March 24, 2004
Members will hear testimony on vessel, port, and cargo security, and security issues related to individuals with access to vessels and cargo at maritime facilities. Senator McCain will preside. Witness list will be announced at a later time.
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Admiral Thomas H. Collins
Click here for a PDF version of Mr. Collins', Mr. Stone, and Mr. Bonner's remarks.
The Honorable David M. StoneAssistant SecretaryTransportation Security Administration
See Mr. Collins' testimony.
The Honorable Robert C. Bonner
See Mr. Collins' testimony.
Witness Panel 2
Mr. Gary P. LaGrange
I want to thank Chairman McCain and Senator Hollings for calling this hearing and continuing to shed light on the issues of port security. I also would like to thank Senator John Breaux for his tireless support of the Port of New Orleans and the maritime industry throughout the United States. We will deeply miss Senator Breaux’s advice and counsel when he leaves the Senate at the end of this year. Since reporting to the committee two years ago, the Port of New Orleans, along with many other U.S. ports, has made significant port security enhancements. The Port has accomplished all previously enumerated goals and objectives that could be undertaken administratively by its staff. The following security enhancement and/or regulatory compliance requirements have been completed: • Increased Security to Heightened MARSEC /National Alert Levels • Federal Grant Application Initiatives • Federal Grant Project Award Management • Port Vulnerability Assessment • Harbor Police Department Anti-Terrorism WMD Manual • Increased Cruise Terminal and Waterside Security • U.S. Coast Guard Area Maritime Security Executive Committee Membership • Region One Urban Area Security Initiative Membership • F.B.I. Joint Anti-Terrorism Task Force Membership • Immigration and Customs Enforcement (ICE) “Operation Check Down” Initiatives • MTSA Facility Security Plan • Metal Detection Equipment Enhancements The Port has completed or is in the process of completing necessary infrastructure enhancements with funding assistance made available by the Federal government. The Port has dutifully absorbed all personnel, operations and maintenance costs related to security improvements, including overtime for heightened level alert periods. The impact of increased security costs on port authorities is significant and must be addressed. It is the primary reason that Federal funding assistance must not only be continued, but increased to meet the level of funding needed to address security concerns demonstrated by the Port Vulnerability Assessments completed by ports throughout the United States and submitted to the U.S. Coast Guard. These assessments document U.S. ports’ numerous areas of weakness and, consequently, their susceptibility to criminal and terrorist activities. The preparation, distribution and review of these assessments, albeit as protected SSI (Security Sensitive Information) documents, may actually result in increased port vulnerability, if the steps required to mitigate identified weaknesses are not taken within a “reasonable” period of time. Therefore, Congress and the Bush Administration should act immediately to provide funding at levels sufficient to enable port authorities to meet the increased financial burden associated with increased security costs as well as the mandates of the Maritime Transportation Security Administration which become applicable on July 1, 2004. As stated, during the past two years, the Port of New Orleans has accomplished many of the goals listed in its previous report. To date, the Port has applied for more than $33 million in federal grant funding. The following awards have been received • TSA I Upriver Gate Access $3.5 million Project ongoing • TSA I Cruise Terminal Fencing $184,450 Project completed • TSA II Cruise Terminal Lighting/ Monitoring $600,000 Project ongoing • TSA II Signs, barricades, barriers $50,000 Project ongoing • TSA II Metal detectors $15,000 Project completed • DHS Upriver Perimeter Enhance- ments $3.4 million Project ongoing • DOJ/Tech. Video Teleconferencing $52,000 Project completed • DOJ/COPS Hiring Grant $212,351 3 Officers over 3 years • DOJ/COPS Overtime Grant $37,500 Req. -0- Award • TSA III 8 Projects $5.5 mil. Req. -0- Award The Port of New Orleans anticipates contributing matching funding for these projects totaling approximately $1.2 million. ( This is in addition to an annual Safety and Security Division operating budget of $ 5.5 million and a capital equipment budget of $275,000.) The Port intends to apply for additional funding through the Round III Federal grant initiative. However, the President’s proposed Fiscal Year 2005 budget of $46 million for port grant funding is not sufficient to meet port security funding requirements. It is worth noting, that this figure represents a significant reduction in available grant funding because infrastructure improvements or new construction projects, which were included in previous rounds, are now listed as “ineligible” in the Round III guidelines. Nearly $5.4 million in security enhancements were not funded in the Port’s previous grant application. This amount alone comprises eight percent of the President’s proposed budget. None of the grant projects included in Round III attempts to address the prohibitive costs of providing infrastructure improvements and associated equipment, maintenance and staffing costs (as opposed to installation or replacement enhancements) which result directly from elevated security requirements. The American Association of Port Authorities estimates that $400 million in funding is called for in FY ‘05. The latest U. S. Coast Guard forecast estimates the cost for total MTSA compliance to be $1.125 billion for the first year and $5.4 billion over the next 10 years. Numerous administrative or procedural MTSA mandates must also be addressed and clarified. The most glaring example is the TWIC (Transportation Worker Identification Card) concept for ports. Information concerning the status of the TWIC initiative is all too often illusive, sketchy and most of all inconsistent. The Port of New Orleans, like many ports, has deferred initiating a card access project because the “start-up”(staffing for processing, distribution, enforcement and administration); equipment; and software costs are extremely high and this is without the assistance of a paid consultant. A recent article in the Winter, 2004, Port Illustrated discusses the TWIC pilot program in Wilmington, Delaware. The pilot program began in July, 2003, and is scheduled to run for 15 months, extending beyond the July, 2004, MTSA compliance deadline, and leaving ports without firm guidelines. To date, no directives or guidelines which address the need or requirement for a biometric component of TWIC have been issued. As a result, ports will be forced to purchase more expensive card access systems which will be able to accommodate features which, ultimately, may not even be required. The Port of New Orleans will submit a grant application for all eligible unfunded security initiatives, ranging from training and exercises to communication system upgrades and patrol vessels used to supplement Coast Guard patrols and response. The price tag for these initiatives is currently being estimated at approximately $50 million dollars. Port executives remain committed to securing additional funding for security initiatives from both self-generated revenues and Federal funding sources. Now, more than ever, port executives truly understand that the safety and security of our nation’s waterways will forever be a paramount component of port operations. The vessel collision that occurred at the mouth of the Mississippi River on February 21 of this year provides a poignant example of the potential economic havoc that could be visited upon this nation by a terrorist act. In this unfortunate incident, the sinking of a relatively small vessel in the busy Southwest Pass resulted in a four-day closure of the main international shipping channel into the Mississippi River and the delay of 158 ocean-going vessels. The closure was absolutely necessary to conduct search and rescue and recovery operations followed by removal of the vessel. Our thoughts go out the families of the five seamen who lost their lives. After removal of the sunken vessel, the backlog of ship traffic was cleared and shipping returned to normal within three and a half days. Estimates are that this incident caused approximately $17 million in direct losses and $68 million in overall negative economic impacts. Not only were ships delayed ,but three container cargo ships and three cruise vessels had to be diverted to other ports. Thousands of passengers were bussed to other Gulf Coast ports which were ill-equipped to handle them on such short notice. The cruise lines incurred thousands of dollars in ground transportation costs and reimbursements to passengers for the loss of their vacations. With more than 5,000 ocean-going vessel calls on the Mississippi River annually, the importance of this waterway system to the nation’s economy is readily apparent. The nation’s economy would experience severe consequences from a prolonged closure of the Mississippi River to deep draft navigation. In 2002, the ports of the Lower Mississippi River from the Gulf of Mexico to Baton Rouge handled 227 million tons of foreign waterborne commerce valued at nearly $40 billion and representing 18.1% of the nation’s international waterborne commerce. American producers exported 27 percent of total U.S. exports out of lower Mississippi River ports. Included in this total are agricultural products from 17 midwestern states exported from the 10 grain elevators located on the lower Mississippi River, making up more than 62% of total U.S. Grain Exports. More than 92 million tons of petroleum and petroleum products are imported to Louisiana facilities on the Mississippi River system, comprising nearly 16% of all U.S. waterborne imports of petroleum and related products. This collision and its consequences clearly demonstrates the need for the timely completion of all elements of the of the Vessel Traffic Service (VTS) on the lower Mississippi River to facilitate safe and secure vessel operations. Ports and industries along the lower Mississippi are poised to reap the considerable benefits of the new state-of-the-art VTS being implemented by the U. S. Coast Guard. All facets of the maritime community have been involved in this unprecedented multi-year cooperative venture with the Coast Guard. The system, for the most part, is up and running on a test basis out of the Coast Guard’s Vessel Traffic Center on the river front in New Orleans. Two more radar sites must be installed and the system must be subjected to formal testing procedures, involving both the computer simulation and real world tests with a large number of vessels on the waterway equipped with VTS transponders. VTS New Orleans will enhance both safety and security of the largest port complex in the world. The Coast Guard will be able to identify and track the movements of all ocean-going vessels and most other commercial vessels moving on the lower Mississippi. Tracking will begin prior to a ship’s entrance to the river and will extend up river beyond the limit of deep draft navigation at Baton Rouge. Mariners will be given a powerful new tool to assist safe navigation in the busiest waterway in the nation. Existing radar only provides a very limited view of the river and is particularly hampered by the river’s twists and turns. Mariners depend on extensive use of radio communication with other vessels to determine navigation conditions, but radio communication, as seen in the recent vessel collision, is not always reliable. VTS will provide a detailed, real-time picture of vessel movements on the waterway, including vessel identification, as well as provide a method for communicating waterway conditions and special alerts to all mariners. VTS will not be blinded by bends in the river or by fog or darkness. We have to thank the Coast Guard for its perseverance in bringing VTS to our ports and waterways, and Louisiana Senator John Breaux for his tireless championing of VTS, especially for his insistence on expediting VTS carriage requirements for vessels. A final notable attribute of VTS is that as currently programed it comes at no cost to the Port. The Port’s emergency response vessel, which assists the U. S. Guard and responds to every level of waterway emergency and service, is scheduled to be have the system installed at no cost to the Board. In conclusion, now is not the time for Congress to lose its zeal in the war against terrorism on the domestic front. Extending the deadline for compliance with security measures without providing necessary additional funding is not the answer. The nation’s ports, like its airports, simply cannot by themselves bear the financial burden of added security costs, especially during these volatile economic times. From the beginning of this regulatory process, port executives have pleaded that no security mandates be issued without the proper funding. The mandates are here. Please ensure that adequate funding is too.
