Witnesses are listed below. They may not appear in the order listed:
STATEMENT OF CHAIRMAN SENATOR TED STEVENS
COMMERCE COMMITTEE HEARING ON PORT SECURITY
May 17, 2005
Thank you, Senator Inouye, for requesting this important hearing and for your commitment tot he security of our nation's ports.
I welcome the witnesses who are here today and I thank you for your willingness to appear to discuss the security of our nation's maritime system. Today's hearing is one in a series of hearing that the Committee has held and will hold to fulfill its oversight responsibilities with respect to port security. The Committee will continue to exercise its jurisdiction over these matters as we work to develop ways to further improve the security of all modes of transportation, including the security of our ports.
While the Coast Guard and TSA have made progress since September 11th to bolster port security, including this Committee's work on the Maritime Security Transportation Security Act, much more remains to be done. To date, the Department of Homeland Security still has not yet fully implemented the requirements of the Act, and some progams have lagged behind for a variety of reasons. The challenge that we face in securing our ports is assessing vulnerabilities and allocating limited resources in an effective and efficient manner to mitigate those vulnerabilities. We must also do a better job of developing and utilizing technologies to reduce labor costs and improve our ability to detect cargo that threatens our national security.
Questions and Answers with Panel I
Chairman Stevens: Have you been to the Port of Los Angeles?
Ms. Wrightson: We have been to Los Angeles numerous times in the course of working on various requests for this Committee and others. It represents an incredibly critical port and it suffers from a lot of the problems that are described generally, whether its TWIC program or securing, providing adequate controls – yes, we have and Los Angeles, like other ports, has accomplishments and gaps.
Chairman Stevens: Did you write a separate report on it?
Ms. Wrightson: We have never issued a separate report on Los Angeles. And, if we did it would probably have to be a security and we would not be able to present it publicly.
Chairman Stevens: Are you aware of their secure zone versus their just working zone?
Ms. Wrightson: Absolutely.
Chairman Stevens: Are you critical of that?
Ms. Wrightson: In order to make an informed judgment about it, we would want to audit to see what risks it mitigates and what are the problems that remain and we haven’t done that.
Chairman Stevens: Well, it was pointed out to me that no one goes into that secure zone unless they are known personally by about five other people.
Ms. Wrightson: All ports, which Admiral Hereth is very able to tell you, have security zones around critical infrastructure. So for example, there’s a security zone around Logan Airport. There are security zones around most and they are to various extents patrolled and protected, but I must say in general the efficacy of these efforts, be they for domestic security or internationally still remain to be determined. I think it would be an excellent area for your future oversight and investigation if we were to look at those.
Chairman Stevens: Before he left Senator Lott told me that we have appropriated a total of $515 million beginning in June ’02. Of that money only $107 million had been spent by December of ’04. Are you familiar with those figures, Admiral?
Admiral Hereth: I presume you’re talking about the port security grant program, sir?
Chairman Stevens: Right.
Admiral Hereth: It may be because the constraints on the contracts haven’t been met by the grantees, but I’m not specifically familiar with the details of that. I can certainly give you some feedback.
Chairman Stevens: He had to go to another meeting, but he’s very critical of the rate of spending in terms of the security aspects of the grants we’ve already made. Would you have someone contact him and see if we can get answer for him in the record of why the rate of spending for security, specifically appropriated for that purpose, why is it so low?
Questions and Answers – Panel II
Chairman Stevens: One of the things that was of interest to me when I went to Los Angeles was the fact that all of this enormous growth of water-born imports in the U.S., I understand the economic analysis of that is about $40.5 billion a year coming into our ports, but contrary to the passengers on airlines and contrary to any other assistant we’ve got, that is entirely free from any contribution to the security aspects we’re talking about. I’m told that a 4.3 percent fee similar to the one this Committee has imposed on airline passengers, twice that much, would bring in at least $1.7 billion annually. Now, what do you say about that? Why shouldn’t these imports contribute to the cost of the security? Why should we constantly tax the people who are, taking from tax money, and that’s what we’re talking about – these additions to these amounts that each witness has asked for this morning, in effect more money. But, why not get it from these fees on these imports like we tax the American passengers as they fly on the airlines?
Ms. Godwin: There are fees assessed by ports at the local level. You’re correct there is no national or federal fee imposed on cargo that’s specifically dedicated to security. There are a lot of other federal fees and taxes obviously on maritime cargo that go into the general treasury and customs duties attributable to maritime commerce, but a number of ports have assessed fees individually at the port for security enhancements at that particular location.
Chairman Stevens: Yes, I understand they are starting that in L.A., but I don’t think they’ve reached that magnitude and many of the costs involved, even in the Los Angeles port, are federal costs. By having the local area increase their revenue does not help us meet the demands that we’ve heard here today.
