding does not really tell the 
story. Because they could not shelter, if they end up with that 
many people who are homeless, looking for a place to stay, we 
are not going to be able to shelter them in that area with that 
impact. We are going to have to move them to surrounding 
communities. We are also going to have to bring a lot of 
resources from outside that area in to support that response. 
And this goes back to national preparedness.
    There are scenarios that are so big that for any 
jurisdiction to try to be prepared for it is impossible. You 
have to look at how to leverage those capabilities across, not 
just within a state, but across state lines and in some cases 
nationally. So there we work with Cali EMA out of our Region 9 
office and look at that type of catastrophic planning with a 
focus on how we get to folks, life safety, looking at shelter 
needs, and the fact that we are going to probably have to use a 
lot of capability outside the immediate area. And then we look 
at what it would take to stabilize to even set the stage for 
getting people back in and repopulating.
    It is a very complex event. This is part of why we went to 
these frameworks, to really build that type of capability. This 
is not about responding to our day-to-day emergency. It is 
literally about those type of catastrophic events that can 
happen, from earthquakes, hurricanes, or terrorist attacks.
    Ms. Roybal-Allard. Thank you. I will submit the rest of my 
questions.
    Mr. Aderholt. Mr. Carter.

TEXAS AIR NATIONAL GUARD'S MOVE: IMPACT ON GULF COAST DISASTER RESPONSE

    Mr. Carter. Thank you, Mr. Chairman. Mr. Fugate, I have a 
letter here I asked to be made a part of this record, from the 
governors of five states, Texas, Mississippi, Florida, 
Louisiana, and Alabama, expressing grave concern about the 
decision of the United States Air Force to move the Texas Air 
National Guard's 136th Air Lift Wing of eight C-130s currently 
located in Fort Worth to the State of Montana. This Air Lift 
Wing, I understand, is the only domestic emergency air lift 
capability in the Gulf region.
    According to this letter the Texas Air National Guard C-
130s have flown 423 storm response sorties in Texas, Louisiana, 
and Mississippi carrying 3,143 passengers and delivering 939 
tons of emergency supplies. Under current arrangements the 
Texas governor can mobilize these C-130s in a matter of hours. 
However, it is my understanding that requesting federal support 
in emergencies like these could take days due to federal 
bureaucracy. How then does this relocation of these C-130s from 
Fort Worth, Texas to Montana affect the ability to provide 
disaster relief to the Gulf region in times of emergency? Was 
FEMA a part of the decision making process to move these as it 
impacts the emergency response assets in the Gulf region? And 
should this move happen? What is FEMA's plan to ensure 
appropriate resources are dedicated to the Gulf area to ensure 
timely disaster response?
    Mr. Fugate. Well again, I think Secretary Panetta has a 
more unenviable position than I have, looking at how he is 
having to make his budget decisions. There are several avenues 
where we have worked on this. This is not something 
specifically, but we are a participant with the Secretary of 
Homeland Security on the Council of Governors, which actually 
has 10 governors, not necessarily these governors, but 10 
governors representing the National Governors Association 
working with Secretary Panetta, the branches of the military, 
and the National Guard Bureau, as well as their adjutant 
generals.
    The issue, as we draw down, is what are these impacts and 
how do we look at those responses? I think part of this has 
been Congress recognizing that the National Guard is now able 
to have dual status commands for Title X and State Guard, and 
well as bringing up the Reserves under a Secretary's call up 
not requiring a presidential mobilization in disasters. But I 
would defer to Secretary Panetta and his folks as to this. But 
I would also state that through the Council of Governors, which 
I am honored to be part of under Secretary Napolitano's 
leadership, these are the issues that are being discussed with 
Secretary Panetta and on behalf of the adjutant generals of 
what the impacts are to domestic response.
    Mr. Carter. This is not a draw down. This is actually going 
to cost money to move them to Montana, is going to have to 
build up the capacity to house 130s in Montana because they are 
an F-15 base right now. So it is not part of the draw down that 
we are trying to do to save money in all of the departments. It 
is a very confusing decision that has been made. Is there any 
kind of reporting as to what these governors' decisions are 
going to be as they talk to Panetta?
    Mr. Fugate. Yes, sir. They report back to the National 
Governors Association. The ten are, as the Council of 
Governors, which Congress directed the President to appoint and 
to work with the Secretary of Defense on National Guard issues 
particularly. Both from the standpoint of domestic response but 
also the ongoing care and needs that states have, particularly 
looking at their Guard. So I would defer to that body. I do 
know this issue, not this specific, but the overall issues of 
how these are affecting governors and the ability to do that, 
and also the work that is being done at NORTHCOM to support 
states if we do require federal assistance.
    Mr. Carter. Thank you.

                EMERGENCY MANAGEMENT PREPAREDNESS GRANTS

    Mr. Aderholt. Thank you, Mr. Carter. Before we end this 
first panel session, I have one quick question to follow up 
from the conversation that you and I had yesterday, Mr. Fugate, 
regarding the EMPG fiscal year 2012 guidance. We are very 
concerned with the new inclusion of additional agencies that 
would be eligible. Do we have your commitment to address this 
issue?
    Mr. Fugate. Yes, sir.
    Mr. Aderholt. Thank you.
    Mr. Fugate. It is not our intention to have expanded that 
beyond those that the states have already done before. It was 
more to create a more uniform language and it was not the 
intended consequences to suddenly open up to brand new 
applicants for funds under the Emergency Management 
Preparedness Grants.
    Mr. Aderholt. Okay. Thank you very much. We appreciate 
again your attendance this morning, and for answering some of 
the questions that I know this Committee has had. Questions 
about your agency that touch everyone on this panel, this 
Committee, and I would say every Member of Congress.
    Before we turn to our second panel I do want to recognize 
Norman Dong, who is CFO for FEMA. He is with us this morning, 
and it is my understanding he is going to be leaving to go to 
OMB. We will truly miss his knowledge and working with him. But 
we do thank him for his service, and we do wish you the best as 
you move over to your new job at OMB.
    At this time we will turn to the second panel. Thank you 
again, Mr. Fugate, for being here.
    As I mentioned earlier we are convening a panel of homeland 
security stakeholder organizations to discuss homeland security 
grants and related issues. I would like to introduce the panel. 
Mr. Ross Ashley is with us this morning. He is Executive 
Director of the National Fusion Center Association and he is 
representing the National Fusion Center Association this 
morning. Mr. Jeff Caynon, he is President of the Houston, Texas 
Professional Fire Fighters Association and is representing the 
International Association of Fire Fighters. Captain John 
Holmes, Deputy Executive Director for the Port of Los Angeles 
and representing the American Association of Port Authorities. 
Jim Mullen, who is the current President of the National 
Emergency Managers Association and also the Director of the 
Washington Department of Emergency Management. And he is 
representing the National Emergency Managers Association. And 
last but certainly not least, Mr. Michael DePallo, who is the 
Director and General Manager of the Port Authority Trans-Hudson 
Corporation, representing the American Public Transit 
Association.
    Thank each of you for being here this morning. And we look 
forward to hearing from each of you as you give us your 
thoughts and opinions on the grant reforms that have been 
introduced. This builds on effort by this Committee last year. 