Mr. Mike Mitre
Chairman McCain, Ranking Member Hollings and members of the Committee, my name is Mike Mitre. I am a member of the International Longshore and Warehouse Union (ILWU), which since 1934 has been chosen by thousands of West Coast port and dock workers to represent us in all matters related to our employment. For the past two years, I have served as the union representative regarding port security and have had opportunities to work with the Coast Guard, TSA, Customs, and other stakeholders in an effort to effectively secure our ports from acts of terrorism. We commend these agencies for their hard work and commitment to the national security of the United States. In particular, the ILWU commends the Coast Guard for developing comprehensive port security regulations in a very short time frame. We appreciate the hard work and dedication of the Captain’s of the Ports, coast guard personnel, TSA, and Customs personnel. I also want to commend other labor organizations that have worked on a common agenda to protect our ports including the International Longshoremen’s Association, the International Brotherhood of Teamsters, and the Transportation Trades Department, AFL-CIO. As co-chair of the International Longshore and Warehouse Union Legislative Committee, I have developed a number of policy statements with respect to the security of our ports on behalf of our members and communicated our position to members of Congress and key staff. We appreciate the commitment that Congress and this Committee in particular, has made to the goal of protecting both our ports and ILWU dockworkers from the threat of international terrorism. Mr. Chairman, thank you for holding this important hearing. We are at a critical time in the history of this country. The threat of a terrorist attack against the marine transportation system is a new reality. On March 14, 2004, suicide bombers at the Ashdod Port in Israel killed 10 people and wounded another 16. It appears that all the victims were workers. It is certainly in the interest of American port workers to secure our ports. Every day we unload thousands of containers from ships calling from virtually every point on the globe, each filled with unknown items packed by unknown people throughout the world. Few of these containers or vessels are screened or inspected before being unloaded by longshoremen. Many of the containers do not go through any type of a security screening process before being loaded on a truck or railcar bound for the interior of the United States. Many of our families, friends, and coworkers live in different seaport communities such as San Pedro and Oakland, California, Portland, Oregon, Seattle, Washington, and Honolulu, Hawaii. While I would like nothing better than to be able to tell them that all the stakeholders within the marine transportation system are doing everything possible to keep them safe and secure from terrorism, this may not exactly be the case. My testimony today will focus on specific measures that, if implemented, will provide more meaningful security for our port marine terminals and our communities. Marine terminal operators along the west coast continue to refuse, despite repeated encouragement and demands from the ILWU, to implement adequate port security measures to protect our port workers, communities and the nation as a whole from possible terrorist attacks. Even more shocking and inexplicable is the reality that some terminal operators have reduced or abandoned some of the most basic port security measures following the September 11th and the terrorist attack against our American people. On March 15, 2004, the ILWU wrote to Coast Guard Admiral Hereth to urge the Coast Guard to take effective action to compel these employers, the marine terminal operators, to immediately implement and maintain adequate security measures in accordance with the Maritime Transportation Security Act (MTSA) and the applicable and related Coast Guard regulations issued on July 1, 2003 and October 22, 2003. Since September 11, 2001, the ILWU has made repeated overtures to these same employers to develop and institute, without delay, practices and procedures designed to increase the level of security to at least that which existed on September 11th , 2001. The Union’s requests for Employer action to increase port security is documented in various proposals and letters to the employers, samples of which are attached to this testimony marked Attachment 1. Many of these companies have actually reduced security by, among other things, discontinuing the practice of inspecting the integrity of container seals upon entering marine terminal facilities. The second attachment to the testimony are copies of some of the letters documenting our Employers’ discontinuation of the regular inspection of container seals and inspection of “empty” containers shortly before and after September 11, 2001. The Employers’ insistence, over Union objection, to stop inspecting container seals at certain West Coast marine terminal facilities is especially disconcerting given that the Coast Guard regulations in 105.265(b)(4) specifically mandate that terminal operators and owners “check seals and other methods used to prevent tampering upon entering the facility and upon storage within the facility”. While we have urged our Employers to initiate adequate port security measures regardless of specific governmental mandates, the Union has especially pressed for the PMA Employers’ immediate full compliance with Coast Guard Regulations 105.265, “Security Measures for Handling Cargo”, which plainly constitute the core security provisions for marine terminal facilities; where the majority of ILWU port workers are employed. With respect to the specific security measures mandated in Coast Guard regulation 105.265, “Security Measures for Handling Cargo”, our information, daily work experience, and observations disclose that the PMA Employers have failed to implement the following security measures listed in that provision: o 105.265(a)(5) – “Identify Cargo That is Accepted for Temporary Storage in a Restricted Area While Awaiting Loading for Pickup” – Most if not all port facility operators/owners have, after September 11, 2001, and also after the December 31, 2003 filing of security plans, continued the standard practice of mixing cargo and containers designated for loading on different ships and trucks scheduled for different time periods and also mixing them with other cargo and containers not yet designated for a particular loading or pickup. Moreover, few, if any, facilities have “restricted areas” for temporary storage of cargo. o 105.265(a)(6) – “Restrict the Entry of Cargo to The Facility That Does Not Have a Confirmed Date for Loading as Appropriate” – No facility operator/owner, as far as we know, has instituted any restrictions on the entry of cargo that lacks a confirmed date for loading, let alone conduct any determination of “appropriateness” for receipt of such cargo since September 11, 2001, and since the December 31, 2003 filing of security plans. In fact, many facility operators/owners continue to use what they call “dummy bookings” to document the regular receipt of cargo that lacks a designation or confirmed date for loading onto ships. In addition, most, if not all, marine terminal facilities continue the standard practice of allowing cargo to first enter the facility and only after entry determine the existence of appropriate documentation and designation for loading. Many facility operators/owners also continue the practice of storing on site, without restriction for several days, cargo with inadequate documentation and unknown designation for loading. o 105.265(a)(9) – “Create, Update, and Maintain a Continuous Inventory of All Dangerous Goods and Hazardous Substances From Receipt to Delivery Within the Facility Giving the Location of Those Dangerous Goods and Hazardous Substances.” – This critical security measure has simply not been implemented at any facilities where ILWU members work since September 11, 2001 and continuing after the December 31, 2003 filing of security plans. In nearly all marine terminal facilities, hazardous material cargo is randomly integrated with other types of cargo, including even food products throughout the terminals. Also, as noted, it is standard practice for marine terminals to receive and store for a certain period of time containers of unknown contents pending receipt and verification of complete documentation. o 105.265(b)(1) – “Unless Unsafe To Do So, Routinely Check Cargo, Cargo Transport Units and Cargo Storage Areas Within the Facility Prior to and During Cargo Handling Operations for Evidence of Tampering.” – Few if any West Coast Marine Terminals have instituted any practices or procedures to “routinely check” cargo, containers and the storage areas for possible tampering within these facilities following September 11, 2001 and even since the December 31, 2003 filing of security plans. In those port facilities where some checking is performed, such as for example, at Terminal-6 in Portland, Oregon, the security guards merely drive through the facility in a perfunctory manner no differently than they did before September 11, 2001. o 105.265(b)(2) – “Check That Cargo, Containers, or Other Cargo Transport Units Entering the Facility Match the Delivery Note or Equivalent Cargo Documentation.” – While this practice was commonly followed in the West Coast ports ten or more years ago, the industry trend starting before September 11, 2001 and continuing to the present is the elimination of requiring that cargo and containers match the delivery documentation before entry into marine terminal facilities. Neither the terrorist attacks of September 11, 2001, the issuance of the Coast Guard interim regulations of July 1, 2003, nor the filing of facility security plans as of December 31, 2003, have changed this regressive trend. o 105.265(b)(3) – “Screen Vehicles”. – The screening of vehicles before entering marine terminal facilities is done in some West Coast ports, but not all. o 105.265(b)(4) – “Check Seals and Other Methods Used to Prevent Tampering Upon Entering the Facility and Upon Storage Within the Facility.” - As noted, most marine terminals on the West Coast have not instituted any procedures for the checking of seals and other methods to prevent tampering either upon a container entering a facility or upon its storage within the facility. Indeed, some marine terminal operators have actually discontinued this practice in years before and in months after September 11, 2001. That most marine terminal operators do not routinely check and verify the integrity of seals on most containers is reflected by the one limited exception where such checks are more commonly done with respect to cargo and containers subject to USDA regulations. Moreover, most marine terminal operators fail to have adequate procedures for monitoring pilferage and other tampering of containers and cargo as reflected in the common practice of the terminal operators and the carriers splitting the cost of any such losses based on their failure to know the time and location where such tampering occurred. Mr. Chairman, I cannot emphasize enough the importance of checking the outside seal of containers upon entry into the facility by rail or truck and especially, upon entry by sea. A broken seal would immediately alert the port facility that the container may have been with tampered and needs to be carefully inspected. A systematic check of container seals also provides authorities with a record as to the parties responsible for placing the seal on any container that may be the means of a terrorist act. The Coast Guard regulations do not contain references regarding the need to develop a program to inspect and seal “empty” containers. There should be little