Ms. Godwin: That’s true. When the port is collecting fees they’re using to reimburse their own costs in terms of operations and maintenance and personnel costs, which aren’t even eligible for the port security grants at this point. But, as I said, a number of other federal fees and taxes are attributable to maritime commerce. There’s just no, no amount of that funding is dedicated to security. It’s not set aside for security. I know there have been proposals discussed to take a portion of customs duties, for example, and consider taking some of the customs duties that are collected on maritime commerce and set that aside to pay for security enhancements.
Chairman Stevens: The customs inspections fee on a cruise ship is $2 per passenger. I know of no similar fee paid to the federal government from imports coming to the United States. Mr. Koch?
Mr. Koch: Mr. Chairman, it’s a fair question, but I think, really here’s where I would propose you start the analysis – the Coast Guard’s analysis of what its vessel and port facility regulations were going to cost the industry was $8 billion over 10 years. So, that’s the industry will be spending $8 billion to comply with the regulations as is. That cost estimate does not include the cost of the foreign flagged vessels compliance with the Coast Guard regulations. It does not include foreign ports compliance with the ISPS regulations. So, there are many billions of dollars already being spent. When looking at what additional needs to be done, I think there really needs to be some clarity as to what we would be spending the money for. And, that has been a debate that has been vaguer than it should be. It’s easy to talk about how much money should be given to ports. The real question, as you heard from GAO earlier today, is what is money actually needed for. All port facilities today are compliant with the ISPS code and the NHTSA regs. So, if we’re going to go ahead and look to tax commerce an additional amount, I think there really needs to be clarity given to specifically, what is it the money is going to be spent for and is there a way to make sure the money that would be collected is spent on those things.
Chairman Stevens: Well, as you know the money that comes from air cargo – air cargo domestically is taxed at 6.25 percent. And, that goes into the FAA Trust Fund. We could very easily on this Committee create a similar Trust Fund. These aren’t taxes as such. These are fees paid on cargo and it goes into the FAA Trust Fund created by this Committee. I’m seriously thinking about asking this Committee to create a trust fund for port security. That would be augmented I’m sure by federal expenditures, augmented by other expenditures made by the ports themselves. But, there’s no question that the system needs more money, but when we face that problem with air commerce the passengers and the cargo paid the fee, a substantial part of it.
Witness Panel 1
The Honorable Dutch RuppersbergerU.S. Congressman2nd District of Maryland
Witness Panel 2
Mr. Larry HerethRear AdmiralU.S. Coast Guard
DEPARTMENT OF HOMELAND SECURITY
U. S. COAST GUARD
REAR ADMIRAL LARRY HERETH
COMMITTEE ON COMMERCE, SCIENCE, AND TRANPORTATION
U. S. SENATE
MAY 17, 2005
Introduction Good morning Mr. Chairman and distinguished Members of the Committee. It is a pleasure to be here today to discuss the Coast Guard’s role in securing our ports in order to facilitate the safe and efficient flow of commerce. On September 10th, 2001, our primary maritime focus was on the safe and efficient use of America’s waterways. However, as a result of the events of 9/11, we have made great progress in securing America’s waterways, without impeding commerce. The men and women of the U.S. Coast Guard and the Department of Homeland Security remain committed to improving maritime homeland security each and every day through continued interagency cooperation and assistance from our partners at the local, state, and international levels as well as maritime industry stakeholders. Reducing Maritime Risk The Coast Guard’s overarching security goal is to prevent the exploitation of, or terrorist attacks within, the U.S. maritime domain. Doing so requires a threat-based, risk-managed approach to identify and intercept threats well before they reach U.S. shores. The Coast Guard accomplishes this by conducting layered, multi-agency security operations nationwide; while strengthening the security posture and reducing the vulnerability of our ports, with the initial focus being our militarily and economically strategic ports. As we seek to reduce maritime risk, we continually strive to balance each of the Coast Guard’s mission requirements to ensure minimal degradation in service to the American public. Looking at their accomplishments, it is clear that Coast Guard men and women continue to rise to the challenge and deliver tangible and important results across both homeland security and non-homeland security missions. Today’s global maritime safety and security environment requires a new level of operations specifically directed against terrorism without degrading other critical maritime safety missions. Most importantly, the Coast Guard must exercise its full suite of authorities, capabilities, competencies and partnerships to mitigate maritime security risks in the post-9/11 world. In terms of threat, vulnerability, and consequence, there are few more valuable and vulnerable targets than the U.S. maritime transportation system.
· Threat: While the 9/11 Commission notes the continuing threat against our aviation system, it also states that “opportunities to do harm are as great, or greater, in maritime or surface transportation.” From smuggling to piracy, suicide attacks to the threat of weapons of mass destruction, the threats are many and varied.
