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



 
   EVALUATING INTERNAL OPERATION AND IMPLEMENTATION OF THE CHEMICAL 
FACILITY ANTI-TERRORISM STANDARDS PROGRAM (CFATS) BY THE DEPARTMENT OF 
                           HOMELAND SECURITY

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

                                HEARING

                               BEFORE THE

              SUBCOMMITTEE ON ENVIRONMENT AND THE ECONOMY

                                 OF THE

                    COMMITTEE ON ENERGY AND COMMERCE
                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED TWELFTH CONGRESS

                             SECOND SESSION

                               __________

                            FEBRUARY 3, 2012

                               __________

                           Serial No. 112-111


      Printed for the use of the Committee on Energy and Commerce

                        energycommerce.house.gov



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                    COMMITTEE ON ENERGY AND COMMERCE

                          FRED UPTON, Michigan
                                 Chairman

JOE BARTON, Texas                    HENRY A. WAXMAN, California
  Chairman Emeritus                    Ranking Member
CLIFF STEARNS, Florida               JOHN D. DINGELL, Michigan
ED WHITFIELD, Kentucky                 Chairman Emeritus
JOHN SHIMKUS, Illinois               EDWARD J. MARKEY, Massachusetts
JOSEPH R. PITTS, Pennsylvania        EDOLPHUS TOWNS, New York
MARY BONO MACK, California           FRANK PALLONE, Jr., New Jersey
GREG WALDEN, Oregon                  BOBBY L. RUSH, Illinois
LEE TERRY, Nebraska                  ANNA G. ESHOO, California
MIKE ROGERS, Michigan                ELIOT L. ENGEL, New York
SUE WILKINS MYRICK, North Carolina   GENE GREEN, Texas
  Vice Chairman                      DIANA DeGETTE, Colorado
JOHN SULLIVAN, Oklahoma              LOIS CAPPS, California
TIM MURPHY, Pennsylvania             MICHAEL F. DOYLE, Pennsylvania
MICHAEL C. BURGESS, Texas            JANICE D. SCHAKOWSKY, Illinois
MARSHA BLACKBURN, Tennessee          CHARLES A. GONZALEZ, Texas
BRIAN P. BILBRAY, California         JAY INSLEE, Washington
CHARLES F. BASS, New Hampshire       TAMMY BALDWIN, Wisconsin
PHIL GINGREY, Georgia                MIKE ROSS, Arkansas
STEVE SCALISE, Louisiana             JIM MATHESON, Utah
ROBERT E. LATTA, Ohio                G.K. BUTTERFIELD, North Carolina
CATHY McMORRIS RODGERS, Washington   JOHN BARROW, Georgia
GREGG HARPER, Mississippi            DORIS O. MATSUI, California
LEONARD LANCE, New Jersey            DONNA M. CHRISTENSEN, Virgin 
BILL CASSIDY, Louisiana              Islands
BRETT GUTHRIE, Kentucky              KATHY CASTOR, Florida
PETE OLSON, Texas
DAVID B. McKINLEY, West Virginia
CORY GARDNER, Colorado
MIKE POMPEO, Kansas
ADAM KINZINGER, Illinois
H. MORGAN GRIFFITH, Virginia

                                 7_____

              Subcommittee on Environment and the Economy

                         JOHN SHIMKUS, Illinois
                                 Chairman
TIM MURPHY, Pennsylvania             GENE GREEN, Texas
  Vice Chairman                        Ranking Member
ED WHITFIELD, Kentucky               TAMMY BALDWIN, Wisconsin
JOSEPH R. PITTS, Pennsylvania        G.K. BUTTERFIELD, North Carolina
MARY BONO MACK, California           JOHN BARROW, Georgia
JOHN SULLIVAN, Oklahoma              DORIS O. MATSUI, California
CHARLES F. BASS, New Hampshire       FRANK PALLONE, Jr., New Jersey
ROBERT E. LATTA, Ohio                DIANA DeGETTE, Colorado
CATHY McMORRIS RODGERS, Washington   LOIS CAPPS, California
GREGG HARPER, Mississippi            JOHN D. DINGELL, Michigan
BILL CASSIDY, Louisiana              HENRY A. WAXMAN, California (ex 
CORY GARDNER, Colorado                   officio)
JOE BARTON, Texas
FRED UPTON, Michigan (ex officio)

                                  (ii)


                             C O N T E N T S

                              ----------                              
                                                                   Page
Hon. John Shimkus, a Representative in Congress from the State of 
  Illinois, opening statement....................................     1
    Prepared statement...........................................     4
Hon. Gene Green, a Representative in Congress from the State of 
  Texas, opening statement.......................................     6
Hon. Henry A. Waxman, a Representative in Congress from the State 
  of California, opening statement...............................     7
Hon. Joe Barton, a Representative in Congress from the State of 
  Texas, opening statement.......................................     9
Hon. John D. Dingell, a Representative in Congress from the State 
  of Michigan, opening statement.................................    10
Hon. G.K. Butterfield, a Representative in Congress from the 
  State of North Carolina, prepared statement....................    49

                               Witnesses

Rand Beers, Under Secretary, National Protection and Programs 
  Directorate, Department of Homeland Security...................    11
    Prepared statement...........................................    13
    Answers to submitted questions...............................    54
David M. Wulf, Deputy Director, Infrastructure Security 
  Compliance Division, Office of Infrastructure Protection, 
  National Protection and Programs Directorate, Department of 
  Homeland Security..............................................    23
    Prepared statement...........................................    24

                           Submitted Material

Majority memorandum..............................................    50


   EVALUATING INTERNAL OPERATION AND IMPLEMENTATION OF THE CHEMICAL 
FACILITY ANTI-TERRORISM STANDARDS PROGRAM (CFATS) BY THE DEPARTMENT OF 
                           HOMELAND SECURITY

                              ----------                              


                        FRIDAY, FEBRUARY 3, 2012

                  House of Representatives,
       Subcommittee on Environment and the Economy,
                          Committee on Energy and Commerce,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 9:33 a.m., in 
room 2123 of the Rayburn House Office Building, Hon. John 
Shimkus (chairman of the subcommittee) presiding.
    Members present: Representatives Shimkus, Murphy, Pitts, 
Bass, Latta, Harper, Cassidy, Gardner, Barton, Walden, Green, 
Butterfield, Barrow, Pallone, Capps, Dingell, Waxman, and 
Markey.
    Staff present: Charlotte Baker, Press Secretary; Anita 
Bradley, Senior Policy Advisor to Chairman Emeritus; Jerry 
Couri, Senior Environmental Policy Advisor; Andy Duberstein, 
Assistant Press Secretary; Dave McCarthy, Chief Counsel, 
Environment and the Economy; Andrew Powaleny, Assistant Press 
Secretary; Chris Sarley, Policy Coordinator, Environment and 
the Economy; Peter Spencer, Professional Staff Member, 
Oversight; Alex Yergin, Legislative Clerk; Jacqueline Cohen, 
Democratic Counsel; Greg Dotson, Democratic Energy and 
Environment Staff Director; and Caitlin Haberman, Democratic 
Policy Analyst.
    Mr. Shimkus. The subcommittee will now come to order. We 
would like to welcome our panel, and I would like to begin with 
an opening statement.

  OPENING STATEMENT OF HON. JOHN SHIMKUS, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF ILLINOIS

    In my time serving in Congress, I have learned, as 
oftentimes is the case, that the initial problem isn't as big a 
deal to people as a poor explanation of a problem can be. 
Further, cover-ups are the best hope of people who know they 
are in the wrong and the worst move for those who get found 
out. People who try to hide problems or minimize their 
existence usually face a swifter and more ferocious corrective 
response from Congress and the public than if they had simply 
come clean.
    It is with great surprise and disappointment that I read 
the internal memorandum about the operation of the division 
implementing the Chemical Facility Anti-Terrorism Standards Act 
(CFATS) and its program at the Department of Homeland Security.
    I, for one, have historically been a strong supporter of 
this program. I believe the statute is sound and the 
regulations reasonable. In fact, the Anderson Memo calls for 
only one legislative change: long-term extension of the 
program.
    The CFATS program was not meant to be another EPA-style 
program designed to fine people or a bureaucratic back door to 
overregulate chemicals. CFATS was meant to be a collaborative 
effort to secure ``high risk'' facilities with facility-
appropriate measures based upon the risks presented. 
Congressional intent was that cooperation would get facilities 
into compliance; we did not intend to increase Federal revenues 
through enforcement actions. I hope DHS is not looking to 
abandon our original intent.
    Last March, I acknowledged CFATS was a work in progress, 
but I felt security was being enhanced and significant public 
and private investments were being made to implement the 
program. I still believe security at facilities with chemicals 
is much better today than before Congress gave DHS this first 
ever regulatory authority. Unfortunately, my confidence in DHS 
and the substantial amount Congress has given to it is not 
nearly as strong.
    Someone compared CFATS to an unmanned police car positioned 
at the side of the highway. It wards off speeders, but not much 
else. We need to be reassured that DHS's CFATS program has a 
plan and intends to focus solely on correcting its internal 
problems, implementing the CFATS program as drafted in law, and 
not suggesting the CFATS program should take on any other 
additional responsibilities. I mean, they better first do the 
responsibilities designed under law than to take on additional 
ones, such as drinking water or IST issues.
    CFATS is an appropriate component of this subcommittee's 
jurisdiction, and the days of matador oversight of this program 
are over. I urge all members of this committee to join me in 
that effort.
    As a fellow U.S. military officer, I have tremendous 
respect for Under Secretary Beers' service to this country. 
That said, he and I have been taught that there are only three 
acceptable responses when questioned by an officer: ``yes, 
sir;'' ``no, sir;'' and ``no excuse, sir;'' or ``sir, I don't 
understand.'' Four. I expect no less than that today.
    I want to welcome Under Secretary Beers and Deputy Director 
Wulf, who along with Director Penny Anderson showed great 
courage with the frankness of the internal memo. Mr. Wulf, both 
of you should know that the committee takes very seriously any 
evidence of undue pressure, influence, intimidation or 
retaliation whatsoever, because of your testimony today while 
we continue to investigate these important issues. In other 
words, we really do appreciate this internal memo. I think it 
has been very, very helpful and we want to ensure those who 
came forward are not penalized for that. Please let my 
committee staff know right away if you have any concerns. 
Retaliation and intimidation of Congressional witnesses is 
illegal and will not be tolerated.
    Mr. Beers, I trust you will ensure that you are in 
agreement with me that no retaliation should be tolerated, and 
we will hold you and any other White House officials 
accountable to that.
    [The prepared statement of Mr. Shimkus follows:]

    [GRAPHIC] [TIFF OMITTED] T5573.001
    
    [GRAPHIC] [TIFF OMITTED] T5573.002
    
    Mr. Shimkus. With that, I now yield to the distinguished 
ranking member from Texas, Mr. Green, for 5 minutes for the 
purpose of offering his opening statement.