disagreement over the need for an inspection or verification protocol concerning these containers. The fact that marine terminal operators routinely conducted “empty” inspections in the past as a regular part of their security program to verify the absence of harmful contents and to detect and deter possible terrorist attacks only adds to the viability of this procedure. The ILWU urges the Coast Guard to strongly consider creating a mandate regarding the inspection of empty containers. If there was ever to be an attack from anyone using an “empty” container to transport and stage explosives or chemical or biological agents, this would be the ideal manner in which to accomplish it. The level and manner of intelligence gathering and the sophistication of technique used by various terrorist organizations should leave nothing to chance. It is the Union’s view that the Coast Guard regulations in general, and the MTSA in particular, as well as basic common sense and good faith concern for the security of the ports and the country necessarily require that all maritime companies initiate comprehensive and adequate port security measures without delay, notwithstanding the technical final compliance date of July 1, 2004 as set out in 105.115(b) of the Coast Guard regulations. Terminal operators that fail to implement necessary security measures in the interim preceding the July 1, 2004 deadline is contrary to the stated intent and objective of the MTSA and the Coast Guard regulations. Indeed, Section 70103(c)(7) of the MTSA mandates that the Secretary of Homeland Security, who has delegated such responsibility to the Coast Guard, “shall require each owner or operator of a vessel or facility located within or adjacent to waters subject to the jurisdiction of the United States to implement any necessary interim security measures, including cargo security programs, to deter to the maximum extent practicable a transportation security incident until the security plan for that vessel or facility operator is approved.” Under these clear statutory and regulatory mandates, there is no legitimate reason or excuse for any vessel or facility operator/owner not to implement the provisions of the Regulations and of their security plans after submission to the Coast Guard on December 31, 2003, and pending review and approval by the Coast Guard by July 1, 2004. Any good faith approach to port security would demand no less. To be sure, would-be terrorists will not wait for the passing of a technical future deadline to attack our ports; nor should port Employers wait to adequately protect our port facilities from such potential attacks. Common sense would indicate that waiting until July 1, 2004, in which to institute necessary port security measures actually could heighten the risk of potential terrorism during this waiting period. I understand that our employers are concerned about the cost of port security measures. The ILWU is mindful of their concerns and we understand that it may be cost prohibitive and impractical to subject every container to a thorough and complete inspection. However, every container that enters our ports can and should be subjected to a security check. When there is a conflict between efficiency in the maritime transportation system versus additional security measures that will enhance the security of the system and our port communities, we believe that security should prevail. The ILWU has worked closely with TSA in developing the TWIC ID, envisioned as a nation wide transportation worker ID security program. The prototype phase now underway in the ports has already actively involved many ILWU members, an indication of the realization by the most average worker just how serious security has become. It is also an indication of the degree of commitment the ILWU has exhibited. Only through a dedicated and unified effort by all stakeholders will true port security be achieved. Finally, we ask the Congress and the Administration to fully fund port security. It is critical that when the facility security plans are finalized that money is available for optimum security rather minimal security. We applaud the members of this committee, and particularly Senator Hollings, for efforts to secure the necessary funding. If a terrorist attack occurred in a major port, the lives of our workers, families, and community would be lost. The national economy would be badly shaken. It is incumbent on the Congress to provide the necessary funding to meet longshore labor and other port workers security objectives. On behalf of the members of the International Longshore and Warehouse Union, I thank you for the opportunity to testify today. I would be pleased to answer your questions.
Dr. James Carafano
Mr. Chairman and other distinguished Members, I am honored to testify before the committee today. Appraising the status of national efforts to enhance maritime security is a vitally important task. In my testimony, I would like to assess the progress that has been made in each of the areas related to implementing the national homeland security strategy, examine organizational issues that will affect the long-term development of a national maritime security regime, and reconsider the need for standards and metrics to evaluate preparedness and guide future efforts and investments. The Challenge—Consequences, Size, and Scope There are three reasons why the subject of maritime security requires national attention. · First, the importance and vulnerability of the maritime domain cannot be overestimated. As you well know, 95 percent of U.S. overseas trade traffics the maritime domain. In addition, many major population centers and critical infrastructure are in proximity to U.S. ports or accessible by waterways. Maritime security also has a critical national security dimension. The economic, physical, and psychological damage that might result from a significant terrorist attack targeting maritime commerce or exploiting America’s vulnerability to strikes from the sea is difficult to estimate. The September 11 terrorist attack on New York incurred well over $100 billion in losses to the U.S economy alone. Given the nation’s overwhelming dependence on ocean-going commerce, a similar sudden, unexpected attack in the maritime domain might easily exceed these costs. The United States lacks sufficient means to respond to maritime attacks with catastrophic consequences. · Second, the size of the maritime security challenge is as daunting as the terrible consequences of a serious attack. The figures often citied are well-rehearsed: maritime security involves hundreds of ports, thousands of miles of coastline, tens-of-thousands of commercial and private craft, and millions of shipping containers. Even these figures, however, do not describe the magnitude of the maritime domain, which is truly global in nature, encompassing every ocean and the peoples and property of many nations. Current initiatives, even when fully implemented, may be inadequate to address the global challenges of maritime security. · Third, maritime security is truly a complex strategic problem encompassing a physical domain, land-based critical infrastructure, intermodal means of transportation, and international supply chains that covey goods, services, and passengers. The National Strategy for Homeland Security, issued by the Bush Administration in July 2002, identified six critical mission areas. These areas were established to focus federal efforts on the strategy’s objectives of preventing terrorist attacks, reducing America’s vulnerabilities to terrorism, and minimizing the damage and recovering from attacks that do occur. The components of maritime security cut across each of these functions. Only a strategic solution can provide the comprehensive regime required to address such a complex strategic problem. The United States still lacks such an adequate, overarching approach to the challenges of maritime security. While these challenges are indeed daunting, I would like to start off by commending Secretary Ridge and the entire Department of Homeland Security (DHS) on the work that has been done over the last year in the area of maritime security. The war on terrorism is likely to be a long, protracted conflict, and the DHS has the difficult task of being on watch right now against possible terrorist threats and building a robust homeland security system that must stand for decades. While the nation’s current maritime security regime is inadequate to meet long-term U.S. strategic needs, it represents a significant improvement over the pre-9/11 state of preparedness. The DHS has achieved a lot given the short time frame of its existence and the magnitude of the task it faces. Likewise, Congress has performed yeoman’s service as well. The Maritime Security Act (MTSA) of 2002 produced major changes in the nation’s approach to maritime security and, I believe, provided much of the legislative foundation required to implement robust national programs. But, there is more work to be accomplished. Rather than dwelling on what has been done well, I believe it is more important to focus on what can be done better. A Strategic Assessment One of the most important actions taken by President Bush’s administration in the wake of the September 11 attacks on New York City and Washington was establishing a national homeland security strategy. In turn, the strategy defined the six critical missions required to protect U.S. citizens from transnational terrorism. I would like to review each in turn, highlighting where cautions or questions are in order. Intelligence and Early Warning. The first critical mission area is intelligence and early warning. It includes activities related to detecting terrorists and disseminating threat information and warning. It is widely recognized that promoting intelligence sharing across the public and private sectors is the greatest challenge in this critical mission area. Effective intelligence sharing is a prerequisite for exploiting the full potential of national capabilities to respond to potential terrorist threats. The emerging national maritime system certainly faces this challenge. However, intelligence and early warning in the maritime domain faces an additional obstacle. The United States lacks adequate situational awareness of activities in U.S. coastal waters and waterways. While the U.S. Coast Guard recognized the critical importance of maritime domain awareness even before the 9/11 attacks, current plans for enhancing domain have matured little. For example, the Vessel Traffic Service (VTS) was established in 1972 to improve navigation safety by organizing the flow of commercial maritime traffic. There are 10 VTS areas scattered throughout the United States. These provide limited coverage of the maritime domain. In 1996, Congress required the Coast Guard to reassess future VTS requirements. This initiative resulted in the development of the Ports and Waterways Safety System (PAWSS), which is now in the process of being employed. MTSA requires most large commercial craft and vessels on international voyages to have Automatic Identification System (AIS) tracking devices that will be monitored by PAWSS. PAWSS-VTS is intended to automatically collect, process, and disseminate information on the movement and location of ships in ports and on waterways using a network of radars and onboard ship transponders. Unlike the U.S. air traffic control system, PAWSS-VTS will never be able to provide a complete picture of traffic in the maritime domain. PAWSS-VTS faces three major drawbacks. First, it will not be a national system. According to a report by the General Accounting Office, as currently envisioned, “for the foreseeable future, the system will be available in less than half of the 25 busiest U.S. ports.” Second, PAWSS-VTS was intended to support maritime