· Vulnerability: The maritime transportation system annually accommodates 6.5 million cruise ship passengers, 51,000 port calls by over 7,500 foreign ships, at more than 360 commercial ports spread out over 95,000 miles of coastline. The vastness of this system and its widespread and diverse critical infrastructure leave the nation vulnerable to terrorist acts within our ports, waterways, and coastal zones, as well as exploitation of maritime commerce as a means of transporting terrorists and their weapons.
· Consequence: Contributing nearly $750 billion to the U.S. gross domestic product annually and handling 95% of all overseas trade each year – the value of the U.S. maritime domain and the consequence of any significant attack cannot be overstated. Independent analysis and the experiences of 9/11 and the west coast dock workers strike demonstrates an economic impact of a forced closure of U.S. ports for a period of only eight days to have been in excess of $58 billion to the U.S. economy. Lingering and new maritime safety and security gaps continually present themselves and it is these risks we will continually work to reduce. The Coast Guard guides its efforts by implementing policies, seeking resources, and deploying capabilities through the lens of our maritime security strategy. Implement the Maritime Strategy for Homeland Security Considering the vast economic utility of our ports, waterways, and coastal approaches, it is clear that a terrorist incident against our marine transportation system would have a disastrous impact on global shipping, international trade, and the world economy, in addition to the strategic military value of many ports and waterways. The elements of the Coast Guard’s Maritime Strategy for Homeland Security are in direct alignment with the DHS’ strategic goals of Awareness, Prevention, Protection, Response and Recovery. These elements serve as guiding pillars in our efforts to reduce America’s vulnerabilities to terrorism by enhancing our ability to prevent terrorist attacks and limit the damage to our nation’s ports, coastal infrastructure and population centers in the event a terrorist attack occurs. A brief overview of the core elements of that strategy with particular emphasis on creation and management of a robust security regime is presented here in the following paragraphs. Enhance Maritime Domain Awareness (MDA). First, we seek to increase our awareness and knowledge of what is happening in the maritime arena, not just here in American waters, but globally. We need to know which vessels are in operation, the names of the crews and passengers, and the ship’s cargo, especially those inbound for U.S. ports. Maritime Domain Awareness (MDA) is critical to separate the law-abiding sailor from the anomalous threat. The core of our MDA efforts revolve around the development and employment of accurate information, intelligence, and targeting of vessels, cargo, crews and passengers – and extending this well beyond our traditional maritime boundaries. All DHS components are working to provide a layered defense through collaborative efforts with our interagency and international partners to counter and manage security risks long before they reach a U.S. port. There are two hallmarks to today’s security environment; complexity and ambiguity. Improving MDA will help us to simplify the complex and clarify the ambiguous and prove invaluable to facilitating effective resource, operational, and policy decision-making. Create and Oversee Maritime Security Regime. Second, to help prevent terrorist attacks we have developed and continue to improve an effective maritime security regime – both domestically and internationally. This element of our strategy focuses on our domestic and international efforts and includes initiatives related to MTSA enforcement, International Maritime Organization regulations such as the ISPS Code, as well as improving supply chain security and identity security processes. Before 9/11 we had no formal international or domestic maritime security regime for ports, port facilities, and ships – with the exception of cruise ships. Partnering with domestic and international stakeholders, we now have both a comprehensive domestic security regime and an international security convention in place. Both have been in force since July 1, 2004. In executing the requirements of the Maritime Transportation Security Act (MTSA) and the International Ship and Port Facility Security (ISPS) code, the Coast Guard has:
· Reviewed and approved over 9,600 domestic vessel security plans and 3,100 domestic facility security plans,
· Overseen the development of 43 Area Maritime Security Plans and Committees,
· Verified security plan implementation on 8,100 foreign vessels,
· Completed all domestic port security assessments for the 55 militarily and economically strategic ports, and
· Visited 22 foreign countries to assess the effectiveness of anti-terrorism measures and implementation of ISPS code requirements. An additional 10 countries are scheduled for visits by June 2005 with the goal of visiting all of our approximately 140 maritime trading partners; and
· Oversaw the continuing development of the National Maritime Security Plan.
Aside from the statistics, MTSA and ISPS are truly landmark achievements within the maritime industry. Through a variety of measures, or layers, of regulatory requirements, these two regimes complement each other and have gone far to reduce vulnerabilities within the global maritime transportations system, the general framework of which includes:
· Physical Security. The first pillar of this framework is physical security. Through the implementation of the MTSA, we have significantly hardened the physical security of our ports. Roughly 3,100 of the nation’s highest risk port facilities have implemented mandatory access control measures to ensure that only authorized persons are able to gain access. They have established designated restricted areas within the facility gates and facility owners and operators are now required, under federal regulations, to implement screening protocols for ensuring that cargo-transport vehicles and persons entering the facilities are inspected to deter the unauthorized introduction of dangerous substances and devices. At the facility gates, containers are required to be checked for evidence of tampering and cargo seals are checked.