   OPENING STATEMENT OF HON. GENE GREEN, A REPRESENTATIVE IN 
                CONGRESS FROM THE STATE OF TEXAS

    Mr. Green. Thank you, Mr. Chairman, for holding the hearing 
today.
    Under Secretary Beers requested an internal memo on the 
status of the CFATS program and recommendations for improvement 
in the summer of 2011. This memo was delivered to Mr. Beers in 
November of 2011, and it leaked to the media and detailed in a 
story on December the 23rd, 2011. I must say, when I read the 
internal memo, I was surprised and dismayed by the level of 
dysfunction and the lack of progress within the CFATS program. 
I am also amazed that during this time, the subcommittee 
discussed CFATS program this year during our work on H.R. 908, 
the Full Invitation of the Chemical Facility Anti-Terrorism 
Standards Act. We were simply unaware of the severity of the 
situation within DHS and the CFATS program. The portion of the 
internal memo as related to challenges to implementing these 
priorities--I won't go into all the details, but it seems to me 
the root of the problem lies with the fact that DHS has hired 
people that are unqualified for their positions and was 
prohibited from hiring appropriate and qualified individuals, 
and they had no training program to help those folks who were 
unqualified. These inappropriate hires, along with a lack of 
proper training of the employees, has forced DHS to instead of 
reassigning inappropriate employees, rely on contractors to do 
work that should be done by the Agency.
    The internal memo outlines several priorities of the 
program, including the process for the review of the site's 
security plans. Unfortunately, at the time of the memo, DHS had 
received 4,200 site security plans and not a single plan was 
approved.
    I know that DHS is working to clear up all the Tier 1 
facilities, but it has been 6 years since the program was 
enacted and we haven't even cleared the low level facilities. 
They decide how to conduct compliance inspections and preparing 
staff to do the inspections. To date, DHS has conducted not a 
single compliance inspection. Not that any of my industries 
that I represent along the Houston Ship channel are looking for 
an inspector to come knocking on the door, but they are--they 
have been working to comply and they have made substantial 
private investment. In some cases, we actually were able to see 
grants through DHS for Homeland Security protection and our 
plant protection.
    But I must say that this proposal reinforces problems 
identified in the internal memo, which mostly revolve around 
the fact that DHS is constantly making things more complicated 
than they need to be, and not relying on existing systems, such 
as the TWIC card, to work. What I am speaking about is 
developing the personnel assurity programs. DHS transmitted a 
new personnel assurity program to OMB, and I have some concerns 
about this problem--this proposal, and will discuss that later. 
One, because at earlier hearings in this subcommittee, I felt 
like I had some assurances that the TWIC card would be used as 
a standard ID for someone working whether it be in waterside or 
land-based industry under CFATS. My concern is additional 
personal security programs will make the duplication of the 
CFATS. So that is one thing our committee needs to look at.
    Last year at the subcommittee hearing, I asked Under 
Secretary Beers if the Department intended to integrate TWIC 
into the personnel assurity program and I received a positive 
response, and yet, the proposal does not make clear that TWIC 
is an acceptable background check. Quite frankly, now is not 
the time for DHS to go reinventing the wheel when implementing 
the personnel assurity program. The memo also includes the 
Agency's planned response, including a plan of action for 85 
items.
    I look forward to hearing from the witnesses today to 
confirm, but I believe several of the action items haven't 
initiated or completed. To say the least, I am disheartened by 
the lack of progress in the CFATS program, which seems to stem 
directly from lack of appropriately assigned and trained 
employees and serious lack of moral in the program, which seems 
to stem from the fact that no one constantly knows if the 
program will be reauthorized by Congress. Chemical facility 
security is surely important to the protection of our public 
health, and particularly in the district I represent. I 
represent the Houston ship channel, which is the heart of the 
petrochemical complex that stretches from the Texas Gulf Coast 
and produces more products essential to modern life. It is also 
the largest petrochemical complex in the country. I can't 
stress how important the success of CFATS is to my constituents 
who are the employees and live in the communities that surround 
these facilities. They deserve the best security standards 
possible to prevent the act of terrorism on U.S. soil.
    Our role today is to listen to our witnesses and get a 
better understanding of the problem, and see how Congress can 
assist. The Agency recommends several legislative fixes, and I 
am hoping we have--we on the committee can work together and 
find a compromise on how to assist DHS, after hearing their 
suggestions and hearing from our stakeholders. The program is 
too important to our national security to be this much in 
distress.
    Mr. Chairman, thank you for the time and I yield back.
    Mr. Shimkus. The gentleman yields back his time.
    The chair now looks to the--to my colleagues on the right, 
if anyone would like time for an opening statement. Hearing 
none, the chair would like to recognize the ranking member of 
the full committee, Mr. Waxman, for 5 minutes.

OPENING STATEMENT OF HON. HENRY A. WAXMAN, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF CALIFORNIA

    Mr. Waxman. Thank you, Mr. Chairman, for calling on me, and 
more importantly, for holding this hearing to examine the 
implementation by the Department of Homeland Security of the 
Chemical Facility Anti-Terrorism program, or Standards. The 
letters have been made into a shorthand called CFATS. This 
program is intended to address the threat of terrorism to the 
Nation's chemical facilities. We will hear testimony about its 
successes. But we are also going to hear about the program's 
many challenges.
    The CFATS program was established in 2006. Now, almost 6 
years later, it is clear that implementation has stumbled 
because of serious challenges and limitations in the program.
    Under Secretary Beers will testify about a detailed report 
that he received in November of last year. This report takes 
the form of a memorandum, and DHS has also provided it to the 
committee. It paints a stark picture of this program. According 
to this memorandum, the program has been plagued by personnel 
issues, budget issues, and statutory limitations.
    The challenges described in the memo are serious, and they 
must be addressed.
    Department of Homeland Security has a plan to address the 
identified problems, and that plan deserves our careful 
scrutiny. This is a crucially important effort and we must get 
it right.
    In some ways, the odds have always been stacked against 
this program. This program was created by a provision not 
authorized by this committee, but a rider on an appropriations 
bill. The program was not established with carefully crafted 
legislation that defined its mission and forged a vision for 
its implementation.
    It did not have adequate enforcement authorities, 
enforceable deadlines, or clear procedures for approving or 
disapproving site security plans. It never even had an 
authorization.
    And in some ways, it is fortunate that we have learned of 
these problems when we have, because this committee can now 
return to this issue and do the hard work of understanding 
where the problems are and determining how to fix them.
    It is stunning to realize that this committee of Congress, 
which has jurisdiction over this issue, reported legislation 
that simply rubber-stamped the current program for 7 additional 
years. We didn't really know how the program was working. We 
didn't give it any guidance. We didn't do our job, and that 
legislation needs to be revisited in light of this new 
information.
    I look forward to the testimony of Under Secretary Beers 
and learning more about the Department's efforts to get this 
program on track. The Department can take constructive actions, 
but it can only do so much. They cannot address shortcomings in 
the underlying statute. That task falls to us as the committee 
of jurisdiction and the committee that should have been 
involved in crafting the original provision. That is a 
responsibility we must take very seriously.
    I hope today's hearing will be part of an ongoing effort by 
this committee to address these serious challenges facing our 
chemical facility security program. This is an important issue. 
It deserves our attention.
    In the last Congress, when I was chairman of the committee, 
we were working on a bipartisan basis. We brought in all the 
stakeholders to craft legislation to authorize the program. It 
was a major undertaking. We brought in industry, we brought in 
labor, we brought in everybody else that had a concern about 
this issue. We were consulting everyone throughout the process. 
That is the type of undertaking we should begin anew, because 
what we saw this last year was not a furtherance of examination 
of the program, but simply saying oh, it is already in effect 
for 6 years. We will continue it down the road and we hope it 
will do a good job. We have got more work to do than just 
sending our best wishes for the long period of authorization 
without doing a thorough examination to figure out how we can 
make this program work the way we intended it to and the way it 
must to protect the security of the American people.
    Thank you, Mr. Chairman. I yield back the time.
    Mr. Shimkus. And I thank you, Mr. Waxman, for your 
statement.
    I would like to yield, with the permission of the 
committee, to Mr. Barton for 5 minutes, but before I do, I 
would just like to say, based upon my opening statement, I 
think Mr. Waxman's response was pretty much what I said. When 
problems are hid, you are going to face a swifter and more 
ferocious corrective response by Congress, and that is really 
part of that concern. I would also say, we did have a hearing 
prior to the markup of that bill where Department of Homeland 
Security said things were going well. Obviously--and industry--
--and obviously, that is not the case, either.
    So with that, I would like to yield 5 minutes to the 
chairman emeritus, Mr. Barton.

   OPENING STATEMENT OF HON. JOE BARTON, A REPRESENTATIVE IN 
                CONGRESS FROM THE STATE OF TEXAS

    Mr. Barton. Thank you, Mr. Chairman. I am not sure I will 
take that time, and if I don't, I am happy to yield it to 
anybody else that you wish it to be yielded to. I do appreciate 
you for holding this hearing, you and Mr. Green, on the 
Chemical Facility Anti-Terrorism Standard Program, which has 
the acronym CFATS.
    Back in March of last year, we discussed the concerns and 
dissatisfaction that the program had not met its goals. This 
program was set up to serve and protect the companies and the 
general public against the potential threat of terrorist 
activity. I was chairman of this committee back in the 109th 
Congress, and one of the authors of the Chemical Facility Anti-
Terrorism Standard Act that was included as Section 550 of the 
Department of Homeland Security's appropriation act for 2007.
    The intent was very clear. It was for the safety of the 
Nation's businesses and its citizens against the threat of 
terrorism in these types of facilities. I understand that the 
program has got many facets and that the orchestration of a 
thorough implementation plan at an expedited pace could have 
challenges. What I don't seem to understand is how the Under 
Secretary could be so unaware for so long of so many of the 
internal problems. Why have employees been hired in managerial 
positions who don't have the skill set to fulfill their jobs? 
Why has it taken 3 years to start addressing the internal 
managerial staff training and implementation problems? The 
industry has invested billions of dollars to upgrade security 
to meet the CFATS requirements. This is beyond disappointing. 
You have totally mismanaged this program, Mr. Under Secretary. 
We have spent about $90 million a year, and we have no well-
developed direction and no plan.
    It is my understanding that you have received over 4,200 
site security plans to date, but not even one has been 
approved. Now, we have our differences on this committee and 
this subcommittee, and there were differences between the 
Democrats and Republicans when this bill was put into law, but 
there is nobody, no one, regardless of political affiliation 
that says if you receive 4,200 site security plans, you don't 
even get one approved? Not one? I mean, when I read that a 
couple of days ago, I was just astounded. Your own national 
protection and programs directorate have prevented you from 
hiring personnel with the experience and qualifications to 
review these programs and to conduct the compliance inspection. 
You have allowed the hiring of inappropriate staff and have not 
taken control of your own infrastructure security compliance 
division to fix this problem, and it has been 3 years. The 
administration of the CFATS program must be fixed immediately 
to provide stability to the program and regulatory assurance to 
thousands of covered facilities, many of whom are members of 
the Society of Chemical Manufacturing and Affiliates Alliance, 
SOCMA. They have invested heavily in security measures over the 
past 5 years to attempt to be in compliance.
    I have to say one good thing. Your office has been open and 
candid and transparent in providing the internal memoranda for 
committee staff to review. That is one positive checkmark in 
your column. Having said that, everything else is in the 
negative and everything else is black. It is time to get this 
thing done. If you can't do it, resign. If there are things 
that need to be fixed, tell us and we will try to do it. I 
think Mr. Waxman's opening statement was very good, as was Mr. 
Shimkus's, which I wasn't here to hear, but I did read.
    With that, Mr. Chairman, I have got a minute left if you 
want me to yield it.
    Mr. Shimkus. Let me reclaim that time and look to Chairman 
Emeritus Dingell to see if he would like to use the remainder 
of your time.