safety and environmental protection missions, and has been pressed into service to support homeland security responsibilities. In this regard, PAWSS-VTS will be inadequate to meet emerging security threats. It will, for example, be of virtually no use in providing early warning of small boat threats such as the craft used to attack the USS Cole in October 2000 or large commercial vessels that might be hijacked or converted into covert weapons carriers. Third, PAWSS-VTS does not provide coverage “between the ports.” Terrorists could well mimic tactics of drug smugglers and employ non-commercial vehicles such as small, fast, private boats with concealed compartments capable of storing 30-70 kilograms of material. Currently, the DHS has only two, very expensive and unattractive options for significantly expanding maritime domain awareness. It can direct additional investments in the land-based equipment and other infrastructures required to expand PAWSS-VTS and require additional craft to carry AIS tracking equipment, or it can rely on the surface and aviation assets of the U.S. armed forces (including the Coast Guard and the U.S. Navy) to cover the large remaining gaps. Neither option appears particularly cost-effective nor sufficiently useful or flexible to ensure preparedness in a protracted conflict against an unpredictable foe. Proposals to create a maritime-NORAD, might offer the basis for developing more practical alternatives. Such an approach would probably require three elements to produce more promising alternatives to the long-term challenge of enhancing maritime domain awareness: (1) joint cooperation between the Department of Defense (DOD) and the DHS both in research and development and operational monitoring of U.S. waters, (2) close cooperation of the United States’ northern and southern neighbors, (3) new and innovative technical solutions. Border and Transportation Security. Protecting border and transportation systems includes managing the border and ports of entry, ensuring aviation and maritime security, and developing guidelines and programs for protecting national transportation systems. The key principle guiding federal investments in this area should be ensuring the adoption of a layered security system: a combination of effective, mutually supporting initiatives that simultaneously provide useful counterterrorism measures, protect civil liberties, and do not encumber the flow of travel and commerce. Unlike many strategic challenges, overall, adequacy of resources for implementing new initiatives is not the most significant challenge in this critical mission area. Funding for the DHS role in one layer of the maritime component of border and transportation security, however, is an issue of major concern. In particular, the appropriation for the U.S. Coast Guard’s Integrated Deepwater acquisition program— long-term modernization effort to recapitalize the service’s fleet of cutters, aircraft, sensors, and command and control—is inadequate. The Coast Guard’s fleet is old, expensive to operate and maintain, and poorly suited for some homeland security missions. Deepwater was to be funded at $330 million (in 1998 dollars) in the first year and $530 million (in constant dollars) per year in the following budgets, but no annual budget before FY 2004 matched the required rate of investment. Meanwhile, the Coast Guard’s increased operational tempo and expanded mission requirements since 9/11 have been wearing out the fleet faster than anticipated, putting the modernization program even farther behind schedule. In the Administration’s FY 2005 budget, Deepwater would receive $678 million, an increase of $10 million. This level of funding is totally inadequate to support rapidly building up an essential component of the nation’s homeland security system. Dramatically increasing the budget for Deepwater would not only establish the capabilities needed for a long-term security system sooner, but also garner significant savings (perhaps as much as $4 billion) in lower procurement costs. Reducing life-cycle expenses by retiring older and less capable systems would realize additional savings. While funding should be expanded there are aspects of the Deepwater program that should perhaps be revisited in light of how the U.S. maritime security structure has evolved since September 11. Among the issues that might be reconsidered is whether coordination of requirements and leveraging of research and development between the Coast Guard and the U.S. Navy’s littoral combat ship (LCS) program is adequate and properly synchronized. Likewise, both programs should be assessed to see if they provide an adequate set of capabilities to respond to the small boat threat. Currently, the United States simply lacks an adequate capability to deal with an attack similar to the strike on the USS Cole (In particular, it is unclear if they have sufficiently exploited emerging non-lethal technologies that might be available). Additionally, it is not clear that short-range unmanned aerial vehicle (UAV) and manned aviation requirements of the Navy, Coast Guard, and Immigration and Customs Enforcement Air and Maritime Operations have been adequately rationalized. Another issue that might be addressed is the requirement for Deepwater systems to provide security on the waterside of the ports. Most security plans acknowledge that security on the landside of port facilities is the responsibility of the port. There is often, however, an assumption that security of the water around the port should be the responsibility of the U.S. Coast Guard. While the Coast Guard has traditionally had responsibility for protecting defense-related port facilities, particularly during times of war, it is not clear that service assets should be the primary responders to security incidents in proximity to the ports. Over the long term, it might be more effective if close-in security needs are met by local port authorities and Deepwater assets were focused to an even greater degree on extending depth and redundancy in the U.S. maritime security zone. In contrast to funding for Deepwater, other initiatives in the border and transportation area are programmed to receive significant additional funding. However, of concern here is whether, even with adequate funding, they will provide the redundancy and overlapping security required for an effective layered defense system. Of principal concern are the initiatives intended to secure the supply chain that crosses the maritime domain including the CSI—Container Security Initiative (a program designed to target high-risk cargo for additional screening); CTPAT—the Customs-Trade Partnership Against Terrorism (an initiative for encouraging the private sector to enhance supply-chain security); ACE—the Automated Commercial Environment (which will facilitate Customs oversight of lawful international commerce by streamlining data entry and information exchange between Customs and the trade community and facilitate cargo inspections and clearances); the inspection teams and technologies employed in domestic and foreign ports to screen high-risk cargo; and the shipping and port security measures mandated in MTSA and the International Maritime Organization’s International Shipping and Port Security Standards (ISPS). While all these initiatives are worthwhile, each addresses only a portion of the challenge of providing security of maritime commerce and interdicting terrorist threats before they reach their intended targets. We will only know if they actually provide comprehensive security once they are all up and running in concert and appropriate metrics are developed to measure their effectiveness. This effort will take years and in the end may not prove effective. Nor is it clear these initiatives will be flexible enough to keep with the rapid changes demands and technological innovations of the 21st century marketplace. It may not be strategically prudent to pursue the current combination of measures alone. Layered security, after all requires not placing all the eggs in “one security basket.” The MTSA required the Secretary of Transportation to establish a program to evaluate and certify secure systems of intermodal transportation. It did not direct that these programs would have to necessarily be conceived or implemented by the federal government. In order to reduce risk, as well as exploit the capacity of the marketplace to create innovative and effective solutions, the DHS might consider establishing mechanisms to allow the private sector to develop and implement its own alternatives to the CSI/CTPAT regime. Domestic Counterterrorism. This mission area comprises law enforcement efforts—principally by the FBI and U.S. Immigration and Customs Enforcement (ICE)—to identify, thwart, and prosecute terrorists. The guiding principle for enhancing this critical mission area should be adopting programs that expand the capacity to conduct counterterrorism operations without impinging on civil liberties or detracting from other law enforcement priorities. The addition of the U.S. Coast Guard to the DHS provides another additional tool for expanding the nation’s capacity to conduct domestic counterterrorism in the maritime domain. Several initiatives are noteworthy. Since 9/11, many of the local investigation and inspections arms of the Coast Guard’s Marine Safety Offices have significantly shifted their focus to supporting domestic counterterrorism efforts. In addition, the Coast Guard created the sea marshals program to create a cadre of specially trained law enforcement officers to escort high-risk vessels into port. While the Coast Guard law enforcement initiatives are a positive effort, there is little sign that the service is creating a comprehensive human capital plan, including the leader development training and education that are needed to fully exploit the potential of these programs. Likewise, it is not clear that Coast Guard and ICE law enforcements programs are being developed in tandem to create the objective law enforcement corps needed for maritime security. In fact, it is not apparent that the DHS has defined its long-term strategic needs in this area and that they dovetail with other ongoing federal and state efforts to expand the national capacity to conduct domestic counterterrorism. Defending Against Catastrophic Threats. This critical mission area includes developing better sensors and procedures to detect smuggled nuclear, radiological, chemical, and biological weapons; improve decontamination and medical responses to such weapons; and harness scientific knowledge and tools for counterterrorism efforts. The guiding principle for investments in this mission area must be to focus funding on developing new means to prevent, respond to, and mitigate the unprecedented dangers posed by catastrophic threats. The DHS Science and Technology Directorate is to be commended for developing mission portfolios to address the most critical technology needs for the DHS. On the other hand, it is unclear whether the DHS portfolios, which has not yet been publicly released, adequately reflect the needs of maritime security. Nor has the directorate forged a relationship with the science and technology community in the DOD that can conduct the joint development and acquisition of major programs that might benefit both the defense and homeland security community. In addition, greater consolidation of research and development efforts in regards to supply-chain security is required. For example, the Administration proposes to phase out Operation Safe Commerce in FY 2005. Launched in November 2002, the program was in-tended to use pilot projects in the ports of Seattle-Tacoma, Los Angeles–Long Beach, and New York–New Jersey to test technologies and practices, including cargo tracking, anti-tampering “Smart Containers,” information