· Identity Security: Identity verification is the second critical element of port security, recognizing that we must know and trust those who are provided unescorted access to our port facilities and vessels. The 9/11 Commission report noted that the September 11th hijackers obtained and used government-issued identification cards such as driver’s licenses. The Commission recommended that forms of identification be made more secure. Congress partially addressed this issue in the Maritime Transportation Security Act of 2002 with the requirement for the Transportation Workers Identification Card or TWIC. However, merchant mariner documents are, by statute, identification documents, yet they contain virtually no security features. This, among other reasons, is why the Commandant, the Secretary of Homeland Security and the President have proposed a complete update of the merchant mariner credentialing statutes. We cannot, and must not, continue with business as usual in the area of mariner credentialing. The specter of a terrorist obtaining and using a merchant mariner credential to access and attack vital areas of a strategic port is one that is very real. The changes we have proposed will enable the Department to heighten the security of all mariner credentials in partnership with the mariners themselves and the maritime industry. The Coast Guard is also working very closely with the Transportation Security Administration (TSA), the lead for implementation of the Transportation Worker Identification Card (TWIC), to assist in the implementation of this new credentialing program. Just over six months ago, TSA approached the Coast Guard and asked for assistance in implementing the TWIC in the maritime mode through a regulatory project. The Coast Guard is fully supportive of this regulatory effort and will do everything within our ability to assist TSA in the development of this rulemaking.
· Cargo Security: Cargo security encompasses the process of ensuring that all cargo bound for the U.S. is legitimate and was properly supervised from the point of origin, through its sea transit, and during its arrival at the final destination in the U.S. Since Customs and Border Protection (CBP) has the lead role in maritime cargo security, the Coast Guard has worked in concert with our sister agency to align respective agency roles and responsibilities regarding international trade. When a cargo is moved on the waterborne leg of the trade route, the Coast Guard has oversight of the cargo’s care and carriage on the vessels and within the port facility. The Coast Guard also oversees the training and identity verification of the people who are moving the cargo. CBP has authority over the cargo contents and container standards. Using the information provided through the Coast Guard's 96-hour notice of arrival rule and CBP's 24-hour cargo loading rule, we can act to control vessels, and thus their cargoes, that pose an unacceptable risk to our ports. With Coast Guard officers posted at CBP’s National Targeting Center, we continuously improve agency coordination and our collective ability to quickly take appropriate action when notified of a cargo of interest. As a further improvement, the trade community can file required passenger and crew information via an electronic notice of arrival and departure system. This streamlines the process for industry and improves our ability to apply targeting and selectivity methods. The Coast Guard has worked hard to align all of our regulatory and policy development efforts with CBP. We meet regularly to discuss policy, we participate on inter-agency regulation development teams, and we sit on the Operation Safe Commerce Executive Steering Committee. Between DHS, CBP, and the Coast Guard, we coordinate the work of our various Federal Advisory Committees so that we all understand the trade community’s concerns and priorities. Now that MTSA and the ISPS Code are fully implemented, we are monitoring compliance and carefully noting issues for future improvements to the regulatory framework. Looking at specific cargo-related initiatives, the Coast Guard fully supports the Container Security Initiative and the Customs-Trade Partnership Against Terrorism. We look forward to the results of Operation Safe Commerce, which will highlight technologies and business practices that will bring improved, layered security throughout the supply chain. We also agree with CBP’s view that international compliance and the establishment of international standards are needed to help gain global compliance. In this way, the International Standards Organization and the International Maritime Organization have achieved great success in institutionalizing both safety and security standards, many times incorporating industry standards by reference. A multilateral approach provides a more efficient and effective security regime. Compliance with a common, acceptable standard is checked by all our trading partners, not just the U.S. The evidence of success can be directly measured in the level of compliance. A prime example is the success of the ISPS Code implementation evidenced by the 98 percent compliance rate achieved by foreign vessels arriving in U.S. ports.
