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






                 BALANCING MARITIME SECURITY AND TRADE 
                  FACILITATION: PROTECTING OUR PORTS, 
       INCREASING COMMERCE AND SECURING THE SUPPLY CHAIN--PART I

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

                                HEARING

                               before the

                       SUBCOMMITTEE ON BORDER AND
                           MARITIME SECURITY

                                 of the

                     COMMITTEE ON HOMELAND SECURITY
                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED TWELFTH CONGRESS

                             SECOND SESSION

                               __________

                            FEBRUARY 7, 2012

                               __________

                           Serial No. 112-65

                               __________

       Printed for the use of the Committee on Homeland Security





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                     COMMITTEE ON HOMELAND SECURITY

                   Peter T. King, New York, Chairman
Lamar Smith, Texas                   Bennie G. Thompson, Mississippi
Daniel E. Lungren, California        Loretta Sanchez, California
Mike Rogers, Alabama                 Sheila Jackson Lee, Texas
Michael T. McCaul, Texas             Henry Cuellar, Texas
Gus M. Bilirakis, Florida            Yvette D. Clarke, New York
Paul C. Broun, Georgia               Laura Richardson, California
Candice S. Miller, Michigan          Danny K. Davis, Illinois
Tim Walberg, Michigan                Brian Higgins, New York
Chip Cravaack, Minnesota             Jackie Speier, California
Joe Walsh, Illinois                  Cedric L. Richmond, Louisiana
Patrick Meehan, Pennsylvania         Hansen Clarke, Michigan
Ben Quayle, Arizona                  William R. Keating, Massachusetts
Scott Rigell, Virginia               Kathleen C. Hochul, New York
Billy Long, Missouri                 Janice Hahn, California
Jeff Duncan, South Carolina
Tom Marino, Pennsylvania
Blake Farenthold, Texas
Robert L. Turner, New York
            Michael J. Russell, Staff Director/Chief Counsel
               Kerry Ann Watkins, Senior Policy Director
                    Michael S. Twinchek, Chief Clerk
                I. Lanier Avant, Minority Staff Director
                                 ------                                

              SUBCOMMITTEE ON BORDER AND MARITIME SECURITY

                Candice S. Miller, Michigan, Chairwoman
Mike Rogers, Alabama                 Henry Cuellar, Texas
Michael T. McCaul, Texas             Loretta Sanchez, California
Paul C. Broun, Georgia               Sheila Jackson Lee, Texas
Ben Quayle, Arizona, Vice Chair      Brian Higgins, New York
Scott Rigell, Virginia               Hansen Clarke, Michigan
Jeff Duncan, South Carolina          Bennie G. Thompson, Mississippi 
Peter T. King, New York (Ex              (Ex Officio)
    Officio)

                      Paul Anstine, Staff Director
                   Diana Bergwin, Subcommittee Clerk
            Alison Northrop, Minority Subcommittee Director


















                            C O N T E N T S

                              ----------                              
                                                                   Page

                               STATEMENTS

The Honorable Candice S. Miller, a Representative in Congress 
  From the State of Michigan, and Chairwoman, Subcommittee on 
  Border and Maritime Security:
  Oral Statement.................................................     1
  Prepared Statement.............................................     4
The Honorable Henry Cuellar, a Representative in Congress From 
  the State of Texas, and Ranking Member, Subcommittee on Border 
  and Maritime Security..........................................     5
The Honorable Bennie G. Thompson, a Representative in Congress 
  From the State of Mississippi, and Ranking Member, Committee on 
  Homeland Security..............................................     6
The Honorable Laura Richardson, a Representative in Congress From 
  the State of California:
  Prepared Statement.............................................     7

                               WITNESSES
                                Panel I

The Honorable Jerrold Nadler, a Representative in Congress From 
  the State of New York..........................................     9

                                Panel II

Mr. David Heyman, Assistant Secretary, Office of Policy, U.S. 
  Department of Homeland Security:
  Oral Statement.................................................    12
  Joint Prepared Statement.......................................    14
Mr. Kevin McAleenan, Acting Assistant Commissioner, Office of 
  Field Operations, U.S. Customs and Border Protection, U.S. 
  Department of Homeland Security:
  Oral Statement.................................................    21
  Joint Prepared Statement.......................................    14
Rear Admiral Paul Zukunft, Assistant Commandant for Marine 
  Safety, Security, and Stewardship, U.S. Coast Guard, U.S. 
  Department of Homeland Security:
  Oral Statement.................................................    23
  Joint Prepared Statement.......................................    14
Mr. Stephen L. Caldwell, Director, Maritime and Coast Guard 
  Issues, Homeland Security and Justice Team, Government 
  Accountability Office:
  Oral Statement.................................................    25
  Prepared Statement.............................................    26

                                APPENDIX

Questions for David Heyman From Chairwoman Candice S. Miller.....    61
Questions for David Heyman From Honorable Mike Rogers............    62
Questions for Paul F. Zukunft From Honorable Mike Rogers.........    62
Questions for Kevin K. McAleenan From Chairwoman Candice S. 
  Miller.........................................................    63
Questions for Stephen L. Caldwell From Chairwoman Candice S. 
  Miller.........................................................    66
Questions for Stephen L. Caldwell From Honorable Mike Rogers.....    70

 
  BALANCING MARITIME SECURITY AND TRADE FACILITATION: PROTECTING OUR 
    PORTS, INCREASING COMMERCE AND SECURING THE SUPPLY CHAIN--PART I

                              ----------                              


                       Tuesday, February 7, 2012

             U.S. House of Representatives,
                    Committee on Homeland Security,
              Subcommittee on Border and Maritime Security,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 10:03 a.m., in 
Room 311, Cannon House Office Building, Hon. Candice S. Miller 
[Chairwoman of the subcommittee] presiding.
    Present: Representatives Miller, Broun, Duncan, Cuellar, 
Sanchez, Jackson Lee, Clarke of Michigan, and Thompson.
    Also present: Representatives Richardson and Hahn.
    Mrs. Miller. Good morning, everybody. The Committee on 
Homeland Security, the Subcommittee on Border and Maritime 
Security will come to order.
    The subcommittee is meeting today to hear testimony from 
Congressman Jerry Nadler, from assistant secretary David 
Heyman, from Department of Homeland Security Office of Policy, 
acting assistant commissioner Kevin McAleenan, Office of Field 
Operations, Customs and Border Protection, Rear Admiral Paul 
Zukunft--I know I am never pronouncing that correctly, 
assistant commandant for marine safety, security, and 
stewardship with the U.S. Coast Guard, and Mr. Steve Caldwell, 
who is the director of Maritime Security from GAO.
    Today our very important topic is the global supply chain. 
I would recognize myself for an opening statement.
    This hearing is really the first of a two-part series. We 
are going to have another follow-on hearing as well. We are 
going to examine the Nation's maritime and global supply chain 
security measures.
    Last year, this subcommittee focused on security at the 
Southern and the Northern Border, both at and between the ports 
of entry. But I think it is important as well to remember that 
we really have three borders.
    The Nation's maritime border is certainly just as important 
as the other two. It is a conduit for much of the country's 
trade. Commerce, of course, is the life blood of the Nation.
    After September 11, we in the Congress rightly recognized 
the importance of securing our Nation's ports and the cargo 
that transits from overseas to our stores and our shops here on 
a daily basis.
    I have actually had the opportunity recently really to 
visit some of our Nation's largest ports and see first-hand the 
hard work that the men and women of Customs and Border 
Protection and the United States Coast Guard do to help secure 
our Nation.
    However, it is certainly clear that more work needs to be 
done. Whether it comes into our ports or travels by truck, 
coming through Laredo or El Paso or what have you, or coming 
across from a train from Canadian border, we have to always 
make sure that we understand the risk posed by cargo shipment 
in order to secure the entire global supply chain.
    The logistics involved in moving goods across the global 
supply chain are incredibly complex. Security solutions we 
propose should be cognizant of that reality.
    Today's hearing will examine how we balance maritime 
security and the safeguarding of our supply chains with the 
need to facilitate trade and not place an undue burden on a 
flow of goods that is so vital to our way of life.
    Delays to shipping can cost billions of dollars to our 
economy. Balancing security and facilitating commerce is not an 
easy thing. But risk-based systems and trusted trade programs 
can help separate companies who play by the rules and make 
extra efforts, allowing the Customs and Border Protection to 
focus on less-secure shipments.
    We need to make sure that we push our borders out by 
conducting as much of CBP's cargo inspection and screening work 
before potentially dangerous cargo arrives on our shores.
    We can and we must do a better job of leveraging the work 
of our trusted allies to help screen and, when necessary, 
either scan or inspect high-risk cargo. It is no secret that 
our Nation faces a difficult financial situation. We are always 
going to have limited taxpayer dollars.
    That requires that the Government make smart decisions to 
use those resources in the most effective and efficient 
possible manner. We should be under no illusion that we can 
eliminate every single risk, certainly, that terrorists pose to 
the Nation, and that all we need to do is just to spend more to 
make that risk completely disappear.
    A clear-eyed assessment of risk should inform how we 
allocate scarce Homeland Security dollars as well.
    I think this is especially important to remember when 
considering the 9/11 Act, which mandated 100 percent 
screening--or excuse me, scanning of cargo prior to it arriving 
in America.
    Certainly that is a very, very worthwhile goal. That should 
be our goal.
    However, we have to look at how we implement this law, 
whether it is possible, the potential costs, and the benefits 
as well.
    We currently scan 4 to 5 percent of all containerized cargo 
entering the country, based upon the National Targeting 
Center's data screening system and the current threat 
environment.
    It is certainly far from clear that the investment required 
to scan the rest of the 95 percent of the cargo is possible, is 
wise. Again, we are going to be talking about based on risk; is 
it grounded in a proper understanding of the threat posed by 
containerized cargo?
    The Secretary, herself, of the Department of Homeland 
Security has mentioned on numerous occasions, including in 
front of this committee, on a number of times that she wants to 
work with the Congress to modify this requirement. So I would 
say certainly I stand, and I know this committee stands ready 
to work with her.
    We are waiting for her legislative proposal that will help 
move the country into a more risk-based system, as the 
Secretary has been saying now for over 2 years.
    As part of our discussion today, I am eager to hear the 
witnesses' thoughts on the Customs Trade Partnership Against 
Terrorism, the C-TPAT Program. The private sector has a role to 
play in helping to secure their supply chains.
    I think it is important to spend Customs and Border 
Protection officers' time on shippers of concern, rather than 
on trusted embedded companies, who are willing to make security 
enhancements. C-TPAT, you know, I think is a wonderful example, 
that program, of how Government and the private sector can 
really partner together to help increase security and ensure 
the smooth flow of goods.
    We want to explore ways to improve and expand this program 
to additional companies that are willing to improve the 
security of the supply chain.
    Then finally, I would like to note that the SAFE Port Act 
of 2006 calls for a global supply chain strategy to be 
released. This requirement came due in October 2009, but 
actually was not released until just a few days ago--excuse me, 
a few weeks ago.
    I think it is interesting to note that many times this 
subcommittee has been having hearings on particular issues, and 
then the agency, the Department responds, which I think is a 
very good thing. In fact, we held a hearing in July on maritime 
cooperation; and then the Department released their Maritime 
Coordination Plan, right at that time.
    Then we held a hearing on visa security in September; and 
the Department released an announcement on visa security on the 
day of our subcommittee hearing. So I don't know if it is 
serendipity or what, but I think it is great.
    The Congress is doing its job on oversight. The agencies 
are responding. I think that tells us that this subcommittee is 
focused on the right issues, matters of security for our Nation 
as well.
    However, I will mention that even though we just received 
this a couple of weeks ago, the document that was produced by 
the White House, it is only 6 pages long. The first page was an 
executive summary.
    So I am certainly looking forward to hearing the 
Department's plans on the implementation details, and their 
complete vision on a strategy that will help us better secure 
the supply chain.
    With that, I would also like to recognize now the Ranking 
Member of the subcommittee, gentleman from Texas, Mr. Cuellar, 
for his opening remarks.
    [The statement of Chairwoman Miller follows:]
                Statement of Chairman Candice S. Miller
                            February 7, 2012
    This hearing is the first of a two-part series that will examine 
the Nation's maritime and global supply chain security measures.
    Last year this subcommittee focused on security at the Southern and 
Northern Border, both at and between the ports of entry, but I think it 
is important to remember that we have three borders. The Nation's 
maritime border is just as important as the other two, and is the 
conduit for much of the country's trade. Commerce is the life-blood of 
the Nation, and after September 11 we in Congress rightly recognized 
the importance of securing our Nation's ports and the cargo that 
transits from overseas to our stores on a daily basis.
    I recently had the opportunity to visit some of our Nation's 
largest ports and saw first-hand the hard work that the men and women 
of Customs and Border Protection and the U.S. Coast Guard do to help 
secure the Nation--however it is clear that more work needs to be done.
    Whether it comes into the ports of Los Angeles and Long Beach, 
travels by truck through Laredo or on a train across the Canadian 
Border, we must correctly gauge the risk posed by cargo shipments in 
order to secure the entire global supply chain. The logistics involved 
in moving goods across the global supply chain is incredibly complex--
security solutions we propose should be cognizant of that reality.
    Today's hearing will examine how we balance maritime security and 
the safeguarding of our supply chains with the need to facilitate trade 
and not place an undue burden on the flow of goods that is vital to our 
way of life. Delays to shipping can cost billions of dollars to our 
economy. Balancing security and facilitating commerce is not an easy 
task, but risk-based systems and trusted trade programs can help 
separate companies who play by the rules and make extra efforts--
allowing Customs and Border Protection to focus on less secure 
shipments.
    A disruption or attack at one of our Nation's largest ports could 
be catastrophic, and we need to make sure we ``push the borders out'' 
by conducting as much of CBP's cargo inspection and screening work 
before potentially dangerous cargo arrives on U.S. shores. We can and 
must do a better job of leveraging the work of our trusted allies to 
help screen, and when necessary, scan or inspect high-risk cargo.
    It is no secret that the Nation faces a difficult financial 
situation--we will always have limited taxpayer dollars and that 
requires that the Government make smart decisions to use those 
resources in the most effective and efficient manner possible. We 
should be under no illusion that we can eliminate every single last 
ounce of risk that terrorists pose to the Nation and that all is needed 
is to spend more to make that risk completely disappear. A clear-eyed 
and sober assessment of risk should inform how we allocate scarce 
homeland security dollars--we just don't have the resources to do it 
any other way.
    I think this is especially important to remember when considering 
the 9/11 Act, which mandated 100% scanning of cargo prior to it 
arriving in America. Let me be clear--I think this is a worthwhile 
goal; however, we must look at the impediments to the implementation of 
this law, such as potential costs and benefits. We currently scan 4-5 
percent of all containerized cargo entering the country based upon the 
National Targeting Center's data screening system and current the 
threat environment. It is far from clear that the investment required 
to scan the rest of the 95% of cargo is wise, is based on risk, or is 
grounded in a proper understanding of the threat posed by containerized 
cargo.
    The Secretary herself has mentioned on numerous occasions, 
including in front of this committee that she wants to work with the 
Congress to modify this onerous requirement. Today, I stand ready to 
work with her, and I await her legislative proposal that will help move 
the country into a more risk-based system, as the Secretary has been 
saying for almost 2 years.
    As part of our discussion today, I am eager to hear the witnesses' 
thoughts on the Customs Trade Partnership Against Terrorism (the C-TPAT 
program). The private sector has a role to play in helping to secure 
their supply chains, and I think it is important to spend Customs and 
Border Protection officer's time on shippers of concern, rather than on 
trusted and vetted companies who are willing to make security 
enhancements. C-TPAT is an example of how Government and the private 
sector can partner together to help increase security and ensure the 
smooth flow of goods. I want to explore ways to improve and expand this 
program to additional companies that are willing to improve the 
security of the supply chain.
    Finally, I would like to note that the SAFE Port Act of 2006 called 
for a global supply chain strategy to be released. This requirement 
came due in October 2009 but was not released until just a few weeks 
ago. I am disappointed that this document produced by the White House 
provided little more than high-level concepts and did not articulate a 
tangible path forward. More than 27 months late and a grand total of 6 
pages; it is nothing short of an embarrassment. Is this really the best 
we could do? I look forward to hearing DHS' plans on the implementation 
details and their complete vision for this strategy can lead to a more 
secure supply chain.

    Mr. Cuellar. Thank you so much, Madam Chairwoman, for 
holding this meeting.
    Also I would like to recognize our Ranking Member of the 
full committee. Again, thank you for holding this meeting.
    Madam Chairwoman, before I move forward with a statement, I 
would ask for unanimous consent to allow the gentle lady from 
California, Ms. Richardson and Ms. Hahn, both from California, 
to sit and question the witnesses in today's hearing.
    Mrs. Miller. Without objection.
    Mr. Cuellar. Thank you so much.
    As you know, this subcommittee has previously examined 
cargo security and facilitation issues at our land borders. 
Some of our Nation's busiest land ports of entry are located in 
my Congressional district, making supply chain security and 
facilitation of legitimate commerce a key issue for me and my 
constituents.
    I know this issue is of great importance to the gentle lady 
from Michigan as well, given her district along the Northern 
Border. I appreciate all the work that she has done there to 
make sure we facilitate finding the balance between security 
and, of course, commerce moving as quickly as possible.
    Today, we are examining another important part, which is 
the maritime cargo security, that have certain parallels.
    Indeed, the fundamental issue is the same: How can we 
expedite legitimate cargo to its destination, while keeping 
possible terrorist instruments or contraband from entering the 
United States? Given the volume of cargo crossing and entering 
this country every day, this is no easy task for DHS and its 
settled partners.
    We are hearing testimony today regarding DHS programs and 
initiatives to secure maritime cargo, through programs such as 
the Container Security Initiative, Secure Freight Initiative, 
and the C-TPAT.
    I have also had the opportunity to visit a TSI port with 
Mr. Thompson. I have also been to the National Targeting 
Center, where much of the Customs and Border Protection cargo 
security work is done.
    While I appreciate the hard work of the men and women of 
CBP and their DHS colleagues on this challenging issue, more 
remains to be done. Many of the cargo security programs have 
grown stagnant in recent years, in part due to lack of adequate 
funding.
    Many of those programs are carried out by CBP officers who 
are in short supply. We have greatly expanded the ranks of the 
Border Patrol, the men and women in green, since September 11, 
2001. But we have not kept pace with the CBP officers, the men 
and women in blue.
    We need to do better to make sure that we get the men and 
women in blue, because those are the ones that man our 
airports, our seaports, and our land ports. Without adequate 
personnel, our sea, land, and airport security and facilitation 
will both suffer.
    Finally, I would like to bring also the issue that Madam 
Chairwoman also brought up, which is my dismay at the recently 
released, long-overdue National Security and Supply Chain 
Security. This was due in 2009. It just got released this last 
month, in January.
    Again, not that weight counts or number of pages counts, 
but 6 pages I think is not sufficient for such a very important 
issue that we have here. I am hoping that we will get a little 
bit more substance from the administration on the path forward 
for supply chain security and facilitation.
    I know we can do better than this. It is my hope that the 
witnesses today will be able to speak to DHS' vision for its 
role in this very important mission.
    I thank the witnesses for joining us here today. I look 
forward to your testimony.
    With that, Madam Chairwoman, I yield back the balance of my 
time.
    Mrs. Miller. Thank the gentleman.
    The Chairwoman now recognizes the Ranking Member of the 
full committee, the gentleman from Mississippi, Mr. Thompson.
    Mr. Thompson. Thank you very much, Madam Chairwoman. I 
appreciate you calling this hearing. I appreciate our witnesses 
for their participation also.
    Today's hearing comes at a critical juncture in the 
Department of Homeland Security's efforts to secure maritime 
cargo entering our Nation's ports. Later this year, July 12, 
2012, marks the deadline for achieving 100 percent scanning of 
maritime cargo before it arrives in the United States, pursuant 
to the implementation recommendation of the 9/11 Commission Act 
2007.
    In other words, the law requires all U.S.-bound cargo be 
scanned either through non-intrusive scanning machines, or 
receive a physical examination. Today, it is widely 
acknowledged that DHS will not meet this deadline.
    I am a pragmatic person. I was a proponent of 100 percent 
scanning mandate, but understood that fulfilling the 
requirements would be no easy task. However, those of us who 
supported the provision hoped to spur significant advances in 
cargo security by this point, even if the initial 2012 deadline 
was not met.
    Instead, in the nearly 5 years since the law was enacted, 
DHS has failed to make an honest effort to implement the 
mandate. We have heard a litany of reasons that 100 percent 
scanning cannot or should not be done.
    In testimony before this committee, Secretary Napolitano 
expressed opposition to the mandate, indicating that the 100 
percent requirement is not achievable by 2012, and instead 
advocating for a risk-based approach to maritime cargo 
security.
    Of course, the surest way to fail is not to try at all. 
Equally troubling is the fact that in recent years, some of 
DHS' existing cargo security programs have become stagnant or 
have been scaled back.
    For example, the Container Security Initiative, CSI, is 
operational in the same 58 ports that were active before the 
enactment of the 9/11 Act. Over the past 5 years, CSI has not 
been expanded, despite the fact that at least 700 ports ships 
goods to the United States. The number of overseas personnel 
deployed to the 58 ports has plummeted.
    Specifically, in 2009, there were 167 CSI officers at 
overseas ports. Today, there are only 79. Similarly, while a 
few years go, the Secure Freighter Initiative included six 
ports, today, the program has reduced to a single low-volume 
port.
    Last month, the administration released a long-awaited 
``National Strategy for Global Supply Chain Security.'' You 
have heard my Ranking Member talk about the size of this 6-page 
document. It is hard to see how this document could offer a 
comprehensive blueprint for enhancing the security of the 
supply chain, especially given the enormity of the task and the 
number of stakeholders involved.
    Nevertheless, I expect to hear testimony today from DHS 
witnesses about how successful the Department has been at 
creating programs to ensure that shippers can be trusted, 
manifest, or analyzed, and ports are protected. These programs 
play an important role in maritime security.
    However, they do not take the place of having an active 
partnership, where CBP personnel work with their foreign 
counterparts in overseas ports to examine high-risk cargo 
containers before they arrive in U.S. ports.
    After all, what good is identifying a high-risk container 
if it doesn't get examined until it has arrived in the Ports of 
New York, Houston, Los Angeles, New Orleans or any of the other 
hundreds of ports across America?
    By then, it very well may be too late.
    I hope to hear from our witnesses today not only about the 
successes, but also about what remains to be done to secure 
maritime cargo, and how we can get there. Meaningful homeland 
security will only be achieved when we know who and what is 
coming into this country, not only by air and land but also by 
sea.
    I thank the witnesses for joining us today, Madam 
Chairwoman. I look forward to their testimony.
    Mrs. Miller. Thank the gentleman.
    I would remind all the other committee Members as well that 
opening statements that you may have can be submitted for the 
record.
    [The statement of Hon. Richardson follows:]
                   Statement of Hon. Laura Richardson
                            February 7, 2012
    I would like to thank Chairwoman Miller and Ranking Member Cuellar 
for allowing me to participate in today's subcommittee hearing. I look 
forward to hearing from our distinguished panel of witness on how we 
can increase commerce through our ports, while protecting our ports 
against a terrorist attack. I am particularly interested in hearing how 
the Department of Homeland Security will address the law that requires 
100 percent of containers be scanned prior to arrival in the United 
States by July 12, 2012.
    After the terrorist attacks on September 11, 2001, the 9/11 
Commission was established to help protect our country against future 
attacks. One of the Commission's recommendations was that all cargo 
containers be scanned prior to being loaded on a vessel bound for the 
United States. The Implementing Recommendations of the 9/11 Commission 
was signed into law on August 3, 2007. This law required that the 
Secretary of Homeland Security meet the mandate of 100 percent 
container scanning by July 12, 2012, unless the Secretary extends the 
deadline by certifying that it is currently not feasible.
    Unfortunately, DHS has made little effort in meeting this mandate. 
I have consistently raised this extremely important National security 
issue with the Department of Homeland Security.
   At a full Homeland Security Committee hearing on February 
        25, 2010, I questioned Secretary Napolitano on the Department's 
        progress towards the 100 percent container screening mandate.
   On June 16, 2010, as Chairwoman of the Subcommittee on 
        Emergency Communications, Preparedness, and Response, I and the 
        other Homeland Security Committee chairs sent a letter to 
        Secretary Napolitano regarding the Department's policy and 
        efforts to meet the 2012 deadline.
   At a full Homeland Security Committee hearing on March 3, 
        2011, I again questioned Secretary Napolitano on the 100 
        percent container screening law. The Secretary responded that 
        the 100 percent mandate was constructed at a time before there 
        was a mature understanding of what the possibilities were in 
        the maritime cargo security and that the Department was working 
        on an entire ``global cargo security initiative'' that involves 
        the International Maritime Organization, the International 
        Aviation Organization, and the World Customs Organization.
    The Department of Homeland Security has given multiple reasons why 
the 100 percent container screening requirement will not be met. We 
have heard that the technology is not available, the costs of 
implementing the requirement is too high, it would cause delays in the 
global chain, there is not buy-in from foreign partners, and that the 
DHS is moving towards only screening 100 percent of high-risk 
containers. However, I am very concerned that DHS has not conducted any 
studies on the feasibility of meeting the 100 percent container 
screening mandate. DHS has also scaled back its maritime cargo security 
programs and reduced the number of personnel at overseas ports. I am 
also concerned that DHS has not made any efforts towards improving 
container screening, and will continue to extend the 100 percent 
container screening deadline without demonstrating a good faith effort 
in meeting the law's requirements.
    Once cargo reaches our ports, it could be too late to prevent a 
catastrophic terrorist attack. The Port of Long Beach and the Port of 
Los Angeles are not only important to my district, but are also 
important to the U.S. and global economy. A nuclear or radiological 
bomb that detonated in the Port of Long Beach or the Port of Los 
Angeles would result in thousands of deaths and cripple our economy. We 
need to ensure that 100 percent of cargo that enters our ports is 
screened before they arrive.
    In May 2011, I visited the Port City of Kaohsiung in Taiwan. I 
personally observed the screening process at this port. Kaohsiung 
screens 100 percent of containers prior to the being shipped to the 
United States. Suspicious cargo receives additional screening until it 
is cleared or removed for further investigation. We need to work with 
other countries to ensure this is happening before cargo is shipped to 
our U.S. ports.
    A successful terrorist attack on one of our ports, such as the Port 
of Los Angeles or the Port of Long Beach would have a devastating 
economic impact and severely impact the global supply chain. The cost 
of one terrorist attack in our ports would far surpass the costs of 
instituting the 100 percent container scanning that is required by law 
and was recommended by the 9/11 Commission.
    We have been extremely fortunate that an attack has not yet 
occurred in our ports. I was disappointed that the administration's 
National Strategy for Global Supply Chain Security did not address 
container scanning. As a Member of the Homeland Security Committee, I 
will continue to fight for the safety of our Nation's ports. Congress 
and the 9/11 Commission has made it clear that 100 percent container 
scanning is vital to our National security interests.
    Again, I thank Chairwoman Candice Miller and Ranking Member Cuellar 
for allowing me to attend today's hearing. Port security is a top 
homeland security priority for me. I look forward from hearing from our 
DHS witnesses on what is being done to protect our ports against a 
terrorist attack. I also want to hear what is being done to ensure the 
safety of the containers that pass through our Nation's ports.
    I yield back the balance of my time.