But we recognize that there are challenges and we believe that 
it is also time for reform.
    If you could, I ask you to keep your comments to two or 
three minutes and summarize it for the Committee. But bear in 
mind that your written testimony will be placed in the record. 
So before you begin, let me recognize Mr. Price, our 
distinguished Ranking Member for his opening remarks.
    Mr. Price. Thank you, Mr. Chairman. I would like to join 
with you in welcoming this panel. It is particularly important, 
I think, to hear from this panel this morning. We are 
interested in the current grant programs, how they are working, 
and how they can be improved. But we are of course especially 
focused on this new proposal for the National Preparedness 
Grant Program. We have discussed this with the Administrator. 
We want to discuss that with you because we value your 
perspectives. The Chairman has introduced each of our 
panelists. I will not go through that again except to welcome 
you and say with limited time I think we had better get on with 
the testimony. Thank you.
    Mr. Aderholt. Okay. Mr. Caynon, we will start with you.
    Mr. Caynon. Good morning, Chairman Aderholt, Ranking Member 
Price, and distinguished members of the Subcommittee. Thank you 
for the opportunity to testify before you today. My name is 
Jeff Caynon and I serve as an engineer operator in the Houston, 
Texas Fire Department, and I am the current President of the 
Houston Professional Fire Fighters Association.
    I am pleased to appear before you today on behalf of the 
IAFF and our General President Harold Schaitberger, and the 
nearly 300,000 professional fire fighters and emergency medical 
personnel of the International Association of Fire Fighters.
    The most fundamental purpose of government is to protect 
the public safety. And despite rising deficits the federal 
government cannot afford to cut spending on homeland security 
funds to state and local governments. As the first line of 
defense in protecting our homeland the federal government has 
an inherent responsibility to help ensure the local departments 
can effectively protect the public.
    Among the most effective Federal programs to assist local 
communities in protecting the homeland are SAFER and FIRE grant 
programs. A study by the NFPA recently found that fire 
department capabilities have improved in a variety of areas 
funded by SAFER and FIRE. There have been significant increases 
in the numbers of fire departments that are able to provide 
their fire fighters with vital equipment, such as radios, 
protective clothing, and turnout gear. And thanks to FIRE 
grants more fire departments today are able to train their fire 
fighters in basic structural fire fighting, HAZMAT response, 
and emergency medical care.
    The needs assessment also found similar improvements in 
staffing. All of this translates into improved public safety. I 
know first hand the value of these programs. Following the 
tragic death of two fire fighters at a fast food restaurant in 
Houston, the Houston Fire Department applied for and received a 
$2 million FIRE grant to fund an innovative fire ground 
survivability program that provided training for survival 
skills and mayday prevention.
    Although SAFER and FIRE have been traditionally well 
funded, efforts to reduce the deficit have caused a reduction 
in funding for the programs over the last two fiscal years. For 
fiscal years 2010 and 2011, the programs were funded at a total 
of $810 million. For fiscal year 2012, however, funding was 
reduced to $675 million. The administration's budget proposal 
further reduces funding for SAFER and FIRE to $670 million.
    Reversing recent funding cuts to SAFER and FIRE will help 
ensure that communities have the resources they need to protect 
the homeland. We therefore recommend that the Subcommittee 
provide $810 million evenly divided for the two programs in 
fiscal year 2013.
    In addition to SAFER and FIRE grants, the Urban Search and 
Rescue system is crucial to our nation's homeland security. The 
US&R system comprises 28 national task forces consisting of 
highly trained, equipped, and exercised emergency response 
personnel capable of responding to both natural and manmade 
disasters. The State of Texas is the proud sponsor of one such 
force, Texas Task Force 1. Congress has in recent years 
provided modest increases to US&R, and funding the program at 
$41.25 million in fiscal year 2012. Unfortunately, the 
Administration's budget reverses this trend and cuts the 
funding by $13.7 million. The average cost to maintain a US&R 
team exceeds $2 million, leaving local governments which would 
sponsor the task force to fill the gap. With many localities 
facing budget shortfalls themselves, sponsor US&R teams has 
become a burden they struggle to afford, significantly 
straining task force capability and readiness.
    For a minor investment Congress can significantly enhance 
the nation's preparedness to respond appropriately. We 
encourage the Subcommittee to increase the funding to US&R over 
the 2012 appropriation.
    Lastly, we wish to express our reservations regarding the 
administration's proposal to consolidate 16 Homeland Security 
Grant Programs into the new National Preparedness Grant 
Program. Each of the Homeland Security Grants was established 
in order to serve a specific and important public safety need. 
Given limited Federal funding, merging these distinct homeland 
security priorities into a single block grant could cause such 
priorities to go unserved.
    As a major metropolitan area in a border State, containing 
a port, significant rail and road freight, and replete with 
hazardous industry, Houston faces significant risk from 
terrorist attack and other large scale disaster and these 
targeted grant programs have contributed to a more complete 
level of preparedness. We are also concerned that the National 
Preparedness Grant would be administered solely by the States 
without adequate input from local emergency managers and first 
responders who often have the best knowledge of homeland 
security threats and needs. We urge the Subcommittee to 
carefully consider any grant consolidation proposal and seek 
the input of all stakeholders, especially State and local 
government representatives and first responders, before making 
major changes to current Homeland Security Grants.
    Again, I would like to thank the Subcommittee for the 
opportunity to testify here today, and I am happy to answer any 
of your questions.
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    Mr. Aderholt. Captain Holmes.
    Mr. Caynon. Pass the mike.
    Captain Holmes. Pass the mike. Mr. Chairman and members of 
the Committee, thank you for the opportunity to testify. I am 
Captain John Holmes, Director of Operations for the Port of Los 
Angeles. My testimony focuses on the experience of the Port of 
Los Angeles and AAPA's U.S. members. My written testimony has 
been submitted for the record. I will summarize it briefly 
before I answer any questions.
    In the decades since 9/11 a key component of our nation's 
effort to harden the security of seaports has been the Port 
Security Grant Program. Under the Safe Port Act the Port 
Security Grant Program is authorized at $400 million. 
Unfortunately, in the last few years the funding for this 
program has decreased dramatically.
    There were other adverse changes to the fiscal year 2012 
grants as well. First, the term of performance has been changed 
from three years to two years. Although we appreciate the need 
to execute projects, we are concerned that such a move will 
shift the focus to buying stuff rather than developing 
solutions. The past period of performance made it difficult to 
execute these solutions. The current period will make it nearly 
impossible.
    Cost share requirements have also been an obstacle. 
Although I appreciate that it is effective for a grantee to 
have skin in the game, it is often overlooked that the skin 
that the ports provide is the ongoing operations and 
maintenance costs of the grant funded equipment or systems. 
This is particularly true with technology solutions where the 
annual operating costs can be as high as 10 percent of the 
project cost.
    Another hurdle is the environmental and historic 
preservation review. While other FEMA programs must go through 
these reviews there is not the threat of a loss of funds 
because there is no time table associated with these programs. 
While EHP has streamlined some of these reviews they still are 
a major reason why many of the grant projects require an 
extension.