· Culture of Security: Finally, and perhaps most importantly we have been able to take important steps to instill a culture of security within a system previously focused almost exclusively on efficiency. Reducing the vulnerabilities of our vessels and ports required a cultural shift to put security at the top of the agenda rather than as an afterthought. It is centered on the people who must implement the new security measures. Under our MTSA regulations, facilities and vessels are required to designate individuals with security responsibilities, including company security officers, facility security officers, and vessel security officers. These individuals must have knowledge, thorough training and equivalent job experience. They must be familiar with, and responsible for, implementation of the specific security measures outlined in their facility/vessel security plans and they must be knowledgeable in emergency preparedness, the conduct of security audits, and security exercises. In addition, facility security officers must have training in security assessment methodologies; current security threats and patterns; recognizing and detecting dangerous substances and devices, recognizing characteristics and behavioral patterns of persons who are likely to threaten security; and techniques used to circumvent security measures. Increase Operational Presence. Third, we seek to better protect critical maritime infrastructure and improve our ability to respond to suspect activities by increasing our operational presence in ports, coastal zones and beyond,--to implement a layered security posture, a defense-in-depth. Our collective efforts to increase operational presence in ports and coastal zones focus not only on adding more people, boats and ships to our force structures, but making the employment of those resources more effective through the application of technology, information sharing, and intelligence support. Improve Response and Recovery Posture. Finally, we are improving our ability to respond to and aid in recovery if there were an actual terrorist attack. Understanding the challenge of defending 26,000 miles of navigable waterways and 361 ports against every conceivable threat at every possible time, we are also aggressively working to improve our response capabilities and readiness. While many of the increases in MDA and operational presence augment our collective response and recovery posture, we must also incorporate initiatives that will increase our ability to adequately manage operations and coordinate resources during maritime threat response or recovery operations. The Coast Guard is implementing the new National Response Plan across all operations. The Incident Command System is our mandated crisis management system, and we have years of practical experience in its use. At the local level, each port is ready with port-specific and even sub-area specific, response plans. All law enforcement agencies, public service providers, and port stakeholders have participated in the plan development process. The Coast Guard has confidence that if a maritime transportation security incident (TSI) should occur in one of our ports, the local responders (Coast Guard Sector Commander or Captain of the Port, other federal agencies, state and local authorities, and partners in industry) will immediately react with mitigation, response, and recovery activities in that port and region. At the same time, we are continuing to refine tools and analysis to aid senior leadership in their ability to rapidly respond to a crisis, minimize damage, and aid in recovery operations. Conclusion After experiencing the most horrific act of terrorism on U.S. soil on 9-11, all sectors of the maritime community rallied together to strengthen the security of the maritime transportation system. The tremendous successes in this endeavor is due, in large part, to the cooperation and prompt measures taken by government and industry working together as partners. Much work remains to be done to reduce America’s vulnerabilities to terrorism and other maritime security threats but with the continued support of the Congress and Administration, I know that we will succeed in delivering the robust maritime safety and security America expects and deserves well into the 21st Century. Thank you for the opportunity to testify today. I will be happy to answer any questions you may have.
Ms. Margaret WrightsonDirector, Homeland Security and Justice TeamUnited States Government Accountability Office
Mr. Richard L. SkinnerInspector General, Office of Inspector GeneralU.S. Department of Homeland Security
STATEMENT OF RICHARD L. SKINNER
ACTING INSPECTOR GENERAL
U.S. DEPARTMENT OF HOMELAND SECURITY
COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION
UNITED STATES SENATE
MAY 17, 2005
Mr. Co-Chairman and Members of the Committee: Thank you for the opportunity to be here today to discuss the work of the Office of Inspector General (OIG) regarding port and maritime security. I would like to address three areas related to security: preventing terrorist weapons from entering the United States, maritime security challenges facing the U.S. Coast Guard (USCG), and the Port Security Grant Program. These areas involve major components of the Department of Homeland Security (DHS) and its wide-ranging operations. Each has been the subject of oversight by the OIG and my comments are drawn from our reports, which are available on the OIG website at www.dhs.gov/oig. Preventing Terrorist Weapons from Entering the United States Since September 11, 2001, the Department of Homeland Security’s Bureau of Customs and Border Protection’s (CBP) priority mission is detecting and preventing terrorists and terrorist weapons from entering the United States. A major component of its priority mission is to ensure that oceangoing cargo containers arriving at the seaports of entry are not used to smuggle illegal and dangerous contraband. To test controls over importing weapons of mass destruction, ABC News was successful in two attempts at smuggling depleted uranium into the country. On September 11, 2002, ABC News reported that a 15-pound cylinder of depleted uranium was shipped from Europe to the U.S. undetected by CBP. On September 11, 2003, ABC News reported that the same cylinder was smuggled to the U.S. from Jakarta, Indonesia, again undetected. In the first smuggling event, ABC News reported that a steel pipe containing a 15-pound cylinder of depleted uranium, which was shielded with lead, was placed in a suitcase and accompanied by ABC News reporters by rail from Austria to Turkey. In Istanbul, Turkey, the suitcase was placed inside an ornamental chest that was crated and nailed