    We are pleased to have two distinguished panels.
    But our first panel is Congressman Jerry Nadler, who joins 
us today. We appreciate you, sir, coming. He represents the 8th 
District of New York, which includes much of the west side of 
Manhattan, the financial district, and a number of diverse 
neighborhoods in southwestern Brooklyn.
    He began his political career in 1976 in the New York State 
Assembly, where he served for 16 years. Then in 1992, he was 
elected to the U.S. House of Representatives in a special 
election, has been here ever since.
    With that, the floor is yours, sir. Again, we appreciate 
you taking time to give us your testimony and insight on this 
issue today.

STATEMENT OF HON. JERROLD NADLER, A REPRESENTATIVE IN CONGRESS 
                   FROM THE STATE OF NEW YORK

    Mr. Nadler. Thank you very much, Chairwoman Miller, Ranking 
Member Cuellar, Ranking Member Thompson, Members of the 
subcommittee.
    Thank you for inviting me to testify today on the issue of 
maritime security and trade facilitation. I speak to you today 
not as a maritime cargo security expert, but as a Member of 
Congress who has long advocated that we as a Nation must do a 
better job of ensuring the security of the cargo arriving on 
our shores every day.
    As representative from New York's 8th District. I have the 
honor of representing portions of Manhattan and Brooklyn. The 
World Trade Center site is located in my district, as is much 
of the Port of New York and New Jersey, the largest port on the 
East Coast.
    As such, I believe my district stands as an example of why 
we need to secure our Nation, including our ports and 
waterways, while also ensuring the flow of legitimate commerce.
    As you might recall, I was the principal author of many of 
the port provisions of the implementing recommendations of the 
9/11 Commission Act of 2007. I worked closely with Chairman 
Thompson, then Chairman Oberstar, and Representative Ed Markey 
to push for inclusion of the 100 percent scanning provision 
into this measure.
    We were successful. Section 1701 of that act states that by 
July 12, 2012, all cargo containers must be scanned by non-
intrusive imaging equipment and radiation detection technology 
before being loaded on a vessel bound for the United States, 
unless the Secretary of Homeland Security extends the deadline 
by certifying it is not currently feasible.
    In short, this provision requires scanning of all maritime 
cargo containers before they arrive in this country. We 
understood that we must not wait to impose security measures 
until containers reach the United States.
    Scanning containers in the U.S. port is not sufficient. If 
there is a nuclear bomb inside a container and it is detected 
by radiation portal monitors in Newark or Miami or Los Angeles, 
it may very well be too late.
    Reading the cargo manifests is not enough. Trusting certain 
shippers is not enough. We must verify the contents of the 
containers at the point of origin, before they are loaded on a 
ship bound for America.
    So the law is designed to do just that.
    When I introduced a free-standing bill on this topic, and 
later pushed for inclusion of these provisions in the 9/11 Act, 
I understood that achieving 100 percent maritime cargo scanning 
mandate would be neither easy nor cheap.
    But I was also aware of the human and economic toll of a 
potential terrorist attack on our soil. The New York 
Metropolitan Area is home to approximately 19 million people. 
The effects of a weapon of mass destruction or a dirty bomb at 
the Port of New York or New Jersey would be catastrophic.
    Similarly, several of the Nation's other major ports are 
located near populations--in fact, all of them are located near 
population centers, and might also make attractive targets for 
terrorists. This threat is not exclusive to major metropolitan 
areas, however.
    There are currently approximately 360 commercial sea and 
river ports throughout the United States, making this issue of 
concern to communities across the country.
    Aside from the potential human costs, the economic costs of 
a maritime terrorist attack would be devastating. Maritime 
ports are a vital component of the supply chain, moving the 
overwhelming majority of cargo into and out of the United 
States, 99.4 percent by weight, and 64 percent by value, at a 
value of $3.8 billion each day.
    In 2010, the dollar value of cargo that moved the Port of 
New York and New Jersey alone is more than $175 billion. 
Anything that threatens this flow of commerce would not only 
affect the ports themselves, but would also disrupt the supply 
chain, with widespread effects across the country and around 
the world.
    I might add here, parenthetically, that when I first 
introduced the legislation, someone said to me that demanding 
100 percent scanning might slow the flow of commerce. I replied 
that one nuclear bomb going off in an American port would 
eliminate the flow of commerce for a good long time.
    Given the very serious nature of the threat we face, I am 
dismayed that the Department of Homeland Security has not made 
a realistic effort to implement the 100 percent scanning 
mandate. Nor has it offered an alternative proposal to achieve 
the same ends.
    I am aware that that Department opposed the original 
legislation, has never thought that this was a good idea. But 
it must make a realistic attempt to implement the will of 
Congress.
    I urge DHS to aggressively more forward in implementing the 
100 percent maritime cargo scanning mandate. It is one thing to 
say we cannot achieve this goal this year. It is yet another to 
declare that the goal itself is not worth pursuing, which 
unfortunately is something I have heard said.
    That would be an enormous mistake. We must continue to take 
steps toward 100 percent scanning as the ultimate goal. We must 
not relent in our pursuit of security.
    We must not allow gaping holes in our system to go 
unaddressed. Remember what is at stake here. It seems absurd 
that we would even entertain the notion that we would perhaps 
allow a nuclear weapon to be smuggled into our country on board 
a container that has never been scanned, when we know that if 
detonated in one of our cities, it would kill millions of 
people in a deadly flash.
    Now it is obvious that the initial statutory deadline this 
year will not be achieved. However, we can and must make 
incremental progress that will ultimately get us to the 100 
percent standard, while making cargo, our ports and waterways, 
the American people, more secure in the interim.
    We owe the American people no less.
    I thank the subcommittee for inviting me to participate in 
today's hearing. I look forward to continuing to work with my 
colleagues, the Department of Homeland Security, and other 
Federal, State, and local agencies, and private stakeholders, 
on this very important issue.
    Mrs. Miller. Thank you very much, Congressman. We certainly 
appreciate, again, you taking the time.
    We are going to dismiss you and ask for the next panel to 
come. But I had a chance to talk to you before we started. I 
recognize certainly your passion on this issue.
    That really is going to be the--that was the impetus and 
will be the crux of all of our questions today, as we can 
either achieve the mandate of Congress, or if not, as you say, 
a realistic way to implement, and where we are going with all 
of this as well.
    So it is going to be an interesting hearing.
    Mr. Nadler. Thank you very much.
    Mrs. Miller. Thank you.
    Mr. Cuellar. Also, Mr. Nadler, I would say, if Madam 
Chair----
    Mrs. Miller. Certainly.
    Mr. Cuellar. Just I have no questions, but also I know you 
worked very hard with Mr. Thompson on this. So I appreciate all 
the hard work that you put in on this. I appreciate your good 
work. Thank you.
    Mr. Nadler. Thank you, too.
    Mrs. Miller. Thank you.
    We all ask the second panel to come forward.
    You are all suited up, ready to go here. I think what I 
will do is just for our panel--and we are looking forward to 
all your testimony. I will just introduce you all sort of at 
once. Then we all start with Mr. Heyman.
    But let me read your bios a bit here. We are first 
delighted to have David Heyman, excuse me, assistant secretary 
for policy at the United States Department of Homeland 
Security. Previously, he served as the senior fellow and 
director at the CSIS Homeland Security Program, where he led 
the research and program activities in homeland security, 
focusing on developing the strategies and policies to help 
build and transform the United States' Federal, State, local, 
and private sector homeland security institutions.
    Kevin McAleenan--how do you pronounce it? McAleenan, okay, 
got it--is the acting assistant commissioner at the Office of 
Field Operations, Customs and Border Protection. Mr. McAleenan 
is responsible for overseeing CBP's anti-terrorism, 
immigration, anti-smuggling, trade compliance, and agricultural 
protection operations at 20 major field offices, 331 ports of 
entry, and over 70 locations in over 40 countries 
internationally, with a staff of more than 28,000 employees and 
an operating budget of over $3.5 billion.
    Rear Admiral Paul Zukunft is the assistant commandant for 
marine safety, security, and stewardship, and responsible for 
developing National marine safety, security, and environmental 
protection doctrine, policy, and regulations, as well as 
ensuring policy alignment throughout the Federal Government and 
with international maritime partners.
    He recently served as the Federal on-scene coordinator for 
the Deepwater Horizon incident in the Gulf. We appreciate your 
service for that horrific incident, and our Nation as well. 
While there, he directed Federal, State, and local agencies in 
their response efforts as well.
    Mr. Steve Caldwell is the director of maritime security and 
Coast Guard at the Government Accountability Office, the GAO. 
His recent reports and testimony covered issues relating to 
protecting critical infrastructure, the implementation of the 
Maritime Transportation Security Act and the SAFE Port Act, 
port security exercises, maritime threat information sharing, 
maritime domain awareness, container security programs, and 
risk management for critical maritime infrastructure as well.
    The Chairwoman would now recognize Mr. Heyman for his 
testimony.

   STATEMENT OF DAVID HEYMAN, ASSISTANT SECRETARY, OFFICE OF 
          POLICY, U.S. DEPARTMENT OF HOMELAND SECURITY

    Mr. Heyman. Thank you, Chairwoman Miller, Ranking Member 
Cuellar, and other distinguished Members of the subcommittee. 
Thank you for the opportunity to appear here today.
    I am pleased to highlight the Department's work in the area 
of supply chain security and maritime security. This is an 
issue of great importance to us.
    International trade is this engine that is now the power of 
economies all around the world. Billions of dollars worth of 
commodities and merchandises move between trading partners 
every month by land, sea, and air.
    The modern international trading system, or the global 
supply chain that undergirds the exchange of goods between 
countries, it is a system that has evolved over decades. We 
have experienced a dramatic transformation over the past 
quarter of a century, with the integration and interconnection 
of buyers and sellers, suppliers and manufacturers all over the 
world.
    Information and communication technologies have enabled 
this transformation, creating jobs, wealth, and opportunity. 
Today, that supply chain provides food, medicine, energy, and a 
myriad of other products that sustain our daily lives.
    This is true around the world. It is a model of economic 
efficiency, enabling just-in-time delivery. But it also means 
that our economies are more and more interdependent. The 
expansive nature of the global supply chain system also renders 
it vulnerable to disruption. We have seen this in terrorist 
acts, the volcano on Iceland, and in the recent tsunami in 
Japan.
    Disruptions can have a significant impact on our National 
economies. As such, governments and businesses around the world 
have a vital interest in transforming the old model of 
efficiency, and adopting a new model based on ensuring the 
integrity and reliability of supply chain.
    That is precisely what we seek to achieve with the 
administration's new National Strategy for Global Supply Chain 
Security; 2 weeks ago, Secretary Napolitano announced the 
strategy.
    It is a strategy to ensure the security and resilience of 
the global supply chain. It recognizes the critical importance 
of the system to our economy and security, and lays out an 
approach to help us foster a transformation from just-in-time 
to just-in-case.
    This country's safety and security will always remain a 
paramount concern of the Department. The supply chain is an 
integral component. We have taken a number of significant 
efforts to strengthen the global supply chain, which we can 
talk about today.
    Specifically on the administration's strategy, it 
incorporates and builds upon these prior efforts. There are two 
principle goals: Promoting the timely and efficient flow of 
legitimate commerce, while protecting and securing the supply 
chain from exploitation; and No. 2, fostering a global supply 
chain system that is prepared for and can withstand evolving 
threats and hazards, and also recover rapidly.
    The strategy aligns U.S. and international security and 
resilience efforts to foster agile systems, able to resolve 
threats early, improve verification and detection, and reduce 
vulnerabilities. We do this by galvanating action through a 
whole-of-Government, all-of-Nation approach, and through 
managing risk by utilizing layered defenses.
    We would like to especially thank the Congress for its 
foresight, and this committee in particular, in the need for 
this work, which formed the basis of a strategy under the SAFE 
Port Act in 2006.
    Again, safety and security of the American people is of 
paramount importance to the Department. The strategy is a 
significant step forward in this process and evolution.
    Over the next 6 months, significant outreach will be 
conducted to foreign and domestic stakeholders as part of our 
implementation efforts. This builds on a number of on-going 
efforts.
    In particular, it is worth noting that as a result of 
Secretary Napolitano's Supply Chain Security Initiative last 
year, we have already made significant progress implementing 
the strategy, through new efforts and in some cases new 
partnerships, such as with the World Customs Organization, the 
International Maritime Organization, International Civil and 
Aviation Organization, and the Universal Postal Union.
    We are, in fact, helping lead efforts to improve the 
security of operations across the global supply chain, to raise 
international standards and foster systems for trade recovery 
globally.
    The written testimony outlines these efforts in greater 
detail. Let me close with a final thought.
    The global supply chain system is an interconnected, 
multimodal, multi-actor system, highly complex. It encompasses 
foreign and domestic ports, transportation systems, 
conveyances, and infrastructure.
    Its strength is its ability to deliver goods that sustain 
our daily lives on a near-real-time basis. That system will 
continue to grow in scale and importance. So we must recognize 
today that, without a doubt, disruptions to this system will 
happen. We must think anew on how to best build in not just 
efficiency, but security and resilience as well.
    Our new National Strategy for Global Chain Security 
presents a blueprint for change, while building on efforts and 
infrastructure that have been in place for some time. We 
encourage other countries and organizations to adopt similar 
efforts.
    We thank you again for the opportunity to testify, and look 
forward to answering the questions you may have.
    [The joint prepared statement of Mr. Heyman, Mr. McAleenan, 
and Admiral Zukunft follows:]
Joint Prepared Statement of David Heyman, Paul F. Zukunft, and Kevin K. 
                               Mcaleenan
                            February 7, 2012
                              introduction
    Chairwoman Miller, Ranking Member Cuellar and other distinguished 
Members of the subcommittee, thank you for the opportunity to appear 
before the subcommittee to highlight the Department of Homeland 
Security's work in the area of supply chain security. This is an issue 
of singular importance, and we commend the subcommittee for holding 
this hearing.
    International trade is the engine that powers economies all around 
the world. Billions of dollars worth of commodities and merchandise 
move between trading partners every month, by land, by sea, and by air. 
The modern international trading system--or global supply chain--that 
undergirds the exchange of goods between countries is a system that has 
evolved over several decades, built incrementally in an effort to 
reduce costs and expand markets.
    We have experienced a dramatic transformation over the past quarter 
of a century with the extraordinary integration and interconnection of 
buyers and suppliers and sellers and manufacturers all over the world. 
The internet and linkages provided by information and communication 
technologies has helped to enable this transformation. The end result 
has been the creation of jobs and wealth and opportunity in areas 
across the globe.
    Today, the global supply chain system provides food, medicine, 
energy, and myriad of other products that support and sustain our daily 
lives. This is true around the world. It is a model of economic 
efficiency built to sustain ``just-in-time'' delivery, but it also 
means that our economies are more and more interdependent, one upon 
each other.
    However, the expansive nature of the global supply chain system 
renders it vulnerable to disruption. Disruptions to the global supply 
chain can be triggered by a range of causes--man-made or naturally 
occurring--a number of which we have witnessed in recent years. Whether 
through terrorist acts like the cargo bomb plot in October 2010 or 
market-driven forces like the slowdown and lockout in 2002 of 29 ports 
on the West Coast or, most recently, by the volcanic ash clouds of the 
2010 eruption of the volcano Eyjafjallajokull in Iceland or the Tsunami 
that hit Tohoku, Japan in 2011, we see the impact that disruptions can 
have on our national economies.
    Given this, governments and businesses around the world have an 
interest in transforming the old model of efficiency and adopting a new 
model based also on ensuring the integrity and reliability of the 
system as well. In other words, we must move from a model principally 
focused on ``just-in-time'' to one also predicated on ``just-in-case''. 
It is this notion of a need for greater integrity and reliability that 
shapes the context for the administration's new--first-ever--strategy 
to ensure the security and resilience of the global supply chain. It 
has also been a driving force in our work internationally to foster 
systems for trade recovery on a global scale.
  the administration's new national strategy for global supply chain 
                                security
    The United States Government, in collaboration with State, local, 
Tribal, international, and private sector stakeholders, has undertaken 
a number of efforts to strengthen the global supply chain. These 
efforts include implementation of legislative requirements and a number 
of strategic efforts with a specific security focus. The 
administration's Strategy incorporates and builds upon those prior 
efforts.
    Initially begun in response to a requirement in the Security and 
Accountability for Every Port (SAFE Port) Act of 2006 that DHS develop 
a final Strategy to Enhance International Supply Chain Security by July 
2010, it was quickly recognized that the multimodal, international 
nature of the global supply chain system required a broad, all-of-
government effort that included input from public and private sector, 
international, and domestic stakeholders. This effort was led by the 
National Security Staff and is intended to inform and guide efforts by 
all stakeholders, but especially those of the Federal Government.
    The focus of the Strategy is the worldwide network of 
transportation, postal, and shipping pathways, assets, and 
infrastructure by which goods are moved from the point of manufacture 
until they reach an end consumer, as well as supporting communications 
infrastructure and systems. Our approach to supply chain security has 
two principal goals:
    (1) To promote the timely and efficient flow of legitimate 
        commerce, while protecting and securing the supply chain from 
        exploitation and reducing its vulnerabilities to disruption; 
        and
    (2) To foster a global supply chain system that is prepared for and 
        can withstand evolving threats and hazards and can recover 
        rapidly from disruptions.
    At its core, the Strategy is about a layered, risk-based, and 
balanced approach in which necessary security measures and resiliency 
planning are integrated into supply chains. It is about protecting 
supply chains from being targeted or exploited by those seeking to 
cause harm. And, it is about maximizing the flow of legitimate 
commerce. The Strategy achieves this by establishing and adhering to 
two guiding principles:
    (1) Galvanize action through a whole-of-Government, all-of-Nation 
        approach and by collaborating with State and local governments, 
        the private sector and the international community.
    (2) Manage risk by utilizing layered defenses, resolving threats as 
        early in the process as possible, and adapting our security 
        posture to changing environments and evolving threats.
    Recognizing the good work already accomplished by the United States 
and the international community, the Strategy does not seek to supplant 
or impede those efforts. Rather, it seeks to align U.S. and 
international security and resilience efforts, to foster agile systems 
able to resolve threats early, improve verification and detection, and 
reduce systemic vulnerabilities.
    The Strategy also sets out eight priority actions upon which 
immediate implementation efforts will be focused. Through the Strategy, 
over the next year and beyond, the President has tasked us with:
    (1) Aligning Federal activities across the U.S. Government (USG) to 
        the goals of the Strategy;
    (2) Refining our understanding of the threats and risks associated 
        with the global supply chain through updated assessments;
    (3) Advancing technology research, development, testing, and 
        evaluation efforts aimed at improving our ability to secure 
        cargo in air, land, and sea environments;
    (4) Identifying infrastructure projects to serve as models for 
        developing critical infrastructure resiliency best practices;
    (5) Seeking opportunities to incorporate global supply chain 
        resiliency goals and objectives into Federal infrastructure 
        investment programs and project assessment processes;
    (6) Promoting necessary legislation to support Strategy 
        implementation by Federal departments and agencies;
    (7) Developing, in concert with industry and foreign governments, 
        customized solutions to speed the flow of legitimate commerce 
        in specific supply chains that meet designated criteria and can 
        be considered low-risk; and
    (8) Aligning trusted trader program requirements across Federal 
        agencies. We will consider the potential for standardized 
        application procedures, enhanced information-sharing 
        agreements, and security audits conducted by joint or cross-
        designated Federal teams.
    The Strategy also fulfills DHS's SAFE Port Act requirement to 
submit a Strategy to Enhance International Supply Chain Security, when 
combined with the DHS report Fulfilling the SAFE Port Act Requirements, 
which was transmitted to this committee on January 25, 2012. This SAFE 
Port Act requirements report addresses those areas of the Act which 
Congress directed us to consider, such as impacts to small and medium 
enterprises and supply chain linkages with terrorism financing. As 
outlined in the report, we considered these issues carefully and they 
directly informed the development of the goals and objectives of the 
Strategy.
      implementation outreach to global supply chain stakeholders
    Recognizing the interconnected nature of the global supply chain 
system, the Strategy emphasizes that continued collaboration with 
global stakeholders is critical.
    Over the 6 months following its release, significant outreach will 
be conducted by the United States to foreign and domestic stakeholders. 
We are soliciting their views on how best to implement the Strategy and 
how best to foster a secure, efficient, and resilient global system.
    Outreach to our foreign partners will be accomplished through a 
collaborative process in which the Department of State and DHS engage 
with appropriate government Ministries and organizations. This 
engagement will educate our partners on our strategic goals and 
objectives and solicit their input of how we can best implement secure, 
efficient, and resilient systems that span the globe, from the 
beginnings of supply chains to their end.
    We will confer with our domestic partners through a Cross Sector 
Supply Chain Working Group that DHS has established under the Critical 
Infrastructure Partnership Advisory Council. Through this process, 
Critical Infrastructure Sectors will be consulted through their Sector 
Coordinating Councils (SCC). The general public, or industry segments 
that do not directly participate in the SCCs, will be able to 
participate in these discussions as subject matter experts, ensuring we 
obtain the broadest possible input.
    We are specifically interested in receiving views and 
recommendations from governments, transportation sector partners, and 
other affected stakeholders on, but not limited to, the following 
areas:
   Specific opportunities to implement the goals of the 
        Strategy and enhance the security, efficiency, and resilience 
        of the global supply chain;
   Understanding evolving threats (man-made as well as natural) 
        and vulnerabilities in the global supply chain as a whole and 
        among different modes of transportation;
   Opportunities to develop or advance international best 
        practices, standards, or guidelines for reducing threats/
        vulnerabilities and opportunities to encourage global 
        implementation of them;
   Opportunities for the USG to work in concert with industry 
        and the international community to further strengthen the 
        global supply chain, including ways to increase participation 
        in and improve the cost-effectiveness of private-public 
        partnership programs;
   Assumptions that currently inform supply chain security 
        policies and programs that may be incorrect, dated, or 
        obsolete.
    The results of the outreach will be combined with other, on-going 
work, including threat and risk assessments, to support Federal 
department and agency implementation planning.
               building on past and on-going initiatives
   While the National Strategy for Global Supply Chain Security 
        speaks to our future focus, we would like to address current 
        efforts to secure our ports and waterways and collaborate with 
        our international partners.
Global Initiatives
    As discussed previously, we recognized early in the Strategy 
development process that supply chains are inherently interconnected, 
intermodal--and global. Even as the Strategy was being created, DHS 
increased its emphasis on working with the international community to 
enhance efficiency, security, and resilience and meet the President's 
strategic goals. Our on-going efforts now that the Strategy has been 
released will form a basis for our implementation activities.
    In January, 2011, Secretary Napolitano identified global supply 
chain security as a focal point for our Department.
    She specifically emphasized the need for global collaboration--and 
met with the Secretary Generals of the International Maritime 
Organization (IMO), the International Civil Aviation Organization 
(ICAO), and the World Customs Organization (WCO), as well as the 
leadership of the Universal Postal Union (UPU).
    Her engagement has resulted in seven international objectives, 
which we have been actively pursuing:
    (1) Identifying and Responding to Evolving Threats/Risks;
    (2) Expanding Advance Information Requirements Across All Modes;
    (3) Streamlining ``Trusted Trader'' Programs;
    (4) Stemming the Flow of Illicit Shipments of Dangerous Materials;
    (5) Securing and Facilitating Air Cargo and Global Mail;
    (6) Building a Resilient System; and
    (7) Exploring and Deploying New Technologies.
    There has been significant progress since January 2011, including 
not only the practical efforts to improve the security of operations 
across the global supply chain, but also advancing the 
institutionalization of these efforts on an international level through 
new work streams, international bodies committed to our objectives, and 
new standard-setting processes. Among other results, our work with our 
partners has had the following impacts:
   The WCO has developed a Risk Management Compendium, enabling 
        Customs administrations to operate under common terminology and 
        criteria to target both high- and low-risk cargo.
   The ICAO is currently finalizing its Risk Context Statement, 
        which will be presented to the Aviation Security Panel of 
        Experts in March, 2012, creating a common risk definition for 
        aviation security.
   The ICAO established a Transshipment sub-working group to 
        address air cargo that is transshipped through world airports.
   The IMO has completed a user's guide for International Ship 
        and Port Facility Security (ISPS) Code implementation, 
        enhancing compliance and understanding of port security 
        standards.
   The WCO has revised its advance data guidelines, modeled 
        after DHS's Importer Security Filing rule (better known as 
        ``10+2'') and is working on refining air cargo advance data 
        guidelines in coordination with the Air Cargo Advance Screening 
        pilots currently being conducted by DHS.
   DHS has been actively aligning ``trusted trader'' programs 
        such as the Customs Trade Partnership Against Terrorism (C-
        TPAT) and the ``trusted shipper'' concept, and are working with 
        the ICAO and WCO toward creating common global standards.
   The Immigration and Customs Enforcement (ICE) project Global 
        Shield has transitioned into the WCO Program Global Shield, 
        with significantly expanded--and growing--participation across 
        the globe to detect illegal activity and mitigate the 
        misdirection of improvised explosive device precursor materials 
        through seizures and arrests. Under Program Global Shield, more 
        than 89 participating countries are currently sharing 
        information with each other to ensure that chemicals entering 
        their countries are being used in safe and legal ways. As of 
        December 2011, Program Global Shield has accounted for seizures 
        of chemical precursors totaling over 45 metric tons and 19 
        arrests related to the illicit diversion of these chemicals.
   The International Atomic Energy Agency (IAEA), in 
        collaboration with DNDO, is developing technical standards for 
        detection devices and recommendations on addressing nuclear and 
        other radioactive materials out of regulatory control. DHS is 
        also working with the IAEA to establish an Action Plan to 
        finalize a list of detection technologies that meet 
        international standards by April 2012. Based on their analysis, 
        shortfalls in current standards will be identified and targeted 
        for action.
   Work is on-going with the UPU to strengthen advance 
        information for mail and postal operations and develop a 
        strategy embracing security and advance data sharing measures 
        for consideration at the UPU Congress in October 2012. The UPU 
        has established emergency contacts in all countries to 
        facilitate the adjudication of potential security alerts and is 
        establishing an international standard for the handling and 
        resolution of anomalies detected at international mail transit 
        hubs.
   The Asia-Pacific Economic Cooperation (APEC) adopted 
        regional information guidelines for government-to-government 
        and government-to-private sector communications related to 
        trade recovery in September, 2011. The APEC information 
        guidelines were subsequently adopted by the WCO, creating 
        global guidelines, in December, 2011.
Bilateral Agreements and Partnerships
    Specific to supply chain security, DHS has entered into Joint 
Statements or publicly affirmed our mutual commitment through published 
meeting summaries and statements with a number of nations, and is 
discussing additional statements with key partners. These statements 
reaffirm our commitment and our partners' commitments to cooperate, 
identify key areas of mutual emphasis and principles, and encourage 
collaboration in our efforts with multilateral forums such as the IMO, 
ICAO, and WCO. To date, Joint Statements have been signed with New 
Zealand and the European Commission, and supply chain security has been 
specifically addressed with the Russian Federation, India, and Canada.
    To increase the operational reach of U.S. assets, and to enable 
partner nation assets to patrol and respond to threats in their own 
sovereign waters, the U.S. Government has entered into 41 bilateral 
maritime counter-drug law enforcement agreements. Additionally, the 
Coast Guard has developed non-binding operational procedures with 
Mexico, Ecuador, and Peru to facilitate communications between 
operation centers for the confirmation of registry requests and for 
permission to stop, board, and search vessels. Coast Guard law 
enforcement and border security capabilities are evident at both the 
National and the port level.
    The Strategy, and our international agreements and partnerships, 
also directly support the President's priorities as outlined in the 
``Beyond the Border'' Initiative with Canada and the ``21st Century 
Border Management'' Agreement with Mexico. Indeed, many of the specific 
activities associated with the efforts were informed by and aligned 
with the strategy during their development.
International Port Security
    To address threats farthest from our borders, the Coast Guard 
establishes and fosters strategic relationships with other nations and 
international forums. The ISPS Code was created by the IMO with 
significant Coast Guard assistance. The ISPS Code provides an 
international regime to ensure ship and port facilities take 
appropriate preventive measures to ensure security, similar to our 
domestic regime in the Maritime Transportation Security Act. The 
International Port Security (IPS) Program sends Coast Guard men and 
women to foreign ports that conduct maritime trade with the United 
States to assess the effectiveness of their antiterrorism measures and 
to verify compliance with ISPS Code. To date, the IPS Program has 
assessed more than 900 ports and facilities in more than 150 countries.
    In 2011, the IPS program assessed the effectiveness of 211 port 
facilities in 76 of our maritime trading partners. Two countries were 
found to not have adequate anti-terrorism measures in place in their 
ports. As a result, they were added to the Coast Guard's Port Security 
Advisory (PSA) and conditions of entry (COE) were imposed on vessels 
that have visited one of those ports during their last several port 
calls before arriving in the United States.
    The Coast Guard also supports the European Commission, the 
Organization of American States, the APEC, and the Secretariat of the 
Pacific Community to reduce the number of non-compliant foreign ports, 
thereby reducing and mitigating risk to U.S. ports. Vessels arriving to 
the United States from non-ISPS compliant countries are required to 
take additional security precautions, may be boarded by the Coast Guard 
before being granted permission to enter, and may be refused entry.
    As a result of the enactment of the Coast Guard Authorization Act 
of 2010, the Coast Guard received additional authority to conduct 
capacity-building activities. The Coast Guard has implemented a Port 
Security Engagement Strategy to expand its engagement with countries 
beyond minimal ISPS Code implementation to a more robust effort to 
improve all aspects of port security including legal regimes, maritime 
domain awareness, and port security operations. The Coast Guard has 
also developed a Return on Investment Model that identifies countries 
where capacity-building activities would be of the most benefit.
    Finally, DHS is pursuing a ``Mutual Recognition'' Memorandum of 
Understanding (MOU) with the European Commission (EC). The MOU would 
call for mutual joint inspections of each other's ports, and the Coast 
Guard would recognize a successful EC inspection of its Member State's 
ports the same as a successful country visit by the IPS Program. A 
similar arrangement is being contemplated with Canada.
Maritime Domain Awareness and Offshore Operations
    Maritime Domain Awareness (MDA) is a diverse set of capabilities 
that support all levels (strategic, operational, and tactical) of 
decision-making. MDA is more than an awareness of ships en route to a 
particular port; it also entails knowledge of:
   People: Crew, passengers, owners, and operators;
   Cargo: All elements of the global supply chain;
   Infrastructure: Vital elements of the Nation's maritime 
        infrastructure, including facilities, services, and systems;
   Environment: Weather, environmentally sensitive areas, and 
        living marine resources; and
   Trends: Shipping routes, migration routes, and seasonal 
        changes.
    Effective MDA requires efficient information sharing that demands 
coordination among numerous participants at international, Federal, 
regional, State, local, territorial, and Tribal levels of government, 
as well as with maritime industry and private sector partners.
    The Coast Guard's major cutters and deployable forces are critical 
to the layered security approach. The Coast Guard's mix of cutters, 
aircraft, and boats--all operated by highly proficient personnel--allow 
the Coast Guard to maximize its unique authorities to exercise layered 
and effective security.
Maritime Intelligence and Targeting
    As the lead DHS agency for maritime homeland security, the Coast 
Guard screens ships, crews, and passengers for all vessels required to 
submit a 96-hour Notice of Arrival (NOA) to a U.S. port. CBP's National 
Targeting Center (NTC), supported by Coast Guard staff, vets 
passengers, personnel, and cargo destined for the United States. 
Further vetting of the NOA is performed by the Intelligence 
Coordination Center (ICC), while the two Maritime Intelligence Fusion 
Centers (MIFCs) focus on screening the vessel itself. The MIFCs 
associate relevant intelligence and law enforcement analysis to 
specific vessels, and assess vessel activity. Screening results are 
passed to the appropriate Coast Guard Sector Command Center, local 
intelligence staffs, and CBP field offices to be used to ascertain the 
potential risk posed by a vessel.
At Home In Our Ports
    Coast Guard Captains of the Port (COTP) are designated as the 
Federal Maritime Security Coordinator for their port. In this role they 
lead the Area Maritime Security (AMS) Committees, which often include 
representatives from CBP, ICE, and the TSA, and oversee the development 
and regular review of the AMS Plans. AMS Committees have developed 
strong working relationships with other Federal, State, Tribal, 
territorial, and local law enforcement agencies in an environment that 
fosters maritime stakeholder participation. Each AMSC reflects the 
unique challenges and environment of the local port community.
    On a National scale, the establishment of Interagency Operations 
Centers (IOCs) for port security is well under way. Coast Guard, CBP, 
and other agencies are sharing workspace and coordinating operational 
efforts for improved efficiency and effectiveness of maritime assets in 
ports including Charleston, Puget Sound, San Diego, Boston, and 
Jacksonville.
    The Coast Guard is also responsible for inspecting U.S. port 
facilities and vessels for safety and security and ensuring compliance 
with U.S. laws and regulations. In 2011, 10,209 facility safety and 
security inspections were completed and more than 9,500 Port State 
Control and Security examinations were conducted on foreign-flag 
vessels.
Cargo Security and Supply Chain Integrity
    As the lead DHS agency for cargo security, CBP is at the front line 
of protecting the Nation from threats, including those posed by 
containerized cargo. CBP's security and trade facilitation missions are 
mutually supportive: By utilizing risk-based strategies, and applying a 
multilayered approach, CBP can focus time and resources on the small 
percentage of goods that are high-risk or about which we know the 
least, which in turn allows CBP to expedite trade that is low-risk or 
about which we already know a great deal. This approach improves supply 
chain integrity, promotes economic viability and increases resilience 
in the event of a disruption to the global supply chain.
    CBP's multilayered security approach involves:
   Obtaining information about cargo and those involved in 
        moving it early in the process;
   Using advanced targeting techniques to assess risk and build 
        a knowledge base about the people and companies involved in the 
        supply chain;
   Fostering partnerships with the private sector and 
        collaborating with other Federal agencies and departments, such 
        as the U.S. Coast Guard, Department of Health and Human 
        Services, the Consumer Product Safety Commission, ICE, and the 
        Department of Agriculture, and with foreign governments, 
        including through information sharing;
   Expanding enforcement efforts to points earlier in the 
        supply chain than simply at our borders; and
   Maintaining robust inspection regimes, including non-
        intrusive inspection equipment and radiation detection 
        technologies, at our ports of entry.
    CBP requires advance electronic cargo information, as mandated in 
the Trade Act of 2002 (24-Hour Rule, through regulations), for all in-
bound shipments in all modes of transportation. CBP requires the 
electronic transmission of additional data, as mandated by the SAFE 
Port Act, through the Importer Security Filing and Additional Carrier 
Requirements rule (Security Filing ``10+2''), which became effective as 
an Interim Final Rule on January 26, 2009, and went into full effect on 
January 26, 2010. Security Filing ``10+2'' joins the 24-hour rule, and 
the C-TPAT program and Container Security Initiative (CSI) discussed 
below, in collecting advance information to improve CBP's targeting 
efforts.
    As part of CBP's layered targeting strategy, the National Targeting 
Center--Cargo (NTC-C) proactively analyzes advance cargo tactical and 
strategic information using the Automated Targeting System (ATS) before 
shipments reach the United States. ATS provides uniform review of cargo 
shipments for identification of the highest threat shipments, and 
presents data in a comprehensive, flexible format to address specific 
intelligence threats and trends. Through targeting rules, the ATS 
alerts the user to data that meets or exceeds certain predefined 
criteria. National targeting rule sets have been implemented in ATS to 
provide threshold targeting for National security risks for all modes 
of transportation--sea, truck, rail, and air. ATS is a decision support 
tool for CBP officers working in the NTC-C and in Advanced Targeting 
Units at our ports of entry and CSI ports abroad allowing officers to 
focus on the highest threats while facilitating legitimate trade.
    NTC-C has established partnerships and liaisons with other 
agencies, both domestically and abroad. Partnerships with ICE, the Drug 
Enforcement Administration, the Financial Crimes Enforcement Network 
(FinCEN), the Department of Commerce, and the Department of Health and 
Human Services promote information sharing and the exchange of best 
practices, while collaboration with foreign governments results in 
seizures and detection of threats at our borders and in foreign ports.
Customs Trade Partnership Against Terrorism (C-TPAT)
    CBP works with the trade community through the C-TPAT, a voluntary 
public-private partnership program wherein some members of the trade 
community adopt tighter security measures throughout their 
international supply chain and in return are afforded benefits such as 
reduced exams, front-of-line examination privileges to the extent 
possible and practical, and an assigned Supply Chain Security 
Specialist who helps them maintain compliance. C-TPAT has enabled CBP 
to leverage private sector resources to enhance supply chain security 
and integrity.
    CBP conducts records checks on the company in its law enforcement 
and trade databases and ensures the company meets the security criteria 
for its particular business sector. Members who pass extensive vetting 
are certified into the program. Using a risk-based approach, CBP Supply 
Chain Security Specialists conduct on-site visits of foreign and 
domestic facilities to confirm that the security practices are in place 
and operational.
    C-TPAT has been a success--membership in this program has grown 
from 7 companies in its first year to 10,221 as of January 12, 2012. 
Additionally, CBP is working with foreign partners to establish bi-
national recognition and enforcement of C-TPAT. CBP currently has 
signed mutual recognition arrangements with New Zealand, Canada, 
Jordan, Japan, and Korea and is continuing to work towards similar 
recognition with the European Union, Singapore, Taiwan, and other 
countries.
Container Security Initiative (CSI)
    Close coordination and joint operations with CBP and ICE in 
international programs are also critical. The CSI ensures that U.S.-
bound maritime containers that pose a high risk are identified and 
inspected before they are placed on vessels destined for the United 
States.
    Through CSI, CBP stations multidisciplinary teams of officers to 
work with host country counterparts to identify and examine containers 
that are determined to pose a high risk for terrorist activity. CSI, 
the first program of its kind, was announced in January 2002 and is 
currently operational in 58 foreign seaports--covering more than 80 
percent of the maritime containerized cargo shipped to the United 
States.
    CBP officers stationed at CSI ports, with assistance from CSI 
targeters at the NTC-C, review 100 percent of the manifests originating 
and/or transiting those foreign ports for containers that are destined 
for the United States. In this way, CBP identifies and examines high-
risk containerized maritime cargo prior to lading at a foreign port and 
before shipment to the United States. In fiscal year 2011, CBP officers 
stationed at CSI ports reviewed over 9.5 million bills of lading and 
conducted 45,500 exams in conjunction with their host country 
counterparts.
    CBP is exploring opportunities to utilize emerging technology in 
some locations, which will allow the program to become more efficient 
and less costly. In January 2009, CBP began to reduce the number of 
personnel stationed overseas who perform targeting functions, 
increasingly shifting more of the targeting of high-risk containers to 
personnel stationed at the NTC-C. This shift in operations reduces 
costs without diminishing the effectiveness of the CSI program. CSI 
will become a hybrid of different operational protocols designed around 
the uniqueness of each foreign port. CBP will remain operational in all 
58 locations in fiscal year 2012 with sufficient personnel in country 
to conduct the examinations of high-risk shipments with the host 
government and to maintain relationships with their host-country 
counterparts.
Secure Freight Initiative (SFI)
    The SFI partnered with the Department of Energy deploying networks 
of radiation detection and imaging equipment at six overseas pilot 
ports. All pilot operations, with the exception of Qasim, Pakistan have 
ended and those ports have reverted back to the CSI protocols of risk-
based targeting. The pilots encountered a number of serious challenges 
to implementing the 100% scanning mandate.
    While each port presented a unique set of challenges, most of the 
challenges were universal in nature. CBP has documented numerous 
challenges associated with implementing 100 percent scanning including 
diplomatic challenges, international trade opposition, the need for 
port reconfiguration, potential for reciprocal requirements on the 
United States and lack of available technology to efficiently scan 
transshipped cargo. It is also important to keep in mind that 
approximately 80% of the cargo shipped to the United States is sent 
from only 58 of more than 700 ports. Installing equipment and placing 
personnel at all of these ports--regardless of volume--would strain 
Government resources without a guarantee of results.
Non-Intrusive Inspection (NII)/Radiation Detection Technology
    The deployment of imaging systems and radiation detection equipment 
has made a tremendous contribution to CBP's progress in securing the 
supply chains that bring goods into the United States from around the 
world against exploitation by terrorist groups. NII technology serves 
as a force multiplier that allows officers to detect possible anomalies 
between the contents of a container and the manifest. CBP's use of NII 
allows us to work smarter and more efficiently in recognizing potential 
threats and allows cargo to move more expeditiously from the port of 
entry to the final destination.
    CBP has aggressively deployed NII and Radiation Portal Monitor 
(RPM) technology. Prior to 9/11, only 64 large-scale NII systems, and 
not a single RPM, were deployed to our country's borders. Today CBP has 
301 NII systems and 1,388 RPMs. To date, CBP has used the deployed NII 
systems to conduct over 60 million examinations, resulting in over 
11,200 narcotic seizures, with a total weight of over 3.2 million 
pounds, and more than $45.9 million in undeclared currency seizures. 
CBP uses RPMs to scan 99 percent of all in-coming containerized cargo 
arriving in the United States by sea and 100% of all passenger and 
cargo vehicles entering the U.S. land ports of entry. Since RPM program 
inception in 2002, CBP has scanned over 679 million conveyances for 
radiological contraband, resulting in more than 2.8 million alarms. 
CBP's Laboratories and Scientific Services 24/7 Teleforensic Center 
spectroscopy group at the NTC has responded to nearly 53,000 requests 
from the field for technical assistance in resolving alarms. To date, 
100 percent of alarms have been successfully adjudicated as legitimate 
trade.
                               conclusion
    The global supply chain system is an interconnected multimodal 
system, encompassing foreign and domestic ports, transportation 
systems, conveyances, and infrastructure. Enhancing its security, 
efficiency, and resilience requires a culture of mutual interest and 
shared responsibility among stakeholders throughout the world. It 
requires a balanced approach and the dedication of resources, 
collaboration--and where necessary, compliance verification and 
enforcement.
    While our efforts to date have been successful, we recognize that 
further diligence is required. Our new National Strategy for Global 
Supply Chain Security presents a blueprint for change, while building 
on efforts and infrastructure that have been in place for some time. 
The risk of natural disasters and other disruptions to the global 
supply chain presents a risk to our Nation's economic strength and 
vitality. Our Strategy presents an opportunity to continue to promote 
America's future economic growth and international competitiveness by 
remaining open and thriving for business.
    Thank you again for this opportunity to testify about our efforts.
    We look forward to answering any questions you may have.