    The fiscal year 2012 grant announcement also includes 
improvements to the program, like expanding the use of funds 
for maintenance and allowing the limited use of grants for 
personnel. We are also pleased to see that despite the funding 
cuts all ports continue to be eligible. Restricting funding to 
the highest risk ports would leave a soft underbelly of 
unprotected ports for terrorists to exploit.
    We appreciate the willingness of DHS to work with the ports 
on grant issues. Positive changes have been made and we hope 
that these changes will continue. We feel that over the time 
the pile on effect of new requirements has had a significant 
negative impact on the program. For fiscal year 2013 and beyond 
we strongly urge the Committee to restore port security 
funding, keep the funding separate, maintain federal control, 
provide a uniform cost share waiver, and establish a joint DHS 
port group to streamline the process.
    In order to continue to be effective the grant process must 
evolve in conjunction with port needs and vulnerabilities. 
Working with DHS efforts have been made to keep pace with this 
evolution. We fear that if ports are lumped into the larger 
Homeland Security equation efforts to date will be marginalized 
and the focus on ports will be lost. Thank you.
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    Mr. Aderholt. Mr. Ashley.
    Mr. Ashley. Chairman Aderholt, Ranking Member Price, 
members of the Subcommittee, on behalf of the National Fusion 
Center Association, thank you for inviting me.
    A lot has changed since I was here as the Assistant 
Administrator of the Grant Programs Directorate. The 
administration's intent to streamline the grant programs, 
allocate funding based on risk, and measure the impact, is 
exactly the right way to go given funding reductions that have 
occurred. But there are a lot of unanswered questions. Absent 
reauthorization of the Preparedness Grant programs the 
President's proposal should be considered under the current 
construct of law. We would do a disservice to the progress made 
by creating a new patchwork program without authorization. 
After nearly five years, Congress should reauthorize as soon as 
possible or make it clearer to the department that the current 
construct of law should be followed.
    Congress should also continue to ensure that DHS measure 
the effect these programs have on preparedness. Until DHS fully 
implements a planning, programming, and budgeting system that 
assess all impacts of federal investment, we cannot determine 
whether 100 new Border Patrol Agents, or another $10 million in 
Operation Stonegarden funding provides the best return on 
investment.
    The fiscal year 2012 funding allocations and grant guidance 
continue to head in the right direction. The NFCA urges this 
subcommittee to continue to support the Secretary's efforts to 
focus funding on programs that support the analysis and sharing 
of homeland security threat information. That includes the 
sustainment of a strong national network of fusion centers.
    Fusion centers have helped transform the way Federal, 
State, and local, and tribal governments share intelligence 
information to protect the Homeland, just as envisioned by the 
9/11 Commission and the Intelligence Reform and Terrorism 
Prevention Act of 2004. Fusion centers analyze national threat 
information in a local context, pass critical State and local 
information up to Federal partners in the intelligence 
community, and disseminate relevant actual information to State 
and local decision makers. And all of this is done by 
protecting privacy, civil liberties, and civil rights.
    Fusion centers are owned and operated and budgeted at the 
State and local level. A sustainment model that works in Boston 
may not work in my hometown of Montgomery. For example, the 
Alabama Fusion Center budget was $800,000 in fiscal year 2011. 
Forty percent of that came from the State general fund, and 60 
percent from DHS preparedness grants. North Carolina 
Information Analysis Center budget was $683,000 in fiscal year 
2011. Seventy-seven percent of that came from DHS Preparedness 
Grants and 23 percent from DOJ grants.
    Flexibility of State or urban areas to determine how a 
center is supported is an essential element of the national 
network. Simply put, the decentralized effort of fusion centers 
is a national asset. And it is the same as a shared 
responsibility among all levels of government. There is no 
other mechanism for leveraging more than 2 million public 
safety practitioners in the private sector in every corner of 
the country to protect the homeland.
    Let me conclude with a story that shows the value of the 
national network. Recently a local police officer in Alabama 
made a traffic stop. Based on plain sight observations the 
officer asked to see the contents of a duffel bag in the 
backseat. Inside the duffel bag were four police uniforms and 
four police badges. When interviewed each of the occupants 
stated they were headed to a location in Colorado and the 
occupants were allowed on their way. What happens next shows 
how far we have come in taking proactive measures to protect 
the Homeland.
    The officer completed a report and clicked the SAR button 
in the Alabama reporting system. That suspicious activity 
report went immediately to the Alabama Fusion Center, which 
analyzed the information and contacted the Colorado Fusion 
Center. The FBI has a presence in both of those centers. The 
matter is still being considered. Whether this situation has to 
do with terrorism, or some other criminal activity, the key 
point is that within hours Federal, State, and local officials 
who can act to prevent criminal activity were aware of the 
situation.
    This goes far beyond information sharing. This is deep 
collaboration that makes our country safer and the fusion 
centers enable it. Thank you, and I look forward to your 
questions.
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    Mr. Aderholt. Mr. Mullen.
    Mr. Mullen. Thank you, Chairman Aderholt, Ranking Member 
Price, and members of the Subcommittee so much for the 
opportunity to provide some brief comments this morning on our 
submitted statement for the record.
    NEMA was very pleased to see the progress made by the 
administration in their 2013 budget proposal. We should be, 
because since June of last year in direct response to Congress' 
call for reform NEMA has worked on developing a new 
comprehensive preparedness grant system.
    The current grant structure is complex and contradictory 
often, creating too many opportunities for uncoordinated 
efforts. As many on this committee have stated before, the 
current fiscal condition of this nation requires us to invest 
every dollar more wisely than ever. We appreciate your 
continued support over the years of the Emergency Management 
Performance Grant, or EMPG. NEMA remains committed to 
demonstrating to you the return on your investment in this 
program and recently released our second annual report on EMPG.
    NEMA believes we can gain efficiencies in the grant system 
to increase the effectiveness of our mission. We can achieve 
increased flexibility while gaining much needed accountability, 
but changes must be made to the structure under which we 
operate.
    First, a skilled cadre is necessary in order to effectively 
complete the Threat Hazard Identification Risk Assessment, or 
THIRA, and a comprehensive planning process outlined in our 
proposal. We propose keeping EMPG as is and begin a similarly 
structure grant for homeland security professionals allowing a 
State and local focus on preventing terrorist acts to continue. 
Once the THIRA is completed a comprehensive planning process is 
required. Current planning efforts seem driven more by funding 
levels than on the capabilities we need to confront threats and 
hazards. We recommended turning this process upside down and 
allocate funding based on the THIRA and the development of 
capabilities to address gaps, buy down risk, and most 
importantly build performance measurement into each project.
    The THIRA and subsequent plan feed intelligent investments 
in national aspects. We like aspects of the proposed National 
Preparedness Grant Program of the President's 2013 budget but 
suggest it be project based. Applications should be evaluated 
by a multidisciplinary and multijurisdictional committee prior 
to review by the state administrative agency. Local governments 
should be encouraged to ban together and apply directly when 
they share a common threat or hazard.
