Department of Homeland Security 

Office of Inspector General 

U.S. Customs and Border Protection’s 
 


Oversight of the Permit to Transfer 
 


Process for Cargo Containers 
 


OIG-11-28 January 2011 
• w" ..

Office.ofInspector General

U.S. Department of Homeland Security

Washington, DC 20528

Homeland

Security

JAN 1 1 2011

MEMORANDUM FOR: The Honorable Alan Bersin

Commissioner

U.S. Customs and Border Protection

FROM:

Inspector General

SUBJECT: Final Letter Report: CBP's Oversight ofthe Permit to

Transfer Process for Cargo Containers

Attached for your information is our final letter report, Final Letter Report: CBP's

Oversight ofthe Permit to Transfer Process for Cargo Containers.

CBP did not identify any sensitive information in the report that would warrant a "For

Official Use Only" designation. Consistent with our responsibility under the Inspector

General Act, as amended, we are providing copies of our report to appropriate

congressional committees with oversight and appropriation responsibility over the

Department of Homeland Security. The report will be posted on our website.

Should you have any questions, please call me, or your staff may contact Mark Bell,

Deputy Assistant Inspector General for Audits, at (202) 254-4100.

Attachment

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Background 

Section 809(g) of the Coast Guard and Maritime Transportation Act of 2004 (Public Law 

108-293) requires the Office of Inspector General to submit an annual report on its 

evaluation of the U.S. Department of Homeland Security’s (DHS) current targeting 

system for international intermodal cargo containers. This is our sixth audit on selected 

aspects of DHS’ targeting system. This year, we are focusing our efforts on determining 

whether CBP’s permit to transfer (PTT) process has effective controls in place to ensure 

that the U.S. Customs and Border Protection (CBP) secures and inspects all identified 

high-risk containers. 

CBP is responsible for targeting and conducting cargo examinations on cargo destined to 

enter United States commerce. In 2009, approximately 9 million containers arrived in the 

United States. To manage the potential security threats presented by this large volume of 

maritime cargo, CBP employs a multi-layered approach, including analyzing and 

reviewing shipment information and targeting and inspecting high-risk cargo. CBP 

requires carriers to provide shipment information about the contents of their cargo 

containers to determine the level of risk associated with the cargo. CBP uses the 

Automated Targeting System (ATS) to review this information, which includes the 

country of origin, type of merchandise, and destination, to determine if the shipment 

poses a high risk to the United States and should be examined prior to release. CBP 

allows importers up to 15 days after the arrival of their shipment to provide additional 

shipping information. 

Cargo terminals have limited storage space and constantly receive new shipments. 

Therefore, title 19 Code of Federal Regulations (CFR) § 19.45 allows carriers to move 

cargo from the place of arrival using PTT once the application has been approved by the 

port director. The CFR does not provide specific policy and procedures on how ports 

should implement the PTT process. As a result, each port director has established local 

policies and procedures based on port logistics and needs. In 2009, approximately 

176,000 containers were moved using the PTT process. Recent terrorist events such as 

the recent incidents concerning air cargo highlight the need for continued strengthening 

of controls to protect the integrity of the nation’s cargo security efforts. As cargo 

containers move through the supply chain, including the PTT process, each point of 

transfer increases the risk of vulnerabilities. The security of each transfer and the 

trustworthiness of each party involved within the PTT process are critical to the overall 

security of the supply chain. 

Results of Review 

CBP does not have a centralized PTT process. Each of the six ports we visited processed 

PTTs differently using varying methods to mitigate risks including special queries in 

ATS and the Automated Manifest System, as well as advanced targeting units who target 

cargo needing an examination. Our audit tests did not identify significant deficiencies in 

the PTT processes at the ports we reviewed. 

1 
We reviewed a random sample of 68 high and low risk PTTs for the first and second 

quarter of FY 2010. Additionally to ensure high risk PTTs were properly inspected prior 

to release, we reviewed a sample of 295 high risk PTTs and a targeted sample of 60 other 

high risk cargo containers processed in July 2010. 