    Mrs. Miller. Thank you very much. Appreciate that 
testimony.
    The Chairwoman now recognizes Mr. McAleenan for his 
testimony.

 STATEMENT OF KEVIN MCALEENAN, ACTING ASSISTANT COMMISSIONER, 
OFFICE OF FIELD OPERATIONS, U.S. CUSTOMS AND BORDER PROTECTION, 
              U.S. DEPARTMENT OF HOMELAND SECURITY

    Mr. McAleenan. Madam Chairwoman, Ranking Member Cuellar, 
esteemed Members of the subcommittee, it is a privilege and 
honor to appear before you today to discuss U.S. Customs and 
Border Protection's work to balance maritime security and trade 
facilitation, protecting the country from dangerous shipments, 
and enhancing the security of the global supply chain, while 
expediting legitimate commerce.
    Customs and Border Protection, or CBP, is charged with 
managing the physical access to our economy and our Nation and 
ports of entry. At the core of that responsibility, we are on 
the front lines of protecting our Nation from threats, 
including those that could potentially be introduced in cargo 
shipments.
    Just as importantly, CBP is on the front lines of 
protecting our economic future by facilitating legitimate trade 
through our ports. Through the use of better information, 
technology, partnerships, we have been able to form the most 
effective supply chain security structure in the world, helping 
to reduce transaction costs for U.S. business, and provide an 
environment where U.S. security and business interests can work 
together toward our common mission.
    To meet our responsibilities, we have worked to identify 
and address potential threats before they arrive at our ports. 
This requires that we secure the flow of cargo at each stage of 
the supply chain, the point of origin, while in transit, and 
when it arrives in the United States.
    To accomplish this, CBP pursues a multi-layered approach to 
security, segmenting cargo by potential risk, and examining it 
as early as possible in the process. Although often presented 
as being in tension or conflict, our security and trade 
facilitation missions are mutually supporting.
    By utilizing a risk-based strategy, we can focus our time 
and resources on the small percentage of goods that are higher 
risk, which in turn allows us to expedite trade that is low 
risk or about which we already know a great deal.
    Our multi-layered approach is based on the following core 
elements: Obtaining information about cargo shipments as early 
in the process as possible, using sophisticated targeting 
techniques to assess each shipment for risk, partnering with 
the private sector to secure supply chains from the 
manufacturer to the importer, working with foreign governments 
and international organizations like the World Customs 
Organization to harmonize and enhance approaches to supply 
chain security, and maintaining a robust inspection regime, 
including non-intrusive inspection equipment and radiation 
detection technology at our ports of entry.
    I am sure these elements are quite familiar to the 
subcommittee, especially in light of how these tenets are 
fundamental to the approach taken in the new National strategy.
    Over the past several years, DHS and CBP, often working 
closely with you and your staff, have achieved significant 
advances on both cargo security and trade facilitation. Allow 
me to highlight a few.
    With your support, we have implemented the Import Security 
Filing, of 10+2. Building on the 24-hour rule, this program 
provides additional insight into the supply chain, allowing us 
to identify potential risks more accurately, and allowing our 
trade partners to identify inefficiencies in their processes.
    We have developed and enhanced the unique capabilities of 
the National Targeting Center for Cargo to proactively analyze 
advanced cargo information using the automated targeting 
system, which allows us to take action before shipments are 
loaded onto vessels and aircraft destined to the United States.
    The CBP Trusted Shipper Program, the Customs Trade 
Partnership Against Terrorism, or C-TPAT, has long been 
recognized as the model for true collaboration between 
Government and business. Today, there are over 10,000 members, 
representing over 55 percent of the imported value into this 
country.
    While terrorism will remain the primary C-TPAT focus, we 
will explore ways to collaboratively address other threats that 
have the potential to compromise the supply chain, including 
drug smuggling, weapons trafficking, and trade and import 
safety violations.
    Under the Container Security Initiative, or CSI, CBP 
continues to work with our international partners to mitigate 
the threat that high-risk maritime cargo present before it 
leaves the foreign ports. Today, CBP CSI maintains operations 
at 58 ports in 32 countries, screening approximately 80 percent 
of the maritime cargo being shipped to the United States.
    We are continuing our aggressive deployment and use of 
advance imaging systems and radiation detection equipment at 
our ports. This non-intrusive inspection technology allows us 
to work smarter and more efficiently in recognizing potential 
threats.
    These highlights demonstrate that CBP remains at the 
forefront of supply chain management. I am confident that the 
approach laid out in the National strategy represents an 
effective way forward, building on these existing programs.
    Thank you again for the opportunity to testify about CBP's 
commitment to enhancing cargo security and trade resilience.
    We look forward to continuing to work with the subcommittee 
on these issues. I will be happy to take any of your questions.
    Mrs. Miller. Thank you very much.
    The Chairwoman now recognizes Admiral Zukunft.

 STATEMENT OF REAR ADMIRAL PAUL ZUKUNFT, ASSISTANT COMMANDANT 
FOR MARINE SAFETY, SECURITY, AND STEWARDSHIP, U.S. COAST GUARD, 
              U.S. DEPARTMENT OF HOMELAND SECURITY

    Admiral Zukunft. Good morning, Chairwoman Miller, Ranking 
Member Cuellar, and distinguished Members of the subcommittee.
    I am honored to appear before you today to speak about the 
Coast Guard's layered approach to protecting our ports, 
maritime commerce, and securing the global maritime supply 
chain.
    From our inception, the United States has been a maritime 
Nation. Considering that high concentrations of our population 
live and around port areas, and 95 percent of our international 
trade is done via the sea, the consequences of any attack or 
disruption on our maritime transportation system are 
potentially severe.
    Backed by the Maritime Transportation Security Act of 2002, 
and the Security and Accountability for Every Port Act of 2006, 
the Coast Guard has led a joint Federal, State, local, Tribal, 
private sector, and international charge to implement a robust, 
layered security approach, that starts in ports abroad, carries 
across the high seas, and culminates in our domestic waterways, 
designed to identify and stop any threat long before it reaches 
our shores.
    Our efforts start abroad under the auspices of the 
International Ship and Port Facility Security Code, which 
guides the Coast Guard's overseas assessment at more than 900 
port facilities and 153 of the 157 countries that could 
potentially conduct maritime commerce with the United States.
    For example, in 2010, two companies commenced the shipment 
of liquefied natural gas from Yemen to the United States. Due 
to the increased terrorist risk at the origin, the Coast Guard 
conducted additional port assessments in Yemen, and are now 
using biometric technologies to screen arriving crew members 
before they depart Yemen.
    Those vessels are also inspected with an undersea 
inspection, well in advance, in the Mediterranean Sea, before 
they make arrival in U.S. ports.
    Offshore, a major cutter fleet maintains a vigilant 
presence, conducting fisheries enforcement, counter-drug, alien 
migrant interdiction operations, while armed with the 
authorities of 41 bilateral agreements, and simultaneously 
maintaining an agile posture to respond to humanitarian 
disasters and threats to maritime security and the global 
supply chain.
    The Coast Guard's planned fleet of National Security 
Cutters and Offshore Patrol Cutters, augmented by our long-
range C-130s, maritime patrol craft, and working with Customs 
and Border Patrol, are essential to maintaining this offshore 
response capabilities.
    Additionally, the Coast Guard, in cooperation with U.S. 
Customs and Border Protection, ensure that U.S.-bound vessels 
that pose a potential risk are identified and inspected before 
they reach U.S. shores. Specifically, the Coast Guard and CBP 
share and jointly screen manifests 96 hours prior to a vessel's 
arrival in the United States, to identify crew, cargo, vessel 
documentation, and route anomalies, thereby providing an 
appropriate lead time to marshal a response to any threat well 
off-shore.
    In 2011, the Coast Watch Program, run by Coast Guard's 
Intelligence Coordination Center, screened 28.5 million people 
and more than 121,000 ship arrivals, as well as their business 
practices and associations, and generated 120 advanced warnings 
on arriving ships, cargoes, and persons posing a potential 
security or criminal threat.
    The Coast Guard leads the International Maritime 
Organization's Workgroup Three, which focuses on combating 
piracy on the high seas. This effort has resulted in several 
best practices, such as the use of private armed security teams 
on-board commercial vessels transiting the high-risk waters.
    In 2011, these teams repelled over 120 attacks that would 
have otherwise impacted the global supply chain.
    Our final level of security resides in our domestic ports 
and waterways. Since 2004, we have reviewed, approved, and 
verified compliance of security plans for more than 11,000 U.S. 
vessels, 3,200 domestic port facilities, and through the use of 
area maritime security committees, have fostered an extensive 
interagency collaboration to bolster the security of our 
critical infrastructure.
    This layered maritime security approach was highlighted in 
2010 when the motor vessel Sun Sea, carrying almost 500 illegal 
migrant smugglers, with ties to the Tamil Tigers from Sri 
Lanka, to Canada, was intercepted by Canadian forces who were 
supported by Coast Guard operational intelligence resources.
    This case demonstrated our capacity and capability to track 
and intercept a potential threat on the high seas, and mitigate 
risk to our homeland. It was also a prime utilization of our 
Maritime Operational Threat Response Plan, a Presidential-
directed interagency process that establishes protocols for 
real-time communication, coordination, and decisionmaking among 
interagency principals.
    Thank you for the opportunity to appear before you today, 
and for your continued support of the Coast Guard. I will be 
pleased to answer your questions.
    Mrs. Miller. Thank you very much, admiral.
    The Chairwoman now recognizes Mr. Caldwell for his 
testimony.