    This opportunity for combinations of local governments to 
participate specifically addresses the UASI question. Due to 
their size and inherent threat tier one UASI cities should 
continue to be directly funded. By allowing other combinations 
of local governments to apply directly those remaining UASI 
jurisdictions can continue participating in the process and 
receive funding without that annual fear of falling off the 
list.
    Overall this process is about building and sustaining 
capabilities across the country; encouraging innovation, self-
organization, and regionalization where local decision makers 
wish to do so; empowering local governments to decide which 
projects they want to fund; providing visibility to all levels 
of government and helping remove politics from preparedness 
decisions; recognizing the interdependencies across this 
country; and most importantly it is flexibility with 
accountability.
    One tenet of the NEMA proposal stands above all others. As 
Chairman Rogers reminded last year President Eisenhower stated 
our nation deserves security, but we also deserve solvency. In 
these budget constrained times NEMA remains committed to 
working with you and achieving both of these goals.
    Through this process we wanted to initiate a dialogue with 
all stakeholders and we thank you for this forum to do just 
that. I appreciate the opportunity to participate in this 
hearing and I look forward to any questions you may have.
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    Mr. Aderholt. Thank you. Mr. DePallo.
    Mr. DePallo. Good morning Chairman Aderholt, and Ranking 
Member Price, and Members of the Subcommittee. My name is 
Michael DePallo and I thank you for the opportunity to offer 
testimony. I am the Director and General Manager of the Port 
Authority Trans-Hudson Corporation, or PATH, a subsidiary of 
the Port Authority of New York and New Jersey. Today I am 
testifying as Chairman of the Security Affairs Steering 
Committee of the American Public Transportation Association.
    Mr. Chairman, according to the Mineta Transportation 
Institute since 1970 more than 2,000 separate attacks have 
occurred worldwide on surface transportation, causing over 
6,000 deaths and approximately 19,000 injuries. The Government 
Accountability Office along with various government agencies 
have reported on or testified to Congress that public 
transportation in America remains vulnerable to terrorist 
attacks and that al-Qaeda remains interested in targeting the 
transit sector. And that more needs to be done to prevent and 
prepare for such a potential attack.
    While we have been very fortunate to date in not having a 
direct terrorist attack carried out in our transit systems, we 
have indeed foiled plots and arrested individuals who intended 
to attack our systems. Let me especially note that PATH has 
experienced the tremendous devastation of a terrorist attack as 
a result of the horrific attacks on the World Trade Center in 
1993 and 2001. For this and many other reasons I feel strongly 
that the funding commitment to fortifying our systems must 
match the recognized risks and threats.
    There is a tremendous need for security grants to secure 
and fortify our transit systems across the country. In 2010 an 
APTA survey of its members found security investment needs in 
excess of $6.4 billion nationwide. This stated need contrasts 
with the recent trends in cuts to transit security grant 
programs, including the fiscal year 2012 allocation of $87 
million in transit security. I urge Congress to restore 
appropriations for the Transit Security Grant Program in this 
and subsequent appropriation bills.
    While there is good policy represented in the fiscal year 
2012 grant guidance and fiscal year 2013 National Preparedness 
Grant Program, we do have some thoughts about elements of both. 
Specifically we are concerned with the new 24 month grant 
period for performance on all projects, a reduction from the 
previous three to give year allowable expenditure period. Also, 
since PATH assets are included on the top transit asset list, 
the TTAL, I would welcome this risk-based funding approach, an 
approach that APTA agrees with. However, speaking on behalf of 
the larger industry, including thousands of assets not listed 
on the TTAL, I recognize that the narrow funding approach could 
preclude other important security improvements from receiving 
funding consideration under such limited transit security 
dollars availability.
    There are also concerns with the elimination of the TSGP 
from the National Preparedness Grant Program and we call for a 
sufficiently funded targeted grant program for public 
transportation security as envisioned in the 9/11 Commission 
Act.
    And finally APTA supports the approach that Congress has 
consistently endorsed in legislation that allows grants to be 
provided directly to the transit agencies as opposed to 
requiring applications be made through the state administrative 
agency.
    Before closing I want to inject a personal note on behalf 
of the Port Authority Executive Director Patrick Foye, who 
along with myself and other Port Authority staff, are honored 
to be hosting Chairman Aderholt, Ranking Member Price, and 
Committee Members Lowey and Dent next week at the World Trade 
Center site. We are looking forward to showing you how the Port 
Authority has utilized and can continue to utilize federal 
homeland security dollars to support our own investments in 
security initiatives at this site of national historic 
significance that continues to be one of the highest risk 
targets in our nation.
    Thank you for the opportunity to testify on these critical 
security issues and I welcome any questions you may have. Thank 
you.
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    Mr. Aderholt. Thank you, Mr. DePallo. The fiscal year 2013 
grant proposal from the department builds on the reforms that 
this committee implemented back in fiscal year 2012. I would 
like to hear from each of you briefly to address the proposed 
fiscal year 2012 guidance, and the Department's fiscal year 
2013 budget proposal.
    Mr. Caynon. We made some recommendations in the written 
testimony that is submitted and I did as well in the oral. The 
needs assessment is also included in the written testimony and 
it talks about some of the benefits that we have seen as a 
result of FIRE and SAFER. The amounts that we are requesting 
that we increase to are relative to the effect that we have 
seen of the grants over the last several years. And can you 
hear me? Okay. I cannot hear myself over the mike. I am not 
sure how specific you want me to go on the answer, there.
    Mr. Aderholt. Just briefly. Just summarize. Like I say, 
include things that would be helpful as well.
    Mr. Caynon. Okay. And it is included in the written 
testimony. There is a lot of evidence there that points to, 
very specifically to the effect, to the positive effect of FIRE 
and SAFER. And so it is important I think that we keep making 
progress. When you look at the needs assessment one of the 
things that it absolutely points out is that there are still 
staffing shortages across the fire service. And the effect of 
FIRE and SAFER to improve on that shortage is something I think 
we should build on.
    Mr. Aderholt. Thank you. Captain Holmes.
    Captain Holmes. And I will be very brief. I think that, you 
know, because the system of, you know, fundamentally working 
through the grant system has been so difficult that there is a 
lot of unobligated funding and grant funding. And people seem 
to perceive that as a difficulty with the ports and really not 
take a hard look at a system that has become, as I said, very 
cumbersome and has this huge sort of pile on effect, 
particularly with requirements, both State and Federal, and 
requirements from, you know, historical State people, and 
historical Federal people. And it is just, in our world it has 
made it very, very difficult to execute money. So as a result I 
think there is money that appears like it is not needed because 
it has not been executed. But I think realistically the grant 
funding, port security grant funding is still needed. And my 
principal recommendation would be to restore the funding to the 
levels. It has been dramatically cut, about 75 percent, over 
the period of the last three of four fiscal years.
    And in addition to that really take a look at the grant 
system and try to fix that, and then you will be able to sort 
of execute all the funding. Because as we go and try to do our 
day to day business, and we are a very large port with a very 
big staff, it is extremely difficult for us to deal with the 
grant process. And I cannot even imagine how a smaller port can 
deal with the grant funding process. There is not a week that 
goes by at the Port of Los Angeles where somebody does not just 
say, ``This is so difficult, why do we just not ask for money 
anymore?''
