DHS OIG, OIG-15-64, CBP's Houston Seaport Generally Complied with Cargo Examination Requirements but Could Improve Its Documentation of Waivers and Exceptions (Redacted) (2015)

CBP's Houston Seaport Generally Complied with Cargo Examination Requirements but Could Improve Its Documentation of Waivers and Exceptions (Redacted) April 14, 2015 OIG-15-64 HIGHLIGHTS CBP's Houston Seaport Generally Complied with Cargo Examination Requirements but Could Improve Its Documentation of Waivers and Exceptions April 14, 2015 What We Found Why This Matters U.S. Customs and Border Protection's (CBP) Houston Seaport is the fifth largest port for arriving containers and the largest petrochemical complex in the Nation. CBP is responsible for identifying high-risk cargo shipments arriving at the port that pose a possible threat to national security. We conducted this review to determine whether the Houston Seaport complied with CBP's National Maritime Targeting Policy (NMTP) and Cargo Enforcement Reporting and Tracking System (CERTS) Port Guidance. What We Recommend We made three r ecommendations to improve the documentation of waiver approvals and exceptions to mandatory examinations of h igh­ risk cargo shipments.

For Further Information: Contac~ our Office of Public Affairs at (202) 254-4100, or email us at [email protected] The Houston Seaport generally complied with the NMTP and CERTS Port Guidance. However, CBP could improve its documentation of waivers and exceptions to mandatory examinations of h igh-risk cargo. In addition, CBP could improve access controls for authorizing Port Director waivers within CERTS. Proper documentation of Port Director waiver s and exceptions to mandatory examinations of h igh-risk cargo shipments in CERTS may help facilitate management oversight, as well as accurate reporting of waiver and standard exception statistics.

Additionally, improved access controls over Port Director waiver within CERTS would that may threaten national security. a high-risk shipment CBP's Response CBP concurred with all three recommendations. www.oig.dhs.gov OIG-15-64 ~QEeia%+rF, o\i~~ J~Y ~'~~ aND SEA% OFFICE OF INSPECTOR GENERAL Washington, DC 20528 / www.oig.dhs.gov MEMORANDUM FOR: Todd C. Owen APR 14 2015 FROM: SUBJECT: Assistant Commissioner Office of Field Operations U.S. Customs and Border Protection Mark Bell~~,,Q Assistant Inspector General for Audits CBP's Houston Seaport Generally Complied with Cargo Examination Requirements but Could Improve Its Documentation of Waivers and Exceptions For your action is our final report, CBP's Houston Seaport Generally Complied with Cargo Examination Requirements but Could Improve Its Documentation of Waivers and Exceptions. We incorporated the formal comments provided by your office. The report contains three recommendations. Your office concurred with all of the recommendations.

Based on information provided in your response to the draft report, we consider recommendations 1 and 3 open and resolved. Once your office has fully implemented the recommendations, please submit a formal closeout letter to us within 30 days so that we may close the recommendations. The memorandum should be accompanied by evidence of completion of agreed- upon corrective actions and of the disposition of any monetary amounts. Recommendation 2 is resolved and closed.

Please send your response or updates to OIGAuditsFollowu ,oig.dhs.gov. Consistent with our responsibility under the Inspector General Act, we will provide copies of our report to congressional committees with oversight and appropriation responsibility over the Department of Homeland Security. We will post the report on our website for public dissemination. We will post a redacted version of the report on our website.

Please call me with any questions, or your staff may contact Paul Wood,Acting Deputy Assistant Inspector General for Audits, at(202) 254-4100. www.oig.dhs.gou OIG-15-64 OFFICE OF INSPECTOR GENERAL Background The Houston Seaport is the fifth largest port for arriving containers and the largest petrochemical complex in the Nation. U.S. Customs and Border Protection (CBP) is responsible for identifying high-risk cargo shipments arriving at the port that pose a possible threat to national security. CBP’s National Maritime Targeting Policy (NMTP) requires CBP officers to conduct examinations of all high-risk shipments that do not qualify for a standard exception.1 In addition, the Port Director or appointed designee may waive the examination of high-risk shipments if CBP officers determine there is no security risk and based on a specific, articulable reason. According to data provided by CBP, the Houston Seaport processed 7,192 high- risk cargo shipments, excluding one of the standard exceptions, in fiscal year (FY) 2013.

Houston Seaport did not examine nearly 60 percent of those shipments because it was either a standard exception or the Port Director waived the mandatory examination requirement. We conducted this review to determine whether the Houston Seaport complied with CBP’s NMTP and Cargo Enforcement Reporting and Tracking System (CERTS) Port Guidance. This report has been revised from our draft report submitted to CBP as it included sensitive security information (SSI), which must be protected from public disclosure. Therefore, this report omits sensitive information regarding the list of standard exceptions among other things.

Although the Houston Seaport generally complied with NMTP and CERTS Port Guidance, it could improve its documentation of Port Director waivers and exceptions to mandatory examinations. The Automated Targeting System (ATS) is the primary mechanism for CBP officers to review, identify, and select cargo shipments that pose a possible threat to national security. ATS consolidates information on manifests, importer security filings, and entry data as well as information on supply chain parties such as importers and carriers. ATS assigns an overall risk score of low, medium, or high to the shipment based on this information and places automatic holds for examination on high-risk shipments.

