Hearing before the Committee on Appropriations
Subcommittee on Homeland Security
U.S. House of Representatives
April 2, 2008

Introduction
Chairman Price, Ranking Member Rogers, distinguished Members of the Subcommittee, it is a privilege and an honor to appear before you today to discuss the work of U.S. Customs and Border Protection (CBP) to both strengthen the security of containerized cargo entering our borders and facilitate the flow of legitimate trade and travel.

Let me begin by expressing my gratitude to the Committee for the strong support you provided for important initiatives implemented by CBP last year. Your support has enabled CBP to make significant progress in securing our borders and protecting our nation against the terrorist threat. CBP looks forward to working with you to build on these successes.

The CBP Fiscal Year 2009 budget request totals $9.49 billion in appropriated resources. This represents an increase of $1.6 billion, a 20 percent increase over Fiscal Year 2008. This increase is critical to help CBP to fulfill its priority mission. We must perform our important security and trade enforcement work without stifling the flow of legitimate trade and travel that is so important to our nation’s economy.

CBP has made great strides toward securing America’s borders, facilitating legitimate trade and travel, and ensuring the vitality of our economy. As America’s frontline border agency, our priority mission is to protect the American public against terrorists and the instruments of terror while at the same time enforcing the laws of the United States and fostering the Nation’s economic security through lawful travel and trade. Today, trained CBP Officers, technology, automation, advance electronic information, and partnerships with the trade and foreign governments are concepts that underpin CBP’s cargo security and anti-terrorism initiatives. These concepts extend our zone of security outward and reinforce the components of our layered defense strategy.

As we work toward gaining control of our ports and borders, we must also continue to perform our traditional missions, which include stemming the flow of illegal drugs and other contraband, protecting our agricultural and economic interests from harmful pests and diseases, protecting American businesses from theft of their intellectual property, regulating and facilitating international trade, collecting import duties, and enforcing United States trade laws. In FY 2007, CBP processed more than 414 million pedestrians and passengers, 124 million conveyances, 30 million trade entries, examined 5.6 million sea, rail, and truck containers, intercepted 877 thousand illegal aliens between our ports of entry, and seized more than 3 million pounds of narcotics.

CBP Overview
I am pleased to appear before the Subcommittee today to highlight key accomplishments related to container security. Since the last time I testified, CBP has continued to make tremendous progress in ensuring the supply chains that bring goods into the United States from around the world are more secure against potential exploitation by terrorist groups as a means to deliver weapons of mass effect. CBP uses a multi-layered approach to ensure the integrity of the supply chain from the point of stuffing through arrival at a U.S. port of entry. This multi-layered approach includes:

• Advanced information under the 24-Hour Rule and Trade Act of 2002 (supplemented now by our Advance Security Filing, or "10+2" requirements)
• Screening the information through the Automated Targeting System (ATS) and National Targeting Center (NTC)
• Partnerships with industry and the private sector such as the Customs Trade Partnership Against Terrorism (C-TPAT)
• Partnerships with foreign governments, such as the Container Security Initiative (CSI) and the Secure Freight Initiative (SFI)
• Use of Non-Intrusive Inspection (NII) technology and mandatory exams for all high risk shipments

The goal of this layered approach is to combine each of these systems to allow us to receive, process, and act upon commercial information in a timely manner so that we can target, in a very specific fashion, the suspect shipments without hindering the movement of commerce through our ports.

While I will discuss each one of these layers in greater detail, I would first like to clarify a few points with respect to our multi-layered approach. Different layers focus on securing different parts of the supply chain, ensuring that cargo is regularly assessed and that security does not rely on any single point that could be compromised. Our approach is to look at all of these distinct but related threats and rely upon a layered security process which is designed to reduce risk to the extent possible, but not to eliminate all risk at the expense of harming our economy.