shut. The crate containing the suitcase was then placed alongside crates of huge vases and Turkish horse carts in a large metal shipping container, and then loaded onto a ship that left Istanbul. Based on data contained in the Automated Targeting System, the crate was targeted as high-risk for screening by the U.S. Customs Service (Customs). ABC News broadcast on September 11, 2002, that Customs failed to detect the depleted uranium carried from Europe to the United States. During the second smuggling event, ABC News placed the same cylinder of depleted uranium into a suitcase, and then placed the suitcase into a teak trunk. The trunk, along with other furniture, was loaded into a container in Jakarta, Indonesia, and then transshipped to the U.S. from Tanjung Pelepas, Malaysia. This shipment was also targeted as high-risk for screening and subsequently inspected by CBP personnel, but was then allowed to proceed from the port by truck. In a classified September 2004 report, Effectiveness of Customs and Border Protection’s Procedures to Detect Uranium in Two Smuggling Incidents, we cited several weaknesses that occurred at the time of the two incidents that made the container inspection process ineffective. The protocols and procedures that CBP personnel followed at the time of the two smuggling incidents were not adequate to detect the depleted uranium. CBP has since enhanced its ability to screen targeted containers for radioactive emissions by deploying more sensitive technology at its seaports, revising protocols and procedures, and improving training of CBP personnel. At the request of four congressional committees, we recently initiated a follow-up audit to determine the status of CBP’s implementation of the recommendations made in our September 2004 report. In addition, we will review other relevant technologies and implementation plans recommended by entities associated with CBP’s efforts to increase the detection capability of the radiation portal monitors that are deployed domestically and internationally. Maritime Security The Coast Guard’s willingness to work hard and long hours, use innovative tactics, and work through partnerships in close inter-agency cooperation has allowed it to achieve mission performance results goals. However, to improve and sustain its mission performance in the future, the Coast Guard faces significant barriers, most importantly the deteriorating readiness of its fleet assets. The Coast Guard faces three major barriers to improving and sustaining its readiness to perform its legacy missions: 1. The lack of a comprehensive and fully defined performance management system impedes the Coast Guard’s ability to gauge its performance, allocate resources effectively, and target areas for improved performance. 2. The workload demands on the Coast Guard will continue to increase as it implements the Maritime Transportation Security Act of 2002 (MTSA). This complex work requires experienced and trained personnel; however, the Coast Guard has in recent years suffered from declining experience levels among its personnel. 3. Sustaining a high operating tempo due to growing homeland security demands, such as added port, waterway, and coastal security patrols, will tax the Coast Guard’s infrastructure including its aging cutter and aircraft fleet. The lack of a comprehensive and fully defined performance management system impedes the Coast Guard’s ability to gauge its performance, allocate resources effectively, and target areas for improved performance. The Coast Guard has yet to define a performance management system that includes all the input, output, and outcomes needed to gauge results and target performance improvements, balance its missions, and ensure the capacity and readiness to respond to future crises or major terrorist attacks. For example, for search and rescue, the number of mariners in distress saved is a good indicator of outcome; however, resource hours under-represent the effort put into this mission by omitting the many hours of watch standing at stations. Without more complete information, the Coast Guard has limited ability to identify and target cost effective improvements to mission performance. The workload demands on the Coast Guard will continue to increase as it implements the MSTA. Under MTSA, the Coast Guard must conduct risk assessments of all vessels and facilities on or near the water; develop national and area maritime transportation security plans; and approve port, facility, and vessel security plans. This complex work requires experienced and trained personnel, presenting a major challenge for the Coast Guard, which has in recent years suffered from declining experience levels among its personnel. Since the Coast Guard largely relies on experienced senior personnel to coach and train junior personnel and new recruits on the job, mission performance is at risk. In addition to implementing MTSA, growing homeland security demands, such as added port, waterway, and coastal security patrols, result in a continued high operating tempo. Sustaining this high operating tempo will be a major challenge for Coast Guard personnel and will tax its infrastructure, especially its aged cutter and aircraft fleet. The Coast Guard reported that mission sustainment is at risk due to cutters and aircraft that are aging, technologically obsolete, and require replacement and modernization. Currently, the Coast Guard is experiencing serious cracking in the hulls of the 110 foot cutters and engine power loss on the HH-65 Dolphin helicopters, resulting in operating restrictions. These problems adversely affect the Coast Guard’s mission readiness and ultimately mission performance. The Port Security Grant Program The department’s Port Security Grant Program is designed to reduce the vulnerability of American ports to potential terrorist attacks by enhancing facility and operational security. The Transportation Security Administration, the U.S. Coast Guard, and the Department of Transportation’s Maritime Administration have collaborated to award over $560 million for over 1,200 projects. My office reviewed the design and goals of the program, the roles and responsibilities of participating agencies, and the grant evaluation and selection process. The bulk of our analysis focused on grant award decisions in rounds two and three. The results of our review are discussed in our January 28, 2005 final report, Review of the Port Security Grant Program (#OIG-05-10). We identified several important issues relating to the strategic direction of the program, the program’s support of national infrastructure protection priorities, and the general administration of the program. I would like to