For each stage, we tested various key internal controls, such as port policies and 

procedures, determined whether PTT data requests and authorizations were properly 

processed and verified that all high-risk cargo identified in our sample received the 

appropriate examination. We interviewed CPB Office of Field Operations personnel at 

CBP headquarters in Washington, D.C., and CBP supervisors and officers at the ports we 

visited. We also interviewed non-CBP supervisors and employees working in various 

types of warehouses, including container examination stations, container and foreign 

trade zones, and customs bonded warehouses. 

This report does not contain any recommendations. 

Management Comments and OIG Analysis 

We obtained written comments on a draft of the report from the U.S. Customs and Border 

Protection’s Office of Internal Affairs Assistant Commissioner, James Tomsheck, 

responsible for taking corrective action. CBP generally concurs with the content of the 

report and offered no technical or general comments. We have included a copy of the 

comments in Appendix B. 

2 
 

Appendix A 

Purpose, Scope, and Methodology 

The objective of this audit was to determine whether CBP’s permit to transfer 

(PTT) process has effective controls in place to ensure that CBP secures and 

inspects all identified high-risk containers. We selected a sample of ports that 

processed the highest volume of cargo containers and selected additional ports as 

a representative sample of the differing sectors in CBP. Those ports included Los 

Angeles and Long Beach, California, Newark, New Jersey and New York, New 

York, Norfolk, Virginia, Houston, Texas and Miami and Port Everglades, Florida. 

We reviewed a random sample of 68 high and low risk PTTs for the first and 

second quarters of FY 2010. Additionally to ensure high risk PTTs were properly 

inspected prior to release, we reviewed a stratified sample of 295 high risk PTTs 

and a targeted sample of 60 other high risk cargo containers processed in July 

2010. We assessed adherence with Title 19 Code of Federal Regulations (CFR) 

§ 19.45 and CBP’s port-specific policies and procedures in the key stages of the 

PTT process for processing high-risk shipments. 

We conducted this performance audit between June and December 2010 pursuant 

to the Inspector General Act of 1978, as amended, and according to generally 

accepted government auditing standards. Those standards require that we plan 

and perform the audit to obtain sufficient, appropriate evidence to provide a 

reasonable basis for our findings and conclusions based upon our audit objectives. 

We believe that the evidence obtained provides a reasonable basis for our findings 

and conclusions based upon our audit objectives. 

We appreciate the cooperation by CBP management and staff in providing the 

information and access necessary to accomplish this review. 

3 
 

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Appendix B 

Managements Comments to the Draft Letter Report 

4 
 

Appendix C 

Major Contributors to This Report 

Paul Wood, Director, Trade Operations and Security 

Shelley Howes, Audit Manager 

Jeffrey Wilson, Team Lead 

Robert Edwards, Senior Auditor 

Elizabeth Garcia, Senior Auditor 

Andre’ Marseille, Program Analyst 

Jeff Mun, Program Analyst 

David Kinard, Referencer 

5 
 

Appendix D 

Report Distribution 

Department of Homeland Security 

Secretary 

Deputy Secretary 

Chief of Staff 

Deputy Chief of Staff 

General Counsel 

Executive Secretariat 

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 

United States Customs and Border Protection 

Assistant Commissioner, CBP 

Director, Office of Field Operations 

CBP Audit Liaison 

Office of Management and Budget 

Chief, Homeland Security Branch 

DHS OIG Budget Examiner 

Congress 

Congressional Oversight and Appropriations Committees, as 

appropriate 

6 
 

ADDITIONAL INFORMATION AND COPIES 

To obtain additional copies of this report, please call the Office of Inspector General (OIG) at (202) 254-4100, 

fax your request to (202) 254-4305, or visit the OIG web site at www.dhs.gov/oig. 

OIG HOTLINE 

To report alleged fraud, waste, abuse or mismanagement, or any other kind of criminal or noncriminal 

misconduct relative to department programs or operations: 

• Call our Hotline at 1-800-323-8603; 

• Fax the complaint directly to us at (202) 254-4292; 

• Email us at DHSOIGHOTLINE@dhs.gov; or 

• Write to us at: 

DHS Office of Inspector General/MAIL STOP 2600, 

Attention: Office of Investigations - Hotline, 

245 Murray Drive, SW, Building 410, 

Washington, DC 20528. 

The OIG seeks to protect the identity of each writer and caller.