OPENING STATEMENT OF HON. JOHN D. DINGELL, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF MICHIGAN

    Mr. Dingell. Most briefly, Mr. Chairman. Thank you.
    I want to welcome our two witnesses and our panels today, 
Secretary Beers and Mr. Wulf, and I want to commend you for 
having this hearing. I want to note that it is being conducted 
in a bipartisan fashion, something which merits high praise 
around this place. Having said that, I look forward to the 
results of the hearing today. I would note that I have a number 
of these facilities in my district, and when they let go, as 
one did not long back, it causes lots of excitement and can 
cause significant numbers of casualties and enormous hardships 
on the communities in which the facility might exist. So your 
labors and your leadership, Mr. Chairman, are much appreciated 
and I look forward to the hearing going forward in the spirit 
in which it has begun, and in the hopes that we will be able to 
see to it that we get these programs of widely differing 
character under different agencies in the point where they are 
pulling together and working together to accomplish the great 
purpose of seeing to it that we have safety and security for 
the country.
    Thank you, Mr. Chairman.
    Mr. Shimkus. Thank you, Mr. Dingell.
    With that, the chair calls forward today's witnesses, the 
Honorable Rand Beers, the Under Secretary of National 
Protection and Programs Directorate at the Department of 
Homeland Security, and Mr. David M. Wulf, who is Deputy 
Director of Infrastructure Security Compliance Division, Office 
of Infrastructure Protection, National Protection and Programs 
Directorate at the U.S. Department of Homeland Security.
    As you know, the testimony that you are about to give is 
subject to Title 18, Section 1001 of the United States Code. 
When holding an investigative hearing, this committee has the 
practice of taking testimony under oath. Do you have any 
objection to testifying under oath?
    The chair then advises you that under the rules of the 
House and the rules of the committee, you are entitled to be 
advised by counsel. Do you desire to be advised by counsel 
during your testimony today?
    In that case, if you would please rise and raise your right 
hand, I will swear you in.
    [Witnesses sworn.]
    Mr. Shimkus. You may now be seated, and it is my 
understanding that the only opening statement will be given by 
you, Mr. Secretary, and Mr. Wulf is here to answer questions 
with regard to the internal? They are both going to give it, 
OK. Change in direction from last night, so Mr. Beers, if you 
would then--you are recognized for 5 minutes to give your 
opening statement.

 TESTIMONY OF RAND BEERS, UNDER SECRETARY, NATIONAL PROTECTION 
AND PROGRAMS DIRECTORATE, DEPARTMENT OF HOMELAND SECURITY; AND 
    DAVID M. WULF, DEPUTY DIRECTOR, INFRASTRUCTURE SECURITY 
   COMPLIANCE DIVISION, OFFICE OF INFRASTRUCTURE PROTECTION, 
  NATIONAL PROTECTION AND PROGRAMS DIRECTORATE, DEPARTMENT OF 
                       HOMELAND SECURITY

                    TESTIMONY OF RAND BEERS

    Mr. Beers. Thank you, Chairman Shimkus and Ranking Member 
Green, and distinguished members of this committee. I am 
pleased to be here before you today to discuss the Department 
of Homeland Security's efforts to regulate the security of 
high-risk chemical facilities under the Chemical Facility Anti-
Terrorism Standards Act.
    As you all are aware, the Department's current statutory 
authority to implement CFATS came about, as mentioned earlier, 
in Section 550 of the fiscal year 2007 appropriations act, and 
it has been amended recently to extend that authorization until 
October 4 of 2012. I believe strongly in the CFATS program, and 
I welcome the opportunity to continue to work with this 
committee, with the Congress, and levels of government and the 
private sector to further improve this vital national security 
program.
    Since the inception of CFATS, we have issued a basic rule, 
we have defined chemicals of interest, we have jointly 
conducted two surveys with industry to define the facilities 
that have a substantial enough quantity of chemicals that 
caused them to be determined could be at high risk. After 
receiving the initial submissions from more than 40,000 
facilities that might potentially be under the program, we have 
narrowed that down now to about 4,500 covered facilities. And 
in the process of doing that, more than 1,600 facilities which 
would have fallen under the program and 700 facilities--1,600 
facilities have totally removed their chemicals of interest and 
700 have reduced them to the point that they are no longer 
under the program. So I think we can say that these actions 
represent some of the successes have happened with respect to 
this program and the adoption of the regulation. So I think we 
can say that there has been a reduction in risk throughout the 
Nation, and that the Nation has correspondingly been made more 
secure.
    The Department has done much work over the past few years 
to establish and implement this unprecedented program, but as 
the report suggests and as we acknowledge, CFATS still has a 
number of challenges to address. In recognition of this and 
upon the arrival of Penny Anderson and David Wulf, I asked both 
of them to provide for my consideration the views on the 
successes and challenges of the program. Candid, honest 
assessments and challenges to the program. These kinds of 
assessments are extraordinarily valuable tools that we need in 
order to evaluate progress and to determine where improvement 
is needed. Furthermore, in an unprecedented program like CFATS, 
course corrections are to be expected and ongoing decisions 
will need to be made.
    In late November of 2011, a detailed report was hand 
delivered to me. It is important to note that in addition to 
the referenced challenges, the report also proposed for my 
consideration a charted path that will address those 
challenges. Specifically, the report included an action plan 
with detailed recommendations for addressing the issues 
identified, and we have shared those recommendations with this 
committee. Since my receipt of this report, each of the nearly 
100 items in the action plan have been assigned to a member of 
the program's senior leadership team and I have already seen 
progress on these issues. For accountability planning tracking 
purposes, the members of the leadership team have been asked to 
provide milestones and a schedule for completion of each task 
assigned to them. The program's acting chief of staff will 
monitor that progress. In addition, program leadership now 
meets with my principal Deputy Under Secretary, Suzanne 
Spalding, at least once a week to provide status updates to 
this program.
    Mr. Chairman, let me assure you, there will be no 
retaliation to the people who wrote this report who have served 
me and you and this Nation by frankly telling us where we had 
challenges and what we need to do about it, nor will I tolerate 
any retaliation between me and the office director and her 
deputy. You have my pledge on that and I expect to be held 
accountable to that issue.
    The Department does take its responsibilities for CFATS and 
the Nation's security seriously, and we are going to move 
forward both quickly and strategically to address the 
challenges before us. Again, we believe that CFATS is making 
the Nation safer and we are dedicated to its success. We will 
make the necessary course directions to improve the program to 
protect the Nation.
    Thank you for holding this important hearing, and I will be 
happy to answer any of your questions.
    [The prepared statement of Mr. Beers follows:]

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    Mr. Shimkus. Thank you.
    Now I would like to recognize Mr. Wulf for 5 minutes. There 
might be a button. There you go.

                   TESTIMONY OF DAVID M. WULF

    Mr. Wulf. I would also like to thank the members of the 
committee for the opportunity to testify before you today.
    In July of last year, Penny Anderson and I assumed our 
positions as deputy and deputy--director and deputy director, 
respectively, of the Infrastructure Security Compliance 
Division, or ISCD, the division within NPPD that manages the 
CFATS program. In response to the Under Secretary's request 
that we provide a fresh perspective on the program, Penny and I 
produced an internal assessment of what we see to be the 
essential priorities, challenges, and action items necessary to 
the success of the program. Both Penny and I feel strongly that 
while the challenges we have identified are not insignificant, 
they also are not insurmountable. I welcome the opportunity to 
answer any questions you might have on the background and 
context behind the challenges we cited, but I would also like 
to echo the Under Secretary's focus on the action items.
    We have already made tangible progress in addressing some 
of the challenges in the report. One issue identified in the 
report is ISCD's ability to complete facility's site security 
plans--site security plan reviews in a consistent, reasonable, 
and timely fashion. To help overcome past difficulties in 
meeting this challenge, ISCD is utilizing an interim review 
process that allows the Department to authorize Tier 1 facility 
plans in a more effective and timely manner. Using this interim 
approach, over the past few months ISCD has been able to more 
than quadruple the number of conditionally authorized plans. 
Specifically, throughout all of 2010 and through November 28, 
2011, we had conditionally authorized 10 site security plans. 
In the subsequent 2 months leading up to January 23 of this 
year, we conditionally authorized an additional 43 Tier 1 site 
security plans. ISCD expects to complete our review of all Tier 
1 site security plans and to notify the facility's of ISCD's 
decisions on those plans within the coming months. ISCD also 
expects to begin issuing authorizations to Tier 2 facilities 
during fiscal year 2012. While this interim review process is 
underway, we are also working on an even more efficient long-
term approach to site security plan reviews for facilities in 
Tiers 2, 3, and 4.
    This is one example of how we have identified programmatic 
issues such as the lack of an efficient site security review 
process and found workable solutions to ensure near-term 
improvements and progress, as well as the long-term success of 
CFATS. While not every action item will have a near-term or 
simple solution, what I can tell you is that I am very proud to 
represent the hardworking men and women of the CFATS program 
and I am confident in our ability to address these challenges 
together.
    I welcome your questions and look forward to working 
together to further the success of this important national 
security program.
    [The prepared statement of Mr. Wulf follows:]