protection, and real-time data reporting. However, it has shown only limited results, and the research and development effort could be performed better and more efficiently under a development program in the DHS Science and Technology Directorate. As the DHS consolidates these programs in the directorate it should reevaluate whether they are consistent with the department’s research priorities. It is not clear, for example, that “Smart Containers” are a worthwhile program for federal research. Any solution to implement smart containers should come from the private sector, which is in a better position to evaluate the utility of added security information as measured against the added cost. The DHS effort in this area might be more profitably focused on leveraging the security that might be provided by new commercial products and practices rather than developing and mandating standards and technologies to the marketplace. Protecting Critical Infrastructure and Key Assets. This critical mission area includes national efforts to secure public and private entities. Since virtually all of the nation’s critical maritime infrastructure and key assets are not federally owned, developing programs to ensure responsible, efficient, and cost-effective cooperation between the public and private sectors should be the principle guiding investments in this area. Making the challenges of critical infrastructure protection in the maritime domain particularly pressing is that U.S. ports must comply with new security provisions detailed in MTSA and ISPS. However, in developing a funding strategy to improve port security, the Administration should not become overly “port-centric.” Addressing all the critical infrastructure concerns at U.S. ports could well require many billions of dollars. On the other hand, the DHS awarded only $245 million in port grants in FY 2003 (albeit the largest amount of any year to date). According to an unpublished analysis by Dr. Joe Bouchard, implementing MTSA at current funding levels (about $50 million a year) would take 112–162 years. Yet, the current restraint in federal funding may be very appropriate. Addressing the considerable vulnerabilities of maritime infrastructure does not necessarily require a dramatic infusion of federal dollars. For example, effective intelligence and early warning, domestic counterterrorism, and border and transportation security programs can help to reduce risks to critical infrastructure by limiting the opportunities for terrorists to reach U.S. ports. With limited resources available in the federal homeland security budget, it is not apparent why a multi-billion-dollar port security initiative would be a superior strategic choice to a more balanced maritime security program. In addition, the overwhelming preponderance of maritime infrastructure is in private hands. It is not clear that full-federal funding would be either appropriate or sustainable. Excessive funding would more likely create a condition of dependency with security declining as soon as the infusion of federal dollars ended. Initiatives that enable and encourage the private sector to take a more expansive and proactive role should be central to any protection program. Federal port grants should used sparingly, as a tool to promote appropriate public-private sector solutions. More important than simply spending more money to help facilitate the development of maritime security programs, the federal government should help create a predictable business environment with (1) multi-year authorizations so that states, local governments, and the private sector would have a clear grasp of what funds will be available over the long term; (2) national performance standards so that they know what the federal government expects state and local governments and the private sector to contribute to critical infrastructure protection; and (3) a clear system of national priorities so that the preponderance of federal investments support the most critical strategic needs. Emergency Preparedness and Response. This critical mission area includes preparing for, responding to, and mitigating the effects of terrorist attacks. The overarching principle that must guide funding is that federal resources should be used to assist in creating a true national preparedness system, not merely to supplement the needs of state and local governments. Currently, the major challenges affecting an effective response to a maritime incident are the same as those affecting other types of domestic emergencies: interagency coordination, organization and communications, and convergence. Establishing unity of effort is central to addressing all of these concerns. The Coast Guard should be commended for its announcement in January 2004 to consolidate all its regional activities under sector commands, so that captains of the port will have all the assets available to support maritime security under their control. This initiative, however, does not ensure proper unity of effort at the port. In many ports, the Coast Guard, ICE, and port authorities, each with critical specific duties and authorities in regard to port security, have their command posts in different facilities, undercutting efforts to ensure effective integration of their efforts in times of crisis. The DHS should review the requirements for command and control at the ports and determine the needs for unified command posts, redundant command facilities, and virtually integrated command posts to ensure unity of effort for emergency response. It may also be worth reviewing whether national plans are adequate to deal with the consequences of catastrophic or multiple attacks on geographically disparate maritime targets. For example, in the immediate aftermath of the 9/11 attacks, the Federal Aviation Administration halted all civilian aviation. In the aftermath of a maritime attack, similar concerns might call a halt to U.S. maritime traffic. In this event, mechanisms to rapidly reestablish confidence in the supply chain and resume the flow of commerce in order to minimize economic disruption and restore public confidence will be vital. If adequate public/private sector plans do not exist to address such contingencies, they must be rapidly developed. Organizational Issues While the issues raised in each of the critical mission areas deserve attention, together they still do not address the core issue of how well the nation is doing in preparing a maritime security system that will protect us during a protracted conflict against threats that will surely change and evolve to test the defenses we throw up to frustrate them. We will not be able to depend on the terrorists to provide us measures of success. The fact that al-Qaeda operatives took five to seven years to plan and execute the September 11 terrorist strikes is a cause for concern. It could well be a half-dozen years before the DHS faces its first great test. For now our metrics of success must rely on measuring our capacity to implement strategy. The first task should be revisit the basic organization and missions of the DHS. Here a lesson from the Cold War is instructive. The National Security of Act of 1947 created what became the Department of Defense and the Central Intelligence Agency, the nation’s two premier weapons for defending against the Russian bear. Yet, it soon became apparent that in the enabling legislation neither organization had been crafted perfectly to match the nation’s emerging strategy of containment. Two years later it was necessary for the Congress to revisit the organization and missions of the departments. At the same time, some of the most difficult and obvious challenges, such as how to promote jointness (operations involving more than one of the military services), were ignored. As a result, organizations and practices became institutionalized, and it took over 40 years to resolve some of the obstacles to effective operations. Congress can help the DHS avoid a similar fate if it begins now to assess how well the department is organized to implement the emerging national strategic priorities. One area that should be addressed is assigning responsibility for directing national maritime strategy. Clearly, emerging strategic requirements call for an integrated system of layered security initiatives. Yet, there is no single over arching strategic concepts that defines how ongoing initiatives will be forged into a coherent system or makes the hard choices for prioritizing scarce resources. In part, the lack of unifying maritime strategy is understandable—four major organizations play prominent roles (DOD, and within the DHS, the Coast Guard, ICE, and the TSA—Transportation Security Agency) and arguably their roles and missions overlap. Congress might profitably look at the prospects for consolidating missions, assigning one entity within the DHS the role of providing overall strategic planning and operational control of maritime security and responsibility for coordinating with DOD. At the same time, Congress might revisit the regulatory functions of the components in the DHS to see if the Departments of Transportation or Commerce might more appropriately perform them, allowing the DHS to focus more of its resources on homeland security. Finally, a crosswalk needs to be performed between the performance metrics established by each agency for measuring progress to ensure that they are integrated and complimentary. Another area that deserves further attention is an examination of how we will train the next generation of leaders that will be responsible for implementing the future national maritime security system. Currently, the nation lacks an overall homeland security training and education strategy. Training is not only essential to prepare leaders for the difficult and complex decisions they will face in a crisis, but also to evaluate readiness, determine the effectiveness of programs, and identify needed improvements. Meanwhile, education is critical in preparing leaders to respond to long-term challenges. The advanced degree program offered by the DHS through the U.S. Naval Post-Graduate School is one admirable initiative, but it is not enough. Other professional development opportunities for emerging senior leaders are also needed. The Massachusetts Institute of Technology, for example, conducts a program called Seminar XXI for the federal government. Seminar XXI provides a year-long series of lectures and workshops for mid-grade professionals on international affairs. A similar program targeted on homeland security might be equally useful. In the same manner, the national community might benefit from the establishment of a national homeland security university modeled on the military’s war college system. Finally, any national leader development effort will have to include a plethora of state and local leaders and private sector leaders. The nation’s network of junior colleges, which have become the hub of continuing adult education throughout the country, may provide the best venue for offering appropriate leader development opportunities. Congress might consider guiding the DHS training and education effort by creating mandatory training, education, and experience requirements similar to the provisions established in the Goldwater-Nichols Act to foster jointness among the military services. Over the long term, the capacity of the national maritime security system to exploit the initiatives currently being put in place will be more dependent on the quality of the decisions made by its leaders and the programs they implement than on the structure of the system itself. The nation would be well served if we gave equal attention to both sides of the equation. I, again, thank the committee for the opportunity to testify on this vital subject and I look forward to your comments and questions.