STATEMENT OF STEPHEN L. CALDWELL, DIRECTOR, MARITIME AND COAST 
 GUARD ISSUES, HOMELAND SECURITY AND JUSTICE TEAM, GOVERNMENT 
                     ACCOUNTABILITY OFFICE

    Mr. Caldwell. Chairman Miller, Ranking Member Cuellar, and 
other Members of the committee, thank you very much for having 
GAO up here to talk about supply chain security.
    I think it is important to recognize that the issues and 
programs that we are talking about today didn't start with the 
Secretary's or the President's Strategy from last week. These 
things go back 10 years.
    They go back to 9/11. They go back to the Maritime 
Transportation Security Act, which was passed in November about 
10 years ago.
    The Maritime Transportation Security Act, among other 
things, called for a secure system of international intermodal 
transportation, including standards and procedures for 
screening, evaluating, and monitoring cargo while in transit.
    Since 9/11, GAO has conducted about two dozen reports on 
some aspects of supply chain security, everything from the 
programs that have been discussed to a lot of the technologies 
that have been used, some successfully, and some attempts that 
haven't been as successful.
    Many of these programs were jump-started right after 9/11. 
So I think it was important to understand some of the--that 
they had initially. GAO made a number of recommendations 
through the years for DHS to improve its strategic planning, 
workforce management, internal controls, cost estimates, and 
performance measures.
    As these programs developed, a lot of GAO's recommendations 
were implemented. Through that and the maturation of the 
programs, they have certainly improved over the years.
    I will be happy to discuss any of those individual programs 
during the Q&A session.
    Now regarding the 100 percent scanning, the new strategy 
itself does not mention the existing statutory requirement. We 
completed a thorough review of the 100 percent scanning back in 
2009. We cited a number of challenges which did bring into 
question the feasibility of whether we can do that as called 
for in the law.
    In our report, we made a number of recommendations. For 
example, we recommended that DHS develop more accurate cost 
estimates of what it might cost, conduct a cost/benefit 
analysis, conduct a formal feasibility analysis, and after 
doing all of these, provide specific alternatives to Congress, 
including potential legislation.
    Unfortunately, and despite the issuance of the recent 
strategy, really little has changed in terms of our 
recommendations in the last 2 or 3 years. While DHS partially 
concurred with our recommendations at that time, they haven't 
implemented most of those.
    They now indicate that these recommendations are largely 
overcome by events. We think that if DHS had implemented these 
recommendations a while back, the Department would be in a much 
stronger position to talk about what those alternatives should 
be to 100 percent scanning, and actually have specific 
legislative things.
    It would also be in a stronger position to justify the 
waivers that the Department will obviously have to be providing 
and notifying Congress about relatively soon. In fact, I think 
if these recommendations had been implemented 2 to 3 years ago, 
we might already have some kind of maybe legislated compromise 
and be quite a bit ahead from where we are right now.
    So here we are. We are still at kind of an impasse in turns 
of the legislative requirement of the 100 percent scanning. Our 
industry and trade partners are still very concerned about the 
uncertainty this creates for them.
    This is both our domestic industry as well as international 
industry.
    DHS will soon have to implement their chosen path in terms 
of doing a blanket waiver for all ports, and provide Congress 
with advanced notification of that. There are substantial 
reporting requirements to that waiver. Those will continue as 
long as DHS uses the waivers as their preferred tool to meet 
the requirements of denial of an act.
    In closing, GAO stands ready to continue providing analysis 
to Congress on these issues. I thank you. I will be happy to 
answer questions along with the rest of the panel.
    [The statement of Mr. Caldwell follows:]
               Prepared Statement of Stephen L. Caldwell
                            February 7, 2012
                             gao highlights
    Highlights of GAO-12-422T, a testimony before the Subcommittee on 
Border and Maritime Security, Committee on Homeland Security, House of 
Representatives.
Why GAO Did This Study
    Cargo containers that are part of the global supply chain--the flow 
of goods from manufacturers to retailers--are vulnerable to threats 
from terrorists. The Maritime Transportation Security Act (MTSA) of 
2002 and the Security and Accountability For Every (SAFE) Port Act of 
2006 required the Department of Homeland Security (DHS) to take actions 
to improve maritime transportation security. Also, the Implementing 
Recommendations of the 9/11 Commission Act of 2007 (9/11 Act) required, 
among other things, that by July 2012, 100 percent of all U.S.-bound 
cargo containers be scanned. Within DHS, U.S. Customs and Border 
Protection (CBP) is responsible for container security programs to 
address these requirements. This testimony addresses, among other 
things: (1) Efforts to gather advance information about container 
shipments to assess risks, (2) technologies used to protect the 
integrity of containers and scan them, and (3) the status of efforts to 
scan 100 percent of U.S.-bound containers. GAO's statement is based on 
products issued from April 2005 through July 2011, along with selected 
updates conducted from January to February 2012. Updates involved 
collecting information from CBP on the status of efforts to address 
GAO's prior recommendations on these issues and its plans to implement 
100 percent scanning.
What GAO Recommends
    GAO has made recommendations in past reports to DHS to strengthen 
its container security efforts. DHS concurred with GAO's 
recommendations and has either addressed them or is undertaking efforts 
to address them.
 supply chain security.--container security programs have matured, but 
      uncertainty persists over the future of 100 percent scanning
What GAO Found
    As part of its efforts to identify high-risk cargo for inspection, 
CBP uses various sources of information to screen containers in advance 
of their arrival in the United States. For example, in 2009, CBP 
implemented the Importer Security Filing and Additional Carrier 
Requirements to collect additional information for targeting. The 
additional cargo information required, such as country of origin, is to 
be provided to CBP in advance of arrival of the cargo containers at 
U.S. ports. In September 2010, GAO recommended that CBP establish 
milestones and time frames for updating its targeting criteria to 
include the additional information. In response, CBP updated its 
targeting criteria in January 2011.
    DHS has made some progress in developing and implementing container 
security technologies to protect the integrity of containers and to 
scan them. GAO reported in September 2010 that DHS's Science and 
Technology Directorate initiated four container security technology 
projects to detect and report intrusions into cargo containers. 
However, operational testing had not occurred to ensure the prototypes 
would function as intended. Therefore, GAO recommended that testing and 
evaluation occur in all environments in which DHS planned to implement 
the technologies. DHS concurred and has made progress implementing this 
recommendation. To prevent the smuggling of nuclear and radiological 
materials, CBP, in coordination with the Domestic Nuclear Detection 
Office (DNDO), has deployed over 1,400 radiation portal monitors (RPM) 
at U.S. ports of entry to detect the presence of radiation in cargo 
containers. Since 2006, GAO reported on problems with DNDO's efforts to 
deploy a more advanced and significantly more expensive type of RPM. 
Among other things, GAO reported that an updated cost-benefit analysis 
might show that DNDO's program to replace existing equipment with the 
advanced technology was not justified. After spending more than $200 
million, DHS ended the program in July 2011.
    Uncertainty persists over how DHS and CBP will fulfill the mandate 
for 100 percent scanning given that the feasibility remains unproven in 
light of the challenges CBP has faced implementing a pilot program for 
100 percent scanning. In response to the SAFE Port Act requirement to 
implement a pilot program to determine the feasibility of 100 percent 
scanning, CBP, the Department of State, and the Department of Energy 
announced the formation of the Secure Freight Initiative (SFI) pilot 
program in December 2006. However, logistical, technological, and other 
challenges prevented the participating ports from achieving 100 percent 
scanning and CBP has since reduced the scope of the SFI program from 
six ports to one. In October 2009, GAO recommended that CBP perform an 
assessment to determine if 100 percent scanning is feasible, and if it 
is, the best way to achieve it, or if it is not feasible, present 
acceptable alternatives. However, to date, CBP has not conducted such 
an assessment or identified alternatives to 100 percent scanning. 
Further, as GAO previously reported, DHS acknowledged it will not be 
able to meet the 9/11 Act's July 2012 deadline for implementing the 100 
percent scanning requirement, and therefore, it expects to grant a 
blanket extension to all foreign ports pursuant to the statute, thus 
extending the target date to July 2014. To do so, DHS is required to 
report to Congress by May 2, 2012, of any extensions it plans to grant.
    Chairman Miller, Ranking Member Cuellar, and Members of the 
subcommittee: I am pleased to be here today to discuss the status of 
Federal efforts to enhance the security of maritime cargo containers 
used for shipping many imports to the United States. The potential for 
terrorists to smuggle weapons of mass destruction (WMD) inside cargo 
containers bound for the United States has remained a concern since the 
terrorist attacks of September 11, 2001. Cargo containers are an 
important segment of the global supply chain--the flow of goods from 
manufacturers to retailers. In 2011, about 10.7 million ocean-borne 
cargo containers arrived at U.S. ports, and according to the U.S. 
Department of Transportation, the majority of U.S. imports arrive by 
ocean vessel.\1\ The typical supply chain process for transporting 
cargo containers to the United States involves many steps and 
participants. For example, the cargo containers, and the goods in them, 
can be compromised not only by the manufacturers or suppliers of the 
goods being shipped, but also by vessel carriers who are responsible 
for transporting the containers from foreign ports to U.S. ports, as 
well as by personnel who load and unload cargo containers onto and off 
vessels.\2\
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    \1\ U.S. Department of Transportation, Research and Innovative 
Technology Administration, Bureau of Transportation Statistics, 
America's Container Ports: Linking Markets at Home and Abroad 
(Washington, DC: January 2011).
    \2\ Cargo containers serve, in essence, as packing crates and 
portable warehouses for virtually every type of general cargo moving in 
the supply chain.
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    Given the complexity of the global supply chain process and the 
vast number of cargo containers that are shipped to the United States 
each year, the global supply chain is vulnerable to threats that 
terrorists and criminals might be able to exploit. As we reported in 
October 2009, while the Department of Homeland Security (DHS) has noted 
that the likelihood of terrorists smuggling WMD into the United States 
in cargo containers is low, the Nation's vulnerability to this activity 
and the consequences of such an attack--such as billions of losses in 
U.S revenue and halts in manufacturing production--are potentially 
high.\3\
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    \3\ In 2002, the consulting firm Booz Allen Hamilton sponsored a 
simulated scenario in which the detonation of weapons smuggled in cargo 
containers shut down all U.S. seaports for 12 days--resulting in a loss 
of $58 billion in revenue to the U.S. economy along with significant 
disruptions to the movement of goods.
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    November of 2012 will mark the 10th anniversary of the enactment of 
the Maritime Transportation Security Act (MTSA) of 2002,\4\ which, 
among other things, called for the establishment of a program to 
evaluate and certify secure systems of international intermodal 
transportation, including standards and procedures for screening and 
evaluating cargo prior to loading and for securing and monitoring cargo 
while in transit.\5\ In 2006, the Security and Accountability For Every 
(SAFE) Port Act,\6\ which amended MTSA, required DHS to develop, 
implement, and update as appropriate a strategic plan to enhance the 
security of the international supply chain.\7\ To address concerns 
regarding international supply chain security, U.S. Customs and Border 
Protection (CBP), a component of DHS, developed a layered security 
strategy for cargo containers. Core components of the layered security 
strategy include analyzing information to identify containers that may 
be at high risk of transporting WMD or other contraband, working with 
governments of other nations to examine containers CBP has determined 
to be high-risk before such containers are loaded onto U.S.-bound 
vessels at foreign ports, and providing benefits to companies that 
comply with predetermined security measures.
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    \4\ Pub. L. No. 107-295, 116 Stat. 2064.
    \5\ See 46 U.S.C.  70116.
    \6\ Pub. L. No. 109-347, 120 Stat. 1884.
    \7\ The SAFE Port Act required DHS to report to Congress on this 
strategic plan by July 2007, with an update of the strategic plan to be 
submitted to Congress 3 years later. See 6 U.S.C.  941(a), (g).
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    The SAFE Port Act further requires that pilot projects be 
established at three ports to test the feasibility of scanning 100 
percent of U.S.-bound containers at foreign ports.\8\ In August 2007, 
the Implementing Recommendations of the 9/11 Commission Act of 2007 (9/
11 Act) was enacted,\9\ which requires, among other things, that by 
July 2012, 100 percent of all U.S.-bound cargo containers be scanned at 
foreign ports with both radiation-detection and nonintrusive inspection 
equipment before being placed on U.S.-bound vessels,\10\ with possible 
extensions for ports at which certain conditions exist.\11\ Further, in 
July 2007, DHS issued the strategic plan called for in the SAFE Port 
Act, entitled the Strategy to Enhance International Supply Chain 
Security,\12\ and on January 23, 2012, the administration issued the 
National Strategy for Global Supply Chain Security,\13\ which describes 
a strategy for promoting the efficient and secure movement of goods and 
fostering a resilient supply chain.
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    \8\ 6 U.S.C.  981. A similar requirement was enacted that same 
year by the Department of Homeland Security Appropriations Act, 2007 
(Pub. L. No. 109-295, 120 Stat. 1355 (2006)) and is codified at 6 
U.S.C.  981a. Both statutes specify scanning as examination with both 
radiation detection equipment and nonintrusive imaging equipment. 6 
U.S.C.  981(a), 981a(a)(1).
    \9\ Pub. L. No. 110-53,  1701(a), 121 Stat. 266, 489-90 (amending 
6 U.S.C.  982(b)).
    \10\ Radiation-detection equipment identifies radiation being 
emitted from a container, and through nonintrusive inspection CBP can 
identify anomalies in a container's image which could, among other 
things, indicate the presence of shielding material.
    \11\ The 9/11 Act scanning provision includes possible extensions 
for a port or ports for which DHS certifies that at least two out of a 
list of specific conditions exist. Among others, these conditions 
include: (1) Adequate scanning equipment is not available or cannot be 
integrated with existing systems, (2) a port does not have the physical 
characteristics to install the equipment, or (3) use of the equipment 
will significantly impact trade capacity and the flow of cargo. See 6 
U.S.C.  982(b)(4).
    \12\ DHS, Strategy to Enhance International Supply Chain Security 
(Washington, DC: July 2007).
    \13\ The White House, National Strategy for Global Supply Chain 
Security (Washington, DC: Jan. 23, 2012).
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    DHS and CBP have taken various actions to enhance maritime 
container security. As requested, this statement addresses our work in 
this area and includes the following topics:
   efforts to gather advance information about container 
        shipments to assess the risks of these containers;
   technologies used to protect the integrity of containers and 
        to scan them to detect WMD and other contraband;
   partnerships with foreign governments and the private sector 
        to improve container security efforts; and,
   the status of efforts to scan 100 percent of U.S.-bound 
        cargo containers.
    This statement is based on related GAO reports and testimonies 
issued from April 2005 through July 2011, which addressed various 
programs that constitute CBP's layered security strategy, along with 
selected updates conducted from January 2012 to February 2012.\14\ For 
our prior reports and testimonies, among other things, we analyzed CBP 
documents; reviewed legal documentation; and interviewed foreign 
government, DHS, CBP, and trade industry officials. We also conducted 
site visits to select ports that participate in CBP's container 
security programs and CBP's National Targeting Center--Cargo.\15\ 
Additional details on the scope and methodology for those reviews are 
available in our published products. For the updates, we collected 
information from CBP on actions it has taken to address recommendations 
made in prior GAO reports on which this statement is based. We also 
reviewed publicly available documents, such as CBP's budget 
justifications for fiscal years 2011 and 2012 and the administration's 
National Strategy for Global Supply Chain Security, for information 
regarding DHS's and CBP's plans for implementing the 100 percent 
scanning requirement. We conducted this work in accordance with 
generally accepted Government auditing standards.
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    \14\ See the list of GAO's related products included at the end of 
this statement.
    \15\ The National Targeting Center--Cargo is responsible for 
targeting high-risk shipments for inspection.
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  cbp has various tools for targeting u.s.-bound cargo containers for 
                              inspections
    As part of its efforts to target high-risk cargo containers for 
inspection, CBP uses various sources of information to screen 
containers in advance of their arrival in the United States. 
Specifically, CBP's 24-hour rule requires that vessel carriers submit 
cargo manifest information to CBP 24 hours before U.S.-bound cargo is 
loaded onto a vessel. To further enhance CBP's ability to target high-
risk shipments, in 2006 the SAFE Port Act required CBP to collect 
additional data related to the movement of cargo to identify high-risk 
cargo for inspection,\16\ and in 2009 CBP implemented the Importer 
Security Filing and Additional Carrier Requirements, collectively known 
as the 10+2 rule.\17\ The cargo information required by the 10+2 rule 
comprises 10 data elements from importers, such as country of origin, 
and 2 data elements from vessel carriers, such as the position of each 
container transported on a vessel, all of which are to be provided to 
CBP in advance of arrival at a U.S. port. Some of the data are required 
to be submitted prior to loading the container onto a U.S.-bound 
vessel.\18\ Additionally, the United States has worked to expand the 
program beyond domestic implementation by coordinating with the World 
Customs Organization (WCO)\19\ to incorporate some of the 10+2 data 
elements into the international supply chain security standards, which 
are discussed later in this statement. (Figure 1 illustrates where 
CBP's container security programs intersect with the key points of 
transfer in the global supply chain.)
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    \16\ See 6 U.S.C.   943(b).
    \17\ Importer Security Filing and Additional Carrier Requirements, 
73 Fed. Reg. 71,730 (Nov. 25, 2008) (codified at 19 C.F.R. pts. 4, 12, 
18, 101, 103, 113, 122, 123, 141, 143, 149, 178, & 192).
    \18\ 19 C.F.R.  4.7c, 149.3(a)-(b).
    \19\ The WCO is an independent international organization whose 
mission is to enhance the efficiency and effectiveness of customs 
administrations. 