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    Mr. Shimkus. Thank you, Mr. Wulf. What I would ask--I am 
looking also at the staff, I don't think we have a copy of that 
and some members may want to refer to that, so if I can get 
staff to grab a copy of that and get it copied so that we can 
distribute it, because we did have the Under Secretary's 
opening testimony for the record.
    With that, I would like to recognize myself for 5 minutes 
to begin questions. I am going to bounce around a little bit, 
but the first one, we are in a very fiscally constrained 
environment, Under Secretary, as you understand, and with the 
challenges that are going to occur to our military, 45 billion 
to 90 billion a year that could be cut, we at the national 
level are going to be looking for everywhere we can go to try 
to adjust dollars so that we can meet the needs of the primary 
role of some of the Federal Government's operations.
    So let me start with just this whole--this budget type 
question. The Anderson-Wulf memo states on page 15 that ISCD 
lacks a system for tracking the usage of consumable supplies 
which creates an environment for fraud, waste, and abuse. Our 
concern is this not an IG or GAO saying that, this is a program 
manager describing their own program. How can a member of 
Congress choose to fund a program that is so self-described?
    Mr. Beers. Let me begin the answer to that question and 
turn to my colleague here. The report notes these deficiencies 
in the program. We had asked for a management review of the 
program in December of last year. That program review was 
completed while this particular report was being prepared and 
was incorporated into the report, and the comments that you see 
are part of an effort by management at the most senior level--
that means me--asking to make sure that, in fact, this program 
was working properly.
    I want to turn to Mr. Wulf now to talk about what we are 
going to do about these findings.
    Mr. Wulf. I would just add that, you know, we did not find 
any actual indication of fraud, waste, or abuse with regard to 
the purchase and tracking of supplies. We found that a system 
was not in place, and it is something we have already moved 
forward to address. We----
    Mr. Shimkus. Let me reclaim my time, and I--we know there 
are action items. We are going to move forward. But that is 
obviously a major concern that the--that we are going to have 
to deal with, not just the committee ourselves but our 
colleagues in this whole debate. So we will go ahead and follow 
this. I do appreciate the fact that you in July brought Ms. 
Anderson and Mr. Wulf on board.
    I guess a question would be since you have been on board, 
Under Secretary, since June 19, 2009, what took you so long to 
have an overview of this program?
    Mr. Beers. The initial indications of concern surfaced in 
the following year. Prior to that, I had definitely had the 
sense that the program was an evolving program, that changes 
were being made, but they were being made in due course with 
appropriate diligence by the program managers. In July of 2010, 
I discovered a discrepancy in the way that people were being 
paid within the program, and moved at that point to correct it. 
In the fall of 2010, we posted an announcement to----
    Mr. Shimkus. And let me--not to be disrespectful, just to 
move to another question, because the timeline is kind of 
important for us because you testified before us March 31 of 
2011 and statements were made. Again, that is--my comments back 
to Mr. Waxman was, you know, we were given a pretty good signal 
that things were going well. There were small problems but 
nothing major.
    One of the questions I asked you was about the high-risk 
tiering process and the reasons for a drop in the number of 
those facilities tiered. This is--at that time, I was not aware 
of any mis-tiering problem. Were you?
    Mr. Beers. No, I was not, sir.
    Mr. Shimkus. And that is--if not, when did you first learn 
about the tiering problem?
    Mr. Beers. I first learned about the tiering problem in the 
beginning of June of this last year.
    Mr. Shimkus. Was it the earliest time, to your knowledge, 
that DHS personnel discovered that some facilities have been 
mis-tiered was the month that you had given? Was there--in 
other words, were there other folks within the Department that 
knew that this tiering process was all messed up?
    Mr. Beers. There was an indication in May of 2010 that 
there might be a problem with respect to tiering. The 
individuals within the office looked at the problem and felt 
that they had resolved the problem and informed people up the 
chain of command. I did not know that there was a problem at 
that point in time. I was not informed of that, and the program 
went forward from there.
    In 2011, with a new acting director of the office, he asked 
for a review of the program and he discovered that--or 
rediscovered this discrepancy issue and asked for a much deeper 
dive into that. That deeper dive is what resulted in the 
problem being identified to the assistant secretary and 
immediately to me. And that was in June of 2011.
    Mr. Shimkus. And my time is expired. Just so we can move 
forward, we are going to continue--obviously we are going to 
have to continue to do oversight over this process and I hope, 
if there are any relevant activities that folks within--under 
your office that have not been doing their job, that through 
the legal process of removal that some people can be held 
accountable, because I do think there are probably--if there 
wasn't waste, fraud and abuse, there may have been. There may 
be theft and that would be helpful to understand that the 
government can correct bad actors.
    Now I would like to recognize Mr. Green for 5 minutes.
    Mr. Green. Thank you, Mr. Chairman. Secretary Beers, thank 
you for being here.
    As I said in my opening statement, it seems like the 
problems with--for the last 6 years is the inability to hire 
quality individuals and the lack of morale. I think some of 
that comes from having year to year reauthorization. Mr. Wulf 
said in his statement, but I apologize, none of us have a copy 
of your statement, Mr. Wulf, what has been done since the memo 
was released or since mid-December or since it was released on 
the 23rd, there has been some action that has been done that we 
haven't heard about except this morning.
    Mr. Beers, do you know Mr. Wulf's statement about some of 
the things that have been done in the last month or so?
    Mr. Beers. Yes, I do, sir. I want to start this response, 
but I also want Mr. Wulf to respond as well. We have looked at 
the training issues that were identified in the report. We have 
removed the impediment for hiring training officers within the 
program so that that can go forward, and we have begun to look 
at the training requirements in order to take the people who 
were hired who may not have adequate training for that position 
that they are in. But lastly, the other thing that we need to 
focus on here is we have to define what it is we, in fact, 
expect from our inspectors when they are doing the final site 
authorization inspections and when they are doing compliance 
inspections. David?
    Mr. Wulf. I would add that, you know, we are very excited 
about the progress we have made in the past couple of months on 
the review of the Tier 1 site security plans. I believe the 
progress we have made in that regard and the statistics I 
mentioned are included in the written testimony as well.
    We have a very aggressive plan to move forward with the 
review of the site security plans and to conduct outreach and 
to get into the reviews of the lower----
    Mr. Green. OK. I know you gave some hard numbers. I only 
have 5 minutes; in fact, it is down to 3 now almost.
    You gave some hard numbers on what has been done in the 
last 30 days. Could you reiterate that?
    Mr. Wulf. Absolutely. We started 2 months ago with 10 Tier 
1 site security plans that had been authorized. We are now at 
53.
    Mr. Green. OK, and that is the only hard number that you 
gave in your testimony? Like I said, we don't have your 
testimony and it is hard to go over something outside----
    Mr. Wulf. Absolutely, absolutely. So we have done--we have 
authorized 43 or conditionally authorized 43 additional Tier 1 
site security plans.
    Mr. Green. OK, and----
    Mr. Beers. All those were taken from my testimony. Those 
facts are all in my written testimony.
    Mr. Green. OK, but was that based on actually site visits 
or is that from what has been provided by the companies?
    Mr. Wulf. That is based on what has been provided by the 
companies, in some instances following compliance assistance 
visits conducted on the sites by our chemical security.
    Mr. Green. OK, let me get to another issue I have talked 
about. I mentioned about the personal security program which 
was submitted on June 14 of last year by OMB and listed as the 
third priority in the DHS memo. I am aware that we need to 
screen individuals against the terrorist screening database. As 
the proposed personnel security program would require each 
facility to submit background information on all existing 
personnel within 60 or 90 days upon implementation for existing 
personnel, any new unescorted individuals will not be 
classified as personnel will need, if they have a TWIC card, 
their information submitted to DHS within 24 or 48 hours.
    In the real world, we went through a big roll out of the 
TWIC card a few years ago, and it was not as smooth as we would 
have liked. In fact, I think there are 260,000 TWIC cards 
issued in our district in the port of Houston. And so when you 
are going to overlay it with a personal security requirement, 
what did the TWIC card not cover that you think we need now 
under the personnel assurity? Because I am concerned about 
reinventing the wheel, even though like I said, it wasn't--the 
wheel didn't run too well earlier, but it is running pretty 
well now.
    Mr. Beers. Sir, let me clear up some perhaps 
misunderstanding of the way we intend to use the TWIC card. We 
will accept the TWIC card as a proof of a background check. We 
would like to know the names of the individuals who come onto 
the site who have TWIC cards in order to determine that the 
TWIC card is, in fact, still valid, but anybody who possesses a 
TWIC card, that will be the standard--that will be an 
acceptable standard, and anybody who might have access to 
getting a TWIC card can do so to use that in lieu of any other 
background check.
    Mr. Green. OK. I want to make sure that is what was 
submitted, because I have some concern about that. Sometimes 
what we hear and what even passes in law doesn't get to the 
final stage. Was that submitted that the TWIC card would be the 
ID when submitted to OMB?
    Mr. Beers. David?
    Mr. Wulf. The leveraging of TWIC and other existing 
credentials is part of the--was part of the information 
collected and was submitted to OMB.
    Mr. Green. Well, I would feel comfortable seeing in writing 
what you said, Secretary Beers, about the TWIC card because 
again, we have thousands literally, I don't know how many 
hundreds of thousands around the country that we don't want to 
also have a breakdown in redoing something. And I know working 
with the industry and the bargaining units and everything else 
is something that ought to be important.
    And I know I am over my time, Mr. Chairman. I have a number 
of other questions I would like to submit if we don't have time 
today.
    Mr. Shimkus. Without objection, I thank my colleague and I 
would like now to recognize Mr. Murphy from Pennsylvania, the 
vice chairman of the committee, for 5 minutes.
    Mr. Murphy. Thank you, Mr. Chairman.
    Secretary Beers, the memo states that CFATS must build on--
in its ability to critically evaluate itself and conduct mid- 
and long-range planning. So to that end, let me ask for your 
candid responses. Why was this not done until now?
    Mr. Beers. I beg your pardon? By whom, sir?
    Mr. Murphy. Why was some of this not done until now in 
terms of really evaluating itself? Was there anything that 
stood in the way of delaying this kind of self-evaluation?
    Mr. Beers. No, sir, there wasn't anything that prevented 
it. As I indicated to the--earlier, we have had several 
reviews. This is the most extensive one which we have asked 
for, but we have had several reviews over the course of the 
program since I became the Under Secretary.
    Mr. Murphy. Let me--just for clarification, who sets the 
CFATS goals and objectives for each year? Who is responsible 
for that?
    Mr. Beers. I am sorry, sir?
    Mr. Murphy. Who sets the CFATS goals and objectives for 
each year? Who is responsible for doing that?
    Mr. Beers. Sir, the program directors provide those goals. 
They go up the chain of command to the assistant secretary and 
on to me. Ultimately, I am responsible for them.
    Mr. Murphy. Are those public information, in terms of those 
annual goals and objectives?
    Mr. Beers. I will have to check, sir. I don't know whether 
that is public information.
    Mr. Murphy. OK, and how do you measure those goals and 
objectives? Is that something you have in terms of internal 
documentation of how you review those?
    Mr. Beers. Sir, let me ask David Wulf to answer that.
    Mr. Wulf. There are established performance metrics that we 
prepare and send up the appropriate chains. The performance is 
measured with respect to things such as numbers of inspections 
conducted, percentage of inspections conducted as compared to 
the totality of the regulated community.
    Mr. Murphy. Well clearly from the evaluations, things that 
you are talking about--and I add my comments to the chairman's 