Mr. Christopher Koch
Mr. Chairman, I would like to thank the Committee for the opportunity to comment on the state of maritime security enhancements. My name is Christopher Koch, and I am the President and CEO of the World Shipping Council (WSC). The Council is a non-profit association of thirty companies that operate forty-four international shipping lines. WSC’s members include the full spectrum of vessel-operating ocean common carriers, offering containerized, roll-on/roll-off, car carrier, and other international cargo transportation services. WSC’s members carry approximately ninety-three percent of the United States’ imports and exports transported by the international ocean liner shipping industry. International commerce is a huge and economically vital part of our economy, and liner shipping is an essential facilitator of that trade. In 2002, approximately 202,800 U.S. importers received goods from more than 178,200 foreign exporters via liner shipping. The combined value of U.S. exports and imports of goods moved by international waterborne trade in 2002 was approximately $728.4 billion. Close to $500 billion, or two-thirds of that, was containerized cargo carried on liner vessels. On average, roughly $1.4 billion worth of goods are moved through U.S. ports by the liner shipping industry each day. The Council has strongly supported the various efforts of the government to enhance maritime security, and it will continue to do so. Whether it has been the Coast Guard’s efforts as the lead agency for vessel and port security, or Customs and Border Protection’s efforts as lead agency for cargo security, the Council has fully supported the government’s strategies in both domestic regulation and in international fora. Enhancing maritime security, while maintaining the efficient flow of commerce, is a very large, complex and multi-faceted task, and this Committee’s oversight of that effort is very appropriate. In my remarks this morning, I would like to address several different components of the overall maritime security objective, including enhanced ship security, port facility security, personnel security, and cargo security. I. Ship Security The Maritime Transportation Security Act instructs the Coast Guard to establish regulations requiring all vessels calling at U.S. ports to have vessel security plans. With an upcoming July 1 effective date, all vessels arriving at U.S. ports will have to be fully compliant with the new International Ship and Port Facility Security (ISPS) Code and the amendments to the International Convention for the Safety of Life at Sea (SOLAS). The Coast Guard deserves considerable credit for simultaneously and successfully partnering with domestic and international industry stakeholders, the International Maritime Organization and other governments, other federal agencies and the U.S. Congress to accomplish this. The Coast Guard’s approach to the implementation of the ISPS Code and SOLAS amendments, not only faithfully implements this new international regime that the Coast Guard played a key role in creating, but it enhances maritime security through the use of a consistent, uniform international approach for an industry, which operates within the jurisdictions of all the maritime trading nations of the world. Vessels that are not compliant with the Code by the July 1 effective date will be denied entry to U.S. ports. The Coast Guard regulations will ensure that every vessel has an approved security plan, designated and trained personnel responsible for defined security actions and communications, procedures for communicating with ports and other vessels, procedures for monitoring and controlling physical security and access to the vessel, and the installation of Automated Identification Systems transponders. While a substantial amount of work is being done to be compliant by July 1st, our Member lines’ representatives have identified no significant problems regarding lines’ expectations that their vessels will be compliant by that time. We would note that the new rules require most ships to have AIS transponders installed and operational by July 1, but that Coast Guard receiving stations will not be operational by that time in a number of U.S. port regions, especially along the Atlantic and Gulf coasts. We believe that the Coast Guard should be given the resources to make a nationwide AIS system fully operational as soon as possible. Finally, we note that while these vessel security plans will improve internal vessel security and preparedness as intended, they may be of little defense against an organized, external terrorist attack of a merchant vessel, such as the attacks on the Limburg or the U.S.S. Cole. II. Port Security The regulations established by the Coast Guard to implement the requirements of the Maritime Transportation Security Act and the ISPS Code also require port facilities to be compliant by July 1st. As with vessel security plans, compliance with these requirements may involve considerable effort, but, as with vessels, we are unaware of any U.S. container terminal that does not plan on being compliant by that date. It would appear likely, however, that not all foreign port facilities will be compliant on July 1st. This may be of particular concern in some developing countries. It seems clear that the U.S. will not stop trade with such countries in July; however, the issue is: How will ISPS compliant vessels be treated by the U.S. Coast Guard and other nations’ maritime authorities when they arrive after having called during their voyage at a foreign port facility that does not have an ISPS compliant facility security plan? Vessels calling between such ports and the cargo on those vessels are caught in the middle. It is not yet clear what a vessel can expect in these situations. Similarly, it is currently unclear what consequences shippers should expect for their cargo that passes through noncompliant facilities. For example, it is possible that Customs’ Automated Targeting System may assign a higher security risk to cargo containers transiting through non-ISPS Code compliant facilities, and thus make it more likely such containers will be held up for inspection. While the government may be highly reluctant to stop trade with such countries, we expect it is likely to undertake measures designed to impose pressure on such ports and governments to comply, and those consequences may become more substantial as time passes and the government becomes less tolerant of foreign ports that are not compliant with the Code. In short, while we fully recognize that the U.S. and other ISPS Code compliant nations are likely to take actions that will affect carriers and shippers that move cargo through a non-compliant foreign port facility, and that such actions are likely to be designed to ensure, inter alia, that all parties strongly support efforts by all port facilities to become compliant as soon as possible, it is unclear at present how these situations will be addressed. III. Personnel Security The Transportation Security Administration is developing a Transport Worker Identification Card for all domestic transport workers in each transportation mode, which will require government background checks and biometric identifiers. This system will apply to shore-based, domestic maritime workers. It is unclear when this system will become operational, but several pilot projects are underway. Regarding U.S. and foreign seafarers, the government has undertaken a number of changes. First, it reviewed all U.S. seafarers and revoked the licenses of a number of persons who raised security questions. Second, for foreign seafarers, effective last August, the use of crew list visas has been terminated. Each seafarer is required to obtain an individual visa from a U.S. embassy or consulate, and undergo a personal interview. If a seafarer does not have an individual visa, he will be unable to sign on or off the vessel in the U.S. or obtain shore privileges in the U.S., and the vessel operator may incur additional costs of posting guards at the vessel gangway. Third, today information on all crew members is transmitted electronically to the Coast Guard 96 hours in advance of a vessel’s arrival in a U.S. port, and is provided separately to Customs and Border Protection (CBP) and is screened through government information systems. Both agencies and the industry agree that there should be a “single window” for the advance electronic filing of such information that can be shared among government agencies. One of the positive manifestations of effective coordination within the new Department of Homeland Security is the recent agreement by the CBP and Coast Guard that the Coast Guard’s electronic notice or arrival (e-NOA) system will soon be an acceptable “single window” system for this purpose and will be used by both agencies, thus eliminating duplicative filing requirements. We would like to commend Undersecretary Hutchinson, the Coast Guard and Customs and Border Protection for their continued efforts in this regard. IV. Cargo Security One of the most complex challenges is the enhancement of cargo security, especially containerized cargo. The vast majority of liner cargo is containerized – that is, it is carried in sealed metal containers from point of origin to destination. These containers come in standard sizes (typically 20’, 40’, and 45’ in length) and may include various specialized technologies, such as refrigeration units for chilled and frozen foods, or internal hanger systems for carrying garments. Over 20 million TEUs (twenty foot equivalents) of containerized cargo are imported or exported through U.S. ports per year. Containers serve, in essence, as a packing crate and in-transit warehouse for virtually every type of general cargo moving in international commerce. Physically inspecting every container is not practicable. Commerce would be severely disrupted. A. Cargo Screening and the Automated Targeting System As a result, Customs has developed and implemented a strategy to enhance the security of containerized cargo by: · Requiring carriers to provide the agency with advance cargo manifest information for every container imported into the U.S. (or stowed aboard a vessel that calls at a U.S. port even though the cargo may be destined for a foreign country), 24 hours before vessel loading in a foreign port, · Analyzing such information via the agency’s Automated Targeting System (ATS), · Inspecting any container about which ATS raised significant questions, and · Developing close cooperative working relationships with the governments of our trading partners through the Container Security Initiative. The ATS is thus a central feature in determining which containers get inspected and in the working relationships that Customs is establishing with other federal agencies and with other trading nations’ Customs administrations. It is noteworthy that with international liner shipping, unlike the other transportation modes, the government strategy is to perform cargo security screening before the cargo is even loaded onto the transportation conveyance coming to the U.S. The “24 Hour Rule” has been implemented without major incident, and Customs has worked closely and cooperatively with industry to address those issues that have arisen. The Rule’s importance is obvious to the security strategy described, and ocean carriers have supported Customs’ strategic initiative and the Rule. Today ATS is populated with carriers’ cargo manifest or bill of lading data, and it utilizes other government data. A significant pending question is whether the current 14 cargo manifest data elements are sufficient for the security task at hand. Earlier this year the complexities of this issue became obvious in the context of Customs’ Trade Act cargo documentation regulations. Customs amended the