    Data that CBP collects on U.S.-bound cargo containers and their 
contents are fed into the Automated Targeting System (ATS)--a 
computerized model that CBP uses as a decision-support tool in 
targeting cargo containers for inspection.\20\ Specifically, within 
ATS, CBP uses various data elements to determine an overall risk score 
for a particular threat in a shipment. CBP officers use these scores to 
help them make decisions on the extent to which documentary reviews or 
nonintrusive inspections are to be conducted on cargo containers. In 
our September 2010 report on the implementation of the 10+2 rule, we 
recommended that CBP establish milestones and time frames for updating 
ATS to use the 10+2 data in its identification of shipments that could 
pose a threat to National security. In response to this recommendation, 
CBP took steps in January 2011 to improve targeting efforts by updating 
its targeting criteria in to include risk factors present in the 10+2 
data.\21\ We recently began a review of the effectiveness of ATS as 
part of CBP's targeting efforts and plan to issue a report later this 
year. \22\
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    \20\ For more information on ATS, see GAO, Cargo Container 
Inspections: Preliminary Observations on the Status of Efforts to 
Improve the Automated Targeting System, GAO-06-591T (Washington, DC: 
Mar. 30, 2006).
    \21\ GAO, Supply Chain Security: CBP Has Made Progress in Assisting 
the Trade Industry in Implementing the New Importer Security Filing 
Requirements, but Some Challenges Remain, GAO-10-841 (Washington, DC: 
Sept. 10, 2010).
    \22\ We are conducting this work for the Subcommittee on Oversight 
and Investigations, Committee on Energy and Commerce, House of 
Representatives.
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  dhs has made some progress in implementing technologies to improve 
                           container security
Container Security Technologies Are Intended to Detect Intrusion and 
        Track Movement
    As we reported in September 2010, DHS's Science and Technology 
Directorate (S&T) initiated four container security technology 
projects,\23\ in part, in response to general MTSA requirements,\24\ as 
well as CBP's need for technologies to detect intrusion and track the 
movement of containers through the supply chain.\25\ Specifically, a 
CBP study recognized that existing container seals provided inadequate 
security against physical intrusion (e.g., removing a container door to 
bypass a container seal) and therefore CBP should develop a technology 
to monitor and record intrusions on any of the six sides of a 
container. In September 2010, we reported that DHS had conducted 
research and development for these projects, but had not yet developed 
performance standards for them. Specifically, each project had 
undergone laboratory testing, but S&T had not yet conducted testing in 
an operational environment to ensure that the prototypes for those 
projects that had passed laboratory testing would function as intended. 
Furthermore, S&T's plans for conducting operational testing, did not 
reflect all of the operational scenarios being considered for 
implementation. We recognized that successfully testing the performance 
of these technologies is a precursor to developing performance 
standards for them; therefore, we recommended that DHS test and 
evaluate the technologies within all of the operational scenarios DHS 
identified for potential implementation before S&T provides performance 
standards to the Office of Policy Development and CBP--DHS concurred 
with our recommendation and has completed operational testing for two 
of the four container security technology projects in the maritime 
environment.\26\ S&T officials considered the laboratory and 
operational testing of both technology projects a success because they 
were proven to function under one operational scenario, which resulted 
in the development of performance standards that are necessary to 
pursue implementation of these technologies. To fully address our 
recommendation, however, DHS would need to test and evaluate the 
technologies within each of the remaining operational scenarios it 
identified for potential implementation. DHS has informed us that it 
plans to conduct further operational testing and anticipates completing 
this testing in May 2013.
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    \23\ Two of the four container security technology projects were to 
detect intrusion on all six sides of a container; one of them was to 
detect intrusion on one side (i.e., the door); and, one of them was to 
track containers and communicate the intrusion to the appropriate 
officials.
    \24\ See 46 U.S.C.  70116 (requiring a program that includes 
establishing standards and procedures for securing and monitoring cargo 
in transit, as well as performance standards to enhance the physical 
security of shipping containers, including standards for seals and 
locks).
    \25\ GAO, Supply Chain Security: DHS Should Test and Evaluate 
Container Security Technologies Consistent with All Identified 
Operational Scenarios to Ensure the Technologies Will Function as 
Intended, GAO-10-887 (Washington, DC: Sept. 29, 2010).
    \26\ Laboratory and operational testing has been completed for the 
project to detect intrusion through the door of the container and the 
project to track containers and communicate intrusions.
---------------------------------------------------------------------------
    We also reported on the challenges DHS and CBP could face regarding 
the implementation of the four container security technology 
projects.\27\ For example, DHS and CBP could face challenges in 
obtaining support from the trade industry and international partners as 
it pursues implementation of the security technologies. Specifically, 
some members of the trade industry we spoke with were resistant to 
purchasing and using the technologies given the number of container 
security programs with which they already have to comply. DHS will also 
need to obtain support from international organizations and the WCO to 
implement new container security technologies. For instance, for 
container security technologies to be admitted to foreign countries 
without being subject to import duties and taxes, as well as import 
prohibitions and restrictions, the technologies first have to be 
recognized as accessories and equipment of the containers under the 
Customs Convention on Containers.\28\ The successful implementation of 
security technologies also depends on the security procedures 
throughout the supply chain as well as people engaged in those 
procedures, which are typically documented in the concept of 
operations. As a result, DHS and CBP could face challenges developing a 
feasible concept of operations that addresses the necessary technology 
infrastructure needs and protocols. Container security technologies 
require a supporting technology infrastructure, including readers to 
communicate to customs officials whether a technology has identified an 
intrusion. Thus, CBP will be faced with determining who will have 
access to the container security technologies through readers, where to 
place these readers, and obtaining permission to install fixed readers 
at domestic and foreign ports. Also, protocols will need to be 
developed to identify which supply chain participants will be involved 
in arming and disarming the technologies, reading the status messages 
generated by the technologies, responding to alarms, and accessing 
data.
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    \27\  GAO-10-887.
    \28\ The convention essentially provides for the temporary and 
admission and reexportation of containers and their accessories and 
equipment that meet certain requirements without imposition of duties 
or taxes by any customs authority.
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Radiation Detection and Nonintrusive Imaging Technology Can Help 
        Identify Container Contents
    To prevent the smuggling of nuclear and radiological materials, as 
of September 2010, CBP in coordination with DHS's Domestic Nuclear 
Detection Office (DNDO), has deployed over 1,400 radiation portal 
monitors (RPM) at U.S. ports of entry. Most of the RPMs are installed 
in primary inspection lanes through which nearly all traffic and 
shipping containers must pass before they can exit U.S. ports. These 
monitors alarm when they detect radiation. CBP then conducts further 
inspections of the suspect contents at its secondary inspection 
locations to identify the cause of the alarm and determine what further 
security measures, if any, need to be taken.
    While these RPMs are sensitive and have been effective at detecting 
radiation, they also have limitations. In particular, in May 2009 we 
reported that RPMs are capable of detecting certain nuclear materials 
only when these materials are unshielded or lightly shielded.\29\ In 
contrast, advanced nonintrusive inspection equipment can be used to 
detect dense material that may be consistent with the presence of 
certain nuclear materials. CBP already uses nonintrusive inspection 
equipment to more closely investigate the contents of cargo containers 
that it has selected for secondary inspection at a U.S. port of entry; 
however, according to CBP officials, only a small percentage of 
vehicles or cargo containers are subjected to secondary inspections.
---------------------------------------------------------------------------
    \29\ GAO, Combating Nuclear Smuggling: DHS Improved Testing of 
Advanced Radiation Detection Portal Monitors, but Preliminary Results 
Show Limits of the New Technology, GAO-09-655 (Washington, DC: May 21, 
2009).
---------------------------------------------------------------------------
    Since 2006, we have been reporting on long-standing problems with 
DNDO's efforts to deploy advanced spectroscopic portal (ASP) radiation 
detection monitors, a more-advanced and significantly more-expensive 
type of RPM designed to replace the RPMs CBP currently uses. GAO last 
reported on ASP testing in 2009 and found that DHS's cost analysis of 
the ASP program did not provide a sound analytical basis for DHS's 
decision to deploy the portals.\30\ We also reported that an updated 
cost-benefit analysis might show that DNDO's plan to replace existing 
equipment with ASPs was not justified, particularly given the marginal 
improvement in detection of certain nuclear materials required of the 
ASP and the potential to improve the current-generation RPM's 
sensitivity to nuclear materials, most likely at a lower cost.\31\ DNDO 
officials stated that they planned to update the cost-benefit analysis; 
however, after spending more than $200 million on the program, in 
February 2010, DHS announced that it was scaling back its plans for 
development and use of the ASP, and subsequently announced in July 2011 
that it was ending the ASP program, which means DHS continues to face 
limitations in radiation detection. Since DNDO continued ASP testing 
through 2011, GAO has on-going work to review, among other things, the 
results of testing of ASP since 2009, lessons learned from the ASP 
program, and whether DNDO plans to conduct additional ASP testing in 
the future.\32\
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    \30\ GAO, Combating Nuclear Smuggling: Lessons Learned from DHS 
Testing of Advanced Radiation Detection Portal Monitors, GAO-09-804T 
(Washington, DC: June 25, 2009).
    \31\ GAO, Homeland Security: DHS Could Strengthen Acquisition and 
Development of New Technologies, GAO-11-829T (Washington, DC: July 15, 
2011).
    \32\ We are conducting this work for the Ranking Members of the 
Subcommittee on Investigations and Oversight and Subcommittee on Energy 
and Environment; Committee on Science, Space, and Technology; House of 
Representatives.
---------------------------------------------------------------------------
    Since 2005, DNDO was also engaged in trying to develop a more 
advanced non-intrusive inspection equipment system in order to detect 
nuclear materials that might be heavily shielded. In September 2010, we 
reported that DNDO was simultaneously engaged in the research and 
development phase while planning for the acquisition phase of its cargo 
advanced automated radiography system (CAARS) to detect certain nuclear 
materials in vehicles and cargo containers at ports.\33\ DNDO pursued 
the acquisition and deployment of CAARS machines without fully 
understanding that they would not fit within existing primary 
inspection lanes at CBP ports of entry. We reported that this occurred 
because, during the first year or more of the program, DNDO and CBP had 
few discussions about operating requirements. DHS spent $113 million on 
the program since 2005 and canceled the development phase of the 
program in 2007.
---------------------------------------------------------------------------
    \33\ GAO, Combating Nuclear Smuggling: Inadequate Communication and 
Oversight Hampered DHS Efforts to Develop an Advanced Radiography 
System to Detect Nuclear Materials, GAO-10-1041T (Washington, DC: Sept. 
15, 2010).
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      cbp works with foreign governments, the private sector, and 
 international organizations to implement supply chain security efforts
    As part of its risk-management approach, CBP operates two voluntary 
security programs--the Container Security Initiative (CSI) and the 
Customs-Trade Partnership Against Terrorism (C-TPAT).\34\ CSI, through 
partnerships with CBP's foreign counterparts, is designed to target and 
examine high-risk container cargo as early as possible in the global 
supply chain. CSI places CBP officers at select foreign seaports to 
work with host-country customs officials to identify and scan high-risk 
cargo before it is shipped to the United States. CBP launched CSI in 
January 2002, and in fiscal year 2007 CBP reached its goal of operating 
CSI in 58 foreign seaports, and as of October 2011, these ports 
collectively accounted for over 80 percent of the cargo containers 
shipped to the United States. In 2005 and 2008, we made recommendations 
to CBP to further strengthen the CSI program by, among other things, 
revising its staffing model, developing performance measures, and 
improving processes for gathering information. CBP generally agreed and 
took action to implement these recommendations.\35\ For example, in 
response to one of our recommendations, in January 2009, CBP began 
transferring CSI staff from overseas ports to perform targeting 
remotely from the National Targeting Center--Cargo in the United 
States. As part of this effort, foreign staffing levels for CSI 
decreased from 170 in January 2009 to 86 in April 2011 while 32 
positions were added to the National Targeting Center--Cargo. As a 
result of the changes in its overseas staffing model, CBP has 
experienced a decrease in operating costs of over $35 million from 
fiscal year 2009 through fiscal year 2011.
---------------------------------------------------------------------------
    \34\ For more information on CSI and C-TPAT, see GAO, Supply Chain 
Security: CBP Works with International Entities to Promote Global 
Customs Security Standards and Initiatives, but Challenges Remain, GAO-
08-538 (Washington, DC: Aug. 15, 2008).
    \35\ GAO, Supply Chain Security: Examinations of High-Risk Cargo at 
Foreign Seaports Have Increased, but Improved Data Collection and 
Performance Measures Are Needed, GAO-08-187 (Washington, DC: Jan. 25, 
2008) and GAO, Container Security: A Flexible Staffing Model and 
Minimum Equipment Requirements Would Improve Overseas Targeting and 
Inspection Efforts. GAO-05-557 (Washington, DC: Apr. 26, 2005).
---------------------------------------------------------------------------
    While the CSI program involves partnerships between CBP and foreign 
governments, the C-TPAT program is a Government-to-business partnership 
program that provides benefits to supply chain companies that comply 
with predetermined security measures. Under C-TPAT, CBP officials work 
with private companies to review their supply chain security plans and 
improve members' security measures. In return, C-TPAT members may 
receive benefits, such as reduced scrutiny or expedited processing of 
their shipments. CBP initiated C-TPAT in November 2001, and as of 
November 2010, CBP had awarded initial C-TPAT certification--or 
acceptance of the company's agreement to voluntarily participate in the 
program\36\--to over 10,000 companies.\37\ C-TPAT certified members are 
then subject to validation whereby CBP verifies that the members' 
security measures meet or exceed CBP's minimum security requirements. 
We previously reported that C-TPAT provides CBP with a level of 
information sharing that would otherwise not be available from non-
member companies.\38\ In 2008, we made recommendations to CBP to 
strengthen C-TPAT program management, in part, by developing 
performance measures and improving the process for validating security 
practices of C-TPAT members. CBP has since implemented these 
recommendations.\39\
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    \36\ Acceptance occurs after a review of the company's security 
profile and compliance with customs laws and regulations.
    \37\ Aside from maritime container shippers, C-TPAT members include 
many top air carriers and freight forwarders.
    \38\ GAO, Supply Chain Security: Feasibility and Cost-Benefit 
Analysis Would Assist DHS and Congress in Assessing and Implementing 
the Requirement to Scan 100 Percent of U.S.-Bound Containers, GAO-10-12 
(Washington, DC: Oct. 30, 2009).
    \39\ GAO, Supply Chain Security: U.S. Customs and Border Protection 
Has Enhanced Its Partnership with Import Trade Sectors, but Challenges 
Remain in Verifying Security Practices, GAO-08-240 (Washington, DC: 
Apr. 25, 2008).
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    CBP also partners with international trade and security groups to 
develop supply chain security standards that can be implemented by the 
international community. In 2005, the WCO developed the Framework of 
Standards to Secure and Facilitate Global Trade--commonly referred to 
as the SAFE Framework--for which the core concepts are based on 
components of CBP's CSI and C-TPAT programs. As of the publication of 
the most recent edition of the SAFE Framework in June 2011, 164 of the 
177 WCO member countries have pledged to adopt the framework. As part 
of the SAFE framework, customs administrations may develop Authorized 
Economic Operator programs that offer incentives to supply chain 
companies that comply with predetermined minimum security standards. 
For example, C-TPAT is the designated Authorized Economic Operator 
program for the United States. According to data from the WCO, as of 
May 2011, 59 countries, including the 27 member states of the European 
Union, have implemented or have begun developing Authorized Economic 
Operator programs.\40\
---------------------------------------------------------------------------
    \40\ For more information on the WCO Authorized Economic Operator 
Program, see World Customs Organization, Compendium of Authorized 
Economic Operator Programme, 2011 edition.
---------------------------------------------------------------------------
    CBP and the WCO anticipate that widespread adoption of these 
standards could eventually lead to a system of mutual recognition 
whereby the security-related practices and programs taken by the 
customs administration of one country are recognized and accepted by 
the administration of another. According to CBP, a system of mutual 
recognition could lead to greater efficiency in providing security by, 
for example, reducing redundant examinations of container cargo and 
avoiding the unnecessary burden of addressing different sets of 
requirements as a shipment moves through the supply chain in different 
countries. As of June 2011, CBP has signed five Mutual Recognition 
Arrangements and is currently working toward two more with other 
customs administrations, according to CBP.\41\
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    \41\ CBP has signed the five Mutual Recognition Agreements with 
customs administrations of New Zealand, Canada, Jordan, Japan, and 
South Korea and is working toward more with those of Singapore and EU. 
For more information, see Department of Homeland Security, Customs and 
Border Protection, ``Mutual Recognition Information,'' Customs-Trade 
Partnership Against Terrorism website, (June 2011), accessed January 
24, 2012, www.cbp.gov/xp/cgov/trade/cargo_security/ctpat/mr/.
---------------------------------------------------------------------------
   as the deadline for 100 percent scanning approaches, uncertainty 
            persists over the future of 100 percent scanning
The Scope of the Secure Freight Initiative Has Decreased after Facing 
        Numerous Challenges
    In response to the SAFE Port Act requirement to implement a pilot 
program to determine the feasibility of scanning 100 percent of U.S.-
bound containers with both radiation detection and nonintrusive 
equipment, CBP, the Department of State, and the Department of Energy 
jointly announced the formation of the Secure Freight Initiative (SFI) 
pilot program in December 2006. CBP selected three ports to implement 
the SFI pilot program: Qasim, Pakistan; Puerto Cortes, Honduras; and 
Southampton, United Kingdom.
    In October 2009, we reported that while CBP and the Department of 
Energy had made progress in integrating new technologies as part of the 
SFI program, progress in implementing and expanding the scanning of 
U.S.-bound cargo containers at participating ports was limited. 
Specifically, according to CBP officials, while initiating the SFI 
program at these ports satisfied the SAFE Port Act requirement to 
implement the program at three ports,\42\ CBP also selected the ports 
of Hong Kong; Busan, South Korea; and Salalah, Oman to more fully 
demonstrate the capability of the integrated scanning system at larger, 
more complex ports with higher percentages of transshipment container 
cargo--cargo containers from one port that are taken off a vessel at 
another port to be placed on another vessel bound for the United 
States. However, these ports faced numerous challenges in implementing 
the 100 percent scanning requirement, as we reported in October 2009, 
and some ports that initially agreed to participate in the SFI program 
did so for a limited time, or on a limited basis.\43\ For example, the 
SFI program began operating in one of the nine terminals at the port of 
Hong Kong in January 2008 and ended in April 2009. The SFI program was 
not renewed at the port of Hong Kong based on a mutual decision by the 
Hong Kong government and DHS, in part, because of concerns that 
equipment and infrastructure costs, as well as costs to port 
efficiency, would make full implementation of the SFI program at all of 
its terminals unfeasible. CBP has since reduced the scope of the SFI 
program, and currently the only port that continues to operate under 
SFI protocols is Qasim, Pakistan.
---------------------------------------------------------------------------
    \42\ The act required CBP to identify three distinct ports through 
which containers pass or are transshipped to the United States with 
unique features and differing levels of trade volume. 
6 U.S.C.  981(a).
    \43\ GAO-10-12.
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    Logistical, technological, and other problems at participating 
ports have prevented any of the participating ports from achieving 100 
percent scanning, as ultimately required by the 9/11 Act, leaving the 
feasibility and efficacy of 100 percent scanning largely unproven. For 
example, we reported in October 2009 that while CBP had been able to 
scan a majority of U.S.-bound cargo containers from three comparatively 
low-volume ports (Qasim, Puerto Cortes, and Southampton), at the higher 
volume ports of Hong Kong and Busan, CBP had been able to scan no more 
than 5 percent of U.S.-bound cargo containers, on average. 
Additionally, scanning operations at the initial SFI ports encountered 
a number of challenges--including safety concerns, logistical problems 
with containers transferred from rail or other vessels, scanning 
equipment breakdowns, and poor-quality scan images. Furthermore, since 
the 9/11 Act did not specify who is to conduct the container scans or 
who is to pay for scanning equipment or operations and maintenance, 
questions persist regarding who will bear the costs of scanning.
    In addition to the challenges CBP faced in implementing 100 percent 
scanning at the select SFI pilot ports, CBP also faces a number of 
potential challenges in integrating the 100 percent scanning 
requirement with the existing container security programs that make up 
CBP's layered security strategy. The 100 percent scanning requirement 
is a departure from existing container security programs in that it 
requires that all containers be scanned before CBP determines their 
potential risk level.\44\ Senior CBP officials and international 
trading partners say this change differs from the risk-based approach 
based on international supply chain security standards and accepted 
practices. Specifically, as we reported in October 2009 and October 
2010, foreign government officials have expressed the view that 100 
percent scanning is not consistent with risk-management principles as 
contained in the SAFE Framework.\45\ For example, European and Asian 
customs officials we spoke with told us that the 100 percent scanning 
requirement is in contrast to the risk-based strategy, which serves as 
the basis for other U.S. programs, such as CSI and C-TPAT. Further, the 
WCO, which represents 177 customs agencies around the world, stated 
that the implementation of 100 percent scanning would be ``tantamount 
to abandonment of risk management.'' Some foreign governments have 
stated they may adopt a reciprocal requirement that all U.S.-origin 
containers be scanned, which would present additional challenges at 
domestic U.S. ports.
---------------------------------------------------------------------------
    \44\ For more information regarding the application of risk-
management principles as they relate to 100 percent scanning, see GAO, 
Maritime Security: Responses to Questions for the Record, GAO-11-140R 
(Washington, DC: Oct. 22, 2010), 17-20.
    \45\ GAO-11-140R.
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    We recommended that CBP perform analyses to determine whether 100 
percent scanning is feasible, and if so, the best way to achieve it; 
or, alternatively, if it is not feasible, present acceptable 
alternatives. To date, however, CBP has not conducted such a 
feasibility assessment. CBP has not pursued a feasibility assessment, 
in part, due to the interagency effort to develop the recently issued 
National Strategy for Global Supply Chain Security. CBP officials told 
us in August 2011 that the agency's position was that a risk-based 
approach to global supply chain security was a more feasible and 
responsible approach than 100 percent scanning.\46\ Further, CBP has 
not provided any details about any alternatives to 100 percent scanning 
that DHS or CBP may be considering.
---------------------------------------------------------------------------
    \46\ Additionally, according to CBP, the current SFI budget is 
focused on maintaining operations at the remaining SFI port in Qasim, 
Pakistan, and funds are not presently available to conduct a 
feasibility assessment. The current funding levels may be attributed, 
in part, to CBP's request to reduce funding for the SFI program. In 
CBP's fiscal year 2011 budget justification, CBP requested a reduction 
$16.6 million due to plans to revert three of the SFI ports to CSI 
operations.
---------------------------------------------------------------------------
DHS Intends to Issue a Blanket Extension Because 100 Percent Scanning 
        Cannot be Implemented by the July 2012 Deadline
    CBP's budget documents and public statements from DHS and CBP 
officials, along with the elimination of SFI operations at all but one 
port, indicate that DHS and CBP are no longer pursuing efforts to 
implement 100 percent scanning at foreign ports by July 2012. While CBP 
had previously implemented the SFI program and protocols for 100 
percent scanning at six ports, it has reverted all but one of these 
ports to CSI operations, for which CBP focuses its efforts on scanning 
those cargo containers it identifies as high risk rather than 
requesting scans of all containers regardless of risk. According to 
CBP's fiscal year 2011 budget justification, the SFI program is a 
``helpful but not essential part'' of CBP's layered security strategy.
    In addition, the budget justification noted that DHS will continue 
to use and, when appropriate, strengthen other means to achieve the 
same goals of SFI, such as the 24-hour rule, the 10+2 rule, and C-TPAT. 
Further, there is no mention of the 100 percent scanning mandate or 
efforts to meet the mandate in the recently released National Strategy 
for Global Supply Chain Security. Rather, the strategy notes that the 
Federal Government intends to focus its efforts on ``those enhancements 
that result in the most significant improvement or reduction in risk.''
    As the July 2012 deadline in the mandate approaches, uncertainty 
remains regarding DHS's long-term course of action to satisfy the 100 
percent scanning mandate. As we previously reported, in the short term, 
DHS acknowledged it will not be able to meet this deadline for full-
scale implementation of the 9/11 Act's scanning requirement and will 
need to grant extensions to those foreign ports unable to meet the 
scanning deadline in order to maintain the flow of trade and comply 
with the 9/11 Act. The 9/11 Act allows DHS to grant an extension to a 
port or ports by certifying that least two of six conditions exist,\47\ 
and as we previously reported, DHS believes the last two conditions--
(1) Use of the equipment to scan all U.S.-bound containers would 
significantly impact trade capacity and the flow of cargo and (2) 
scanning equipment does not adequately provide automatic notification 
of an anomaly in a container--could apply to all foreign ports that 
ship containers to the United States. Therefore, DHS expects to grant a 
blanket extension to all foreign ports pursuant to the statue, thus 
extending the target date for compliance with this requirement by 2 
years, to July 2014. To do so, the 9/11 Act requires DHS to report to 
Congress 60 days before any extension takes effect on the container 
traffic affected by the extension, the evidence supporting the 
extension, and the measures DHS is taking to ensure that scanning can 
be implemented as early as possible at the ports covered by the 
extension.\48\ As a result, DHS will need to notify Congress by May 2, 
2012, of any extensions it plans to grant.\49\
---------------------------------------------------------------------------
    \47\ The 9/11 Act scanning requirement authorizes DHS to grant 
extensions for a port or ports if at least two of the following six 
conditions exist: (1) Equipment to scan all U.S.-bound containers is 
not available for purchase and installation; (2) equipment to scan all 
U.S.-bound containers does not have a sufficiently low false alarm 
rate; (3) equipment to scan all U.S.-bound containers cannot be 
purchased, deployed, or operated at a port or ports (including where 
this is due to the physical characteristics of the port); (4) equipment 
to scan all U.S.-bound containers cannot be integrated with existing 
systems; (5) use of the equipment to scan all U.S.-bound containers 
would significantly impact trade capacity and the flow of cargo; or (6) 
the scanning equipment does not adequately provide automatic 
notification of an anomaly in a container. 6 U.S.C.  982(b)(4).
    \48\ 6 U.S.C.  982(b)(6).
    \49\ Additionally, 1 year after an extension takes effect, DHS 
would be required to submit a report on Congress on whether it expects 
to seek to renew the extension. 6 U.S.C.  982(b)(7).
---------------------------------------------------------------------------
    Given that the feasibility of 100 percent scanning remains unproven 
and DHS and CBP have not yet identified alternatives that could achieve 
the same goals as 100 percent scanning, uncertainty persists regarding 
the scope of DHS's and CBP's container security programs and how these 
programs will collectively affect the movement of goods between global 
trading partners.
    Chairwoman Miller, Ranking Member Cuellar, and Members of the 
subcommittee, this completes my prepared statement. I would be happy to 
respond to any questions you or other Members of the subcommittee may 
have at this time.