in terms of we appreciate getting your candor on these. But in 
addition is who would like know, are these factors--are these 
evaluations somehow factored into employee compensation, such 
as raises or bonuses?
    Mr. Beers. Sir, as a general matter with respect to the 
entirety of NPPD performances factored into the issue of 
bonuses or promotions, Dave, do you want to add anything 
specifically?
    Mr. Wulf. I would echo the Under Secretary's sentiments. 
Meeting our performance goals is and will be a significant 
measure for us in assessing allocation of bonuses.
    Mr. Murphy. Do you know if any of the CFATS employees or 
superiors received a bonus since 2009?
    Mr. Wulf. I am sorry, sir, could you repeat that?
    Mr. Murphy. Do you know if any of the CFATS employees or 
supervisors or superiors received any bonus since 2009?
    Mr. Wulf. I don't have that information. We could----
    Mr. Murphy. Would you let--it may be helpful to this 
committee if you would let us know in conjunction with some of 
the information given. We would appreciate that.
    Let me also say, the Anderson-Wulf memo that you have 
states that employees felt uncomfortable delivering bad news to 
superiors. So to what extent does the failure to inform you 
caused by this chill work environment, and who chilled the 
environment that--was it you, someone else? Who in the chain of 
command had that effect? Secretary Beers?
    Mr. Beers. Sir, let me start in answering that. I have said 
as a management principle based on my 40 years in government 
that I appreciate hearing bad news and I don't want to hear bad 
news from anybody else. This particular issue has been used as 
a teaching moment by me for the entirety of my workforce, 
because no one, no one should feel that they can't tell me bad 
news, because bad news is usually something that we can do 
something about, and if we don't hear it, we can't do anything 
about it. I can't speak to the culture within the office that--
and the words in the report, but I want you to understand that 
to all of the people who work for me, I say that time and 
again. I am perfectly prepared to hear bad news, and I really 
don't want to hear from somebody outside the organization.
    Mr. Murphy. As a Navy officer, I admire a Marine officer 
saying that. I recall the former chairman of the Joint Chiefs 
of Staff, Admiral Mullen, saying that as he climbed the chain 
of command the food got better and the news got better, too. 
Unfortunately, it is important to have that bad news coming up.
    So are you confident now that you are getting full accurate 
information, full disclosures on CFATS information?
    Mr. Beers. Sir, I have complete confidence in Penny and 
David making sure that that information comes to me, and they 
know that I want to hear it and they know that I want to fix 
problems that they surface to me to the extent that I have the 
power to fix it, so yes.
    Mr. Murphy. Mr. Chairman, I am over my time. Could I ask 
Mr. Wulf to give an answer to the same question?
    Mr. Shimkus. Yes.
    Mr. Wulf. Sir, I can confirm that Director Anderson and I 
received the message the Under Secretary was just discussing 
that he wants the bad news within the first week or two of our 
arrival on the job, and that is very much the spirit in which 
this report was written for him. Yes, within the organization I 
can't necessarily speak to how the culture evolved, but I can 
tell you that Penny and I have gone to great lengths to create 
a culture of transparency, a culture in which our employees are 
not afraid to raise issues that they view as problems. We have 
an open door policy. We have all hands on meetings on a regular 
basis, and we have made it clear that we don't tolerate 
repression of concerns that folks may wish to bring up.
    Mr. Murphy. Thank you very much, Mr. Chairman, I yield 
back.
    Mr. Shimkus. Let me, before I yield to the chairman 
emeritus, Mr. Dingell, let me ask unanimous consent for 5 days 
for members of the subcommittee to submit opening statements 
for the record. Without objection, so ordered.
    Now I would like to recognize Mr. Dingell for 5 minutes.
    Mr. Dingell. Mr. Chairman, thank you for your courtesy.
    Secretary Beers, why did you commission a top-to-bottom 
study of this program?
    Mr. Beers. Sir, when it became evident to me that, one, we 
had a re-tiering issue that was brought to my attention in 
June, and that we had had an issue about locality pay and we 
had had a slowness in terms of the approval of site security 
plans, that I needed to make sure that the new management which 
we had brought in to take over the program and make sure that 
it was running solidly brought their full attention to giving 
me as accurate a picture as possible in this program.
    As I said earlier, we had already commissioned a management 
study which was completed during the time that the report was 
prepared, and that was part of the report as well. So the final 
request of Penny Anderson and David Wulf was the result of an 
increasing concern on my part that the program was not running 
well.
    Mr. Dingell. Thank you, Mr. Secretary.
    Now, is Department of Homeland Security working to engage 
the industry in helping to get this program successfully 
implemented? Yes or no.
    Mr. Beers. Absolutely yes.
    Mr. Dingell. Mr. Secretary, I know there has been some 
controversy recently regarding some misclassified facilities. 
Can you assure me and the members of this subcommittee that you 
have properly addressed this issue and that you have correctly 
identified high-risk facilities? Please answer yes or no.
    Mr. Beers. Yes.
    Mr. Dingell. Now these questions to Mr. Wulf.
    Mr. Wulf, as your internal memo points out, there have been 
a number of challenges in implementing this program. Do you 
believe that the program is fixable? Yes or no.
    Mr. Wulf. Yes.
    Mr. Dingell. You do agree or believe it is?
    Mr. Wulf. Absolutely.
    Mr. Dingell. Thank you.
    What are the top two or three things that need to be 
addressed to bring this about, in your opinion? The top two or 
three things.
    Mr. Wulf. I would say the SSP, the site security plan 
review process, which we have already begun to move forward 
considerably over the last 2 months, and preparing our 
inspectors and our--the rest of our team to move forward and 
conduct authorization and compliance inspections.
    Mr. Dingell. Now what progress have you and the Department 
made in addressing these issues?
    Mr. Wulf. We have quadrupled the number of Tier 1 site 
security plans that we have conditionally authorized just over 
the last 2 months. We have commissioned an inspector tools 
working group as well to develop the standard operating 
procedures, other policies, and to determine what tools our 
inspectors will need as we move forward to the next stages of 
this program to actually conduct authorization inspections and 
to get into the regular cycle of compliance inspections moving 
forward.
    Mr. Dingell. Thank you, Mr. Chairman. You will note I 
returned 1 minute and 27 seconds. Thank you.
    Mr. Shimkus. Thank you, Mr. Dingell.
    Now I would like to recognize the gentleman from New 
Hampshire, Mr. Bass, for 5 minutes.
    Mr. Bass. Thank you very much, Mr. Chairman.
    I am not as familiar with the substance of this program and 
its history and so forth. I don't have a lot of facilities in 
my area. I am, however, very concerned about this memo. We have 
oversight responsibility, and to some extent, we are as 
vulnerable, if you will, to criticism for failure to be--to 
perform adequate oversight and be vigilant about the use or 
abuse or alleged abuse of taxpayers' funds. And that is why 
this memo is bipartisan, because we all know that we have a 
responsibility to make sure that the government is run well.
    I am also a businessman, and have over my life hired and 
fired people to do things. I don't like to fire people, but it 
happens. Mr. Beers, if you were in my position, looking at this 
report, would you consider yourself to have done a good job on 
your role to date?
    Mr. Beers. Sir, as I have said publically before, I hold 
myself responsible for this--these sets of problems, and I am 
committed to fixing them.
    Mr. Bass. If you were your own boss, would you keep you on 
the job?
    Mr. Beers. I can't answer that question, sir.
    Mr. Bass. I mean, do you--have you considered the 
possibility this might not be the right role for you, and it 
might be time for you to step aside? Mr. Barton referred to it 
in his opening statement.
    Mr. Beers. Sir, I consider that every day I work for the 
Federal Government. I swore an oath of office on at least three 
occasions to protect and defend the Constitution of the United 
States, and I believe in that. And if I believe I can't do the 
job, then I will walk away from it as I have done before.
    Mr. Bass. Do you think it is unusual to have an action memo 
that for all intents and purposes, you are not really 
disputing, with 70 different recommendations, a lot of which 
are noted in progress? You also noted in your testimony or 
answered a question a minute ago that you could address these 
issues ``to the extent that I have the power to fix it.'' Do 
you have the power to fix these--all of these problems?
    Mr. Beers. As far as the issues within this particular 
action plan, yes.
    Mr. Bass. So would you----
    Mr. Beers. But with respect to Mr. Green's comment about 
TWIC cards, no, I can't make the TWIC card be broader than the 
current authorization of the TWIC card, which means that you 
have to be a transportation worker.
    Mr. Bass. All right. Well, Mr. Beers, this is a disturbing 
memo. We appreciate the fact that it has come to our attention, 
and I certainly hope that we--that you understand that most of 
us haven't seen anything like--this is a very unusual and 
unusually poorly run agency. If it is not going to--if at any 
time you believe that you are not the right person to turn this 
troubled agency around, that maybe there ought to be a 
different managing structure.
    So having made that point, I think--I hope that the 
committee will carefully watch the progress in this action 
plan, because the American taxpayers are not going to stand for 
this kind of alleged or perceived incompetence in management 
for this very important agency to our Nation's security.
    Mr. Shimkus. Would the gentleman yield to me----
    Mr. Bass. Yes, sir.
    Mr. Shimkus [continuing]. For the remainder of your time?
    I want to follow up on this. We really got to get a handle 
on this card issue, and we would like for you to provide us 
your legal opinion of why you cannot deal with this TWIC card. 
We think you can. We, and that is the Energy and Commerce 
Committee, have been in discussions with Homeland Security for 
months trying to resolve this. We think it is within your 
jurisdiction and if it is not, we would like to see the legal 
reasoning why it is not so that we can change the law. We think 
it is within your power now, and I think my friend, Mr. Green, 
would be very pleased if we can get a handle on this. So help--
work with us. This is an issue, again, that was brought up in 
the March--in March of last year's hearing that we thought we 
were moving in some direction, and there have been multiple 
consultations with Homeland Security, and we are not any 
further than we were in March of 2011.
    I would like to yield to my colleague.
    Mr. Green. If the chairman would yield? I know we went 
through this last year, and because the TWIC card is under 
Department of Transportation and Coast Guard, I know there is 
an issue with Homeland Security. I just don't want to reinvent 
the wheel, because so many times those same workers that work 
on the dockside are also at an inland plant. And so that is why 
I would hope with interagency agreement, although in 908 
earlier this year our committee passed, we gave that 
authorization there language, but it hasn't passed and hadn't 
passed the Senate, so we need to work on it.
    Mr. Shimkus. And reclaiming the time, I would just say that 
Coast Guard is under Department of Homeland Security. This 
should not be difficult to do.
    Now I would like to recognize Mr. Pallone, my colleague 
from New Jersey, for 5 minutes.
    Mr. Pallone. Thank you, Mr. Chairman.
    We are here this morning to discuss issues facing the 
Chemical Facility Anti-Terrorism Standards, or CFATS, program, 
and we are talking about this leaked DHS internal memo from 
2011 that clearly shows that DHS faces serious implementation 
problems with the CFATS program, most notably that the 
Department has received 4,200 site security plans but has yet 
to approve a single one. The CFATS program was enacted as a 
rider to the 2007 Homeland Security appropriations bill in 
order to give Congress time to enact comprehensive legislation, 
and we did just that in the 111th Congress by passing H.R. 2868 
in the House. That bill provided a comprehensive security 
program to protect Americans living near these facilities, but 
unfortunately the Senate did not take it up.
    I am not here to claim that H.R. 2868 would have magically 
fixed all the problems outlined in the DHS memo, but it 
certainly provided a much stronger framework to protect the 
more than 100 million Americans that live in the danger zone of 
a chemical disaster.
    Last May, this committee had the opportunity once again to 
exercise its jurisdiction and set forth a full authorization of 
this program to replace the vague and inadequate CFATS program 
enacted in 2007. Unfortunately, the committee decided not to 
address shortfalls with the CFATS program, and just moved a 
simple extension of the current law.
    Mr. Chairman, in New Jersey we have the unfortunate 