cargo manifest regulations’ regarding who the carrier should name as the “shipper” on its bills of lading that are filed with the agency, out of a desire to capture information about the identity of an importer’s “foreign vendor, supplier, manufacturer, or other similar party”. This particular approach to obtaining such information presented serious problems. The agency recognized the problem that the regulations created, suspended enforcement of that portion of the regulations, and announced that it would work with the industry to review these issues. In short, it acted in a most professional and responsible manner. What remain to be addressed, however, are some hard issues. While it appears clear that information about importers’ “vendors, suppliers, and manufacturers” is not appropriately obtained by trying to change who should appear as a “shipper” on a transportation contract – a bill of lading, it is not so readily apparent how such information is best obtained by Customs if it is to be used in the ATS for security screening before vessel loading in a foreign port. Because this is an important issue that is likely to be addressed this year, I would like to offer some preliminary observations. One should start by recalling the terms of the law. Section 343 of the Trade Act requires: “In general, the requirement to provide particular information shall be imposed on the party most likely to have direct knowledge of that information. Where requiring information from the party with direct knowledge of that information is not practicable, the regulation shall take into account how, under ordinary commercial practices, information is acquired by the party on which the requirement is imposed, and whether and how such party is able to verify the information.” In short, the information of interest – an importer’s vendors, suppliers or manufacturers – is clearly information within the “direct knowledge” of the importer, not the carrier. In fact, the importer today provides this information to Customs in an existing Customs data system in the merchandise entry process. The difficulty is that this information is not currently filed before vessel loading in time to be useful to ATS. When Customs wanted carriers’ manifest information earlier than the formerly required time of vessel arrival at the U.S. port, the government established the 24 Hour Rule and required carriers to change their systems and processes to comply. The same logic might be applied by requiring shippers to provide Customs with their data before vessel loading. Although importers may not relish the idea of doing so, such a process is used for U.S. export cargo. The threshold issue is whether Customs needs the information about an importer’s suppliers and vendors before vessel loading in order for ATS to become more effective. There is in fact an over-arching and broader question that underlies this issue and the effort to make ATS as effective a cargo security screening system as possible, namely: What information does the government need, from whom, when, filed into what information system? Clarity and agreement on this difficult but fundamental question will be important to understanding what gaps exist, what the objectives are, and how we can all determine how best to make the continued progress. The Trade Act regulations make it appear probable that shippers are going to be involved in measures to provide the government and the ATS more advance information about their cargo shipments before vessel loading. It is also apparent that carriers should not be made into conduits for transmitting to the government information they don’t know, cannot verify, and could be penalized for if inaccurate. In addition to the language of the Trade Act, which indicates carriers should not be the parties filing this kind of information, there are other aspects of this issue that all sectors of the industry will need to consider. First, there is the issue of confidentiality. Do shippers want their supplier and vendor lists given to carriers, and filed in the public manifest system? Second, early carrier manifest filing requirements are becoming more prevalent with Customs administrations around the world. For example, Panama will soon be implementing an advance cargo manifest filing system very similar to U.S. Customs’ system for every container transiting the Canal, regardless of whether Panama is the cargo’s origin or destination. The measures taken here in the U.S. on this issue could easily become a precedent for other nations. Do shippers want their supplier and vendor lists broadly distributed via carrier manifests? Third, would such requirements apply to foreign-to-foreign cargo shipments that move on ships that call U.S. ports or are relayed in bond through U.S. ports? Because it is highly unlikely, for example, that a European importer of Latin American goods is going to supply the U.S. government with a list of its vendors and suppliers just because the ship calls at the Port of Miami, such a measure applied to such goods could have a substantial effect on vessel deployments, vessel calls at U.S. ports, and other service related issues. In short, Customs has addressed the immediate problem that existed in the drafting of the existing Trade Act regulations, but the agency and the industry have yet to determine how the underlying issues will be addressed. B. Container Inspections Today, Customs uses the ATS system to screen 100% of all containers before they are loaded aboard a vessel bound for the U.S. It then has the ability to inspect, via physical de-vanning of a container or use of Non-Intrusive Inspection technology (gamma ray or x-ray), every container that raises a security question. As Customs has refined ATS, ocean container inspection rates have increased, from less than 2% before September 11th to 5.4% according to the most recent reports. That means that Customs is now inspecting almost 400,000 ocean containers a year. We expect container inspections are likely to continue to increase. We believe that a numerical objective, however, should not be the goal. The goal should be to inspect 100% of all containers that ATS says warrant inspection, plus some random process designed to monitor and verify the selectivity techniques being used. How many of these inspections will be performed at U.S. ports and how many at CSI foreign ports of loading we cannot tell at this time. Finally regarding container inspections, Customs has stated that its goal is to establish radiation-screening portals that will perform radiation screening on 100% of all containers transiting U.S. ports. The implementation of this will be challenging, including addressing the screening of containers that are loaded onto on-dock rail cars and do not pass through the terminal gate, but the goal is clear and appears logical. We also note that some foreign ports are undertaking similar measures to protect international commerce and that the Port of Rotterdam is implementing a similar radiation screening system. C. Container Security Initiative I began my testimony by discussing the Coast Guard’s implementation of the new vessel and port facility security plan requirements, which the agency was instrumental in creating at the International Maritime Organization. The Coast Guard’s strategy and its execution, as well as its communication and efforts working with the industry, have been excellent. Customs, however, has not had the benefit of a comparable international regulatory organization to work with, so Commissioner Bonner and his organization have worked with Customs administrations in other trading nations to develop the Container Security Initiative – a set of bilateral agreements designed to foster closer cooperation and more effective security screening of international commerce. It is also significant that the Department of Homeland Security has reached an agreement with the European Commission that can promote trans-Atlantic cooperation and coordination of container security initiatives in conformity with the CSI approach and objective. We welcome this development. The importance of CSI should not be underestimated. Protecting international trade requires international cooperation, and the Council hopes that all participating governments will implement these CSI agreements effectively and cooperatively. Of the 38 CSI ports, 18 are currently operational. CBP deserves a lot of credit for where it has taken this initiative, and while we recognize that many details of CSI have not been spelled out, we would urge the Committee to consider that the program is still in its developmental stage. Ocean carriers are fully supportive of these initiatives. In the event governments need to respond to a terrorist event in this industry, it seems likely that trade would be irreparably harmed if CSI agreements are not operational and well implemented D. Technology and “Smart” Containers As discussed earlier, technology is being improved and deployed more extensively to enhance container security through non-intrusive container inspection technologies and through radiation detection. Government and industry also continue to examine technology that may be appropriate for application to containers themselves. Operation Safe Commerce continues to fund projects reviewing such possibilities. Customs and the Department of Energy continue to review these issues, as do technology manufacturers, shippers and carriers. The objective of this exercise is generally stated to be to make sure that containers are effectively sealed and that one can reliably detect if they have been tampered with in transit. The “sealing” portion of this exercise does not really involve sophisticated technology. It requires shippers to seal a container immediately upon securely stuffing the box with a high security seal. Electronic seals (e-seals) do not provide any more security in this regard than a high security manual seal, but they may have a role in enabling a more efficient way to verify seal integrity. Consideration of e-seals usually involves the application of Radio Frequency Identification (RFID) technology, and in fact many of the products and platforms being marketed as enhancing container security also rely on that technology. Recent announcements by the Department of Defense and major retailers concerning the usage of RFID tags on products have also spurred significant interest in the technology. It is important to keep in mind, however, that no international standard exist today for the application of RFID-based e-seals or for active, read/write RFID tags. Nor has a clear and appropriate delineation been drawn between the possible usage of RFID technology to address container security requirements and the possible usage of that technology to address supply chain management objectives. These are not trivial issues. The issues, the challenges, and the requirements involved in addressing the two are not the same. The purposes and the use are not the same. The technology, operational and information implications are different. A failure to clearly distinguish between security requirements and commercial supply chain management objectives will create confusion; will impede progress on these issues; and may in fact create significant security vulnerabilities. There is also the issue of selection of frequency or frequency bandwidth. It simply would make no sense to select a radio frequency for RFID platforms that is not publicly available in all major trading nations. And it would be of little value to the government and industry if the frequency that is eventually selected were deficient in terms of operational characteristics, such as requiring line of site to be read, producing false positives, etc. The WSC is actively participating in International Standardization Organization (ISO) working groups tasked