briefly talk about those results. First, the program’s strategic effectiveness is hindered mainly because it is attempting to reconcile three competing approaches: the competitive program mandated by Congress, MTSA’s grant authority, and risk-based decision making. These competing approaches are clouding the direction of the program. The program is under pressure to help defray the costs of the MTSA security mandates that broadly affect the maritime industry. MTSA included a grant authority intended to equitably distribute funds for this purpose, but the appropriations legislation did not fund the MTSA port security grant program and required a competitive grant program focused on securing national critical seaports. However, the resulting program must base award decisions on the universe of applications submitted – which may or may not include the most critical needs. In addition, the evaluation and selection process emphasized awarding funds to as many applicants as possible. Hence, the program attempted to balance the competitive program that objectively evaluates the quality of the applications with the need to broadly disperse funds to assist with MTSA compliance, while at the same time incorporating risk-based eligibility criteria and evaluation tools to prioritize projects. Second, the program did not have the benefit of national key asset and critical infrastructure protection information now being developed by the Information Analysis and Infrastructure Protection (IAIP) directorate. Program administrators and IAIP, which is responsible for developing strategies for protecting the nation’s critical infrastructure, did not collaborate to integrate the program with broader national security initiatives. Thus, port security grant award decisions were made without sufficient information about our national priorities. Third, grant award decisions were made with the intent of expending all available funding and spreading funds to as many applicants as possible. The program funded projects despite dubious scores by its evaluators against key criteria, raising questions about the merits of 258 projects costing $67 million. It appeared that headquarters and field reviewers did not share a common understanding of program objectives or eligibility criteria. Frequently, they did not agree about the eligibility or merit of projects and did not consistently document their rationale for recommending or not recommending funding. We pointed out the need for the program to look more closely at the first three criteria (whether the grant proposal was in an area of high risk, addressed a critical security need/vulnerability, and provided high risk reduction), which were well conceived and should have carried more weight. In addition, the program forwarded an additional 82 projects to the Office of Domestic Preparedness to be funded at a cost of $75 million under the Urban Area Security Initiative, despite previously determining that these projects did not merit funding. Another dilemma for the program is the question of where the private sector’s responsibility for preventing terrorism ends and where the federal government’s responsibility begins. At the time of our report, DHS did not have a formal policy to provide financial assistance to private entities, a group that includes those that own and operate high risk facilities. Even though private entities have applied for and received substantial funding, we did not conclude that the program should limit funding to the private sector per se. However, some of the grants to private companies were within the financial reach of the applicants and many were for basic security measures that should have been considered normal costs of doing business. For example, some of the projects were for anti-theft purposes and not related to terrorist attack prevention or deterrence. Furthermore, after three rounds, recipients spent only a small portion of the entire amount awarded. Of the $515 million awarded between June 2002 and December 2003, including $75 million provided under the Office for Domestic Preparedness’ Urban Area Security Initiative, grant recipients had expended only $106.9 million, or 21 percent of total program awards as of September 30, 2004. As a result, the majority of projects had not been completed and the program had not yet achieved its intended results in the form of actual improvements to port security. This brings us to the status of our recommendations. In response to our draft report, DHS concurred with 11 of our 12 recommendations. In our final report, we strongly encouraged DHS to fully implement our recommendations before proceeding with the next round of port security grants. DHS’ Office of State and Local Government Coordination and Preparedness (SLGCP) received $150 million in the FY 2005 budget for round five of the port security grant program. SLGCP officials informed us that they were going to make substantive changes to the design of the program to make it more risk-based, and while it appears they have, we have not evaluated the effect of these changes. We recently received DHS’ action plan, which discusses corrective actions taken and planned in response to our recommendations. The action plan generally appears to be responsive to our recommendations. For example:
· We identified numerous projects within ports not on the list of strategic or controlled ports. The program developed and implemented a funding distribution model that targeted 66 ports as eligible under the program.
· We noted the lack of a policy for funding private sector projects. The action plan refers to a decision by the Secretary that private entities may apply for a grant, but must provide matching funds of 50 percent.
· Program administrators did not collaborate with IAIP on broader national security initiatives. SLGCP is taking steps to improve information sharing with, and participation of, IAIP in the selection and evaluation process.
However, we are also reviewing additional information supporting the action plan. In addition, we have not had the opportunity to review guidance that will be issued for those SLGCP, USCG, TSA, CBP, IAIP, and MARAD personnel who will be evaluating projects. The revised grant application package was just released this past week. We are studying how DHS has modified the program--particularly the criteria program administrators will use and how they will apply it during the evaluation process--and whether those modifications satisfy our recommendations. We expect to communicate this information to SLGCP in the near future. Mr. Co-Chairman, this concludes my prepared statement. I will be pleased to answer any questions you or the members may have.