    So I think fundamentally you have got to work with DHS and 
fix the system because it is very repetitive. And if you are a 
port like we are which is also associated with a city, the City 
of Los Angeles, we have Federal requirements, procurement, 
environmental, historical. We have State requirements, 
procurement, environmental, historical. We have city 
requirements that we have to deal with. And it is just, you are 
making it so difficult to execute that I think that has got to 
be fixed. And when you fix that people will be spending the 
money as it is given to you, and you will not have this lag 
where there is all this, seems like there is this big pot of 
money left over that people do not need. It is not that they do 
not need it. It is that it is just very difficult to use it.
    Mr. Aderholt. Mr. Ashley.
    Mr. Ashley. Sure. The question going between 2012 and 2013, 
I think it is very commendable what Congress did this year in 
the fiscal year 2012 budget, giving $974 million worth of 
discretion to the Department to allocate the funding based upon 
which programs met the best national need. And I think that is 
commendable and I think the Department went about that in a 
very professional and organized way.
    The 2013 proposal, as I mentioned in my brief oral 
statement, like I said, has some concerns to it if it is not, 
if Congress does not act to reauthorize. Because it creates a 
patchwork program, of which between now and October 1, assuming 
we have an October 1 appropriation, is unrealistic to meet. So 
either reauthorize the program after five years, or deal with 
the programs, as 2012 did, under the current construct of law. 
I think that the President's budget as proposed could still be 
implemented using the implementing recommendations in the 9/11 
Act. Unless Congress would like to open up the reauthorization 
issue.
    Mr. Aderholt. Thank you. Mr. Mullen.
    Mr. Mullen. First 2012, we think the layout is a good 
transition from where we have been towards a new system, 
because the flexibility is improved. Running port and transit 
grants through the state we believe is a good move to help 
improve accountability and draw down issue. And in our proposal 
they are still absolutely included. We just recommend that they 
require to operate within the overall preparedness system. And 
I think we are beginning to move in that direction so that we 
can help them, and they can help us, and we can understand each 
other's issues.
    I will just say in case we do not get, we run out of time, 
very few problems occur that occur within the boundaries of a 
port authority. The locals are involved either way. Our economy 
is involved either way. We are very interested in working 
closely with those organizations, port and transit, to make 
certain that we are attending to their needs in this new 
system. And I do not believe that we will shrink from trying to 
assist them in every way, and be very sensitive and respectful 
of their concerns. And I think it gives them an opportunity to 
collaborate with us, too. It is not just us getting into them.
    For 2013, there are many similarities between the NEMA 
proposal that we developed at the end of last year with the 
President's grant structure. There are some concerns, though. 
The definition of regionalization I think needs some work. I 
think we need to talk about, the peer review process appears to 
be little more than an additional bureaucratic layer. I do not 
believe if we move to a project based system that we need to 
have Federal review of every project when the locals and the 
States are collaborating closely on devising and deciding what 
would be the best use of limited funds.
    So there are issues about urban area that I think still 
need to be addressed. We have tried to address that in our 
paper. And in fact we have addressed most of the issues that 
have come in our paper so, which is I think in your request for 
a brief response I will stop there.
    Mr. Aderholt. Okay. Thank you so much. Mr. DePallo.
    Mr. DePallo. Thank you. I agree with Captain Holmes, in the 
idea of separating the funding for ports and for security, the 
security grant. By combining the programs there is no guarantee 
that any money at all will go to, you know, transit security 
grants.
    As far as the 2012, the Transit Security Grant Program, 
there is only $87 million in that program. That is down from 
the previous year of 2011, where there was $200 million. And 
that is down from previous years. So the amount of funding 
needs to increase.
    In 2013 the reduction of the time to finish performance on 
projects goes from three to five to two years. Congressman 
Price mentioned tunnel hardening, a project that you would not 
be able to do. I think what will happen now, essentially what 
will happen is that you will be eliminating any major capital 
projects at all. It will all be just for operating expenses.
    And finally we believe that going through the States for 
funding we believe just adds another step to the process and it 
is not necessary. Most transit systems are already prepared to 
be able to accept grants directly and there is no need to go 
through the States and just add additional administration to 
the program.
    Mr. Aderholt. Thank you. Mr. Price.
    Mr. Price. Thank you, Mr. Chairman. I want to thank all of 
you for some very useful testimony which we will consider as we 
proceed to mark up this bill. Let me just ask a couple of 
specific questions. First to you, Mr. Caynon. As you are well 
aware, for the last few years, in light of the severe economic 
downturn, Congress has included language in the appropriations 
bill that permits grant funds to be used to retain fire 
fighters, to avoid layoffs, as well as to hire new fire 
fighters as is the usual requirement under the SAFER program. 
Has this made a different in Houston? Has it made a difference 
in other situations that you would like us to look at? And do 
you think this waiver is necessary again in 2013?
    Mr. Caynon. Well it has made a difference, less so in 
Houston as opposed to other municipalities. The waivers, I know 
there is some concern about temporary waivers that seem to be 
permanent because we are coming back and saying, you know, we 
need those waivers again. I think first we have to look at it 
in the light of why those waivers were initially put in place 
and what they are there for. Initially, you know, when this 
happened it was 2002 and nobody realized the economic situation 
that we would be in over the last few years. Nobody could 
predict the Great Recession. And there were safeguards that 
were put in place in these grants that would protect the 
process of supplementing and not supplanting municipalities' 
responsibility to staff their departments.
    So to go forward, yes, we need to keep the waivers in 
place. Because the bills, the way they are written right now, 
would require, I will give you some specific examples so you 
will know, or a specific example. Initially under the 
safeguards that were in place a municipality was required if 
they hired a fire fighter under SAFER to keep that fire 
fighter, to provide funding for at least five years into the 
future. The department would not be able to reduce their budget 
any at all. I cannot think of one fire department, including 
Houston, that has not had to reduce their budget after the 
recession. And I think any municipality that is looking at 
applying for a grant where they are required to have future 
funding for an employee for, you know, for up to five years 
would really have to give that a hard look about whether or not 
that is a grant they could apply for and make that kind of 
commitment.
    So unless there is some reform, and I know there is at 
least one bill to reform this legislation, unless there is some 
reform we have to keep the waivers in place so that SAFER is a 
workable alternative to bring fire fighters back to work and 
keep some folks on the job.
    Mr. Price. A workable alternative, that is, under 
conditions of economic pressure and duress.
    Mr. Caynon. Yes, sir.
    Mr. Price. Let me turn to Mr. Holmes and Mr. DePallo. You 
have both in your testimony referred to the shortened time 
frame that is proposed by the department for awarding funds, or 
for getting funds out the door. And you both have suggested 
that this might eliminate certain kinds of larger scale 
projects, certain kinds of capital projects. I mentioned to 
Administrator Fugate a few moments ago tunnel hardening as a 
possible example. I wonder if you would elaborate based on your 
experience on the kinds of projects you have asked for and have 
anticipated going forward? What would be the effect of that 
kind of shortened time frame? And I guess this particularly 
applies to the rail and transit side, what are you going to 
have to make up in some way for this funding to pay for what 
you need to do?