    Mrs. Miller. Thank you very much, Mr. Caldwell.
    That was an interesting testimony, and leads to the obvious 
question, I guess, and the reason for this entire hearing, as 
we listened to the first three witnesses talk about all of the 
various things that have been on-going in the efforts to make 
sure that we secure the global supply chain, and giving us 
statistics, et cetera, which are very impressive, based on the 
workload and the resources available, to be able to accommodate 
the 100 percent mandate that this Congress has passed.
    I guess I would just start by, you were mentioning, Mr. 
Caldwell, by saying that you had made the recommendation for 
them to do cost/benefit, risk analysis, et cetera, et cetera, 
that perhaps if they would have taken some of those 
recommendations and actually done some of those kinds of 
things, we would be a little bit further ahead.
    But overtaken by events. Believe me, we all understand 
that. We totally understand that. The purpose of this hearing 
is just to have a better idea of what kind of events have 
overtaken us, but whether or not we have any realistic 
expectation of ever getting to the 100 percent, or if it is 
even that it is not achievable, as the Secretary has made 
testimony to this committee on a number of occasions, where do 
we actually go from here?
    I guess I am, first of all, just trying to understand from 
a cost--we all recognize it may be optimal but perhaps not 
realistic from a cost perspective. We have 55 ports in our 
country, of which there are I think about 700 ports where there 
is country of origin goods coming into our country.
    Do we have any idea at all of what kind of costs we may be 
looking at, any kind of ballpark figure, in order to--I am not 
sure who I am actually directing this question to.
    Gentlemen, do we have any idea at all of what kind of costs 
that we are actually looking at, understanding the budgetary 
constraints that our Nation is facing, but the goal of securing 
our Nation being our priority as well?
    Who might start with answering that question?
    Mr. Heyman. Let me start by just talking about what the 
costs that we have to include in that, and then go to some of 
the specific operational. There are a number of things that we 
have looked at in terms of the entirety, from end to end, 
questions about security and resilience.
    The implementation of going back to the supply chain, to 
the manufacturers, and things like C-TPAT, require auditing of 
facilities and partners to ensure that they are adhering to the 
security requirements of C-TPAT.
    The ports of embarkation require Coast Guard to go and 
ensure that the international codes have been adhered to, that 
safety and security for procedures are in place, that 
counterterrorism programs are in place.
    The actual scanning of material, cargo in containers that 
CBP has, and other programs within the Federal Government, 
requires that partnerships in foreign countries, with foreign 
governments. It requires the advanced targeting capability.
    Then also, we have the capability at home for screening. So 
there is technology costs and operational costs. All of those 
things are so broad and so large that estimate have been not as 
accurate as people would like.
    Mrs. Miller. I am not looking for an accurate estimate, 
just a ball park.
    Mr. Heyman. So this is in the billions and billions of 
dollars. But let me turn to my CBP colleague, who has the 
operational arm of that, to actually go into some of the 
operational costs.
    Mr. McAleenan. From an operational perspective, we do have 
some significant experience in terms of the cost of these 
programs, from these six SFI pilots that we have ran.
    Over the course of the 2.5 to 3 years that those pilots 
were active--and of course, we still have one additional active 
location in Port Qasim in Pakistan. The DHS alone spent about 
$68 million on the scanning equipment, on the deployment of it, 
on software upgrades and all the relevant costs associated with 
that.
    At the same time, our partners at DOE, who are responsible 
for the radiation and nuclear detection capability aspect of 
the SFI program, they spent over $50 million. So the total 
Government expenditures was almost $120 million on those six 
ports for the short time it was in operation.
    Based on our estimates from that experience, we estimate 
about $8 million per lane, to establish the SFI-type, 100 
percent scanning, screening suite of technologies. Now that 
technology might be improving over time. We are still studying 
that.
    But if you multiply that by the 2,100 lanes at the 700 
ports globally that ship direct to the United States, that is 
quite cost-prohibitive, you know, up to the $20 billion range.
    The other aspect of that----
    Mrs. Miller. $20 billion?
    Mr. McAleenan. Correct, $16.8. The other aspect of that 
that the assistant secretary mentioned is the cost to the 
trade. Those estimates have been very high, both in studies 
from our private sector partners, as well as the European Union 
and others.
    Mrs. Miller. Okay. I guess I would also ask you, Mr. 
McAleenan, I was taking some notes here when you were talking 
about your risk assessments, or the modeling that you are 
doing. Algorithms, I guess, is the types of things that you are 
all looking at there.
    But one of the things that you were mentioning, if you 
could just flesh out for me a little bit, is how you gather the 
information. Then you are looking at targeting technologies 
from the port of origin, et cetera.
    Could you talk a little bit more about what kinds of 
things, targeting technologies you utilize to make the risk 
assessments?
    Mr. McAleenan. Yes, I would be happy to cover that. That is 
an area of excellence we think that CBP has, in coordination 
with our intelligence community and other DHS and law 
enforcement partners.
    We take information on cargo shipments as early as possible 
in the process, both through the 24-hour rule, established 
after the Trade Act of 2002, as well as the ISF, the Importer 
Security Filing, the 10+2.
    We take that information on shipments, combine it with what 
we know about the supply chain, the shippers involved in the 
supply chain, from our trade partnership programs, the C-TPAT, 
as well as historical data on shipments on certain routes, from 
certain countries. We manipulate that data using our automated 
targeting system in a series of sophisticated ways.
    One of the most common that we have talked about is our 
intelligence-based rules. These are specific rule sets that are 
designed to address each mode. They have different rule sets, 
for instance, for maritime versus land, air and rail, to 
identify potential security risks.
    We also are using advanced analytic techniques. This is 
pattern recognition, what is typically called machine learning 
in the field, to help us model our risk more effectively, 
beyond just the intelligence-based process.
    Of course, we use what we know about the supply chain with 
our trusted partners, to help reduce the potential for risk on 
those shipments, as well as the procedures used at the foreign 
port. So all of that is factored in in an automated fashion, to 
give us a sense of the risk of individual shipments.
    We do that both at our National Targeting Center for Cargo 
and with our CSI teams deployed abroad.
    Mrs. Miller. Thank you.
    My time has expired. But I appreciate your candid 
information about your best guesstimate about what kind of 
costs we are looking at, because really it is our job, as 
Congress, to ask you how much does it cost for you to implement 
mandates that we are passing.
    We need to have a clear understanding of what it is, and 
understanding the budgetary constraints that we are all dealing 
with here. Then it is for us to determine, from a priority 
standpoint, where we are going with our budget here and from 
National security perspective as well.
    With that, I would recognize our Ranking Member.
    Mr. Cuellar. Thank you, Madam Chairwoman.
    Mr. Caldwell, you are with the GAO, correct?
    Okay. You have been studying the maritime cargo security 
issue for some time. You know both the legislative requirement, 
as well as the challenges of scanning 100 percent of in-bound 
containers.
    In hindsight, what different courses could have DHS or CBP 
have taken to comply with the law?
    Mr. Caldwell. I think in terms of actually setting up the 
pilot, there could have been more metrics set up to actually 
measure how long it was taking, the costs, what impact it was 
having on trade at those individual ports.
    I think related to this, they could have come up perhaps 
with better and validated data on costs, which is still an 
issue, as we have just discussed. I think, again, if a 
feasibility analysis, cost/benefit analysis had been done 
earlier in the process--and it is unclear whether it is ever 
going to be done at this point--I think it would have made a 
position to provide specific legislative changes and engage 
with Congress perhaps earlier.
    You know, it is very awkward obviously to do this right 
before this deadline is approaching in July 2012.
    Mr. Cuellar. Did GAO communicate those recommendations to 
the Department of Homeland, to CBP, Coast Guard?
    Mr. Caldwell. Yes, we did, particularly with these points 
the DHS. But they were mainly geared toward CBP, which had the 
lead in terms of these container programs. So these were 
recommend in our October 2009 report. We had started talking to 
DHS earlier, perhaps spring of 2009, about the need for these.
    Mr. Cuellar. Okay. Both CBP and Homeland, what do you all 
do with recommendations from GAO? Do you just get the 
recommendations and put them aside?
    I am sure you are going to say that you do something with 
them. But it seems like, you know, I see GAO or an entity like 
that, that they come with ideas to improve. Then you look at 
and say, well, this will work; this won't work. You have that 
dialogue.
    But sometimes I get the feeling, with all due respect, that 
you all know better than anybody else. If you get something 
from GAO, it is some theoretical, academic report that comes 
out. What do you actually do with those?
    I mean, Mr. Caldwell just mentioned that there were some 
recommendations. What did you all do with those specific 
recommendations in 2009? I agree, there is a deadline that is 
coming up in July of this year. We are coming up to that.
    What did you all actually do with those recommendations? 
Keep in mind, as we are going through this discussion, you 
know, I am a former businessman. Certainty is important.
    In the international business community, not knowing what 
CBP is going to do, what is going to happen, it affects the 
certainty. That affects our economy.
    What did you all do specifically with the recommendations?
    Mr. Heyman. So let me answer the general question first, 
which is what do we do with GAO reports, in terms of the 
process of adhering to them or not.
    We actually have instituted, about 2.5, 3 years ago, a very 
synchronized dance, in effect, with GAO, where we are trying to 
get in early. They are trying to get in early to understand the 
problems. So we are working very closely together.
    There is a whole read-in process, where we are all working 
with them to get them as much data as possible.
    On the back end of it, when you are actually implementing--
when the GAO is finishing its recommendations, we have given an 
opportunity to concur or not concur and how we all do it.
    We do that in every report. We don't concur with all of the 
things that they recommend, but we usually provide what kind of 
corrective action or steps that we all be taking. GAO then 
follows up, often, with whether we have done that or not.
    So there is a process there that we do.
    In terms of the cost estimates, the specific question about 
the cost estimates and how we can do better, by the time I 
think that report came out, most of the pilot projects had been 
concluded. Either governments had said they weren't going to 
continue to implement or they actually had concluded for other 
reasons.
    So actually getting those cost estimates we have--that is 
the best that we have right now, is from that original data.
    Mr. Cuellar. Okay.
    Mr. Caldwell, just roughly, out of the recommendations that 
you all made, on a 1 to 100 scale, what percent do you think 
they implemented?
    I understand there is a give-and-take. They are not going 
to accept everything 100 percent. But, I mean, the way I see 
GAO or inspector general, somebody that comes up with ideas--I 
see it as a way to improve. You know, how do we make it better, 
not accepting everything 100 percent.
    What would you say on a 1 to 100 scale, roughly?
    Mr. Caldwell. Well, I would say that, you know, our goal 
within GAO, for example, engaging with the Executive Branch--
and this is true with DHS as well--is to get 80 percent of our 
recommendations implemented.
    Mr. Cuellar. In this specific case, what did they get, 
roughly?
    Mr. Caldwell. This year, we are not doing very well. Of the 
I think five recommendations we have, we maybe have two of them 
partial and the other three--I think also, I mean, one of the 
recommendations we made that they do a feasibility study, I 
mean, was a statutory requirement in the SAFE Port Act. It was 
not just GAO recommendations.
    Mr. Cuellar. So you are saying that on that recommendation, 
it was a recommendation from your own. There was a statutory 
requirement, and they have not done it yet?
    Mr. Caldwell. That is correct.
    Mr. Cuellar. Okay. Let me----
    Mr. Caldwell. There are pieces of it, but they need to pull 
it together. I think the important thing is some of that 
analysis that feeds that will be important even if we do the 
blanket waivers, because under the waiver procedure, there is 
still a reporting requirement that DHS talk about how they plan 
to achieve--you know, what they are doing to still trying to 
achieve the 100 percent scanning, and if not, why not?
    So that is still some of the justification they are going 
to need in that analysis, sir.
    Mr. Cuellar. Right. I think, Madam Chairwoman, Members, 
this is a difficulty, when there is a recommendation; there is 
a statutory requirement. How do we get your buy-in into this?
    One last question, if you don't mind. In regards to the 
interim Final Supply Chain Security Strategy, required by the 
SAFE Port Act, the 2007 strategy was--the interim was 128 pages 
long.
    It included details on topics such as defining the problem, 
strategic objectives, the role of technology, the agency, 
stakeholders roles and responsibilities, implementation of 
schedule, priorities and milestones, recovery and resumption of 
trade, training and exercise requirement.
    But the report we just got last month had only 6 pages, 
which means that there was very little discussion of those 
topics. I don't understand. Usually when you do an interim 
report, you build on it.
    In this one, you build and you took away. I just don't 
understand how that comparison was made.
    Again, my time is up. But I will take whoever wants to take 
this one. Mr. Heyman, how do you explain this discrepancy? Or 
not discrepancy, but how do you go from detail to now a 6-page 
and I think the first page was more of an executive summary?
    It was a managing report of a summary of a summary. So how 
do you explain that? How do you build down instead of building 
up?
    Mr. Heyman. Sir, it is a good question. I would just note--
--
    Mr. Cuellar. By the way, you saw the other 6 pages. This is 
the interim report. Then the interim report, 127, 128 pages. 
You build up on the other one.
    Again, I am not saying--maybe this is a perfect example of 
streamlining and efficiency and effectiveness. But how do you 
go from an interim that goes into the details that we want to 
see as oversight, and then come up with this report here?
    Mr. Heyman. So there is a couple--if I may take a little 
bit of time on that answer, there is a couple things that we 
have done differently here than the interim report that should 
be noted.
    First of all, the scale of the report goes beyond just the 
maritime. It goes into all modes of transportation. It includes 
resilience as a critical element. It also looks to 
international engagement on a way that is, frankly, 
unprecedented.
    What we have done in the strategy document is to talk about 
building on these previous documents. So rather than 
regurgitate all of them, we tried to make it as simple and as 
straightforward as possible. That doesn't mean that there isn't 
more back--there is more behind it.
    There are implementation things that we are working on. We 
have a report to the president that we owe in a year, and 
things like that. I would hope that we wouldn't get lost in the 
length of it.
    In fact, you know, I think Eisenhower's strategy for World 
War II was two words, which was ``Europe first.'' But we have a 
lot of things that go beyond that.
    We are, in fact, actually implementing now things like the 
Supply Chain Security Initiative the Secretary put forward, 
that fits into the global strategy the President put forward.
    All those things come together.
    Mr. Cuellar. Yes. I can summarize two words into one: 
``win''. But what I am saying is this is something that should 
be a guideline to what we are doing. I am just a little 
disturbed by what I am seeing here, especially recommendations 
from Mr. Caldwell, and not meeting a lot of them.
    But again, Madam Chairwoman, I thank you for indulging me 
on this very important issue. Thank you.
    Mrs. Miller. Thank the gentleman.
    The Chairwoman will now recognize the Ranking Member of the 
full committee, Mr. Thompson.
    Mr. Thompson. Thank you very much, Madam Chairwoman.
    Mr. McAleenan--McAleenan, okay--the goal of this 
Congressional law was to give us, within a reasonable period of 
time, 100 percent scans on container shipments coming to the 
United States.
    Where are we at this point in that 100 percent?
    Mr. McAleenan. In terms of the total percentage, sir?
    Mr. Thompson. Yes.
    Mr. McAleenan. Okay. Our CSI program covers 80 percent of 
global trade to the United States. In terms of the actual 
scanning, we do about 45,000 inspections last year through our 
CSI ports prior to loading on vessels. That is a little bit 
less than 1 percent of the total cargo headed to the United 
States.
    Then we scan an additional 4 percent upon arrival 
domestically in the United States.
    Mr. Thompson. All right. In layman's terms, what percent 
cargo that is coming to the United States right now is not 
scanned?
    Mr. McAleenan. In the maritime environment, sir, in terms 
of physical scanning, that would be the vast majority, over 95 
percent.
    Mr. Thompson. All right. Why not?
    Mr. McAleenan. Well, we have been discussing with you, sir, 
and your committee for several years the complexities of this 
process and the tests that we have undertaken with SFI to 
examine the feasibility of the physical scanning, in 
particular.
    At the same time, we have been aggressively pursing the 
layered approach, focused on the targeting and intel, 
coordination through CSI with our foreign partners, conduct 
those exams on high-risk shipments before they are loaded, 
working with international community on standards----
    Mr. Thompson. I understand.
    Mr. McAleenan [continuing]. So forth.
    Mr. Thompson. Taking whatever you are doing to--whether it 
is high-risk shipments or anything like that, at this point in 
this hearing today, is there any shipments using your protocol 
that is coming to the United States that we don't know what is 
in it?
    It is not a complex--of what you are saying--is the layered 
approach, where you are scanning, where you are taking high-
risk, I want to know what the number is.
    Mr. McAleenan. We have stated contents on all shipments 
destined to the United States. Through the ISF 10+2 Filing, we 
also have the carrier explaining both the location on the 
vessel of the container, as well as the container status 
message, where it is in the process.
    The combination of those two data elements allows us to 
identify any un-manifested containers that are on a vessel. We 
address those with a carrier upon arrival.
    Mr. Thompson. Wait, wait, wait. Hold, hold it.
    So your testimony to this committee is that there is no 
container shipment coming to the United States that we don't 
know what is in it?
    Mr. McAleenan. Sir, I think that is too strong a statement. 
What I have explained is that we have requirements----
    Mr. Thompson. I understand requirements. Are you doing 90 
percent? Are you doing 85 percent? Are you doing 95 percent?
    I want to know where we are toward 100 percent standard. 
Whatever protocols you are using, that is fine. But I want to 
know where the gaps are right now.
    Mr. McAleenan. There are very little gaps on information. 
We have very high compliance with----
    Mr. Thompson. Well, what is the little. Give me the little.
    Mr. McAleenan. The 24-hour-rule compliance is over 99 
percent. ISF compliance, as a relatively new program, that is 
at 92 percent.
    That is where we get the information on the cargo shipments 
in the maritime environment. So it is very, very high 
compliance on both of those programs.
    Mr. Thompson. Mr. Heyman, do you agree with that?
    Mr. Heyman. Yes. Almost 100 percent of all things coming to 
the United States are known to us, in terms of what is in the 
manifest, what is the lading. We then use that information to 
do a risk analysis.
    Mr. Thompson. So we are 99 percent of the container 
shipments that come to the United States, its your testimony 
before this committee, meets the requirement that we set forth 
in the 2007 law?
    Mr. Heyman. No, that is not what I was saying. What I was 
answering--the question was whether we knew of all of the stuff 
that was coming to the United States. The answer is generally 
yes.
    Mr. Thompson. When you said knew about--I am not saying of 
all the stuff. Do you know what is in the containers?
    Mr. Heyman. Yes.
    Mr. Thompson. You do?
    Mr. Heyman. So the----
    Mr. Thompson. At 99 percent?
    Mr. Heyman. Yes. The question that the law puts forward is 
to whether the information that we receive is accurate, and 
whether, in fact, somebody has tried to fraudulently put 
material into a container or misrepresent what is in a 
container.
    That is what we try to identify. In fact, we have done it 
to great success. About 11,200 narcotics seizures last year.
    Mr. Thompson. No, no. I am not asking for that kind of 
data. I am just trying to give the public the confidence that 
the law Congress passed saying we want 100 percent, that you 
are telling this committee, from what I understand, that you 
are 99 percent there.
    Mr. Heyman. No, in terms of the 100 percent scanning 
mandate, Congressman, that mandate, as we have testified over a 
number of times over the last several years, poses significant 
operational, diplomatic, financial, and technical challenges.
    Mr. Thompson. Well, that is fine. So where are you to do 
the 100 percent? What percent along the way are you?
    Mr. Heyman. What my colleague has just testified to is that 
we are doing approximately 5 percent of the----
    Mr. Thompson. You are 5 percent.
    Mr. Heyman. Approximately, yes.
    Mr. Thompson. All right. So what are we doing for the other 
95 percent?
    Mr. Heyman. So those are what we have done. They go through 
the advanced targeting system to be identified as not part of a 
high-risk containers that require additional inspection.
    The inspection process, remember, is first to look at 
whether the manifest is accurate, second to look at whether 
there is any threat information, third to look at the 
opportunity for non-intrusive inspection. Then ultimately we 
may have to open that up.
    That is the most difficult course.
    Mr. Thompson. But that is the process DHS put together. 
That was not the process that Congress directed.
    Mr. Heyman. Actually, that is the process that was put in 
place for the pilot project that Congress asked us to do.
    Mr. Thompson. Yes, but the pilot projects are done. So you 
have now taken that and made that the policy, based on what you 
just said.
    Mr. Heyman. I am not sure I understand.
    Mr. Thompson. Mr. Caldwell, let me ask a question of GAO. 
Are you comfortable with the responses you have heard, that 99 
percent of the cargo or container shipments coming to the 
United States, we know what is; we know what is in it?
    Mr. Caldwell. No. Let me maybe interpret what I am hearing 
here.
    Mr. Thompson. No? Don't interpret it. Just stick with the 
facts.
    Why are you not?
    Mr. Caldwell. For the majority of the containers, we have 
the manifest. It doesn't look suspicious, that is where the 
scrutiny stops.
    Now in many cases, this may be a standard shipment from a 
manufacturer overseas into a Target store here in the United 
States, maybe towels, textiles, anything else. But as far as 
assurance of what we know in there, we have the manifest and 
the manifest only.
    Mr. Thompson. So other than the manifest, we don't know.
    Mr. Caldwell. That is correct, unless there is actual 
scanning.
    Mr. Thompson. Thank you.
    Mrs. Miller. Thank the gentleman.
    At this time, the Chairman will recognize the gentleman 
from South Carolina, Mr. Duncan.
    Mr. Duncan. Thank you, Madam Chairwoman.
    Let me just pause to say thank you for arranging a tour of 
the Port of Baltimore with Customs and Border Protection and 
the Coast Guard recently, where you and I had an opportunity to 
witness some of the things that the Ranking Member is talking 
about with scrutiny of manifest, looking at country of origin, 
stops of the ship that is carrying containers, possible 
interdiction multiple places along the way, and then the active 
screening there in the port for radioactive material, chemical 
and biological issues.
    So when you think about the number of ports in this country 
and the number of containers that come in, I am amazed that we 
are able to do as well a job as we do. I commend the gentlemen 
that are doing that, implementing the policies of this country 
every day to keep us safe.
    So thank you. Thanks for educating me.
    I guess the question I have--is it McAleenan?
    Mr. McAleenan. McAleenan, sir.
    Mr. Duncan. Thank you. I wasn't here for the introductions, 
Madam Chairwoman, so I apologize.
    Can CBP effectively screen high-risk shipments in a way 
that expedites legitimate commerce? Because from what I saw, 
there is a stop-and-go process. I know that we have targeted 
certain containers and certain countries of origin, and we are 
trying to do a very good job there.
    But I am very concerned the speed of commerce and 
expedition of that. So can you screen high-risk shipments in a 
way that expedites legitimate commerce, while at the same time 
ensuring the security of the United States? If you will touch 
on that?
    Mr. McAleenan. Yes, I believe we can, Congressman. Our 
layered approach is designed to do precisely that.
    For the vast majority of cargo that we determine to be low-
risk, based on our analysis of intelligence, the information 
provided on those cargo shipments, our knowledge of the supply 
chain and our knowledge of the parties involved in that 
transaction, those are released and fed to their destination, 
the engine of our economy, right away, usually before arrival.
    For those very small percentage of cargo that we think 
might be risky, or that we don't have enough information on 
them and we want to take a further look at, we do try to 
address that potential risk at the earliest possible time in 
the supply chain.
    Forty-five thousand times last year, that was done before 
the cargo was even laden on the vessel in the foreign port. 
Another 5 percent of cargo is examined at the U.S. port of 
arrival. We try to even do those examinations in the most 
efficient way possible.
    We use a non-intrusive inspection technology, which is a 
gamma imaging and X-ray device, as you probably saw at the Port 
of Baltimore, to do the initial exams on cargo that we 
determine might be high-risk. That is a very quick process that 
we can scan the cargo efficiently.
    If we don't see any anomalies, if the picture looks 
consistent with the commodity that we expect to be in that 
container, we are able to allow that to proceed into the 
commerce. It is only a very small percentage, tiny percentage 
that still remains of concern, that we actually do a full 
examination in what we call de-vanning, which is emptying the 
container and looking at all the contents.
    So that layered approach is designed to do precisely what 
you asked about, Congressman, in terms of facilitating that 
trade while securing it.
    Mr. Duncan. I appreciate those efforts and you clarifying 
that.
    You know, it seemed like there was going to try to be a 
gotcha moment a minute ago, asking for 100 percent or 99 
percent. There is no way that any country in the nation or in 
the world can fully screen every container, based on the sheer 
number that are coming into this country.
    So I think scrutinizing the manifest, understanding the 
country of origin, understanding the history of that particular 
shipper or that particular manufacturer or that particular 
importer, is critical.
    So watching you all implement those different steps, and 
saying this container came from X, Y, Z country, but it made 
stops at country Z and country Y before it came to the United 
States. Maybe it was offloaded there and held for a while, and 
then put on another container ship.
    Tracking that container the whole way, and understanding 
that we need to pull that out of the line, we need to 
scrutinize it a little bit further, even to the point of 
possibly unpacking it, is an amazing undertaking.
    So trying to see a gotcha moment of 100 percent of the 
containers, and we know everything that is in there--no. That 
is ridiculous.
    We don't know how many towels are in there other than what 
the manifest says. But you guys do a tremendous job.
    Madam Chairwoman, we saw it, that looking for threats, 
assessing those threats.
    So the question I have for Mr. Caldwell is: In your 
estimate, what do you think it would cost the Government to 
fully implement 100 percent cargo screening? What is the dollar 
figure on that, sir?
    Mr. Caldwell. Well, we talked a little earlier about a 
figure of $20 billion. That is the same figure we had reported 
in 2009.
    Mr. Duncan. $20 billion?
    Mr. Caldwell. $20 billion. Now it is a little unclear who 
would pay this. The SAFE Port Act and the 9/11 Act do not 
specify who would pay it, which is a large issue, of course, 
with that amount.
    Mr. Duncan. Ultimately the consumers are going to pay, 
because import/exporters are going to pass those costs on. That 
is obvious to most folks.
    I am out of time, Mrs. Chairwoman. I yield back, Madam 
Chairwoman.
    Mrs. Miller. Thank the gentleman.
    At this time, the Chairwoman would recognize the gentle 
lady from California, Ms. Sanchez.
    Ms. Sanchez. Thank you, Madam Chairwoman. Again, you are 
doing a good job.
    Mrs. Miller. Thank you. So are you.
    Ms. Sanchez. I would first ask the gentle lady, I have had 
the privilege of being able to go and take a look, having 
chaired this subcommittee before, to many of the ports abroad, 
to see what conditions they work under.
    I would just say that I think aside from trying to take a 
look at some of the major ports we have here, this subcommittee 
might think about taking a look at the major ports that 
actually export to us, and see what conditions there are.
    There is a big difference between Mumbai, for example, the 
Port of Mumbai, and Singapore. That allows us to understand it 
is difficult to get to this 100 percent scanning issue.
    In fact, we have just learned, and we have known for a 
while that it is just 5 percent or so that we scan. I 
understand the layered approach. I was one of the people who 
pushed the C-TPAT, for example.
    But, you know, there is still this uneasiness, at least for 
me, about relying on the manifest for a majority of what is 
going on, and just looking for abnormal patterns and risk 
analysis towards that, and then taking a look at that.
    So I think it is very difficult to get to 100 percent 
screen. But at the same time, there is still a lot out there 
that we are missing. For example, it is my understanding that 
of the cargo at Container Security Initiative Ports determined 
to be high-risk, Customs and Border Protection scans are 
otherwise resolved 96 percent of the shipment that goes 
overseas.
    That means that 4 percent of those, or in fiscal year 2011 
a little under 2,000 shipments, were high-risk cargo that 
weren't examined before they arrived to the United States. As 
somebody who lives 20 minutes away from Long Beach/L.A. Port, 
that is a big concern.
    If there is a dirty bomb or something else in there, I 
don't want it reaching here. I really do want to push it out 
and have that happen out there.
    So that is one of the questions I have, is can you please 
discuss that particular issue?
    Then my second question would be that Secretary Napolitano 
has testified that the requirements of H.R. 1, recommended by 
the 9/11 Commission, could not be met for several reasons, 
including that the technology does not exist for 100 percent 
effective and efficient cargo screening.
    So is that the Department's position today, that we don't 
have the technology to do an efficient and effective, fast, 100 
percent screening?
    It is also my understanding that the Domestic Nuclear 
Detection Office is developing a plan for evaluating and 
testing muon tomography as part of the Advanced Technology 
Demonstration Program. This program has been installed in three 
ports--Bahamas--to demonstrate as a private/public project in 