combination of both a large number of chemical facilities and a 
high population density, so the consequences of insufficient 
security are dire. I regret that this committee has not taken a 
more proactive approach to securing these facilities, and I 
will continue to push for a more comprehensive security program 
to ensure the safety of my constituents living in the shadow of 
these facilities.
    Now to questions. The November 2011 DHS report begins to 
explain why nearly 5 years after these regulations went into 
effect, not a single site security plan has been approved. It 
reveals that this committee was rash, in my opinion, in passing 
legislation to rubber stamp the program for 7 years without 
investigating or addressing the program's shortcomings. Many of 
us have heard from those in the business community that the 
CFATS program is still strong and that businesses have done 
everything that they are required to do under the program. 
According to industry representatives, we should be comforted 
to know that companies have acted prudently and are prepared 
for compliance inspections, should the Department ever begin to 
conduct them.
    I hope this is true, but our national security is 
inherently a governmental function. Many members of this 
committee have worked for years to establish a robust 
regulatory structure for chemical facility security, and none 
should be satisfied with the suggestion that approvals and 
inspections are insignificant or that the role of the 
Department in this program is insignificant.
    Now Under Secretary Beers, do you think that the Department 
of Homeland Security should play a role in ensuring that our 
chemical facilities are secure?
    Mr. Beers. Sir, I strongly believe that the Department has 
a role and that the office that is tasked with doing that can 
play that role.
    Mr. Pallone. Do you think that the Department must play a 
role? I mean, do you think that it is absolutely necessary that 
they play a role?
    Mr. Beers. I am sorry, sir?
    Mr. Pallone. Do you think that the Department must play a 
role, that it is absolutely crucial that they play a role?
    Mr. Beers. I think that the original intent of the Act is 
absolutely appropriate, and yes, the Department must play a 
role.
    Mr. Pallone. Would you say that site security plan 
approvals and compliance inspections are necessary and 
important to ensure chemical facility security?
    Mr. Beers. I think that they are absolutely essential to 
making this program work effectively.
    Mr. Pallone. Well, I mean, I agree with everything you have 
said, and I think the failure of the Department to complete 
security plan approvals and compliance inspections is a very 
serious issue. I am glad to see that the Department is treating 
it as such, and I welcome the opportunity to work together 
towards a strong and effective program.
    But I guess the point I am really trying to make here is 
that this committee has a responsibility to put together an 
appropriate comprehensive authorization bill, and not simply 
rely on this paragraph or whatever it is, I mean, it is like 
this long, in an appropriations bill that really doesn't give 
you sufficient guidance or mandates or inspection or 
enforcement capability to do what you have to do. So I am not--
I understand that there are all kinds of problems with the 
Department, but I think a big part of the problem is that you 
never had a comprehensive authorization bill to tell you what 
to do and to give you the authority what to do. I mean, we 
could sit here all day and talk about how bad you are, and you 
know, there certainly are problems, but I think that it is our 
responsibility to do something more comprehensive to provide 
the guidance, Mr. Chairman. That is my only point. Thank you.
    Mr. Shimkus. The gentleman yields back his time.
    The chair now recognizes the gentleman from Ohio, Mr. 
Latta, for 5 minutes.
    Mr. Latta. Thank you, Mr. Chairman, and gentlemen, thanks 
very much for being here today. We have such short little time 
to ask all these questions, but if I could, first, is it my 
understanding and am I correct in hearing that we spent about--
$480 million has been appropriated for the program since its 
inception? Is that correct?
    Mr. Beers. Yes, sir, I believe that is the right number. I 
can give you the exact number if you want.
    Mr. Latta. OK, but that is a ballpark. Thank you.
    And as Chairman Emeritus Dingell does, he is very good at 
getting his rifling in on his questions, yes or no, but one 
thing I want to go back to is the question about working with 
industry. You said that you are working with industry, but you 
know, as we--reading the report that came through and looking 
at the site security plan that, you know, again as has been 
said a little bit earlier, that we have received--that you have 
received about 4,200 SSP submissions and that none have been 
approved.
    Did you ever hear from industry during this timeframe that 
gee, what is going on? These things have been submitted but we 
are never hearing back from the Department.
    Mr. Beers. Yes, we did receive inquiries from the industry 
about when they were going to be approved.
    Mr. Latta. Do you know how many inquiries you have been 
receiving?
    Mr. Beers. I don't have that information at the tip of my 
fingers, sir.
    Mr. Latta. Do you know when you might have received the 
first inquiry?
    Mr. Beers. Excuse me?
    Mr. Latta. Do you know when you might have received the 
first inquiry from industry as to when they might have these 
approved?
    Mr. Beers. No, I can't tell you precisely when, but I can 
get you that information.
    Mr. Latta. OK, because again, going back to the earlier 
testimony that when you are looking at, you know, those 5-1/2 
years since the enactment of CFATS, and that is also the stats 
of the statute itself, and 4-1/2 years since the final rule. It 
kind of--I really would like to find out when these--the 
industry that was being regulated was finding out if they were 
or not being approved, because you know, there is quite a 
timeframe there.
    Let me go to the other thing that Mr. Wulf had brought up a 
little bit earlier saying that, you know, there is going to be 
an--and I am sorry, again, I don't have it in front of me but I 
just kind of wrote it down--saying that you are going to have 
an open door policy and not afraid to raise issues. The reason 
I bring this up is I was a county commissioner for 6 years, 
years back, and we had about 1,100 employees in the county. We 
regulated all kinds of things. We had a lot of different 
departments. It wasn't unusual for an employee that worked in 
one of those departments that served underneath the Board of 
Commissioners to bypass their supervisors and call me at home, 
or being from, you know, a county of 125,000, they would run 
into you at the county fair, they would talk to you at the 
grocery store, or they would say can I talk to you someplace 
else? Did you all get any contact from anybody at any time 
saying gee, I would like to talk to you about something that we 
think there is something wrong going on with the program?
    Mr. Beers. Sir, on this particular program, yes, and that 
is part of the reason that some of the efforts in order to 
investigate problems took place in the past.
    With respect to bypassing the chain of command, in order to 
prevent that particular problem, we in management and I in 
particular have meetings with either individuals or groups of 
people throughout NPPD that are well down in the chain of 
command in order to elicit their thoughts and suggestions so 
that we can improve the program overall.
    Mr. Latta. OK, let me ask you this question. Do you know 
when you might have started first getting an inclination that 
there was something wrong with people contacting you, going--
bypassing the chain of command to say, you know, there is 
something really wrong here in personnel or the way the program 
is being run?
    Mr. Beers. --that I can report to you on is in the--excuse 
me. The first instance that I can report to you that this 
occurred would be in the summer timeframe of 2010 when it came 
to our attention because of a report by an individual that 
there seemed to be a problem with the locality pay. As soon as 
we found out that that was an issue, we took that on and went 
through the process to determine what had gone wrong in terms 
of the appropriate pay to the individuals involved.
    Mr. Latta. So this would be actions. So the first 
inclination would be a couple of years after the program was 
put in place, would that be correct?
    Mr. Beers. Yes, sir.
    Mr. Latta. OK, thank you.
    And just real quick, I know my time is running out, Mr. 
Chairman, but if we could get some of that information back 
because again, you know, I really, really hope that that open 
door policy really does exist and that folks aren't afraid to 
come forward, because this has got to work. Again, when you 
look at the number of--with 4,200 SSPs that have been submitted 
and trying to get these things caught up, it is very , very 
important not just for the Department itself, but for all those 
industries out there trying to comply.
    And with that, Mr. Chairman, I yield back.
    Mr. Shimkus. Gentleman yields back his time.
    The chair now recognizes the gentleman from Georgia, Mr. 
Barrow, for 5 minutes.
    Mr. Barrow. I thank the chair. I would like to yield my 
time to the ranking member of the subcommittee, brother Green 
from Texas.
    Mr. Green. Thank you. I am going to revisit the personnel 
assurity, but Mr. Wulf--and I appreciate the update that you 
had. I saw your testimony and I am going to encourage the chair 
that maybe two or three months from now, we invite you back to 
enjoy our hospitality again and see how far along we are, 
because this is such an important issue or a lot of areas. I 
know Mr. Pallone and mine, we have substantial chemical 
facilities that are not waterside based.
    Let me get back to personnel assurity program, because that 
is something that is sensitive, because I have plenty of plants 
on the water, but also plenty of plants that are not. The same 
company owns them, and often times they transport personnel 
back and forth. My concern is what was submitted from the OMB 
that the OMB did not recognize that the TWIC card, from what 
you said in your testimony, would be used. And I can understand 
why something regulated by your agency can't apply for a TWIC 
card. But it seems like in the Federal Government we could use 
the same database. The Coast Guard, Department of 
transportation, the TWIC card, and use the same database for 
the background and the TWIC card would be interchangeable.
    And my idea, and I can tell you, you know, some of my folks 
are going to be frustrated if they end up having to pay another 
few hundred dollars to get a second card because their company 
transfers them some where and not all companies are really nice 
and they say no, that is part of your requirement for the job. 
You have to have your driver's license to drive the company 
car. So that is my concern. The proposed personnel assurity 
program will require facilities to submit background 
information on all existing personnel within 60 or 90 days upon 
the implementation, and any new unescorted individuals who are 
not classified as personnel would need--even if they have a 
TWIC card, their information submitted to DHS 48 hours in 
advance. Was that part of the submittal to OMB, because that 
doesn't sound like you are getting TWIC cards consideration.
    Mr. Beers. Sir, I believe that is part of the submittal to 
OMB, and what I am trying to convey here is that we are looking 
at all of the opportunities to leverage the various cards and 
want very much to go in the direction that you want to go.
    Mr. Green. OK. Well--and I know there may need to be an 
interagency memorandum to work together, and I know sometimes 
our Federal agencies don't like to do that, but we have--it is 
redundant information if we are using the same database. And I 
don't understand why DHS, as we proposed in two separate 
legislations earlier, harmonized TWIC with the leverage and the 
operational--the background checks. Is there a justification or 
an incident that I am not aware of that have existed within the 
TWIC system that would require DHS to go beyond TWIC?
    Mr. Beers. I am not aware of any, sir.
    Mr. Green. OK. And it seems to be--because I try and stay 
pretty close to the ground there with a lot of my folks, and I 
have not heard on. In our area, people may not like some of the 
chemicals that we produce, but they are things that we don't--
they produce them because somebody needs them in our country, 
and we want to make sure they are safely produced both for the 
people that live around it, but the folks on that plane. Every 
time I talk about the issue with DHS, you assure me they 
incorporate TWIC. I just want to make sure it goes forward from 
that, and I think maybe we will even contact OMB and express 
that concern that don't reinvent the wheel, even though we have 
two separate Federal agencies and hopefully that would come 
from both agencies, including Department of Transportation. 
They use the same database that you have.
    Mr. Chairman, I don't have any other questions. I would be 
glad to yield back to my colleague from Georgia, and I 
appreciate his courtesy.
    Mr. Shimkus. The gentleman from Georgia yields back his 
time. Chair now recognizes the gentleman from Mississippi, Mr. 
Harper, for 5 minutes.
    Mr. Harper. Thank you, Mr. Chairman, and I certainly thank 
the two of you for being here today, and Mr. Wulf, I want to 
thank you and Ms. Anderson for the work that you have done on 
this. This may come as a shock, but you know, it is not always 