We are continuously working to refine this layered process; our efforts focus on strengthening our tools and capabilities while at the same time maintaining an appropriate balance that considers the wide range of threats and allocates our limited resources accordingly. My concern with respect to our layered strategy is that the continuous focus on certain areas is often maintained at the expense of other, equally important areas that require similar attention.

For example, DHS has already dedicated significant resources and efforts to our cargo and port security programs over the last several years, resulting in a robust risk-management approach. Our focus on risk management and security has to be driven by our informed judgment about the totality of risks. Although there has been much discussion about container security over the last several years, we have also been, and must remain, focused on other threats to our ports and to other components of the supply chain. For example, we must remain vigilant in securing all conveyances and screening passengers at our land borders, airports, railways, and small vessels terminals.

In order to manage risk for all arriving cargo and passengers, we must direct our resources to those areas which represent the greatest threat. While the maritime environment does contain some element of risk for a weapon of mass effect to be transported in a maritime container, the logistics movements which involve multiple hand offs amongst various parties throughout the supply chain may in fact itself be a deterrent to a terrorist considering using a maritime container. In addition, as outlined in my testimony, much has been done to enhance the security of maritime containers and cargo compared to some other areas. As the Department and the Congress look to apply limited resources to multiple areas of threat and vulnerability, we should therefore not over emphasize maritime containers at the potential detriment of other threat areas in need of resources.

Advance Information
CBP has recognized Congress’ mandate that we collect more and improved advanced information for cargo shipments. CBP, in fact, requires advanced electronic cargo information as mandated in the Trade Act of 2002 (including the 24-Hour Rule for maritime cargo). Advanced cargo information on all inbound shipments for all modes of transportation is evaluated through the Automated Targeting System (ATS) before arrival in the United States.

The function of ATS is to provide information to support for the decisions of CBP officers working in Advance Targeting Units (ATUs) at our ports of entry and CSI ports. The system provides a uniform review of cargo shipments, identifies the highest threat shipments, and presents data in a comprehensive, flexible format to address specific intelligence threats and trends. ATS uses a rules-based program to highlight potential risk, patterns, and targets. Through rules, ATS alerts the user to data that meets or exceeds certain predefined criteria. ATS uses national targeting rule sets to provide threshold targeting for national security risks for all modes: sea, truck, rail, and air. CBP is continually striving to improve the ATS system by convening regular "rules conferences". The conferences are attended by our intelligence officers and representatives from various seaports and land border ports who update risk indicators and ensure that the most current intelligence and trends are factored into ATS.

As many of you know, CBP worked with the trade through the Departmental Advisory Committee on Commercial Operations (COAC) to create a new Security Filing in an effort to obtain additional advanced cargo information and enhance our ability to perform risk-based targeting prior to cargo being laden on a vessel overseas. CBP’s close partnership with the trade community is the key reason why the "10+2" Security Filing proposal was developed in a smooth and timely fashion. The trade’s input during the consultative process as well as its participation in the Advance Trade Data Initiative has been instrumental in the successful crafting of the proposal. Additionally, earlier this year, the COAC made almost 40 recommendations to CBP on how to implement the security filing or "10+2 Security Filing initiative". CBP carefully studied and considered the COAC recommendations and agreed in full and/or in part to a majority of the recommendations.

The CBP 10+2 Security Filing proposal covers the following key areas:

1. Ten unique data elements from importers not currently provided to CBP 24 hours prior to foreign loading of cargo,
• Manufacturer (or supplier) name and address
• Seller (or owner) name and address
• Buyer (or owner) name and address
• Ship to name and address
• Container stuffing location
• Consolidator (stuffer) name and address
• Importer of record number/foreign trade zone applicant identification number
• Consignee number(s)
• Country of origin
• Commodity Harmonized Tariff Schedule of the United States number
2. Two additional data elements provided by the carriers, including the Vessel Stow Plan, which is currently utilized by the vessel industry to load and discharge containers, and Container Status Messaging, which is currently utilized by the vessel industry to track the location of containers and provide status notifications to shippers, consignees and other related parties.