the operational environment.
    So has the Department taken a look to see if they want to 
participate in this test to see if, in fact, that technology 
works, and whether we can get it put in here to the United 
States?
    So these would be my three questions, Madam Chairwoman.
    I will leave it to any of you to answer those.
    Mr. McAleenan. Okay. I will take your first, Congresswoman.
    Your numbers are correct on the 96 percent of exams which 
are accepted by our foreign partners in the CSI ports for 
examination. The 4 percent--there are challenges sometimes in 
the timing of the request.
    Some of our partners aren't able to respond during the 
hours that we need them to, before the container is ladened. It 
does mean it gets ladened without an inspection, even though we 
have asked for it.
    Ms. Sanchez. It arrives in my Long Beach Port, let us say.
    Mr. McAleenan. Correct. That happened about 1,780 times 
last year, out of the 10.5 million total cargo shipments to the 
United States. So it is a very tiny percentage that we have 
targeted with CSI, but the foreign governments aren't able to 
respond.
    Ms. Sanchez. But it is still 2,000. If happens to be one of 
those that gets put on a truck that goes through the 5 Freeway 
in my neighborhood----
    Mr. McAleenan. Understood. The definition of high-risk does 
not necessarily mean that it is a risky shipment. In fact, we 
have not found an explosive device or terrorist weapon in all 
of these shipments that are targeted.
    These are based on anomalies in the supply chain. They are 
based on intelligence factors. In most of all of the 
inspections, the vast majority resolve to no concern.
    So, you know, to your point, we would like to get 100 
percent response in this from our CSI partners. The 96 level is 
our highest historically that we have achieved.
    We continue to work with our partners to try to get to that 
100 percent level on the CSI ports.
    Ms. Sanchez. Thank you.
    Mr. Heyman. To get to your other two questions, first, let 
me just agree with you. I think I would recommend a visit to 
these ports. If you have seen one port, you have seen one port. 
I mean, they are so different.
    One of the things that has been challenging to us is that 
diversity. A terminal operation in one port can be different 
from another terminal operation in the same port or even other 
ports.
    So in terms of the cost of the technology and things like 
that, it is not just that. It is also how you configure your 
operations on the terminal; what is the footprint? All of those 
things need to be factored into it.
    They are all problematic.
    Ms. Sanchez. Yes, because every port was made in a 
different way. You have a different footprint. You can't put 
the same standardization in.
    Mr. Heyman. Correct. You know, they weren't designed for--
--
    Ms. Sanchez. This.
    Mr. Heyman [continuing]. This, exactly. Furthermore, the 
challenge, of course, that we are on--we are looking to do this 
in foreign countries, and the diplomatic challenges.
    I think in the pilots, if you look at them, we had labor 
issues in South Korea. We had what I just described the 
terminal operations were challenging in other ports. United 
Kingdom expressed that they were not interested in pursuing 
this.
    So there are foreign diplomatic challenges, not just the 
technical ones or the cost ones. I don't want to belabor the 
point.
    Let me get to your second question about the technology. We 
have to look at technology as a possible solution down the 
road. We always want to look at that as a possible long-term 
solution. It helps drive down costs. It may increase 
efficiencies. It may increase also the speed in which goods 
flow through our ports.
    So we are looking at that. We are partnering with other 
agencies and within our own strategy, looking to do additional 
investments in technology and technology development. We all 
see where that goes in the long term.
    Ms. Sanchez. So is it still the Department's official 
position that the technology does not exist to do the 100 
percent screening?
    Mr. Heyman. The technology that we have--well, no, there is 
technology that exists today that has challenges, all of the 
ones that I just described, and including challenges I didn't 
describe, such as false positives, which end up----
    Ms. Sanchez. Right. I understand.
    Could you answer for the record, in writing, the third 
question that I had about the free port situation, what you 
know about it, whether you are involved in it, whether you 
think you are going to get involved in it?
    Mr. Heyman. Happy to do that.
    Ms. Sanchez. Thank you.
    Thank you, Madam Chairwoman.
    Mrs. Miller. Thank the gentle lady.
    The Chairwoman now recognizes Mr. Broun from Georgia.
    Mr. Broun. Thank the Chairwoman.
    This hearing, as well as many others, have pointed out 
something I have long said here in this committee. That is that 
the Department of Homeland Security has it totally wrong.
    We are spending billions of dollars. In fact, I submit we 
are wasting billions of dollars looking for objects, instead of 
looking for those who want to harm us.
    We would be much better off as a Nation, much more secure 
as a Nation if we would spend the money in human intelligence, 
focusing on those who want to harm us. We have got to stop 
patting down grandma and children, and start looking at 
airports for those who want to do us harm through the aviation 
sector.
    We need to stop looking at all this technology to try to 
get to 100 percent when we can only get 5 percent, by really 
focusing on those entities throughout the world that want to 
harm us. We are not doing that.
    We are wasting billions of taxpayers' dollars. We are 
giving them a false sense of security. We are giving them a 
message that this country is going to be free from having dirty 
bombs, as Ms. Sanchez was talking about.
    We are wasting the taxpayers' money. It is actually 
preposterous to continue looking for objects. We need to 
totally change our focus, whether it is with shipping into our 
ports, across this country, around the world. We need to start 
focusing on those who want to harm us.
    Having said that, I have got just a couple of questions. 
Why is there such a lack of specifics in the administration's 
new ``National Strategy for Global Supply Chain Security''? 
Anybody.
    Mr. Heyman. The strategy represents the highest level of 
fidelity for what we need to do to accomplish our interests in 
ensuring the security and resilience of global supply chains. 
There is obviously a much richer and deeper programmatic 
implementation that goes underneath that.
    What the strategy tries to convey is the idea of all of the 
preceding programmatic and strategic efforts that have gone 
before, that this strategy builds upon. Rather than belabor--
and oftentimes you do list some strategies as you talk about 
all of the authorities and everything that goes before that.
    We tried not to do that because we wanted people to read 
it. That said, we would be happy to give you a more detailed 
brief at some point of all of the things that we are doing and 
have been accomplishing in the last year.
    Mr. Broun. Well please do, because business has a very 
great difficulty dealing with your lack of specifics.
    Why has the administration spoken against 100 percent 
scanning? In some cases, they have even waived the mandate, but 
has not requested that Congress repeal the mandate.
    Mr. Heyman. At this point, one of the things that we have 
done in the last several years, which I think is important for 
people to recognize, is put in place programs that actually 
allow us to do much better risk management.
    If you look at the ATC, which my colleague described, the 
Advanced Targeting Center, and the information, the 10+2, which 
allows us to do much better analysis, we are probably--I don't 
know, eons--much further down the road in terms of our ability 
to identify high-risk and interdict high-risk cargo than we 
were 5 years ago.
    So in many regards, we are moving in a direction which 
allows us to be practical and responsible in the implementation 
of the law.
    Mr. Broun. In the Science Committee, we have looked at a 
number of the technologies that have been developed, you 
utilized, and some that are just sitting in warehouses. I would 
like to have from the Department a run-down of how much money 
has been spent on technologies that have been used and 
discarded as being effective.
    How much money has been even spent and not even utilized, 
is sitting in warehouses? If you please provide those data for 
me, I would be very interested to see those. Because I know 
from a Science Committee perspective, there have been a lot of 
technological proposals that the Department has purchased, and 
have just never been employed.
    But I encourage the Department to change tracks. We have 
got to focus on terrorists, instead of focusing on objects. TSA 
just takes great pleasure in talking about how many weapons 
have been found in airports and talking about the successes 
that they have had.
    But we have let terrorists on airplanes. We are not doing 
our job to keep America safe. The Department is looking in the 
wrong direction when we are looking at objects.
    We need to look at people, those people who want to destroy 
us, and those people groups that want to destroy us. I am not 
talking about looking at every Muslim, every person from Middle 
Eastern descent.
    We need to look at terrorists, instead of looking for the 
objects that the Department of Homeland Security is doing now. 
We are wasting billions of taxpayers' dollars in doing so.
    So I encourage the Department to change tracks. I have told 
the Secretary that she is wasting money and that the whole 
philosophy of the Department is totally wrong.
    We need to look at terrorists. We need to look at those 
people who want to harm us, instead of trying to look at 
objects and keep them from coming in this country, or getting 
on airplanes, boats, or ships, or trains.
    We aren't even looking at those other things, just at 
aircraft.
    I yield back, Madam Chairwoman.
    Mrs. Miller. Thank the gentleman.
    The Chairwoman now recognizes the gentle lady from Texas, 
Ms. Jackson Lee.
    Ms. Jackson Lee. Thank the Chairwoman and the Ranking 
Member.
    To the witnesses, let me ask you a first question of 
everyone. I was trying to catch the gentleman from Georgia's 
comments about wasting money, but I know that you can't put a 
price in America on loss of life.
    Obviously, the issue of property can sometimes generate 
enormous catastrophic impact on communities. So let me ask the 
members of this panel representing a number of entities that 
are involved in I believe the mandate of 100 percent cargo 
screening that was supposed to take place in January 2012.
    Secretary Heyman, do you have the resources? Please don't 
tell me that it is not in my area. You are here to talk about 
cargo screening and et cetera. So it is your impression that 
the Department has the resources, the money right now to make 
good on the mandate of 100 percent screening?
    Mr. Heyman. No, ma'am.
    Ms. Jackson Lee. Thank you.
    Okay, we are always getting this. Mr. McAleenan.
    Mr. McAleenan. McAleenan, right.
    Ms. Jackson Lee. Yes, thank you. Kevin, my good friend. No.
    Mr. McAleenan. That works, Congresswoman.
    Ms. Jackson Lee. A distinguished name. Your answer to that, 
please, sir?
    Mr. McAleenan. My answer would be the same, ma'am.
    Ms. Jackson Lee. Okay.
    Admiral Zukunft.
    Admiral Zukunft. We are not in the container screening. But 
an element that wasn't introduced was the foreign port 
assessments that we are----
    Ms. Jackson Lee. Again, that is correct.
    Admiral Zukunft. Yes, well 153 nations, four that we don't 
do trade with. So that is just another piece of it. Then we are 
embedded with CBP.
    We screened 28.5 million people last year. Getting back to 
the Congressman from Georgia's question, as looking at those 
people. So one, are there holes in the fence line, so to say, 
in a foreign port, where there are not good access control 
points, where someone can enter that facility and then 
introduce an object into a container that is not in a manifest?
    Then screening people; is there somebody on that vessel 
that may do the same?--and looking at that history. Then impose 
conditions of entry on those vessels that may enter a U.S. 
port.
    Then it really comes down to let us stop that threat before 
it enters a U.S. port. Let us not stop it at the terminal.
    Ms. Jackson Lee. So do you have----
    Admiral Zukunft. So we currently have the resources to do 
these foreign assessments. We have roughly 60 individuals that 
are dedicated to doing foreign port assessments. Our challenge 
is the resources that it would take to actually stop the threat 
before it enters U.S. waters.
    So that is where, as you have heard our comment on State, 
time and again--that is where our rubber meets the road.
    Ms. Jackson Lee. So you have the personnel right now and 
you have the resources. Is there a time when you expect those 
resources to run out?
    Admiral Zukunft. Not on foreign port assessments. In fact, 
we have been able to advance those objectives working with 
foreign partners, particularly in the European Union.
    Ms. Jackson Lee. This is under your Coast Guard funding?
    Admiral Zukunft. It is.
    Ms. Jackson Lee. Mr. Caldwell, you are likewise with the 
Government Accountability. Do you think DHS made a assessment 
of the resources that they have to meet the mandate that was 
given to them?
    Mr. Caldwell. Not for the 100 percent, no, ma'am.
    Ms. Jackson Lee. Is anyone in your shop looking at that 
issue? That is part of what may be the potential problem. Is it 
not?
    Mr. Caldwell. Well, every year, we do analyze the budgets, 
provide advice to Congress and committees such as this.
    Ms. Jackson Lee. In the most recent budget that you have 
analyzed, what is your guess on that? When I say recent, the 
most recent one that we may have had, because we don't have a 
budget as we speak.
    Mr. Caldwell. Could I be very specific?
    Ms. Jackson Lee. Yes. You can, sir.
    Mr. Caldwell. The 2012 budget versus the 2011, there was a 
50 percent reduction in international cargo screening requested 
by the administration.
    Ms. Jackson Lee. Thank you very much.
    Requested from the administration and then ultimately what 
occurred? Do you have a next step of what they actually 
received?
    Mr. Caldwell. Well, part of this was a shifting of funds 
from actually people in the ports, like in the CSI port, back 
to the National Targeting Center. From our perspective at GAO, 
while some people need to stay in those ports to have 
relationships with the host countries, that in general, the 
targeting purposes, that can be done much cheaper and more 
efficiently back here at the National Targeting Center, ma'am.
    Ms. Jackson Lee. Thank you.
    Would the Chairwoman indulge me for just one last question, 
please? I would appreciate it, Madam Chairwoman.
    A study produced by Booz Allen Hamilton last year indicated 
a 30-day closure of the Port of New York and New Jersey would 
result in an economic impact on the U.S. GDP of over $5 billion 
and loss of 50,000 jobs.
    Whether in New York, in my hometown of the Port of Houston, 
Houston port, or in any of the other major ports across the 
country, a terrorist incident that closes our Nation's ports 
would have a devastating economic affect in the United States 
and around the world.
    Understanding these potential economic growth impacts--
potential economic impacts, can we afford not to increase the 
security of maritime cargo arriving on our shores?
    I want to point that to the assistant secretary and to the 
assistant commissioner.
    Mr. Heyman. Thank you for that, Congresswoman. That is 
right. This is one of the reasons this strategy is being put 
forward. In fact, the disruptions to ports, the disruption to 
commerce, the disruption to supply chains is going to happen at 
some point.
    We have seen it recently with the tsunami. We have seen it 
with the volcano last year. We have seen it with terrorism.
    One of the things we have tried to do in this strategy that 
is different and that is important to recognize is to 
internationalize the solution. That is to say we have gone to 
and are going to multilateral organizations, World Customs 
Organization, ICAO, IMO, Universal Postal Union.
    We are working bilaterally and saying, look, we need to 
raise standards. No one government, no one private sector firm, 
nobody is going to be able to solve this on its own. It has to 
be a community effort.
    That is why one of the things we are going to be working on 
and having been working on is to internationalize this.
    Ms. Jackson Lee. Have you given up on 100 percent 
screening?
    Mr. Heyman. We are continuing to operate under the law.
    Ms. Jackson Lee. Can Mr. Commissioner just finish the 
answer? It was two of those that I posed the two. Commissioner, 
thank you.
    Mrs. Miller. Okay.
    Ms. Jackson Lee. Thank you.
    Mr. McAleenan. I would just say we must maintain our 
robust, layered approach to enhance cargo security. We have got 
to continue to improve.
    We take the GAO's comments very seriously and have used 
them, as Mr. Caldwell testified, to improve our programs over 
the course of the past 5 or 6 years.
    In fact, the CSI recommendation that they made has saved us 
$35 million a year without diminishing our security with the 
CSI program. So that is a--maintaining our structure and 
expanding it, improving it is absolutely essential.
    Ms. Jackson Lee. I thank the Chairwoman and the Ranking 
Member.
    I thank the witnesses. I yield back.
    Mrs. Miller. Thank the gentle lady.
    The Chairwoman now recognizes the gentle lady from 
California, Ms. Richardson.
    Ms. Richardson. Thank you.
    First of all, I would like to start off my comments by 
thanking Chairwoman Miller and Ranking Member Cuellar for 
supporting my participation today in the hearing.
    Second of all, for the record, I would like to note that 
Representative Rohrabacher is the one who represents the Port 
of Los Angeles and Long Beach, which is known as the San Pedro 
Complex. It is the largest port in the United States, of which 
I will be focusing my comments today.
    I also want to note for the record that at a full Homeland 
Security Committee hearing on February 25, 2010, I questioned 
Secretary Napolitano on the progress of the 100 percent 
container screening. On June 16, 2011, as Chairwoman of the 
Subcommittee on Emergency Communications, Preparedness, and 
Response, myself and committee Members submitted a letter to 
the Secretary regarding the impending deadline of the 
screening.
    Then again on March 3, 2011, I asked Secretary Napolitano 
about the 100 percent cargo screening. So this has been a 
concern of mine for quite some time.
    With all due respect to some of our folks here who are 
testifying, for those of us who live in these communities, the 
port complex itself is in Mr. Rohrabacher's district. However, 
all of the land portion and all of the impacts of the port, 
meaning trucks and activity, for example, in the Port of Long 
Beach is in my district.
    So I take it pretty seriously.
    Madam Chairwoman, for the record I would also like to point 
out that not speculating ideas, but according to the University 
of Southern California's Homeland Secure Center, a preliminary 
economic report was performed back in 2003 due to the strikes 
that we had, the labor strikes in 2003.
    It was recorded at that time that $1 billion a day was 
lost, based upon the closure of our ports. So with all due 
respect to the people who are testifying, when we say a number 
of $16, $20 million, whatever it is, when you keep in mind that 
we lost $11 billion in 2003, and that was a labor issue; that 
wasn't even if there were infrastructure damages.
    So I am not putting aside the cause that we need to 
consider these costs. Which leads me to my first question. If 
you could do yes and no as much as possible, I would appreciate 
it.
    Mr. Heyman, to your knowledge, has the Department conducted 
a feasibility analysis, based upon costs, as Mr. Caldwell has 
referenced?
    Have you guys done that, yes or no?
    Mr. Heyman. We have not done a full feasibility study.
    Ms. Richardson. Okay. Thank you. My next question would be, 
Mr. Heyman, to your knowledge, have any steps been taken--are 
any steps being taken at this time to achieve the SAFE Port Act 
9/11 Recommendations of 100 percent scanning in the Department?
    Mr. Heyman. Yes. We have submitted a report. We can make 
sure you get a copy on that.
    Ms. Richardson. Let me make sure you are clear on the 
question that I am asking. This report will reflect what steps 
you are taking to achieve the 9/11 recommendations of 100 
percent scanning?
    Mr. Heyman. This report reflects all of the SAFE Port 
requirements and how we are implementing it.
    Ms. Richardson. How you are working to achieve 100 percent 
scanning?
    Mr. Heyman. The report talks about what we have done to 
achieve 100 percent scanning to this point.
    Ms. Richardson. Okay.
    Commissioner, is it true that the CBP relies upon host 
governments, with their customs personnel in relevant foreign 
countries, to resolve issues of containers that are deemed 
high-risk?
    Mr. McAleenan. Yes. We work with host nation authorities 
that are sovereign in those ports, and oftentimes observe the 
examinations of participants.
    Ms. Richardson. Is it true that the CBP does not require 
scanning at these ports?
    Is it true that you do not require scanning of the high-
risk containers out of these various ports, these foreign 
ports?
    Mr. McAleenan. Our CSI folks are operating with requests, 
as opposed to requiring authority to examine.
    Ms. Richardson. So it is correct of my question that you do 
not require scanning at these ports. Is that correct?
    Mr. McAleenan. We do not have the authority to force a 
sovereign nation to take action on our behalf.
    Ms. Richardson. Okay. Again building upon Ms. Sanchez, it 
is true that 4 percent of the cargo identified at these ports 
have been identified as high-risk and have arrived in the 
United States without being scanned. That is correct?
    Mr. McAleenan. That is correct, 1,750 shipments last year.
    Ms. Richardson. Okay. Mr. Heyman, you testified about all 
these wonderful international relationships. However, when I 
asked the Secretary and when I also asked Ambassador Kirk, in 
these trade agreements that we recently approved, was there any 
effort to work with these foreign countries to establish a 
scanning process?
    The answer in both of those was no, didn't know, would get 
back to us. Do you know anything different than that?
    Mr. Heyman. I do not, but I can get back to you, if you 
like.
    Ms. Richardson. Okay.
    Finally, Madam Chairwoman, I would just like to build upon 
Mr. Broun's request of not only requesting the information of 
costs of some of the technology of what is being done, but to 
supply to requests of ourselves here who are testifying--to 
supply to us details on what steps have been taken, what 
technology is currently being considered, when has that last 
been reviewed, and what future technologies are they 
considering to meet this request, which may require a 
classified briefing.
    Mrs. Miller. Thank the gentle lady.
    The Chairwoman now recognizes----
    Ms. Richardson. Did you accept my request?
    Mrs. Miller. Yes. Without objection. Were you concluded? 
Yes, okay. Without objection, certainly.
    Chairwoman now recognizes Ms. Hahn.
    Ms. Hahn. Thank you, Madam Chairwoman and Ranking Member. I 
really am appreciative of this hearing, as I mentioned to you 
yesterday on the floor. My friend, Congress Member Ted Poe and 
I have founded the Port Caucus here in Congress.
    In December, we actually sent a letter to the chair of the 
Homeland Security Committee asking for a hearing such as this. 
I am very pleased that we are holding this.
    I have been very interested in the testimony. But I think 
sitting here this whole time and listening to the question-and-
answer, I am not feeling any better about where we are in this 
country in terms of port security.
    I echo many of the comments that my colleague, Ms. 
Richardson, just made. While neither one of us actually 
represents the Port of Long Beach or Los Angeles, those two 
ports, we call them America's ports, because about 44 percent 
of the trade that comes into this country comes through those 
port complex.
    Both of our districts border those ports. Many of our 
constituents live minutes from those ports. Any attack, natural 
or man-made, would be devastating to lives and to the National 
economy. As Ms. Richardson said, in 2002, we had a labor 
dispute. Everyone knew it was happening. There was already 
efforts underway to divert cargo from the West Coast ports.
    Yet we were able to determine that it was a $1- to $2-
billion-a-day hit to our National economy. It lasted 10 days. 
So do the math and we know what that did.
    Also not to our National economy but the global economy. We 
heard that many businesses throughout Asia actually were 
extremely impacted by the loss of cargo moving during that 10 
days. Some of the businesses, we even heard, never recovered 
from that.
    So I think the threat to our National economy, the global 
economy, to lives is severe. I have real concerns. I have 
always felt like the most vulnerable entryway into this country 
is through our sea ports. After 9/11, I think we focused in 
this country, rightly so, on securing our airports.
    You know, and we didn't really take into account the costs. 
We didn't really take into account the inconvenience. I think 
if the traveling public knew exactly what it was going to 
entail to make it through security lines, they would have 
probably balked at what we were recommending.
    But we did it because we knew it was important to the 
safety and security of the traveling public, as well as to our 
commerce. I don't feel like we have done the same with our 
ports.
    I know there is a lot of vulnerabilities still. I am one of 
those that would like to see us get to a much greater 
percentage of scanning. I really think that is imperative.
    I think just by your testimony today, you have talked 
about, you know, really a lot of what you are focusing on is a 
layered approach, knowing what is in the manifest, believing 
what is in the manifest, and believing that when it reaches our 
shores, nothing has happened across the ocean to have tampered 
with any of that cargo.
    Since we have implemented this, I know just at the Port of 
Los Angeles, there has been twice on the anniversary of 9/11 a 
National media company actually ship depleted uranium through 
the port. It was discovered in Los Angeles.
    Also know, since we have implemented this, there has been a 
couple of containers have come in that harbored folks from 
other countries. One was 19 Chinese in a container, that was 
discovered by the longshoremen in Los Angeles, not through any 
of these efforts that are underway.
    In terms of costs, you know, the costs that would impact 
our economy if something were to happen at one of these major 
ports is significant. But, you know, we were spending, you 
know, a lot of money on our wars per month. It was $12 billion 
per month for both of our wars in Iraq and Afghanistan.
    We believe that was worth it. We believe that was worth it 
for the National security. I really think this is at that 
level. I feel like we are vulnerable.
    I think we have all talked about how much we want a greater 
percentage of screening. I think you have answered where we are 
at. I think you have heard this warning from a lot of Members 
of this committee, that we really are interested in seeing you 
get a higher percentage of scanning.
    Let us talk about not when something or if something might 
happen. Let us talk about when something happens and port 
disruption. It was touched on in terms of recovering. I know 
that I am going to be introducing legislation that talks about 
all of our ports in this country having a recovery plan, 
because I think that would make our ports less attractive to an 
attack, if we knew that they could get up and running.
    In this Port Caucus, we are going to talk about a recover 
plan for all of our ports. What would you suggest that we look 
at, in terms of what would be important for our major ports to 
get back up in business after a major disruption?
    Mr. Heyman. Thank you, Congresswoman, for your thoughts on 
this very important subject. We take this very seriously. We 
appreciate your seriousness about it as well.
    On the resilience and recovery side, it is something that 
is not as--it has not been as embraced or as thought through as 
the prevention side. That is because largely we are very 
concerned about prevention. We have done less on the resilience 
side.
    In the United States, that is why we are taking an 
initiative and building in resilience internationally in our 
strategy. In fact, we have led the way, partly through the APAC 
Forum, of ensuring trade recovery procedures are put in place.
    One of the main things that people will do, and frankly, 
the ports should consider, is having the appropriate 
information to know where and when things can open, so that 
businesses can rely on a real understanding of timing and 
recovery of a disruption.
    The sharing of information is one of the things that we can 
do a lot more on, as it pertains to resilience at these ports.
    Ms. Hahn. Let me also ask about once at point of origin, we 
have got the manifest. It arrived at its point of destination. 
We are hoping for the best, that nothing has happened on our 
wide, open seas.
    Can any of you speak to that issue? Are you 100 percent 
sure that when these containers leave their points of origin 
and when they arrive at their point of destination, nothing has 
happened? What are we doing to ensure that?
    Mr. McAleenan. We are trying to make as certain as possible 
of that. To do that is part of the 10+2 filing. It includes 
information on where the containers reside on the vessel.
    That allows us to see if they might be accessible while 
they are on the high seas, to determine whether they could be 
compromised while they are underway. So we do seal checks when 
they arrive. We are able to compare the seal submitted by the 
importer and the shipper.
    Ms. Hahn. Who does those seal checks?
    Mr. McAleenan. U.S. Customs and Border Protection, usually 
officers at the port of entry. So, in other words, this is a 
concern. It is something we take seriously. We work with our 
partners in the Coast Guard as the vessels approach the U.S. 
ports.
    But----
    Ms. Hahn. Do you seal checks on all the containers?
    Mr. McAleenan. No. We do targeted seal checks and also 
random operations to ensure the integrity.
    Ms. Hahn. See, and that is what makes me nervous too, 
again. It keeps me up at night, is that random, you know, your 
kind of best guess on where to even check the seals.
    You know, as more and more of our ports are going to go 
automated, I am concerned that the loading and unloading of our 
cargo by automation, as opposed to real folks, I think presents 
a bit of a risk.
    Thank you.
    Mrs. Miller. I want to thank the--turn my mike on. I 
certainly want to thank all the participation from the Members 
today. It has been I think one of our--well, we have had some 
great hearings, but this certainly has been a good one, I think 
a lively one, a good discussion.
    I certainly want to thank all of the witnesses for your 
testimony. I sincerely want to thank you all for your service 
to our Nation. I know I speak on behalf of all of the Members, 
as we are obviously working in an extremely bipartisan fashion 
about National security.
    My staff gets sick of me saying this, but I say it all the 
time and try to remind certainly myself that with all the 
issues that the Congress faces, the first and foremost 
responsibility of the Federal Government is provide for the 
common defense.
    That is actually in the preamble of our Constitution. So 
National security, homeland security, all of these kinds of 
things are always our priority.
    So it has been very eye-opening to hear about some of the 
dollars that would be involved in us getting to where we may 
want to get to. I think you can see, again from a bipartisan 
standpoint, that we are very cognizant of the challenges to 
ever get to 100 percent, whether or not it is even feasible.
    That is why we have been waiting for the Secretary to come 
forward with possibly some legislation to modify the current 
mandate or what have you. But this subcommittee is very, very 
interested in assisting you with the resources that you all 
need to do your jobs, and the mission that we have tasked you 
with.
    You are out there every single day. It really is for us, as 
I say, to prioritize our spending here. Again, I will say that 
from a bipartisan standpoint, because it is interesting hearing 
that the administration is proposing a 50 percent reduction in 
the CSI program.
    But yet I certainly understand the makeup of all of that as 
well. It is expensive to have officers overseas, et cetera. So 
we are not looking for a sound bite here. We really are trying 
to understand how we prioritize our spending and do what we 
need to do to keep our Nation safe, particularly through our 
ports.
    So again, I appreciate all of the witnesses, your 
testimony. With that, I would mention also that the hearing 
record will be open for 10 days. If there is any additional 
questions, we all may submit those as well.
    Without objection, subcommittee stands adjourned. Thank you 
very much.
    [Whereupon, at 12:01 p.m., the subcommittee was adjourned.]