surprising to us to learn that an agency may be dysfunctional. 
So this is not always a surprise.
    But we appreciate the candor and no one should ever be 
criticized or subject to anything for being very open, which 
you and Ms. Anderson have done, so I thank you for that. I 
believe that gives us some input.
    But I wanted to ask you a few questions, if I may, Mr. 
Wulf?
    You know, as I looked through the report, one of the things 
that you spent some time on was the issue of unions within the 
organization. Can you tell me when the workforce in the 
division was unionized?
    Mr. Wulf. I can't give you an exact date on that. It was 
before Ms. Anderson's and I arrival, but I want to say spring 
of last year, maybe March.
    Mr. Harper. Well let us--can you tell me, does each worker 
have to cast a vote in order for their votes to be recorded, as 
far as do you know how the process works? Non-voters are 
considered voters to unionize, how that is counted?
    Mr. Wulf. I am not completely certain about that process.
    Mr. Harper. Can you get me that information?
    Mr. Wulf. Absolutely.
    Mr. Harper. That would be great. Can you tell me how many 
employees there are in the CFATS program, and how many are 
eligible to be represented by government unions, and how many 
affirmatively voted to be represented by unions?
    Mr. Wulf. I don't have the totals on the voting, and I will 
say, there are approximately--and I don't have the exact 
numbers in front of me--a little more than 200 Federal 
employees in the CFATS program. Of those who would be eligible 
for union--or to vote in a union membership, that would be our 
field force, non-supervisory field force, so a little bit under 
100 of those.
    Mr. Harper. At the time of unionization, were all 
programmatic and accountability measures and job descriptions 
in place that applied to that workforce?
    Mr. Wulf. As we noted in our report, we are continuing to 
refine the requirements for the sections and----
    Mr. Harper. Well, explain what--when you started out in 
your report and you said that the presence of the union at this 
stage in the program will have a significant negative impact, 
explain that.
    Mr. Wulf. I appreciate the opportunity to provide a little 
additional context to that.
    Mr. Harper. Yes.
    Mr. Wulf. The report was not intended to be a statement 
concerning whether unions and Federal workforce are good or 
bad, but rather a recognition of the fact that this is a 
program that is very much in its emerging stages, and we are 
very much in the midst of putting into place policies and 
procedures for the conduct of inspections, for the operation 
and review of site security plans, and so forth.
    So it certainly adds a layer of complexity that wouldn't 
otherwise exist. That said, though, along with the union we 
have very much a shared interest in moving the program forward 
in a collaborative relationship.
    Mr. Harper. Certainly. We have an overall big picture here 
of an issue of national security that we have now kind of 
gotten bogged down and does it not make it more difficult, 
though, after the unionizations take place to implement some of 
these policies? Are you not already seeing that even on the 
reference that you had to the mileage reporting?
    Mr. Wulf. It does add a layer of complexity, but it also, I 
think, adds voices in the development of policy that will allow 
us to develop more sustainable processes moving forward.
    Mr. Harper. What was it, 16 weeks that you reported for the 
mileage requirements to be done?
    Mr. Wulf. I believe that was the estimate.
    Mr. Harper. While I understand the need, everybody has got 
to work together. The fact is that this has caused delay, has 
it not? Why don't I not make you answer that question. I think 
we know.
    I appreciate your time, Mr. Wulf, and for you and Ms. 
Anderson to be so candid with your situations. Thank you.
    Mr. Shimkus. The gentleman yields back his time.
    The chair recognizes the gentlelady from California, Ms. 
Capps, for 5 minutes.
    Mrs. Capps. I thank the chairman for recognizing me, and I 
apologize for the state of my voice, but I am feeling well. I 
am pleased to be here and I think you both for your testimony.
    The internal Homeland Security report from November, 2011, 
provides new support for concerns that problems in the 
statutory language creating the CFATS program hindered its 
successful implementation. And of course, we are talking about 
Homeland Security here. According to the report, CFATS 
personnel have not yet determined how to systematically review 
site security plans. Although the Department has set up an 
interim process to try to get these plans reviewed, staff are 
still working to develop a process to be used over the long 
term. Apparently, many initial site security plan reviews have 
to be redone. The November reports states that they have been 
found to be, and this is a quote, ``inconsistent with the 
spirit and intent of the program's mandate.''
    Mr. Beers, can--would you please elaborate on what the 
report meant when it stated that site security plan reviews had 
not been conducted consistently with the spirit and intent of 
the statutory mandate?
    Mr. Beers. Madam, I can't specifically speak to the reason 
behind that. I can give you some broader context about what 
happened with respect to the efforts to get site security plans 
that, in fact, met the requirement.
    As the program was rolled out and as it evolved, the 
guidelines for the information that needed to be provided in 
the site security plans failed to elicit appropriate responses 
from industry. Some of that undoubtedly was or could have been 
done better if the guidelines that we had put out had been more 
clear and some of it was simply on the part of industry not 
providing that information. I don't mean to suggest in any way 
that that was an intentional act, but it required us to go back 
to those particular facilities and ask for more information in 
order to be able to get to a site security plan that, in fact, 
appeared to meet what we needed to have in order to have a site 
security plan. That iterative process ended up taking time when 
those site security plans were initially filed, and that is 
part of what I regard as the due diligence that we and industry 
need to undertake together in order to ensure that a plan that 
is finally authorized and approved is a plan that is capable of 
providing the kind of security that you all have charged us to 
build.
    But let me turn to Mr. Wulf about the specific comment----
    Mrs. Capps. And I wanted--yes, briefly if you would, 
please, so I can go on to another question.
    Mr. Wulf. About the site security plan review process 
specifically?
    Mrs. Capps. Well, it is just why--I am very concerned that 
these delays have occurred.
    Mr. Wulf. Yes, we have taken steps to address those through 
the implementation of our interim review process, and as the 
Under Secretary and I have mentioned, you know, we, in the last 
2 months, quadrupled the number of SSP--of site security plans 
we have been able to authorize, and I think the future is 
bright moving forward on that path.
    Mrs. Capps. I thank you for that, you are trying, and I 
appreciate the Department is working to address these issues 
and establish a consistent site security plan review process.
    I am concerned, however, that flaws in the law make 
ambiguity and consistency in the review process unaffordable. I 
mean, you may have taken care of this one, but it is going to 
pop up again. That is because Section 550 grants discretion to 
the Secretary to approve site security plans that fail to meet 
the risk-based performance standards under this program. The 
law says only that the Secretary may disapprove a plan that 
fails to meet those standards.
    As many of this committee will perhaps recall--I recall it 
well, because I offered an amendment during the markup of H.R. 
908 that would have changed that word ``may'' to a ``shall'' to 
require that site security plans be disapproved if they failed 
to meet performance standards. That word ``may'' is what causes 
the ambiguity and the having to go back and re-question, and 
time is of the essence when we are talking about Homeland 
Security.
    So Mr. Beers, back to you again. Do you agree that site 
security plans failing to meet the standards should be 
disapproved?
    Mr. Beers. Congresswoman, our objective here is to get the 
yes, so the notion of disapproval doesn't necessarily 
accomplish that. The point is, when we say we are not prepared 
to approve it, that is the functional equivalent thereof. But 
what we want to do is have a cooperative relationship----
    Mrs. Capps. Right.
    Mr. Beers [continuing]. With industry in order to say 
whether or not a plan requires more information or more 
clarification.
    Mrs. Capps. And industry needs to have this as well. May I 
just finish one sentence?
    Mr. Shimkus. We are trying to get these in before the votes 
on the floor.
    Mrs. Capps. Well, I believe that it should be a requirement 
so that industry is clear about what they need to do.
    Mr. Shimkus. The gentlelady's time is expired.
    The chair now recognizes the gentleman from Louisiana, Mr. 
Cassidy, for 5 minutes.
    Mr. Cassidy. Thank you. The memo is--one, let me just 
commend you for asking it be drawn up. On the other hand, 
obviously it paints a disaster in terms of acquisition, 
inventory management, attitudes, I mean, it is just a total 
indictment. Now, as a guy that represents an area with lots of 
PETRA chemicals, lots of businesses and workers dependent upon 
this, if I concede the argument that your job is important for 
safety, it frankly seems not just an indictment of your 
organization, but it frankly seems to place my constituents at 
risk.
    Now that said, how many employees does this particular 
division of DHS have?
    Mr. Wulf. I want to say 206.
    Mr. Cassidy. Two hundred and six?
    Mr. Wulf. I believe so.
    Mr. Cassidy. Now, this problem seems so endemic. How many 
have been fired? I mean, it seems like an easy target because 
they speak consistently of people being hired because they know 
somebody. People who are--I mean, you list--you can almost 
write somebody's name in here if you only have 206 people. So 
clearly, it wasn't how many have been fired. How many are going 
to be fired?
    Mr. Beers. Sir, with respect to the issue about the re-
tiering----
    Mr. Cassidy. No, I mean, just a simple question. I mean, 
clearly there is an endemic problem here, and it is rife. How 
many have been fired? It is a pretty simple question if you 
only have 206 employees, and how many do you have on the 
chopping block?
    Mr. Wulf. Sir, with respect to the leadership of the 
organization, the people who were in the leadership positions 
in the organization----
    Mr. Cassidy. I only have 3 minutes. Can I have a number?
    Mr. Wulf [continuing]. Have moved on.
    Mr. Cassidy. How many?
    Mr. Wulf. That is two people.
    Mr. Cassidy. OK, so two out of 206, one percent, and yet we 
have people here hired, apparently, because they know somebody, 
promoted because they know somebody, apparently fudging on 
their gas reports. We only have two, only one percent? It seems 
like the organization--and I don't mean this to be kind of 
snitty, but I am just amazed that we are tolerating this level 
of incompetence.
    Now I am struck. In your document here, you say that--I am 
quoting from page nine--``We have yet to approve a site 
security compliance inspection. Moreover, we have not yet 
determined what it will look like. And yet, since this report 
was reported in the news, we have quadrupled the number of 
compliance reports issued.'' Is that my understanding, or do I 
understand incorrectly?
    Mr. Wulf. It is--what we quadrupled is the number of site 
security plans we have conditionally authorized, which the step 
that precedes the conduct of an authorization inspection, which 
then leads to the final approval of a facility's site security 
plan, sir.
    Mr. Cassidy. OK. So the indictment of the report stands 
that we are 6 years into this, and we have yet to come up with 
a compliance inspection program. I just don't know what to say.
    Now, I do know what to say. Clearly, there are ways to 
contract this out. I don't know how you just don't start over 
with this program, but I understand the Coast Guard has the 
authority to use an alternative security program. Can we use an 
alternative security program? I understand, again, you have 
this authorization already. Can we use that now since it looks 
like the current program is so dysfunctional to be beyond 
restitution?
    Mr. Beers. Sir, the short answer is yes, and I will let 
David describe what we have done with respect to that.
    Mr. Wulf. We do already have some alternative security 
programs that have been submitted by industry stakeholders, and 
we are working very aggressively in partnership with our 
industry stakeholders to develop some templates that can be 
used. We can't prescribe a specific template, but we are going 
to work through some templates that will--the hope is allow for 
more expeditious, speedy review and approval of----
    Mr. Cassidy. But this does not include contracting out this 
function, correct? Can you go to a third party to conduct these 
inspections? I mean, what you describe here is a staff which is 
poorly hired, poorly trained, and has a poor attitude and has a 
sense of law enforcement wanting to clear--be called commander 
and wear pistols as opposed to actually go through and look at 
something in terms of compliance.
    Mr. Beers. Sir, compliance inspection is an inherently 
government function. We have to have the people who do that be 