with developing standards for RFID e-seals and tags, and has submitted several papers to the ISO identifying user requirements for e-seals and a proposed framework for the optional usage of RFID e-seals and tags. We have also presented this framework to CBP in response to its Request For Information (RFI) for “Smart and Secure Containers”. We commend CBP for having reached out to affected parties to solicit their input in this first stage of what we hope will be a comprehensive and coordinated analysis of the issues involved in trying to identify technology’s role in enhancing container security. One of the more important and difficult issues in this regard is understanding and analyzing the information infrastructure and systems issues necessary to support a technology, whether it be RFID, wireless or satellite based, including: o What information is generated, who is authorized to generate it, and is that information necessary for security purposes? o Who collects the information? o What supporting infrastructure the technology requires, where must it be located, and who operates it? o Who has access to the information? o What is done with the information? o What actions are to be taken, by whom, with respect to the information? o What are the costs of the technology and its use, and who incurs them? o How does the technology affect the operations of shippers, carriers, and the relevant government agencies? The deployment of any such technology would involve many international supply chains, international operating systems, the need for cooperation in other national jurisdictions, and substantial costs. Consequently, it is essential that government and industry analyze all the issues to be sure that appropriate and clearly understood requirements are being defined and met, and that the requirements and technology are not going to be replaced and the necessary capital wasted in efforts to implement technology that is really not the best approach to the issue. Finally, there is the issue of how “sensors” might be applied to containers. Clarity will be needed on what should be sensed, and where. For example, is sensing more appropriately done at the port of loading through centrally operated sensing devices (as is done for radiation detection as discussed earlier) rather than equipping the world’s 16 plus million sea containers with individual sensors, which might be disabled by a terrorist loading the container? For devices installed on containers, there is also the issue of what kind of reading and information infrastructure is needed for these devices to work. For example, some question RFID-based technology platforms for container security application because of their dependence on an array of ground based readers at multiple yet-to-be defined points in many facilities, in many different countries, controlled by many different parties. Increasingly such RFID skeptics are considering whether satellite and/or wireless technologies may be a potentially superior way than RFID-based technology to address security requirements as they are developed. We do not yet know the answer, but these issues need to be addressed before decisions are made on the deployment of technologies, which will have significant cost and operational implications for customs administrations, shippers, carriers, and terminal operators around the world. In this regard, Undersecretary Hutchinson recently announced a significant and important change in the Department of Homeland Security. Responsibility for the issues of smart and secure container technology and systems has been moved from the Transportation Security Administration to the Border and Transportation Security Directorate, with Customs having a major role in implementation and with TSA having an advisory role. The BTS Directorate has also announced that it will soon be establishing a new consultative process with the industry to help consider and address the issues involved. It is not entirely clear at this time how the ongoing “smart” container analysis within Customs and within Operation Safe Commerce will be integrated into this process, but it presumably will be. We look forward to working with BTS, Customs and TSA on these issues and such a process. E. Customs Trade Partnership Against Terrorism (C-TPAT) Secure container loading is the starting point, and arguably the single, most important point, in the container security process. It is also the most difficult to address because it involves millions of containers being loaded and sealed at tens of thousands of different locations in every country in the world. An ocean carrier is like the postman; it receives a sealed container for transportation with all the necessary cargo documentation regarding the shipper, the consignee, and the cargo, but it has no first hand knowledge of what has been loaded inside. Unless the carrier is aware of information that arouses its suspicion about a particular container, it has little choice but to trust what shipping documents state is in the container and that the loading process was secure. The Customs Trade Partnership Against Terrorism (C-TPAT) program is one way to try to effect improvements in this regard, but this is a substantial challenge. We expect that the Bureau of Customs and Border Protection (CBP or Customs) will continue to try to expand the voluntary C-TPAT program into an initiative that includes manufactures and suppliers outside the United States, and that it will continue its efforts to validate compliance. F. Export Cargo Regulation Later this year, the Census Bureau is expected to issue new regulations requiring U.S. exporters to file an electronic Shipper’s Export Declaration (SED) for export vessel cargo directly to the government via the Automated Export System (AES) no later than 24 hours prior to vessel departure. Once those regulations are in place, a carrier may not load export cargo without first receiving from the U.S. exporter either the electronic SED filing confirmation number or an appropriate exemption statement. There are expected to be several exemptions from the advance SED export cargo filing requirement depending on the value of the shipment, the size and nature of the U.S. exporter, and possibly also the types of cargo. G. Imported Food Security The United States imports approximately $50 billion worth of food products per year. The Public Health Security and Bioterrorism Preparedness and Response Act of 2002 requires food facility registration and requires that prior notification of certain imported food be provided to the U.S. Food and Drug Administration (FDA) before its arrival in the United States. The implementing regulations require facilities throughout the world that produce or hold FDA-regulated food products shipped to the United States to register with the FDA and have a U.S. agent. Second, they require every FDA regulated food shipment to file detailed information about the product prior to its arrival in the United States, and they identify carriers as the parties through whom the government will stop cargo that is not compliant with the new rules. This is a complicated and extensive new regulatory system that is being developed, and we would like to commend Customs and Border Protection for their extensive efforts to assist FDA in making these new regulations as workable as possible. V. Contingency Planning The Department of Homeland Security is now one year old, and is dealing with a very substantial number of issues. One of the issues that we hope will be high on the list of priorities for the Department is the unpleasant topic of contingency planning, or how would trade be allowed to continue in the event of a terrorist attack on the industry? The issue first requires clear, agreed and practiced role definition within and among the various U.S. government agencies. Second, it requires clear understandings and practiced scenarios with the governments of our trading partners who presumably will have just as significant an interest and need to address the continuation of commerce as the U.S. government. Third, the implementation of any response scenario would also involve substantial activity by the private sector – importers, exporters, carriers, brokers, terminal operators, and others. Having some kind of dialogue and road map of expectations and requirements would be very helpful to the private sector. The World Shipping Council’s members are fully prepared to support and participate in any such endeavors. VI. Conclusion Mr. Chairman, the above is a brief description of the major security enhancement initiatives as they affect international liner shipping. While liner shipping is the largest component of our maritime commerce, it is important to recognize that there are many other maritime sectors that are not addressed herein, including the passenger cruise industry, the bulk and tanker shipping sector, the inland waterway industry, break-bulk cargo, and small vessels calling at small facilities. Each sector has its separate and distinct security challenges. In the liner shipping sector, enhancing the security of America’s commerce has, in many respects, brought carriers, shippers, intermediaries and government closer together in addressing a common threat and dilemma. Simply hoping you are not the victim cannot be the approach, because a successful terrorist attack would make us all victims. It would affect every supply chain, every carrier, every port, and every nation’s trade and economy. While trade and commerce, like many aspects of our society, remain vulnerable to premeditated criminal, terrorist activity, significant progress has been made in the last year to enhance the protection of international trade from the risk of terrorist attack. But this is a work in progress that must continue. Each of the initiatives discussed above, involving ships, port facilities, people, cargo security, cargo screening, inspection, and risk assessment capabilities is an important part of a multi-layered effort to enhance the security of international commerce. It is a complex and multi-faceted security infrastructure that is being built, but we now live in a world where it must be built, and all sectors of industry and all trading nations must work together to help create it. We should also recognize that the security infrastructure we are trying to build to prevent terrorists from using or attacking international maritime trade needs to be robust enough to function as the security infrastructure that will be used to keep trade flowing in response to a transportation security incident. The security infrastructure thus must not only be effective in design, but all the players’ roles and responsibilities in that system should be clear. Ambiguity in the face of difficult questions is quite understandable, but it neither advances effective security, nor helps government or industry understand what it needs to do to adapt to meet these evolving needs. We are making substantial progress in enhancing the security of international trade. The system is certainly more secure now than it was two years ago. It will be even more secure next year. We fully recognize that it is a difficult challenge, and that industry and government must work closely together to meet the challenge. There are no good alternatives to open, constructive dialogue and the joint development of effective solutions to shared challenges. We would like to state for the record that the agencies responsible for maritime security, particularly the Coast Guard and Customs and Border Protection, have consistently worked closely with the industry in these efforts. The international liner shipping industry fully understands and supports working as closely as possible with the government to make commerce more secure in a way that is sustainable and does not unduly impede trade.