    Mr. DePallo. Yes, you mentioned tunnel hardening and we 
currently have a tunnel hardening project. And a project like 
that requires a great deal of advance planning. Engineering, 
design, procurement of the equipment and materials necessary, 
and then implementation of a project. For example, in a tunnel 
that operates 24 hours a day, seven days a week, it is 
impossible to do that in two years. Most capital projects, and 
that is a very complicated one, even less complicated projects 
still require a great deal of planning, engineering, and 
design. That is compounded by the fact that if the monies are 
not released on time the clock starts ticking later. So it just 
complicates the issue. So in effect, I believe, in my opinion, 
that by reducing the time period to two years you are going to 
be eliminating any significant capital projects at all.
    Captain Holmes. I would echo that, and I think it is very 
similar in the port environment. In my comments when I said you 
move from people seeking solutions to people buying stuff, that 
is what happens. They decide we are going to buy this because 
it is fast. We can do this fast.
    Our projects are very similar. We have a multimillion 
dollar camera system we built and we had to get an extension on 
that system. It was $27 million, 300 cameras. We are doing 
directional drilling to lay fiber optic cable. And in the new 
world order we are looking at things like IT and cybersecurity. 
And those are solutions. They are systems. And they have to be 
designed. And sometimes these systems take a year or more to 
design. And then you have the contracting process and you have 
to go through all the steps.
    With this moving from three years to two years I would have 
to say that you are, I would have to agree. You are probably 
pretty much eliminating any sophisticated project. And what you 
are going to go back to is people getting the money and saying, 
``What can I buy quickly? Let me buy ten cards. Let me buy two 
boats.'' And you are not going to move forward in this process. 
You are going to backslide in this process significantly.
    Mr. Price. Thank you, Mr. Chairman.
    Mr. Aderholt. Ms. Roybal-Allard.
    Ms. Roybal-Allard. First of all, let me welcome all the 
panelists because I think each of you play a critical role in 
protecting our national security. But I do want to specifically 
thank Mr. Holmes for being here, flying across the country to 
testify. Because as I mentioned earlier, the ports play such an 
important role in our national economy.
    Understanding the difficult budgetary decisions that Mr. 
Fugate has to make, the fact remains that a terror attack on 
the Port of L.A./Long Beach complex would have a devastating 
impact on our national economy. You heard Mr. Fugate's 
comments. I believe that you were here during his testimony. 
Could you comment on his response regarding the proposed grant 
program and his hope that everybody can work together to 
properly prioritize the needs? And then also if time allows can 
you also provide us with some suggestions on how you think that 
the port security grant requirements and guidance could be 
improved and simplified? If you could offer us some suggestions 
how to do it?
    Captain Holmes. Well let me start by saying, you know, 
certainly Mr. Fugate is well recognized and has done a great 
job at FEMA. I think the first point I would make is there is a 
difference between coordination and control. You know, it is 
easy to sound like we do not work with the states but we work 
very closely with the State of California doing risk 
assessments and identifying port needs. What we would not be so 
keen on is allowing them to have control of the funding. There 
is a big difference between coordinating with the states and 
controlling, letting them control your funding. I mean, as you 
know the Port is fundamentally a business. We coordinate with a 
lot of people but we do not let everybody handle our money. I 
think that is not a good decision.
    The second thing that I would say is I am not sure what 
kind of time constraints that would add to a system that, as 
you heard from myself and my colleague down at the table, 
already is a cumbersome and time sensitive system. By adding 
another step in the process I am not sure that I could identify 
what the value added is.
    With respect to his comments that all the grants should be 
together, I cannot speak for all the grants. But I can speak, 
as you well know, ports historically in this country as a 
maritime nation are largely Federal controlled. Our biggest 
partner is the U.S. Coast Guard. And I think one of the things 
that has been done well in this system is the Coast Guard 
system of having the Area Maritime Security Committees review 
grant proposals and try to determine where the vulnerabilities 
are and where the needs are.
    So if you are looking at the relationship between a city 
and a State, and a port and a State, they are very, very 
different. Ports are very Federally focused. Port facilities 
are Federally regulated facilities. And so I think there is a 
very good reason why the port funding should be separate from 
the other funding.
    You know, with respect to suggestions I think as I said 
first of all the funding has been woefully decreased. It is 
authorized at $400 million and this year it has been 
recommended at $97.5 million. That is a 75 percent decrease 
over a few years. I think the second thing is, as I also said 
in my testimony, is, and just said it needs to be separate. You 
know, port funding was separated from the other funding because 
it, prior to 9/11 there were very little requirements for 
security at ports and we had to start from zero and work our 
way up. So it was very important to separate the ports and 
focus on the ports. By bundling them together I think a 
statement is being made that ports are not as important 
anymore, with which I do not agree. Because 93 percent of all 
the cargo coming into the country comes in by water.
    The last thing I would say is, you know, we go back and 
forth about cost shares. And again, I think it is important for 
the port or the organization to have skin in the game. But 
people still seem to not appreciate the fact that if any, if 
the gentleman down at this end of the table, or the fire 
department gets equipment, we have to maintain this forever. So 
we more than meet our requirement to pony up the skin in the 
game. Particularly with IT projects. If we do a, our camera 
system maintenance is $1 million a year. So I have significant 
skin in the game. So I am not sure what a 25 percent cost share 
proves. I think that there should be a uniform cost share 
waiver. Because some years there is a cost share and some years 
there is not. I think there should not be a cost share.
    But I think one of the most important things we can do 
immediately is there needs to be a joint DHS port user group to 
take a look at this system and see ways where we perhaps can 
accept a State environmental or historic preservation clearance 
as good for the Federal Government. Because we keep, we keep 
repeating these things on several levels. I think we have to be 
willing to say if as Mr. Fugate says we have go to trust the 
States, let us trust the States. And if the States do an 
environmental clearance and a historical clearance, that should 
be good for the Federal Government as well. But the current 
system it is not. It is repetitive and it is this pile on thing 
that is really making it difficult for us to execute grants.
    I hope that answered all your questions. I did not mean to 
ramble.
    Ms. Roybal-Allard. It does. Does anybody else want to 
comment, if I have the time? On any of those comments?
    Mr. DePallo. I can say I agree as well. I mean, the 
difference between, you know, ports and transit, the needs are 
very much different and it needs to be separated. You know, we 
carry, at PATH for example we carry over 250,000 passengers a 
day. We are a wide open system. And there is a tremendous 
threat and risk associated. But it is a different type of risk. 
And we need to be able to compare projects accurately and be 
able to prioritize them, and to do so across different modes or 
different industries makes it that much more complex and 
difficult.
    Ms. Roybal-Allard. Thank you.
    Captain Holmes. And if I may say one last thing? This idea 
of lumping grants together presumes that there is some 
overarching methodology that exists that I can determine 
whether a suicide bomber at the Mall of America, or at one of 
my colleague's transit facilities, is more or less risky than 
something happening in the port. And up to this point I do not 
think that overarching methodology exists.