Federal employees.
    Mr. Cassidy. Now it is my understanding, though, that the 
Coast Guard actually has an alternative standard, and frankly, 
Bummerd now has it, the whatever they call the offshore for the 
oil rigs. They have a third party that is inspecting oil rigs.
    Mr. Beers. I can't speak to the Coast Guard, sir. I am not 
aware.
    Mr. Cassidy. OK. I have much more to ask.
    Mr. Shimkus. The gentleman yields--they also have some 
contractors doing TSA function at some of the airports. It is 
worth looking into.
    I would like to yield now 5 minutes to the ranking member 
of the full committee, Mr. Waxman, for 5 minutes.
    Mr. Waxman. Thank you, Mr. Chairman.
    None of us can be happy about this memo that came out last 
November, showing how poorly this program is serving the 
American public. This is a serious matter. This is a matter of 
national security, possible attacks by terrorists on chemical 
plants. I note that all of us are concerned, not just the 
people here in the Congress, but Mr. Beers and others in the 
administration. We have a stark and troubling picture, but 
perhaps there is a silver lining, because it appears to me that 
the Department is taking the situation clearly.
    But I want to talk about Congress's role. It is easy at a 
hearing like this after we get a report of a failure to beat up 
on the people running the program. But Congress has a 
responsibility as well. This program was established in an 
appropriations bill, not a bill that came out of this 
committee. It was a rider on an appropriations bill. Mr. Beers, 
is there a provision in Section 550 that addresses personnel 
hiring?
    Mr. Beers. I am not aware of it, sir.
    Mr. Waxman. Is there a provision that addresses use of 
travel cards or purchase cards?
    Mr. Beers. No, sir, I am not aware of that.
    Mr. Waxman. How about a provision that details how 
inspections are to be conducted?
    Mr. Beers. No, sir.
    Mr. Waxman. Is there a provision that explains how 
background checks should be conducted?
    Mr. Beers. No, sir.
    Mr. Waxman. Are there any enforceable deadlines in this law 
that are written in the appropriations bill?
    Mr. Beers. No, sir.
    Mr. Waxman. The answers to these questions are all no, and 
the reason is that this committee never held a hearing or 
conducted a markup on legislation to create this program. So 
the problems we see today were never contemplated by this 
committee, and no direction was provided. Now I understand Mr. 
Barton said you ought to resign, but Mr. Barton was the chair 
of the committee at the time this law was adopted through an 
appropriations bill. We tried to get the people who have a 
stake in this to work out legislation, and the Democrats were 
in power and I was chairman. We had the chemical industry and 
others with us. When the Republicans came to power on this 
committee, they said let us just extend this for 7 years. We 
will just kick this thing down the road for 7 years.
    Now, one of the proponents of doing that was the chemical 
industry. They were troubled by some of the ideas that we would 
have further inspections and we would have further deadlines 
and we would make sure that things happened, but while they 
participated with us in trying to change the law, they said all 
they wanted to do this last year was extend the existing law 
for 7 years. Now this existing law doesn't have much of a 
requirement on you.
    You have established a working group, Mr. Beers, in the 
Department to look at legislative and regulatory changes and 
whether they are necessary, is that correct? Speak into the mic 
and be sure it is on.
    Mr. Beers. I am sorry. Yes, sir, with respect to the 
entirety of the Department.
    Mr. Waxman. And the November report identified several 
statutory limitations on the program that limits effectiveness 
and includes a rigid and limited enforcement authority. For 
example, a facility could violate requirements 20 times and 
they would--and you wouldn't have the authority to take any 
more action based on repeat violations. That means that they 
can repeat these violations over and over again, and you 
couldn't do anything about it. Is that right?
    Mr. Beers. Sir, that is an element of the report that we 
have looked into as a result of the report. While it is true 
that just on the face of it the answer to that is yes, we 
believe we could use our administrative order authority to have 
some action against----
    Mr. Waxman. Excuse me, you are going to have to use your 
regulatory authority to do something that should have been said 
in the law by Congress. I hope this working group will examine 
that.
    The report calls into question the adequacy of the 
program's performance standards. That memo said ``Without 
testing to evaluate the effectiveness of the performance 
standards, adequacy of the standard often is more a matter of 
opinion or fact.'' Will your working group give us some 
recommendations on that issue?
    Mr. Beers. Sir, as we come to recommendations, yes, we will 
give those to you. We, as you know, have to go through a very 
formal process.
    Mr. Waxman. Are you going to examine that issue, I presume?
    Mr. Beers. We will.
    Mr. Waxman. Well Congress should have examined it as well.
    So my point to you is, well, we are pointing fingers at you 
and you are saying you have excuses and everybody says we are 
going to do better. I think we all have a burden to bear in the 
failure, and Congress didn't do its job and we hoped you would 
have taken up the slack and done the job that Congress should 
have directed you to do, but I think it is awfully premature 
for members of this committee to try to put the whole blame on 
you and say you ought to quit. Maybe some members of Congress 
ought to quit if we aren't doing our job, or be replaced.
    I yield back my time.
    Mr. Shimkus. The gentleman's time is expired.
    The chair now recognizes the gentleman from Colorado for 5 
minutes, and we are going to try to get this done and then 
adjourn the hearing after he is through. They did just call 
votes.
    Mr. Gardner. I thank the chairman for the recognition, and 
thank you as well to the witnesses for being here today.
    When I first read this memo, it was a little bit like Jerry 
McGuire meets the Titanic. You have got--just some of the words 
and phrases used in this memo: unnecessary expenses, 
unqualified personnel, unsuited for the work, problems with how 
money spent, foul language, ineffective hiring, unauthorized 
expenses, inappropriate work behavior, catastrophic failure, 
perceived cronyism, favoritism. How would you grade your 
performance on a scale of 1 to 100?
    Mr. Beers. I think this report is a clear indication that 
the program needs a whole lot of work on it, but I don't think 
it entirely recognizes what we have done, and I am not being an 
apologist, but I do think that it indicates that we have some 
major challenges which we are prepared to address.
    Mr. Gardner. Unauthorized use of money, problems with how 
money is spent, are criminal activities taking place here?
    Mr. Beers. Sir, those are issues that we are looking into. 
When we discovered them----
    Mr. Gardner. You are looking into criminal--possible 
criminal activity?
    Mr. Beers. If that turns out to be the result of these 
reviews, the answer to that, of course, is yes. We have an 
obligation to you and to the American public to do that.
    Mr. Gardner. Do you--I mean, in terms of what you are 
facing, what else are we missing from this memo? I mean, is 
this a comprehensive memo or are there other issues that you 
are finding, other issues that need to be addressed?
    Mr. Beers. Sir, you are asking me to say what the unknowns 
are here. I am not saying that this memo is the entirety, and I 
don't think that David would say that. But it does represent a 
commitment to make sure that we understand the problems as we 
know them and to come up with solutions to fix that. David?
    Mr. Wulf. I would just add that I would echo the Under 
Secretary's sentiments. I would say that the report was 
focused, you know, as it was intended to be, an internal candid 
assessment. It was focused very much on the challenges side of 
the equation. It did not focus as much on the program's 
successes and opportunities. You know, I would add, too, that 
we have a very talented and committed workforce within ISCD. We 
have very committed folks at both headquarters and in the 
field, all eager to move the program forward. And I think, as I 
mentioned earlier, you know, the problems we identified in the 
report are certainly not insignificant, but they are by no 
means insurmountable, and we are looking forward. We have a 
nearly 100 point action plan that is in progress. We are 
meeting on a weekly basis with Deputy Under Secretary Spalding 
to review progress on those items, and you know, we anticipate 
continued progress.
    Mr. Gardner. The report identifies several issues with the 
unionization, the challenges you faced with the union. Can you 
name any other agencies or offices who deal in anti-terrorism 
security, national security, who placed a union in the picture 
before most accountability measures were put in place?
    Mr. Wulf. I am not aware of any, but----
    Mr. Gardner. OK. Let us talk a little bit about the budget. 
The memo talks on page 15, and I quote, ``ISCD lacks a system 
for tracking the usage of consumable supplies, which creates an 
environment for fraud, waste, and abuse.'' This isn't an 
Inspector General report, it is not the GAO saying this. It is 
the program managers describing their own program. So how can a 
member of Congress choose to fund a program that is so self-
described?
    Mr. Wulf. We recognize some administrative shortcomings in 
the tracking of funds, and recognizing, too, that this is a 
relatively new program, relatively new organization, we have 
put into place safeguards relating to the receipt of goods. As 
I mentioned earlier, we didn't identify actual fraud, waste, or 
abuse, just that there were additional processes that needed to 
be put into place to ensure that that does not----
    Mr. Beers. And sir, a point of clarification here. That 
part of the report is actually taken from another review that 
was accomplished during, started before, and finished during 
the period in which they prepared that, and it was our own 
compliance unit that did that, that discovered that. They 
didn't discover any charges to be laid, but they said that the 
procedures were inadequate, as the report correctly says.
    Mr. Gardner. Is there--DHS has an Inspector General, 
correct?
    Mr. Beers. We have an Inspector General and we have also--
for the whole department, and we have an office of compliance 
and security within our own NPPD, and that is who looked into 
this issue at the Assistant Secretary and my request.
    Mr. Gardner. So the Inspector General has looked into this?
    Mr. Beers. The Inspector General has access to these 
reports, yes, sir, but this was not done by----
    Mr. Gardner. Have you had conversations with the Inspector 
General?
    Mr. Beers. With respect to this report?
    Mr. Gardner. Yes.
    Mr. Beers. I can't speak to that. I have not personally had 
that conversation.
    Mr. Gardner. But he has this memorandum?
    Mr. Beers. As with all of these kinds of reports, yes, they 
are available.
    Mr. Gardner. They are available or he has them? I mean, 
have you sent it to him?
    Mr. Beers. I will have to confirm that to you, sir.
    Mr. Gardner. Thank you. And another question I would have, 
just based on the authorization, would a multi-year 
authorization give you the surety that you need to pursue 
programmatic improvements? Would it be helpful for you to be 
assured that legislatively the program can't change?
    Mr. Beers. As the report says and as we have said for some 
time, a long-term authorization of this program is vital, both 
to the workforce and to our security partners and stakeholders 
in this program. It gives us a longer term stability that a 
year-to-year unfortunately doesn't provide us.
    Mr. Gardner. On the issue of re-tiering, there are a number 
of sites that were tiered last fall----
    Mr. Shimkus. I would remind my colleague that we are 
getting close to the votes being already called.
    Mr. Gardner. I have some additional questions I will get 
over to you. I yield back my time.
    Mr. Shimkus. Gentleman yields back his time, and I 
appreciate that.
    Let me just say in follow-up, I think Mr. Beers testified 
he would like the law to have been made permanent at the last--
at the March hearing, so--but let me also just again thank you, 
Mr. Beers, for your long career of public service. And this is 
a part of your portfolio, not your entire portfolio: Marine 
Corps officer in Vietnam, foreign service, obviously did stuff 
at the Department of State, Middle East, Persian Gulf, 
international narcotics and law enforcement. We get caught up 
in the heat of battle. We expect you to address these issues 
and fix them, and that will make further hearings go well.
    And just in response to my friend, Mr. Waxman, I love his 
founding father quote, ``Where good laws do well, good men do 
better.'' So you can't pass a law for total compliance. It is 
really the people that make things work, and I think you are 
going to get a handle on it. I just wish that the people who 
have left the Department did not get a move, but probably would 
have been held more accountable to their activities.
    With that, I would like to adjourn this hearing. Thank you 
for your service.
    Mr. Beers. Thank you.
    [Whereupon, at 11:17 a.m., the subcommittee was adjourned.]
    [Material submitted for inclusion in the record follows:]

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