The "10+2" Security Filing proposal was published in the Federal Register on January 2, 2008 and initially the public was provided a 60 day response timeline to comment on the proposed regulations (March 3, 2008). At the request of the trade, CBP extended the public comment period by an additional 15 days (March 18, 2008). Over 200 individual submissions were received by the March 18, 2008, deadline, and CBP is currently in the process of carefully considering all submitted comments.

In addition to the Security Filing, CBP has also explored another possible evolution of securing advanced information. On December 11, 2007, CBP issued a Request for Quotation (RFQ) soliciting bid proposals from the vendor/contractor community for the development and implementation of the Global Trade Exchange (GTX). Specifically, the RFQ outlined the requirements for the development of a privately operated, self-sustaining trade information system that would have the potential to collect commercial transaction data not currently available to CBP from parties in the supply chain who have contracted or provided services for the production/movement of international shipments. The system, furthermore, was envisioned to allow government and trade community participants to input and access trade data through an information broker. When combined with existing CBP targeting/analysis tools, GTX could potentially allow CBP to identify and target suspect shipments/transactions well in advance of a shipment’s entry into a U.S.-bound supply chain.

The RFQ process required qualified vendors to develop a business model and technical solution for the GTX system and to engage directly with industry partners who would provide the data that would populate the GTX system. This process ensured that the vendor proposals would be responsive to industry and international concerns about information security, cost, and transparency. After evaluating the proposals submitted in response to the RFQ and in consideration of comments received from the trade community, CBP has decided not to move forward with a contract award for the Global Trade Exchange (GTX) pilot.

CBP has determined that further consideration of the GTX concept is premature at this time, and may not be a prudent use of limited resources. CBP’s targeting systems will be enhanced through the 10+2 Security Filing, and before initiating further efforts aimed at gathering even greater supply chain security data, it is prudent to assess the benefits to be gained by the Security Filing.

Customs Trade Partnership Against Terrorism (C-TPAT)
C-TPAT is an integral part of the CBP multi-layered strategy through which CBP works in partnership with the trade community to better secure goods moving through the international supply chain. C-TPAT has enabled CBP to leverage supply chain security throughout international locations where CBP has no regulatory reach.

In FY 2009, C-TPAT will focus its efforts on strengthening the partnership with member companies at both the macro and micro levels and leverageing corporate influence throughout the international supply chain. In doing so, C-TPAT will continue to ensure compliance with the requirements of the SAFE Port Act to include certifying security profiles within 90 days of submission and conducting validations within 1 year of certification and revalidations within 4-years of initial validation. C-TPAT projects that 3800-4500 validations will be required during FY 2009, requiring on site visits at facilities throughout the world.

In strengthening this successful program, CBP will also continue to review its performance and, where needed, enhance the minimum security criteria for each enrollment sector. Additionally, CBP will continue to conduct informational and training sessions for various internal / external audiences to improve knowledge of cargo security procedures and provide the latest information regarding terrorism trends and conveyance breeches.

Another important effort to note is the potential mutual recognition of other countries’ customs-to-business partnership programs. The World Customs Organization has developed a global standard for trusted partnerships with the trade, known as the Authorized Economic Operator, or AEO, program. This concept is similar to our C-TPAT. Mutual Recognition Arrangements reduce costs and simplify these programs for both industry and government. We are engaged in mutual recognition discussions with several governments and are following a very methodical process to achieve recognition. These programs must meet three requirements:

• they must be security-based;
• they must be operational; and
• they must have a minimum level of validation to verify the company has done what it claims to have done.

Creating an international network to exchange information about trusted traders and knowing that those participants are observing specified security standards in the secure handling of goods and relevant information is a win-win for both government and business. In June 2007, CBP signed its first mutual recognition arrangement with New Zealand and we are beginning to see several positive outcomes and challenges taking form as the work to implement that arrangement continues.