CBP uses, at a minimum, large-scale Non-Intrusive Inspection (NII) imaging technology and radiation detection technology to examine high-risk shipments. Appendix C displays a flowchart of the cargo targeting process. CBP officers use the CERTS module within ATS to document all cargo examinations, Port Director waivers, and standard exceptions. CBP’s CERTS Port Guidance includes the roles and responsibilities of CBP personnel using CERTS, as well as procedures for documenting waivers of examinations.

1 Examples of standard exceptions are not included because CBP considers them to be sensitive security information. www.oig.dhs.gov 2 OIG-15-64 OFFICE OF INSPECTOR GENERAL Results of Inspection Based on our review of a statistical sample of 382 medium- to high-risk shipments from FYs 2011 to 2013, the Houston Seaport generally complied with NMTP and CERTS Port Guidance in the following areas: x CBP officers performed a mandatory review of medium- and high-risk shipments; x ATS placed an automatic hold on all high-risk shipments; x High-risk shipments were examined with large-scale Non-Intrusive Inspection imaging technology or radiation detection technology; x Physical examinations of shipments were performed if an anomaly was identified during the Non-Intrusive Inspection; and x Examination findings were entered into ATS. CBP could improve its documentation of Port Director waivers and standard exceptions to mandatory examinations of high-risk cargo shipments. In fact, CERTS contains drop-down menus for Port Director waiver reasons and exceptions to mandatory examinations of high-risk cargo shipments. Of the 382 shipments in our sample, Houston Seaport was not required to perform a mandatory examination of 53 high-risk shipments that were waived and 88 that were a standard exception.

CERTS

Port Guidance requires CBP officers to ensure all cargo examination data are accurately documented, including the name of the official accountable for Port Director waivers of mandatory examinations. CBP officers document waivers using CERTS drop-down menus. Of the 53 Port Director waivers in our sample, officers did not select an appropriate reason for 19 waivers or any reason for 2 waivers. CBP officers did not include the name of the Port Director or designee in 52 of the 53 waivers we reviewed.

The CERTS drop-down menus also include an option for each standard exception to mandatory examinations, except one of the standard exception options, which accounted for 44 of the 88 standard exceptions in our sample. Because CERTS does not contain one of the standard exception options, CBP officers selected other non-corresponding options. For the other 44 standard exceptions in our sample, CBP officers did not select appropriate reasons from the CERTS drop-down menus for 24 of those high-risk shipments. Proper documentation of Port Director waivers and exceptions to mandatory examinations of high-risk cargo shipments in CERTS may help facilitate management oversight, as well as accurate reporting of waiver and standard exception statistics. www.oig.dhs.gov 3 OIG-15-64 OFFICE OF INSPECTOR GENERAL Appendix A Scope and Methodology We conducted this inspection between February 2014 and August 2014, under the authority of the Inspector General Act of 1978, as amended, and according to the Quality Standards for Inspection and Evaluation issued by the Council of the Inspectors General on Integrity and Efficiency in January 2012.

The scope of this inspection was limited to FYs 2011–13 operations at the Houston Seaport. We reviewed national and local policies and procedures for the targeting and examination of shipments destined for the Houston Seaport, including the Cargo Enforcement Reporting and Tracking System (CERTS) Port Guidance, Version 2.1, dated April 6, 2011, and CBP Directive 3290-007B, National Maritime Targeting Policy, dated December 28, 2007, and reviewed in December 2010. We conducted limited analysis on data obtained from CBP to determine its reliability. We conducted interviews with officials from CBP’s Office of Field Operations at Headquarters, the Houston Field Office, and the Houston Seaport; and observed cargo targeting and examination operations at the seaport.

From a universe of 67,709 medium- to high-risk shipments in FYs 2011–13, we drew a statistically valid sample of 382 containers using a 95 percent confidence level, a 5 percent sampling error, and a 50 percent population proportion. We used the sample to determine whether: x CBP officers performed a mandatory review of medium- and high-risk shipments; x ATS placed an automatic hold on high-risk shipments; x High-risk shipments were examined with large-scale Non-Intrusive Inspection imaging technology or radiation detection technology; x Port Director waivers to mandatory examinations were properly documented; x Use of standard exceptions to mandatory examinations were properly documented; x A physical examination of a shipment was performed after an anomaly was identified during the Non-Intrusive Inspection; and x Examination findings were accurately entered into ATS. www.oig.dhs.gov 7 OIG-15-64 OFFICE OF INSPECTOR GENERAL Appendix B Management Comments to the Draft Report www.oig.dhs.gov 8 OIG-15-64 OFFICE OF INSPECTOR GENERAL www.oig.dhs.gov 9 OIG-15-64 OFFICE OF INSPECTOR GENERAL Appendix D Report Distribution Department of Homeland Security Secretary Deputy Secretary Chief of Staff General Counsel Director, GAO/OIG Liaison Office Assistant Secretary for Office of Policy Assistant Secretary for Office of Public Affairs Assistant Secretary for Office of Legislative Affairs CBP Audit Liaison Office of Management and Budget Chief, Homeland Security Branch DHS OIG Budget Examiner Congress Congressional Oversight and Appropriations Committees www.oig.dhs.gov 11 OIG-15-64