    So if you are trying to put everything together and divvy 
it up you have the presumption that there is some methodology 
you are going to use to do that. And I am not sure that right 
now that exists.
    Ms. Roybal-Allard. Yes?
    Mr. Mullen. I did want to comment. The key point is 
visibility of what is being spent and what is being committed. 
And I think we get that through the development of the THIRA, 
which is clearly going to be released in the next couple of 
weeks. And then we evolve towards a common planning process. It 
would be very desirable for every part of the community, ports, 
transit, and all the others, to plan and do that together and 
participate together. Then we get an idea. Because the dollars 
are not going up, they are going down. And as dollars go down 
we all have to decide what is the best way to say that? I will 
understand Mr. Holmes' issues a lot better when as part of the 
THIRA we can look at what his risks are and what his threats 
are and make some intelligent judgments about how can we 
support those things.
    Mr. Aderholt. Thank you. Thank you, Ms. Roybal-Allard. Mr. 
Mullen, let me address a question to you. NEMA has been very 
outspoken about the needs to show the impact of investment into 
grant programs, particularly in tight fiscal times such as 
today. Of these, EMPG is one of the few grant programs that has 
significant cost share. So, it is not just Federal funds that 
are invested, but also State and local funds. How does NEMA 
measure performance? And, what lessons learned can you share 
with the rest of the stakeholder community?
    Mr. Mullen. One of the better measures is what the Federal 
Government does not have to do because of the capabilities that 
exist in local and State Government about EMPG. I was just 
looking at the report that we submitted to the Committee just 
the other, just yesterday, I believe. There was something like 
98 or 99 presidential disasters. There were another 250 State 
events that did not rise to a level of a disaster, largely 
because of the ability of the States to control, manage, and 
prepare in advance, and coordinate a response. There were 
thousands of other events that the local governments manage 
that require very little or no intervention by the State 
because their professional staff at the local level are 
equipped, skilled, and talented enough to address the problem 
and keep it from getting out of proportion.
    So in addition to the fact that when we are allocated $350 
million that immediately is a minimum of $700 million that is 
with our match requirement, and the additional monies that are, 
we, since most jurisdictions overmatch at the local level, I 
would say that the way we have measured this is we have tried 
to report to you very clearly how EMPG is actually saving money 
by allowing the response to occur at the lowest possible level 
as needed. So when there is a big event, like some of the 
things that have just happened, that is the kind of time when 
the federal assistance can be valuable. But as Mr. Fugate even 
acknowledged, even that assistance is more oriented towards 
recovery because of the skill sets of the people that have been 
developed on the ground using this combination of dollars that 
have been provided.
    Mr. Aderholt. We have a lot of questions we could ask each 
of you but of course our time is running out. But one thing 
that we have, one of the challenges that we face, especially in 
the tightening budgets, is to make sure that taxpayer funds are 
used wisely. And this creates the need to measure the 
effectiveness of every grant fund. Mr. Caynon, let me ask you 
about this. How would this be accomplished with the funds that 
we grant to the fire departments?
    Mr. Caynon. Well I mentioned it earlier, and everyone has 
got a copy of the needs assessment that the prior 
Administration did for us. One of the major shortfalls in our 
profession is staffing. We have seen, like I said, some 
progress in staffing because of SAFER. And we are asking 
obviously to do what we need to to continue that progress. I 
guess that is the most immediate measurable way that we can 
look at the success of these grants, is the effect that we have 
seen on staffing so far.
    It is difficult I think for folks to get their arms around 
what it means to have appropriate staffing. Because I think, 
because it is a profession that is so specialized. You know, we 
get the question all the time about why do you need four people 
when there are other municipalities that have three, or respond 
with less? The best way I guess I can, the best quick example I 
can give you of that is, you know, we can go to the airport and 
get on a plane, and there only needs to be one person flying 
it. But you would not get on a, you know, you would not go down 
to an airline if they said, ``Well, we are short staffed today. 
And usually we only need one pilot. So you will be fine.'' 
Right?
    And so in the grants we are talking about here I think the 
most measurable valuation of success is what we have seen in 
improvement in staffing since we had SAFER in place. And that 
is a quantifiable example that I think we can look at, and we 
have seen progress there, and we would like to see that 
progress continue.
    Mr. Aderholt. Thank you. One thing I do want to ask about 
the fusion centers--could you tell the Subcommittee about what 
the fusion centers provide for the Federal Government that is 
not provided normally by the State and the local public safety?
    Mr. Ashley. Sure. What is really provided is this national 
network. And having this network, as I mentioned in my oral 
statement, that where Alabama can pick up the phone, talk to 
North Carolina. It is also the notion of before fusion centers 
were in place there was no mechanism to communicate critical 
national security information down to our State and local 
decision makes. It did not exist, at the classified or 
unclassified level. That mechanism is now in place. And put 
that local and State kind of flavor on the information for the 
official that makes it relevant to them.
    The other is is the pushing of information from the State 
and local officials back up to the national intelligence 
community. And that partnership with DHSINA that allows that 
information to get to the national intelligence community to be 
able to prevent acts of terrorism. This committee commissioned 
a report a number of years ago with the Research Triangle 
Institute. And basically that report stated that in 80 percent 
of the cases of any terrorist threat since 9/11, either actual 
or thwarted, that the initial piece of information that came 
from that was either derived from the public or a State and/or 
local law enforcement official.
    Now if you look at where the Department is going with the 
if you see something, say something campaign, with the 
nationwide suspicious activity reporting, and the support and 
requirement for investment justifications in fusion centers, we 
see that as moving in the right direction. And that investing 
in those areas that provide those capabilities that were not 
there prior to 9/11, that are critical for making sure that we 
do not have an event in the port or transit system. That is the 
key. We cannot afford for the event to happen in the first 
place.
    Mr. Aderholt. Thank you. Mr. Price.
    Mr. Price. Mr. Ashley, let me just follow up with you 
immediately about the kind of funding that the fusion centers 
require. Most of this funding, I understand, is from the state 
grants. What is your federal grant funding total overall? And 
do you see this proposal for grant consolidation as in any way 
putting your funding at risk?
    Mr. Ashley. No I am probably one of the few people at the 
table, and I believe Mr. Mullen and myself, basically I do not 
think that puts our funding at risk. I think the department has 
made it clear, the Secretary has made it clear, that fusion 
centers and the national network are a priority. So we view 
that, we do not view that as a problem.
    Let me give you an example of where we are about finding 
out about how much money actually goes, and I am going to use 
fiscal year 2011 as an example. I gave you a couple of 
anecdotal evidence from North Carolina and Alabama.
    We have information back from 43 of the fusion centers at 
this point, of the 77 now recognized fusion centers. In fiscal 
year 2011 the total budgets of 43 of those centers was 
approximately $110 million. Of that $74 million was State and/
or local funding. Which totals about 67 percent--33 percent of 
that was from Federal investment, either through the State 
Homeland Security Grant Program or the UASI program. I mean, 
that is pretty specific. I asked earlier with staff to keep the 
record open. We would actually like to submit State by State, 
urban area by urban area the funding, both the total budget of 
the centers as well as what categories of funding, where it is 
coming from for the Committee's----
    Mr. Price. Well let me ask you another question----
    Mr. Aderholt. We will keep the record open.