Container Security Initiative (CSI)
To further our priority mission of preventing terrorists and terrorist weapons from entering the United States, CBP has partnered with other countries through our Container Security Initiative (CSI). Almost 32,000 seagoing containers arrive and are off loaded at United States seaports each day and under CSI, which is the first program of its kind, CBP partners with foreign governments to screen containers at foreign ports and then identify and inspect high-risk cargo containers at those foreign ports, before they are shipped to our seaports and pose a threat to the United States and to global trade.

The goal is for CBP’s overseas CSI teams to review all the manifests before containers are loaded on vessels destined for the United States. However, in those locations where the CSI team cannot review all the bills because of the tremendous volume, CSI targeters at the National Targeting Center - Cargo provide additional support to ensure that 100 percent review is accomplished. Utilizing the overseas CSI team and the CSI targeters at our National Targeting Center - Cargo, CBP reviews 100% of manifests under the CSI program.

Oversight of the CSI program is supported by automated tools for statistical analysis, an evaluation database to track and analyze any deficiencies identified during the evaluation process of the CSI ports, and a non-intrusive inspection (NII) equipment utilization database that tracks the use of NII equipment at CSI ports to include the downtime of the equipment.

Today, CSI has partnered with 32 countries and is operational in 58 ports world-wide in North, South, and Central America; Asia; Europe; South Africa; the Middle East; and the Caribbean.

Secure Freight Initiative (SFI)
The Secure Freight Initiative (SFI) pilot scanning project is another component of this layered enforcement strategy for protecting the nation. Integrated scanning systems, consisting of Radiation Portal Monitors (RPMs) provided by DOE/NNSA and NII imaging systems provided by CBP or the host nation, are used to scan containers as they move through the foreign ports. Data from these systems is integrated utilizing optical character recognition (OCR) technology and provided to CBP officers who determine if the container should be referred to the host nation for secondary examination prior to lading.

Meeting the legislative requirements of the SAFE Port Act, the first three SFI pilot ports (Puerto Cortes, Honduras; Port Qasim, Pakistan; and Southampton, United Kingdom) became fully operational on October 12, 2007, and are attempting to scan 100 percent of U.S.-bound maritime containers (total U.S.-bound container volume at these three ports from October 12, 2007 to February 12, 2008 was 51,937). Furthermore, CBP and DOE are expanding the deployment of scanning equipment to certain terminals in Hong Kong, Salalah (Oman), Port Busan (South Korea), and Singapore. SFI chose these ports because they present a unique set of challenges and provide diverse environments in which to evaluate varying options. While these are the deployments currently planned and anticipated, we are constantly assessing the priority of foreign ports and terminals that present the greatest opportunities to reduce risk through deployment of SFI resources and will adjust our deployment plans and schedule accordingly and keep the Committee informed.

A preliminary report on the lessons learned through SFI has already been submitted to this committee, and another report will be sent to Congress later this month. The lessons learned from the SFI deployments in Pakistan, Honduras, and Southampton indicate that scanning U.S.-bound maritime containers is possible, however, results are based on scanning on a very limited scale. Scanning all 11.5 million containers that enter U.S. seaports from a foreign port presents significant operational, technical, and diplomatic challenges. They include:

• Sustainability of the scanning equipment in extreme weather conditions and certain port environments;
• Varying and significant costs of transferring the data back to the United States (National Targeting Center) in real-time;
• Re-configuring port layouts to accommodate the equipment without affecting port efficiency and getting the permission of host governments;
• Developing local response protocols for adjudicating alarms;
• Addressing health and safety concerns of host governments and local trucking and labor unions;
• Identifying who will incur the costs for operating and maintaining the scanning equipment;
• Acquiring necessary trade data prior to processing containers through the SFI system;
• Addressing data privacy concerns in regards to the scanning data;
• Concluding agreements with partnering nations and terminal operators to document roles and responsibilities regarding issues such as ownership, operation, and maintenance of the equipment; sharing of information; and import duty and tax considerations;
• Staffing implications for both the foreign customs service and terminal operator;
• Licensing requirements for the scanning technology;
• Host government support for continuing to scan 100 percent of U.S. bound containers after the pilot ends; and
• The potential requirements for reciprocal scanning of U.S. exports.