                            A P P E N D I X

                              ----------                              

      Questions for David Heyman From Chairwoman Candice S. Miller
    Question 1. Secretary Napolitano has stated that the 9/11 Act's 
mandate to scan 100% of maritime cargo containers is not achievable, 
does not necessarily make sense, and is not in line with the current 
risk-based approach. In fact, the Secretary has stated that the 
``mandate was constructed at a time before we had really a mature 
understanding of what that meant.''
    What is the current status of the DHS efforts to meet the 100% 
scanning mandate?
    Answer. DHS remains committed to ensuring that all goods coming 
into the United States are secure and do not pose a threat to our 
citizens or National interests. This is an area where we have done a 
significant amount of work, particularly with regard to containerized 
maritime cargo where we see such huge volumes of goods arriving each 
year. The SAFE Port Act required DHS to implement a pilot program to 
assess the feasibility and potential challenges with a 100 percent 
maritime container scanning program, titled the Secure Freight 
Initiative, or ``SFI.'' SFI was deployed in six international ports in 
2007 and 2008, double the required number. It demonstrated to us both 
the value that scanning can provide but also the significant impacts 
and challenges such a regime can pose if not implemented thoughtfully. 
As outlined in six annual reports to Congress titled Update on 
Integrated Scanning System Operations, these challenges included cargo 
processing delays, limited space within ports for the systems, high 
costs, diplomatic issues, and immature technologies. In light of these 
challenges, five of the six pilot project locations have reverted to 
Container Security Initiative (CSI) protocols of risk-based targeting 
and only the Port of Qasim in Pakistan remains an active SFI location.
    Question 2. Why was the 100% scanning mandate not addressed within 
the recently released Global Supply Chain Security Strategy?
    Answer. The National Strategy for Global Supply Chain Security 
(Strategy) does not address any specific statutes, programs, or 
initiatives, including the 100 percent maritime containerized cargo 
provision. Instead, the Strategy provides a high-level, integrated 
vision on a broad and complex topic. It establishes a collaborative 
risk-based approach to pursuing our goals of security, efficiency, and 
resiliency in the global supply chain. As a number of recent threats 
have shown us, the global supply chain is dynamic, growing in 
complexity and size, and remains vulnerable to a host of threats and 
hazards. A common approach is necessary to strengthen and protect this 
vital system. The Strategy is an important first step; it will enhance 
coordination among the many U.S. departments and agencies with 
responsibilities related to the global supply chain and convey our 
goals and priorities to stakeholders interested in collaborating with 
us.
    Question 3. Does DHS intend to move forward with implementing the 
100% scanning mandate?
    Answer. At this time, DHS is assessing whether it will be necessary 
to extend the deadline for the 100% scanning mandate established in 
Section 232(a) of the SAFE Port Act. We currently believe that at least 
three of the conditions for a 2-year extension exist but our assessment 
is not yet complete, nor has a final decision been made.
    While no decision has been made yet on the extension, the National 
Strategy for Global Supply Chain Security does identify promoting 
necessary legislation that supports implementation by Federal 
departments and agencies. Should a determination be made to pursue 
amending the mandate to reflect the Strategy's layered, risk-based 
approach, DHS would seek to work with Congress.
    In the mean time, we continue to work in concert with other 
departments and agencies (such as the Departments of Energy, Defense, 
Commerce, and State) to ensure that our Nation's nuclear non-
proliferation programs remain strong and global security measures to 
combat this threat are advanced.
    Question 4. Is 100% scanning an achievable goal?
    Answer. We do not believe that 100 percent scanning is an 
achievable goal, given the challenges previously noted. We are and 
continue to be committed to using a risk-based security approach and 
multiple layers of defense. We will continue work with Congress to 
refine our approach and ensure that scanning remains a key layer of our 
risk-based security system.
    Question 5. If 100% scanning were fully implemented, what would the 
initial and on-going costs to the Federal Government be to establish, 
maintain, and operate such a regime?
    Answer. DHS estimates that fully implementing the 100 percent 
scanning mandate would require establishing 2,100 scanning lanes across 
approximately 700 ports worldwide. A conservative estimate, based on 
costs associated with the Secure Freight Initiative pilots, is that 
such an effort would cost $16.8 billion dollars. This estimate does not 
factor the impacts and costs to the shipping industries or an estimated 
$2.9 billion annual operations and maintenance of the scanning 
equipment. If the 100 percent scanning mandate were fully implemented 
using currently available technological systems, the trade capacity 
impact on the flow of cargo would be significant.
         Questions for David Heyman From Honorable Mike Rogers
    Question 1. TSA and the Coast Guard completed the Transportation 
Worker Identification Credential (TWIC) reader pilot program in May 
2011. DHS has failed to publish their assessment regarding the pilot 
program, even though the Coast Guard Authorization Act of 2010 
specifically required these findings to be submitted to Congress within 
4 months of the completion of the program. Furthermore, the failure to 
complete this report has delayed the publication of the TWIC reader 
regulations, and now DHS does not expect to publish this key rulemaking 
until July 2012 at the earliest.
    What is the status of the Department's findings on the TWIC reader 
pilot program?
    Answer. The Transportation Worker Identification Credential Reader 
Pilot Report was signed by the Secretary on February 27, 2012, and 
delivered to the following committees: The Senate Committee on 
Commerce, Science, and Transportation, the Senate Committee on Homeland 
Security and Governmental Affairs, the House Committee on Homeland 
Security, and the House Transportation and Infrastructure Committee.
    Question 2. Why is this report already over 4 months late, and 
Congress still has yet to receive it?
    Answer. The Transportation Worker Identification Credential Reader 
Pilot Report underwent a thorough review by a number of components 
within DHS prior to the Secretary's approval.
    Question 3. When can we expect to have this report?
    Answer. The Transportation Worker Identification Credential Reader 
Pilot Report was delivered to the required House and Senate Committees 
on February 27, 2012.
    Question 4. When can we expect the TWIC reader regulations to be 
published?
    Answer. The Coast Guard is working diligently to publish the TWIC 
Reader Notice of Proposed Rulemaking (NPRM). An Advanced Notice of 
Proposed Rulemaking (ANPRM) on the TWIC reader requirements was 
published in the Federal Register on March 27, 2009. The ANPRM comments 
have been analyzed along with pilot data, and together they will help 
inform the Notice of Proposed Rulemaking (NPRM). It is difficult to 
predict when the final TWIC reader requirements might be implemented, 
as the Coast Guard is required to review, analyze, and take public 
comments into account before any final TWIC reader requirements can be 
implemented. For this reason, the Coast Guard does not have a precise 
date for publication of the TWIC reader rulemaking project.
        Questions for Paul F. Zukunft From Honorable Mike Rogers
    Question 1. TSA and the Coast Guard completed the Transportation 
Worker Identification Credential (TWIC) reader pilot program in May 
2011. DHS has failed to publish their assessment regarding the pilot 
program, even though the Coast Guard Authorization Act of 2010 
specifically required these findings to be submitted to Congress within 
4 months of the completion of the program. Furthermore, the failure to 
complete this report has delayed the publication of the TWIC reader 
regulations, and now DHS does not expect to publish this key rulemaking 
until July 2012 at the earliest.
    What is the status of the Department's findings on the TWIC reader 
pilot program?
    Answer. The Transportation Worker Identification Credential Reader 
Pilot Report was signed by the Secretary on February 27, 2012, and 
delivered to the following committees: The Senate Committee on 
Commerce, Science, and Transportation, the Senate Committee on Homeland 
Security and Governmental Affairs, the House Committee on Homeland 
Security, and the House Transportation and Infrastructure Committee.
    Question 2. Why is this report already over 4 months late, and 
Congress still has yet to receive it?
    Answer. The Transportation Worker Identification Credential Reader 
Pilot Report underwent a thorough review by a number of components 
within DHS prior to the Secretary's approval.
    Question 3. When can we expect to have this report?
    Answer. The Transportation Worker Identification Credential Reader 
Pilot Report was delivered to the required House and Senate Committees 
on February 27, 2012.
    Question 4. When can we expect the TWIC reader regulations to be 
published?
    Answer. The Coast Guard is working diligently to publish the TWIC 
Reader Notice of Proposed Rulemaking (NPRM). An Advanced Notice of 
Proposed Rulemaking (ANPRM) on the TWIC reader requirements was 
published in the Federal Register on March 27, 2009. The ANPRM comments 
have been analyzed along with pilot data, and together they will help 
inform the Notice of Proposed Rulemaking (NPRM). It is difficult to 
predict when the final TWIC reader requirements might be implemented, 
as the Coast Guard is required to review, analyze, and take public 
comments into account before any final TWIC reader requirements can be 
implemented. For this reason, the Coast Guard does not have a precise 
date for publication of the TWIC reader rulemaking project.
   Questions for Kevin K. McAleenan From Chairwoman Candice S. Miller
    Question 1. At the Border and Maritime Security Subcommittee 
hearing focusing on Supply Chain Security held on February 7, 2012, you 
testified that CBP has concluded that implementing 100% scanning could 
cost more than $16.8 billion.
    Please breakdown this number and explain this $16.8 billion cost.
    Answer. DHS estimates that fully implementing the 100 percent 
scanning mandate would require establishing 2,100 scanning lanes across 
approximately 700 ports worldwide. A conservative estimate, based on 
costs associated with the Secure Freight Initiative pilots, is that 
such an effort would cost $16.8 billion dollars. This estimate does not 
factor the impacts and costs to the shipping industries or an estimated 
$2.9 billion annual operations and maintenance of the scanning 
equipment.
    To develop this estimate, CBP first assessed the costs associated 
with operations at the Container Security Initiative (CSI) ports as 
well as the Secure Freight Initiative pilots. CBP determined that 187 
suites of technology were used to maintain operations at the 58 CSI 
ports and 12 additional locations. The costs associated with these 187 
suites of technology are broken down further below.
   Non-Intrusive Inspection Systems
     $3.5 million-$4.5 million each
     Total cost for 187 units is between $654 million-$841 
            million
   Radiation Portal Monitor Systems
     $400,000 each
     Total cost for 187 units is approximately $74.8 million
   Information Technology Transmission
     $800,000
     Total cost for supporting 187 units is $149.6 million
   Construction
     $1 million per site
     Total costs for all 187 suites is $187 million
   Staffing
     $500,000 per officer
     Total cost for 2-4 officers required per port is $187 
            million-$374 million
   Approximate total for 187 suites of technology needed to 
        support the 58 CSI ports and additional 12 pilot locations was 
        therefore $1.25 billion-$1.62 billion
    We arrived at the total implementation estimated cost of $16.8 
billion by extrapolating the costs above associated with the 70 
locations to the more than 700 ports (2,100 lanes) that shipped 
maritime containers to the United States in 2009 (the year the analysis 
was conducted).
    Question 2. Is this $16.8 billion the initial start-up cost, and if 
so, what are the annual reoccurring costs for implementing 100% 
scanning?
    Answer. $16.8 billion is the start-up cost for 700 ports and the 
annual operations and maintenance costs would be approximately $2.9 
billion.
    Question 3. Please explain how you came up with this figure and 
provide any documentation that supports the $16.8 billion cost.
    Answer. In fiscal year 2009 (the year the analysis was completed) 
there were approximately 700 ports that shipped cargo to the United 
States. We used the analysis from 70 ports (58 CSI ports and 12 
additional ports) to estimate of the number of suites of technology 
required for those 70 ports to implement 100 percent scanning. Based on 
the additional ports shipping to the United States and the volume of 
cargo from each of those ports, CBP estimated that it would require 
approximately 2,100 suites of technology for all ports to implement 100 
percent scanning. CBP used a figure of approximately $8 million per 
suite of technology for a total of approximately $16.8 billion. This 
does not include the cost to the trade if they were charged for 
scanning or if containers were delayed.
    Question 4. In the Secretary's recent State of the Homeland 
Address, she explained the rationale behind a risk-based approach to 
Homeland Security and expounded on the need for strong partnerships 
with industry, foreign governments, and other key stakeholders. One 
program that incorporates cooperation with industry to provide 
additional layers of security in exchange for certain benefits is the 
C-TPAT program. While C-TPAT has been a largely positive program, it 
does have several limitations. Some participants in the voluntary 
program have complained that they are not realizing certain privileges 
of membership.
    What are you doing to increase participation in C-TPAT? Are you 
considering new or additional benefits for some or all members?
    Answer. Tiered Benefit Levels for importer partners ensure that 
examination benefits are commensurate with the partner's status in the 
program and are recognized by the Security and Accountability for Every 
(SAFE) Port Act. The highest level of program benefits are awarded to 
those partners that exceed the minimum-security criteria through 
innovation and dedication to excellence.
    The program is currently surveying members requesting input on 
additional benefits.
    C-TPAT is in the process of implementing a National standard 
operating procedures to ensure for front-of-the-line benefits at ports 
of entry.
    C-TPAT is looking into areas for program expansion which would 
include critical nodes in the international supply that may not require 
a large commitment of current limited resources to physically visit. 
One possibility is to expand the Foreign Manufacturer sector (which is 
currently limited to those companies which qualify in Mexico and 
Canada) to allow for global participation. Many of the companies who 
would qualify have been visited at least once already by C-TPAT teams 
as part of validations of U.S. importer supply chains and could in many 
cases be validated based on previous visit(s) data. Furthermore, many 
of these companies are participants in AEO programs which C-TPAT has 
established Mutual Recognition Arrangements with and could potentially 
validate based on the AEO visit data. Similar potential may exist in 
the foreign-based consolidator sector where these facilities are often 
visited as part of U.S. importer validations. Historical data could be 
leveraged to increase membership while minimizing the impact on 
operational resources because initially, many new companies in the 
previously described examples could be virtually validated (not 
requiring physical trips).
    Question 5. What have been some of the biggest impediments to 
further expanding the C-TPAT program?
    Answer. CBP has carefully expanded the program since its inception 
to include new entities which have the physical means to enhance 
security along these critical points. In accordance with the SAFE Port 
Act of 2006, CBP established new membership communities for Mexican 
Long Haul Carriers, Foreign Marine Port Terminal Operators by 
invitation, and third party logistics providers. The decision to expand 
C-TPAT membership to include these groups was made in close 
consultation with the trade community including the U.S. Department of 
Homeland Security's Commercial Operations Advisory Committee.
    Existing members have expressed concern with a possible softened 
posture on eligibility requirements that would imply that new members 
will be subjected to a less robust validation process.
    Question 6. I understand that each C-TPAT supply chain specialist 
is responsible for about 75 companies. Have staffing shortages limited 
the expansion or effectiveness of the C-TPAT program?
    Answer. Our current staffing levels are adequate to meet our 
existing workload. However, human capital and funding will need to grow 
at a commensurate rate as the program expands in order to manage the 
increase in vetting, validation process, and C-TPAT partner account 
maintenance.
    Question 7. What steps has the Department taken to link with our 
foreign partners and improve the security of the entire global supply 
chain in terms of aligning our trusted shipper program, C-TPAT, with 
similar and effective programs abroad, such as Europe's AEO program or 
Canada's PIP program?
    Answer. CBP continues to collaborate with foreign customs 
administrations to improve efficiency and reduce redundancy within 
their respective trusted trader programs. Mutual Recognition (MR) links 
the various international industry partnership programs so that they 
create a unified and sustainable global security posture. CBP has 
signed MR Arrangements with five countries and is also working with 
three additional entities towards MR (Taiwan, Singapore, and the 
European Union).
    Mutual Recognition countries:
New Zealand--Secure Export Scheme (SES) (MR signed in June 2007)
   Observe New Zealand validation visits in accordance with 
        MRA.
Canada (MR signed in June 2008)
   PIP and C-TPAT have jointly developed single application 
        requirements for highway carriers and conducted a pilot with 4 
        highway carrier companies (2 located in Canada and 2 in the 
        United States) in the first quarter of 2011. The joint pilot 
        was successful and illustrated the feasibility of the single 
        application with single entity to single entity.
Jordan--Golden List (MR signed in June 2008)
   Increase communication with Jordan's Golden List program to 
        improve Mutual Recognition.
Japan AEO (MR signed in 2009)
   Continue open communication and implementation of Mutual 
        Recognition.
   Conduct Export pilot for C-TPAT companies that export to 
        Japan in 2012.
   In accordance with the MRA signed, observed their validation 
        process in December 2011.
South Korea AEO (MR signed in June 2010)
   Continue open communication and implementation of Mutual 
        Recognition
   In accordance with the MRA signed, observed their validation 
        process in December 2011.
    Future MR Arrangements:
EU AEO
   Finalize Mutual Recognition Arrangement and implement 
        reciprocal benefits.
   Accepting MRA certificates from the European Union for 
        foreign manufacturers in lieu of visiting the foreign site.
   Mutual Recognition Arrangements with the European Union is 
        expected to be signed on May 4, 2012. Implementation to follow 
        soon afterwards.
Taiwan AEO
   In February 2012, conducted joint validation visits towards 
        signing a Mutual Recognition Agreement, implement reciprocal 
        benefits by 2012.
   Taiwan AEO will be observing C-TPAT Validations in the 
        United States the week of April 23, 2012.
Singapore--Secure Trade Partnership (STP)
   In March 2012, conducted joint validation visits towards 
        signing a Mutual Recognition Agreement, implement reciprocal 
        benefits by 2012.
   Singapore STP will be observing C-TPAT Validations in the 
        United States the week of June 4, 2012.
   C-TPAT HQ and International Affairs will be meeting with 
        Singapore STP representative the week of June 11, 2012 in 
        Washington, DC.
    CBP is also actively engaged with other countries' Authorized 
Economic Operator (AEO) programs to improve the security of the 
international supply chain:
Mexico AEO
   Continue to work with Mexican Customs AEO program Nuevo 
        Esquema de Empresas Cerificadas (NEEC) to provide technical 
        assistance and further advance supply chains originating in 
        Mexico. C-TPAT and NEEC developed a strategy to recognize C-
        TPAT manufacturers into Mexico's program. The objective of this 
        strategy is to increase NEEC membership giving it instant 
        credibility; and to help both programs synchronize procedures 
        and standards to ensure maximum compatibility. This will 
        eventually facilitate the road towards mutual recognition 
        between the United States and Mexico. So far, 295 C-TPAT 
        manufacturers operating in Mexico have agreed to join the NEEC 
        program.
Colombia
   Conduct Export Pilot for C-TPAT companies that export to 
        Colombia in 2012. Companies in both the United States and 
        Colombia have been identified and invited to participate in the 
        pilot. Colombia's program remains young and it will need 
        sometime to process the applications and eventually certifiy 
        the companies that will be participating in this pilot program.
China
   Continue open communication and joint validations, with the 
        possibility of Mutual Recognition Agreement.
Costa Rica Programa de Facilitacion Aduanera para el Comercio Confiable 
en Costa Rica PROFAC (Customs Facilitation Program for Trusted Trade in 
Costa Rica)
   Costa Rican AEO program PROFAC has identified their four 
        Export Pilot companies to participate in the pilot program. 
        Maria Iris Cespedes will e-mail Bryan Picado with names and MID 
        numbers. She also expressed that she would like to include an 
        additional company as back-up.
   Deliverables and a time line have been established to launch 
        the ``Export Pilot Program'' by August 2012. PROFAC has 
        recruited five companies which are in the process of applying.
     April 23-30, PROFAC will determine if companies are 
            eligible to participate in Export Pilot Program via a self-
            evaluation questionnaire provided by PROFAC.
     May-July, all eligible companies will be certified via 
            PROFAC's internal vetting process and validated jointly by 
            PROFAC and C-TPAT to ensure a side-by-side comparison of C-
            TPAT's minimum security criteria.
     Once all eligible companies successfully pass vetting and 
            are in compliance with PROFAC and C-TPAT's minimum security 
            criteria, the ``Export Pilot Program'' will be launched in 
            the month of August
Guatemala AEO
   Continue cooperative efforts and provide training and 
        assistance.
Dominican Republic
   Continue cooperative efforts and provide training and 
        assistance.
Turkey AEO
   Continue cooperative efforts and provide training and 
        assistance.
India AEO
   Continue cooperative efforts and provide training and 
        assistance.
Brazil AEO
   Continue cooperative efforts and provide training and 
        assistance.
    Question 8. What concerns do you have about such mutual recognition 
agreements?
    Answer. C-TPAT receives requests from foreign governments for 
assistance and capacity-building on trusted trader/mutual recognition 
programs. The program is concerned with meeting ever-increasing 
requests for MRA capacity-building due to our limited staff resources.
    Question 9. Has there been any consideration of including third-
party logistic providers in the C-TPAT program?
    Answer. Currently, C-TPAT is considering the inclusion of asset-
based warehouses that are located within close proximity or equivalent 
of the port of arrival that receive international cargo directly from 
the port in excess of 500 Twenty-Foot Equivalent Units (TEUs). The 
value of adding this sector is that these entities are the ``first 
domestic custodians'' to verify the integrity and number of the seal 
and reconcile the cargo against the manifest.
    The decision to create a new entity in the program takes into 
account several factors, including the ability of participating 
businesses to physically influence security practices and procedures 
abroad, available program resources, and redundancy with other existing 
security programs. In developing the eligibility criteria for the 
third-party logistic providers' (3PLs') sector, CBP determined that 
non-asset-based 3PLs which perform duties such as quoting, booking, 
routing, and auditing, but which do not own warehousing facilities, 
vehicles, aircraft, or any other transportation assets, should be 
excluded from C-TPAT enrollment. As these type of 3PLs may possess only 
desks, computers, and freight industry expertise, such entities would 
have limited ability to exert influence on their business partners in 
the international supply chain. CBP does not believe it would be 
prudent to use its limited program resources to validate such entities, 
most of which are based solely in the United States, when resources 
would be better served to validate entities abroad.
 Questions for Stephen L. Caldwell From Chairwoman Candice S. Miller\1\
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    \1\ [sic]
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    Question 1. GAO has completed extensive work regarding the C-TPAT 
program.
    Has the C-TPAT program been effective in accomplishing its goal of 
encouraging companies to boost their security programs?
    On the basis of work we performed as part of our last review of the 
Customs-Trade Partnership Against Terrorism (C-TPAT) program in April 
2008,\2\ as well as more recent follow-up work we performed to 
determine the status of our recommendations from that report, we 
believe that U.S. Customs and Border Protection (CBP) has been 
successful in getting companies to join C-TPAT and verifying that the 
member companies are generally following minimum standards designed to 
improve their security.\3\ Specifically, as part of our 2008 C-TPAT 
review, we assessed the progress CBP had made in addressing challenges 
in validating C-TPAT members' security practices, among other things. 
We reported that CBP had introduced a process to award benefits for C-
TPAT importers depending on validation of their security practices, and 
that CBP had taken steps to improve the security validation process, 
but faced challenges in verifying that C-TPAT members' security 
practices meet minimum criteria. For example, we found in 2008 that CBP 
lacked a systematic process to ensure C-TPAT members take appropriate 
actions in response to CBP security specialists' recommendations during 
validation inspections. Without such a key internal control, CBP did 
not have reasonable assurance that companies would implement its 
recommendations to enhance supply chain security practices in 
accordance with CBP criteria. In response to recommendations we made in 
our April 2008 report, CBP has taken a number of actions to strengthen 
the C-TPAT program and better ensure its process for validating C-TPAT 
members' security procedures.
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    \2\ GAO, Supply Chain Security: U.S. Customs and Border Protection 
Has Enhanced Its Partnership with Import Trade Sectors, but Challenges 
Remain in Verifying Security Practices, GAO-08-240 (Washington, DC: 
Apr. 25, 2008).
    \3\ The DHS Inspector General (DHS-IG) is currently conducting an 
audit of the C-TPAT program to determine the extent to which CBP 
ensures that highway carriers participating in the program have 
implemented security measures that meet the minimum security 
requirements of C-TPAT. The DHS-IG expects to issue the report on the 
results of this review at the end of April 2012.
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    To address the challenges noted in the report related to verifying 
that C-TPAT members' security practices meet minimum criteria, we 
recommended that, among other things, CBP strengthen the evaluation of 
members' security practices by requiring that validations include the 
review and assessment of any available results from audits, 
inspections, or other reviews of a member's supply chain security. CBP 
has addressed this and other recommendations from our 2008 review. For 
example, CBP issued policy guidance in May and June 2008, shortly after 
our report was issued, that instructs field directors and supervisors 
to immediately require supply chain specialists to: (1) Request 
information from C-TPAT members about any audits or inspections 
conducted of its security practices as part of preparing for the 
validation visit and (2) ensure any required actions and 
recommendations from C-TPAT validation reports are completed. Further, 
in response to a separate GAO recommendation, CBP has explored options 
for developing performance measures to assess the effectiveness of the 
C-TPAT program in enhancing supply chain security.
    Question 2. Do you think that companies are properly incentivized 
to join C-TPAT? Have the benefits CBP promises to C-TPAT members been 
fully realized?
    Answer. C-TPAT membership has increased over time, indicating an 
incentive for companies to participate in the program. Specifically, at 
the end of 2007, CBP had initially certified fewer than 8,000 members, 
and by November 2010 CBP had certified over 10,000 members. While we 
have not conducted work to specifically evaluate the incentives or 
benefits of the C-TPAT program, according to CBP, some of the benefits 
of participating in C-TPAT include improved predictability in moving 
goods and services, decreases in supply chain disruptions, and 
reductions in cargo theft and pilferage. Further, according to CBP, C-
TPAT importers are 4 to 6 times less likely to incur a security or 
compliance examination. However, as we reported in October 2009, the 
incentives to join C-TPAT could diminish with the implementation of 100 
percent scanning because C-TPAT members would not receive the benefit 
of fewer examinations.\4\ According to a survey conducted in 2007 by 
the University of Virginia, the most important motivation for 
businesses joining C-TPAT was reducing the time and cost of cargo 
getting released by CBP.\5\ This benefit could be diminished by the 100 
percent scanning requirement, though, since under such a requirement 
all cargo is to be scanned regardless of C-TPAT membership. This view 
was shared by 3 of the 6 C-TPAT members we interviewed for our October 
2009 report who stated that there would be less incentive to maintain 
membership or for other companies to join C-TPAT if the 100 percent 
scanning requirement were fully implemented.
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    \4\ GAO, Supply Chain Security: Feasibility and Cost-Benefit 
Analysis Would Assist DHS and Congress in Assessing and Implementing 
the Requirement to Scan 100 Percent of U.S.-Bound Containers, GAO-10-12 
(Washington, DC: Oct. 30, 2009).
    \5\ University of Virginia, Customs-Trade Partnership Against 
Terrorism (C-TPAT) Cost/Benefit Survey (August 2007).
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    Question 3. In your research, has CBP been able to hold C-TPAT 
members accountable for their security procedures? Is the C-TPAT 
validations process working?
    Answer. As part of the program, CBP requires C-TPAT members to 
submit plans for their security measures, and to hold members 
accountable, CBP conducts a validation to ensure that members have 
implemented the security measures as planned. In conducting a 
validation, CBP may make recommendations for improvement. In some 
cases, CBP has determined that the security measures have not been 
implemented and has suspended or removed companies from the program.
    Since we completed our last review of the C-TPAT program in 2008, 
we do not have current information regarding how the validations 
process is working. However, based on monitoring we have conducted of 
the program since we issued our report, we have verified that CBP has 
taken a number of actions to strengthen the C-TPAT program and better 
ensure its process for validating C-TPAT members' security procedures. 
In response to our recommendations, CBP made changes to its records 
management system to automatically document time-sensitive decisions 
mandated by the Security and Accountability For Every (SAFE) Port 
Act.\6\ At the time of our follow-up in October 2009, CBP demonstrated 
that its system tracked 90-day certification, validation within 1 year 
of a company being certified, and re-validation within 3 years of the 
initial validation. According to CBP's fiscal year 2013 budget request, 
CBP is planning to extend the re-validation cycle from 3 years to 4 
years in an effort to save $5 million in fiscal year 2013. The impact 
that this potential change will have on C-TPAT members' security 
practices is unknown.
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    \6\ Pub. L. No. 109-347, 120 Stat. 1884 (2006).
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    Question 4. In your testimony, you note that GAO has recommended 
saving Government funds by migrating the Container Security Initiative 
(CSI) to a more remote-screening system based upon reciprocity 
agreements with foreign partners.
    How much money has CBP saved by moving screening personnel back to 
America?
    Answer. CBP has saved approximately $35.4 million cumulatively over 
fiscal years 2010 and 2011 as a result of the changes to its staffing 
model, which included transferring Container Security Initiative (CSI) 
positions from overseas to the National Targeting Center--Cargo in the 
United States. We recommended in April 2005 that CBP revise the CSI 
staffing model to consider what functions needed to be performed at 
overseas CSI ports and what functions could be performed remotely in 
the United States.\7\ In response to our recommendation, CBP issued a 
human capital plan in May 2006 that did not specify that CSI targeting 
positions be located at CSI seaports, thus recognizing that officers 
could support CSI ports from the National Targeting Center--Cargo in 
the United States.
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    \7\ GAO, Container Security: A Flexible Staffing Model and Minimum 
Equipment Requirements Would Improve Overseas Targeting and Inspection 
Efforts, GAO-05-557 (Washington, DC: Apr. 26, 2005).
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    Question 5. Could CBP move further with this initiative and move 
even more of their personnel back to America and migrate the CSI 
program to a more reciprocity-based system? Would this save additional 
taxpayer dollars?
    Answer. Relocating additional CSI positions from overseas ports to 
the United States could result in cost savings; however, according to 
CBP officials, it could also affect how the CSI program works and its 
effectiveness. According to CBP officials, cost savings may be realized 
in expenses, such as housing, by moving certain CSI functions and 
positions back to the United States, but some costs (such as office 
space and communications equipment) would not be eliminated entirely 
unless CBP removed all officers stationed at each foreign port. 
According to CBP officials, if CBP were to relocate its officers from 
all CSI ports, one of the primary methods for ensuring the 
effectiveness of CSI operations, namely the working relationships 
between CBP targeters and host government officials, would also be 
eliminated. In visiting ports as part of work issued in January 2008, 
we observed that relationships with host governments have improved over 
time, leading to increased information sharing between governments and 
a bolstering of host government customs and port security practices, 
among other things.\8\ CBP officials also explained that if there are 
no CBP officers stationed at a foreign port, CBP would have to rely 
more heavily on foreign governments' cooperation in conducting cargo 
examinations, which would require negotiations with the host 
governments before changing the operations at the port, and this could 
be a difficult and time-consuming process. According to CBP officials, 
CBP plans to fill some existing vacancies in overseas CSI positions, 
and upon filling those positions it plans to maintain its level of 
overseas staffing for the CSI program. These officials also explained 
that CBP has no significant changes planned for the program, such as 
expanding or reducing the number of participating ports.
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    \8\ GAO, Supply Chain Security: Examinations of High-Risk Cargo at 
Foreign Seaports Have Increased, but Improved Data Collection and 
Performance Measures Are Needed, GAO-08-187 (Washington, DC: Jan. 25, 
2008).
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    Question 6. In your testimony, you mentioned two programs where CBP 
spent significant sums and then canceled the programs with little to 
show in the way of achievements. You specifically note that the DHS 
spent $200 million developing a new advanced spectroscopic portal 
(ASP), but then canceled the program before updating their cost-benefit 
analysis. In addition, DHS spent $113 million on the cargo advanced 
automated radiography system (CAARS) and then canceled the program.
    What happened here? Why were such vast sums expended on this new 
technology and then DHS turned away from these ideas? How can we 
prevent this type of waste in the future?
    Answer. To prevent these types of situations from recurring in the 
future, we reported in September 2010 that DHS should consider 
incorporating lessons learned, identified by our reviews of the ASP and 
CAARS programs, in its continuing efforts to develop technology for 
detecting nuclear materials in vehicles and containers at U.S. ports of 
entry. These lessons learned included: (1) Enhancing interagency 
collaboration and coordination, (2) engaging in a robust Departmental 
oversight review process, (3) separating the research and development 
functions from acquisition functions, (4) determining the technological 
readiness levels before moving forward to acquisition, and (5) 
rigorously testing devices using actual agency operational tactics 
before making acquisition decisions. In addition, we are engaged in on-
going work reviewing the results of ASP testing conducted after our 
last report on the ASP program in 2009. As part of this on-going work, 
we will identify lessons learned from the ASP testing campaign. We 
expect to report on the results of this work by the end of 2012.\9\
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    \9\ We are conducting this work for the Ranking Members of the 
Subcommittee on Investigations and Oversight and Subcommittee on Energy 
and Environment; Committee on Science, Space, and Technology; House of 
Representatives.
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    Regarding the ASPs, we reported in June 2009 that many major DHS 
investments, including the ASP program, had not met the Department's 
requirements for basic acquisition documents necessary to inform the 
investment review process. As a result, DHS had not consistently 
provided the oversight needed to identify and address cost, schedule, 
and performance problems in its major investments.\10\ Moreover, 
emphasizing expediency in replacing existing equipment with new portal 
monitors led to an ASP testing program that initially lacked the 
necessary rigor. Additionally, we reported that DHS's decision to 
replace existing equipment with the ASPs was not justified due to the 
marginal improvement offered by the new technology and the potential to 
improve the current-generation portal monitors' sensitivity to nuclear 
materials, most likely at a lower cost. For example, though preliminary 
test results showed that ASPs performed better than current-generation 
portal monitors in detecting certain weapons-usable nuclear materials 
concealed by light shielding, as approximated by the Department of 
Energy's threat guidance, differences in sensitivity were less notable 
when shielding was slightly below or above that level. We also reported 
in November 2009 that the ASPs experienced serious problems during 
testing.\11\ For example, the ASPs had an unacceptably high number of 
false positive alarms for the detection of certain high-risk nuclear 
materials. In addition, ASPs experienced a ``critical failure,'' which 
caused an ASP to shut down. Importantly, during this critical failure, 
the ASP did not alert the CBP officer that it had shut down and was no 
longer scanning cargo. As a result, were this not in a controlled 
testing environment, the CBP officer would have permitted the cargo to 
enter the country thinking the cargo had been scanned, when it had not. 
Finally, the Director of DHS's Domestic Nuclear Detection Office (DNDO) 
indicated during a July 2011 hearing that the speed of trucks passing 
through the ASP was an additional problem and contributed to DNDO's 
decision to cancel the ASP program as originally conceived.
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    \10\ GAO, Combating Nuclear Smuggling: Lessons Learned from DHS 
Testing of Advanced Radiation Detection Portal Monitors, GAO-09-804T 
(Washington, DC: June 25, 2009).
    \11\ GAO, Combating Nuclear Smuggling: Recent Testing Raises Issues 
About the Potential Effectiveness of Advanced Radiation Detection 
Portal Monitors, GAO-10-252T (Washington, DC: Nov. 17, 2009).
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    Regarding CAARS, in September 2010, we reported that DHS's decision 
to cancel acquisition of the CAARS program in December 2007 was due to 
the system's inability to satisfy operating requirements at ports of 
entry coupled with technological shortcomings. Officials from DNDO and 
the system's end-user, CBP, acknowledged that they had few discussions 
regarding operating requirements at ports of entry during the first 
year or more of the program. As a result, DNDO pursued the acquisition 
and deployment of CAARS machines without fully understanding that they 
would not fit within existing primary inspection lanes at CBP ports of 
entry. In addition, regarding CAARS technology, the development of the 
system's algorithms (software)--a key component needed to identify 
shielded nuclear materials automatically--did not mature at a rapid 
enough pace to warrant acquisition and deployment.
      Questions for Stephen L. Caldwell From Honorable Mike Rogers
    Question 1. GAO has done extensive work to review and test the 
Transportation Worker Identification Credential (TWIC) program.
    What do you see as the major deficiencies in the program?
    Answer. As discussed in our May 2011 report, the TWIC program faces 
several challenges in meeting its mission needs.\12\ We reported that 
internal control weaknesses governing the enrollment, background 
checks, and use of TWIC potentially limit the program's ability to 
provide reasonable assurance that access to secure areas of Maritime 
Transportation Security Act (MTSA)-regulated facilities is restricted 
to qualified individuals. Key program weaknesses included an inability 
to provide reasonable assurance that only qualified individuals can 
acquire TWICs or that once issued a TWIC, TWIC-holders have continued 
to meet eligibility requirements. Moreover, internal control weaknesses 
in TWIC enrollment, background checks, and use could have contributed 
to the breach of MTSA-regulated facilities during covert tests 
conducted by GAO's investigators.
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    \12\ GAO, Transportation Worker Identification Credential: Internal 
Control Weaknesses Need to Be Corrected to Help Achieve Security 
Objectives, GAO-11-657 (Washington, DC: May 10, 2011).
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    Question 2. Do you think that getting the regulations on TWIC 
readers pushed out of the Department and getting these readers 
installed in our ports will help rectify some of these deficiencies?
    Answer. Implementation of a card reader system will not address the 
enrollment, background checks, and deployment weaknesses we identified 
in our May 2011 report. These weaknesses could render the electronic 
reader check moot, by allowing unqualified individuals to acquire 
authentic TWICs using a counterfeit identity and then using the TWICs 
for accessing MTSA-regulated facilities and vessels using electronic 
card readers.\13\ If an individual presents an authentic TWIC acquired 
through fraudulent means when requesting access to the secure areas of 
a MTSA-regulated facility or vessel, the cardholder is presumed to have 
met TWIC-related qualifications during a background check. Further, the 
extent to which the use of TWIC readers will help identify the use of 
counterfeit TWICs (that is, TWICs produced independently by individuals 
seeking to circumvent port security) at MTSA-regulated facilities and 
vessels will largely depend on how each card reader system is 
implemented in practice. The ability of readers to identify counterfeit 
TWICs depends on the sophistication of the counterfeit and the mode 
that the reader is set to when reading a TWIC. There are four mode 
settings. Each increasing mode requires a longer time to read the TWIC 
but also provides greater assurance that the TWIC is authentic and 
belongs to the person that is presenting it. Consequently, there is a 
tradeoff between throughput and security. For example, at lower 
settings/modes the reader is not comparing the cardholder's fingerprint 
to the fingerprint stored on the card, but the card is read faster than 
when the reader is set to read the fingerprint. We recommended that DHS 
perform an internal control assessment of the TWIC program by: (1) 
Analyzing existing controls, (2) identifying related weaknesses and 
risks, and (3) determining cost-effective actions needed to correct or 
compensate for those weaknesses so that reasonable assurance of meeting 
TWIC program objectives can be achieved.
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    \13\ In commenting on our May 2011 report, DHS stated that document 
fraud is a vulnerability to credential-issuance programs across the 
Federal Government, State and local governments, and the private 
sector.
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