    Mr. Price. Let me ask you another question related to this 
consolidation proposal. It has to do with UASI. I think you 
were fairly outspoken last year about the undesirability of 
limiting the number of UASI eligible cities during our debate, 
especially on H.R. 1. Now given our current fiscal environment, 
I mean, this money is hard to come by these days and knowing 
the original intent of the UASI program, do you still believe 
that UASI should not be targeted to the very highest risk urban 
areas?
    Mr. Ashley. From the National Fusion Center Association, we 
do not take an opinion on whether funding ought to go towards 
UASI or State. We basically, we have urban area centers and we 
have State centers. And you know, I think it gets down to what 
can we afford at that point. We believe in eligibility for the 
urban areas. However, given fiscal constraints it is logical to 
figure that we are going to have to reduce funding. And I think 
the department has moved in a way to try to look at sustained 
capabilities where we have built capabilities. And too we 
cannot afford to continue to build new capabilities. Let us 
focus on what we have. So I think we still hold by the fact of 
having urban areas still eligible, even in a reduced fiscal 
environment.
    Mr. Price. I will close with you, Mr. Mullen. I want to 
return to the question that the Chairman raised, the very last 
question the Chairman raised with Administrator Fugate. It has 
to do with the major change, or maybe it is a major change, I 
do not know. EMPG guidance that is included in the budget has 
expanded use of the dollars, or the potentially expanded use of 
the dollars permitting EMPG's grant funds to be subgranted to 
nongovernment emergency management stakeholder entities, such 
as nonprofits, public and private universities, hospitals, 
faith based entities. It is not mandated, but the possibility 
is opened up. How do you regard this change? Do you think it is 
likely to garner significant interest? As you well know, a lot 
of the people in the emergency management community have raised 
concerns about this. I have asked a lot of questions about it. 
How do you assess this proposal? What kind of position does 
your organization, if any, take on it?
    Mr. Mullen. We have not taken a position on that specific 
guidance at this time. But a couple of things need to be 
considered. One is that with the funding levels remaining 
static I think the needs that are currently being funded are 
going to be prioritized at the local and state level for EMPG, 
which might not leave as much room as one would hope for those 
programs. But some states actually do fund those programs as 
part of their overall effort. So in a sense it may not make 
that much difference in the short term. But we are going to 
look at that and we will be happy to get back to you with a 
more thorough position on that. But we have not had a chance to 
meet and review and take a specific position. But some states 
already provide that and some do not.
    Mr. Price. Thank you, Mr. Chairman. Thanks to all of you.
    Mr. Aderholt. Ms. Roybal-Allard, you do not have any 
further questions? Okay. Well thank you all for being here, for 
your presence here this morning and this afternoon. And I know 
we went a little long but we have talked about some very 
important issues here today. So, we appreciate each of you for 
taking your time to come here and testify before the Committee. 
We look forward to getting your written testimony for the 
record. And so with nothing else, the meeting is adjourned.

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                           W I T N E S S E S

                              ----------                              
                                                                   Page
Ashley, Ross.....................................................   177
Beers, Rand......................................................     1
Caynon, Jeff.....................................................   177
DePallo, Michael.................................................   177
Fugate, Craig....................................................   177
Holmes, J.M......................................................   177
Mullen, Jim......................................................   177
Papp, Admiral R. J., Jr..........................................   119


                               I N D E X

                              ----------                              

         National Protection and Programs Directorate 3/1/2012

                                                                   Page
Chemical Facility Anti-Terrorism Standards (CFATS):
    Hiring Inspectors............................................    45
    Infrastructure Security Compliance Division..................    26
    Personnel Surety.............................................    34
    Program Challenges...........................................    42
    Tiering Issues...............................................    31
Cybersecurity:
    Continuous Monitoring Program................................27, 38
    Deploying Einstein 2 and 3...................................    45
    DHS Collaboration............................................    30
    Private Sector Collaboration.................................    36
Greg Schaffer's Departure and State of Cybersecurity.............    47
Opening Remarks: Chairman Aderholt...............................     1
Opening Remarks: Ranking Member Price............................     7
Opening Statement: Under Secretary Beers.........................    10
Questions for the Record.........................................    49
U.S. COAST GUARD (USCG)..........................................   119
    Aircraft, 21 C-27J:
        Business Care Analysis...................................   157
        Transfer from Air Force..................................   154
    Air Station Closures, Impact of..............................   155
    Aviation Safety Assessment Action Plan.......................   149
    Budget Challenges, Meeting...................................   139
    Capital Investment Plan, Submission of.......................   137
    Chemical Facilities: Overlapping Regulations.................   145
    Drug Interdiction............................................   141
    Fleet Interoperation with Navy...............................   148
    Mission Need Statement, Update of............................   146
    National Security Cutters (NSCs):
        FY 2013 Budget...........................................   153
        Production.............................................138, 153
        Options if Not Funded....................................   138
    Offshore Patrol Cutters                                         138
        Projected Operation Date.................................   153
        Capability...............................................   157
    Opening Remarks: Chairman Aderholt...........................   119
    Opening Remarks: Ranking Member Price........................   126
    Opening Statement: Commandant Papp...........................   130
    Personnel Cuts...............................................   157
    Polar Icebreakers:
        Addressing Needs with Small Fleet........................   150
        Funding Increases........................................   156
        FY 2013 Budget...........................................   153
        Plan for Operational Additions...........................   140
    Transitional Worker Identity Credentials:
        Readers..................................................   145
        Use at Chemical Facilities...............................   144
Questions for the Record.........................................   161

FEDERAL EMERGENCY MANAGEMENT AGENCY (FEMA).......................   177
    Catastrophic Planning: Los Angeles Shelters..................   223
    Centers of Excellence........................................   215
    Debris Removal:
        Alabama..................................................   220
        Cost.....................................................   201
    Disaster Relief Fund.........................................   200
    Emergency Management Preparedness Grants.....................   225
    Fire Fighter Grants..........................................   230
    Flood Map Modernization......................................   222
    Grant Fund Allocations.....................................221, 233
    Major Disaster Declarations..................................   207
    National Preparedness System.................................   217
    Nuclear Power Plant Accidents: Cleanup/Evacuation............   209
    Nuclear Regulatory Commission................................   211
    Opening Remarks: Chairman Aderholt.........................177, 226
    Opening Remarks: Ranking Member Price......................182, 226
    Opening Statement: Administrator Fugate......................   186
    Pre-Disaster Mitigation Program..............................   211
    Questions for the Record.....................................   284
    Texas Air National Guard's Move: Impact on Gulf Coast 
      Disaster Response..........................................   224
    Urban Search and Rescue......................................   232
    Urban Security Area and State Homeland Security Grants.......   202
    Working with State and Local Governments, Others.............   213
    Witnesses:
        Opening Statement: Jeffrey Caynon........................   226
        Opening Statement: Captain John Holmes...................   235
        Opening Statement: W. Ross Ashley III....................   243
        Opening Statement: Jim Mullen............................   255
        Open Statement: Michael DePallo..........................   265
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