CBP is working to address these challenges in a manner consistent with the risk-management and layered approach to maritime cargo security we have in place and in a manner consistent with the WCO SAFE framework of standards.

There are significant challenges and costs associated with 100% scanning of all containers destined for the United States. While the additional data gleaned from the radiation detection and radiography can enhance CBP’s risk management process to some degree, CBP already has robust layers in place to secure the supply chain, based on effective risk-management principles. We support scanning equipment in specific higher risk trade corridors where the challenges can be overcome. However, the resource commitment required to achieve 100% scanning at the more than 700 ports shipping to the United States could be more appropriately directed towards other cargo and passenger venues that present an equally real threat, but where current security programs are less developed. Based on preliminary results from our three pilot locations, USG-funded scanning of cargo containers at foreign ports is a worthwhile investment only in high-risk trade corridors.

Non-Intrusive Inspection (NII) and Radiation Detection Technology
Technologies deployed to our nation’s sea, air, and land border ports of entry include non-intrusive imaging equipment, such as large-scale X-ray and gamma-imaging systems, as well as a variety of portable and hand-held technologies to include radiation detection technology. NII technologies play a key role in CBP’s layered strategy and are viewed as force multipliers that enable us to screen or examine a larger portion of the stream of commercial traffic quickly, while facilitating the flow of legitimate trade, cargo, and passengers. An integral part of CBP’s comprehensive strategy to combat nuclear and radiological terrorism is to scan all arriving sea containers with radiation detection equipment prior to release at domestic ports. Currently, CBP has 398 RPMs (RPM) deployed at priority seaports in the United States, through which approximately 98% of all arriving sea-borne containerized cargo passes. CBP is forecasting the deployment of 94 additional seaport RPMs by the end of FY 2009.

CBP has requested $27.3 million to hire 238 new CBP Officers to support the deployment and operation of RPMs at our seaport terminals. This staffing would ensure that at new seaport RPM deployment sites (i.e. small seaport terminals) CBP has the appropriate personnel to conduct radiological scanning of arriving sea-borne cargo while permitting the flow of legitimate containers.

Additionally, we currently have 241 RPMs on the northern border, which provides CBP with the capability to scan 91% of truck cargo and 81% of personal owned vehicles (POVs) for illicit radiological/nuclear materials. The current forecast calls for the deployment of an additional 385 northern border RPMs. This will give CBP the capability to scan approximately 100% of truck cargo and 100% of personal vehicles for illicit radiological/nuclear materials with RPMs. CBP will also increase the southern border RPM deployments (currently scanning 100% of all truck cargo and 95% of POVs). By the end of FY2009, CBP plans to deploy 46 additional southern border RPMs - providing CBP with the capability to scan approximately 100% of POVs.

In the meantime, CBP, in partnership with the Domestic Nuclear Detection Office (DNDO), is continuing to move forward with the testing and evaluation of the next-generation RPMs, known as Advanced Spectroscopic Portals (ASP). The goal of ASP development is to further improve the efficiency of radiological scanning of cargo containers.

Role of Technology
I would like to take just a moment to discuss the role of technology for supply chain security. Security technology is continuously evolving, not only in terms of capability but also in terms of compatibility, standardization, and integration with information systems. It is important to note that there is no single technology solution to improving supply chain security. As technology matures, it must be evaluated and adjustments to operational plans must be made. Priority should be given to effective security solutions that complement and improve the business processes already in place, and which build a foundation for 21st century global trade. A more secure supply chain also can be a more efficient supply chain.

Both the SAFE Port Act of 2006 (SAFE Port Act) and the Implementing Recommendations of 9/11 Act of 2007 (9/11 Act) reference the potential benefits of container security standards and devices and encourage DHS to move forward with their development and implementation. However, neither law prescribes a clear path for their development and use. The SAFE Port Act provided the Secretary of DHS with the authority to initiate a rulemaking process and issue an interim rule to establish minimum standards and procedures for security containers in transit to the United States. The provision established that if the rule was not issued, the Secretary would submit a letter of explanation to Congress.

Because DHS does not believe that, at the present time, the necessary technology exists to adequately improve container security without significantly disrupting the flow of commerce, the Department did not make use of the rule-making authority or mandate the use of CSDs and instead issued the required congressional notification letter on May 18, 2007. DHS has thereby fulfilled the requirements under this provision of the SAFE Port Act.

The 9/11 Act amended the SAFE Port Act by establishing that if an interim final rule was not issued by the Secretary of DHS by April 1, 2008, all containers in transit to the U.S. would be required to be secured with a bolt seal by October 15, 2008. DHS does not anticipate that an interim final rule will be issued by the April deadline. Therefore, effective 10/15/08, all containers will be required to be secured with the standard bolt seal.

It is important to note that CSD technology only improves container security if one can ensure the integrity of the shipment before the CSD is activated. Requiring such a device independent of a process to ensure that the goods within a container were secure before its application would have an adverse effect on security, creating the false impression that a dangerous shipment was secure.

While DHS has decided to not exercise its rule-making authority regarding CSDs to-date, we continue to explore the potential efficiency of these technologies and how they can best enhance container security in very specific trade lanes. In fact, following CBP’s recent Request for Information on CSD technology, CBP will soon begin testing the CSD technology provided by the most qualified vendors who participated. If this technology passes the laboratory testing phase, the devices will then be tested in real world operational environments. If ultimately proven mature and effective, CBP will determine potential high risk supply chain applications where the CSD would add security value. This measured approach will lessen the will allow CBP to better understand the state of available technologies that have the potential to increase the security of containers as they transit the global supply chain

DHS and other Federal Agencies continue to look to enhance and improve existing technologies. One such effort is the development of Crane-Mounted Radiation Detection Technology. CBP, in collaboration with the Department of Energy/Second Line of Defense (SLD) and the Domestic Nuclear Detection Office (DNDO), will develop and implement a two phase plan for this technology.

Phase one involved the issuance of a Request for Information (RFI), which solicited vendors to provide crane-mounted radiation detection technology for testing at a seaport facility where the technology can be assessed to determine its ability to detect and identify surrogate sources using different source types and configurations, container sizes, and shielding configurations (to include naturally occurring radioactive materials). After technological review of the received submissions, testing of the qualifying technology is tentatively planned for mid calendar year 2008 and will last several weeks. Individual test results will be discussed with vendors.

Subsequently, phase two of the plan will occur at a test facility where actual threat materials can be utilized to ascertain the ability of the devices to detect and identify threat materials. This activity is planned for late calendar year 2008, but is largely dependent on the outcome of phase one.

The reliability, ruggedness, and standard operating procedures associated with this technology will not be extensively evaluated during these tests as field validation activity would be the logical course of action after testing with surrogates and actual threat materials, but this requires more time.

Conclusion
Mr. Chairman, Members of the Committee, I have outlined a broad array of initiatives and steps towards enhancing cargo security. I believe CBP has demonstrated and will continue to demonstrate its leadership and commitment to protecting America against terrorists and the instruments of terror. As we move forward to face the many challenges ahead, we look forward to working in partnership with the 110th Congress to build on our many accomplishments and focus on getting the desired results. With the continued support of the President, DHS, and the Congress, CBP will succeed in meeting the challenges posed by the ongoing terrorist threat.

Thank you again for this opportunity to testify. I will be happy to answer any questions you may have.