Witness Panel 3
Mr. Christopher Koch
Ms. Jean GodwinVice PresidentAmerican Association of Port Authorities
Testimony of Jean Godwin
Executive Vice President and General Counsel
American Association of Port Authorities
Senate Commerce, Science and Transportation Committee
MAY 17, 2005
Good morning. I am Jean Godwin, Executive Vice President and General Counsel for the American Association of Port Authorities (AAPA). I thank you for inviting us to testify before your Committee on the implementation of the Maritime Transportation Security Act and vulnerabilities that remain in the maritime transportation sector. AAPA is an alliance of the leading public ports in the Western Hemisphere and our testimony today reflects the views of our U.S. members. Prior to 9/11, security was not a top concern for most ports. 9/11 changed that and Congress and the Administration took quick action to help focus ports on this new risk. Enhancing maritime security and protecting America’s seaports from acts of terrorism and other federal crimes is now a top priority for AAPA and U.S. ports authorities. Much has been done since 9/11, but more is needed. Protecting America’s ports is critical to our nation’s economic growth and vitality, and is an integral part of homeland defense. Ports handle 95% of our overseas cargo by volume, enable the deployment of our military, and serve as departure points for millions of cruise passengers. Protecting our international seaport borders is a responsibility shared by the federal, state, and local governments, seaports and private industry. The Department of Homeland Security takes the lead in protecting America’s ports. This includes programs of the U.S. Coast Guard, the Border and Transportation Security Administration, Customs and Border Protection Service, Immigration and Customs Enforcement, and plant and animal inspection. Ports, for their part, focus on protecting the facilities where this international cargo enters and exits the country. The security blueprint for these facilities is the MTSA and its regulations. AAPA commends the U.S. Coast Guard for its excellent job in developing regulations and reviewing all facility and vessel plans within a very short timeline. All port facilities were required to have operational port security plans by the end of 2004. These plans established a baseline to protect ports from terrorist threats. As we learn more and start to look at the vulnerabilities identified by the area maritime committees and DHS’s intelligence programs, we understand more what needs to be done and make improvements to plans. More sophisticated technology can also help us harden these facilities and enhance communications with first responders. Ports also hope technology will provide a mechanism to decrease the number of personnel required to secure our ports, and enhance productivity in the movement of cargo. Key to enhancing physical security of ports is the Port Security Grant program. It was established after 9/11 through the Appropriations process and provides much-needed help to port facilities to harden security to protect these vital ports of entry from acts of terrorism. The program has been authorized in several bills – MTSA and Coast Guard reauthorization – although the program, as implemented, is a bit different from the current authorization bills. Since its inception, the program has provided $565 million in grants for 1,200 projects, with Congress providing an additional $150 million in FY’05. Overall, only one-sixth of all projects have been funded. With 95% of our overseas trade flowing through our ports, all states and all citizens would be impacted by a shutdown of our seaports. Agriculture as well as oil are two commodities that are heavily dependent on ports to ensure these products get to market. Imagine the impact of a shutdown of the ports in South Louisiana that handle much of the oil imports and grain exports for this nation. The level of funding and policy decisions from DHS have made this program less effective than it could be. The need is great, and in the last round, especially, DHS gave small amounts to numerous projects. Some ports had to wait to finish projects because they did not have the necessary funds to fully complete the project. The Port of New Orleans, for example, got partial funding for four gates rather than full funding for one. The MTSA states that the funds will be distributed in a fair and equitable way. However, DHS is also trying to balance risks and protect critical national seaports (as noted in the Appropriations bill). DHS faced a dilemma – if it funds only the top risks, it leave a soft underbelly of smaller ports. If it gives a little to everyone, little gets done. The problem seems to be one of historic underfunding. We must have funds to do both – provide the needed resources for big and small ports alike. These complaints were also echoed by DHS’s Inspector General and others. In an attempt to make the grants more risk-based, in the fifth round ODP is expected to focus more on high-risk and vulnerable ports. But the funding level, and partial funding of projects, continues to be a huge constraint to progress. There is also an inconsistency over what the grants pay for. The MTSA stated grants can pay for salaries, operation and maintenance of security equipment, and the cost of physical improvements and vulnerability assessments. But the program allowed only reimbursement of the last two items. This is due to the low level of funding. The Coast Guard estimated the cost of facility compliance with the MTSA regulations would be $5.4 billion over 10 years. AAPA supports a funding level of $400 million a year, which is significantly higher than the current budget. And there is a new threat to this vital program. In the proposed FY’06 budget, the Administration recommended eliminating the Port Security Grant program and merging ports into a broad targeted infrastructure protection grant program. This runs counter to the intent of this Committee. Last year, this Committee included a provision in the Coast Guard reauthorization bill to update the authorization of the program. The Act maintained that there would be a separate program specifically for port security to be based on the MTSA. The new Targeted Infrastructure Protection program would lump port security into a program with trains, trucks, buses and other public transit, and chemical companies and ties these grants to the goal of protecting critical infrastructure based on relative risk, vulnerability and needs. This move would pit an underfunded border protection program (port security) against underfunded domestic protection programs. AAPA has great concerns, and encourages your Committee to voice opposition to this new structure. Our economy, our safety and our national defense depend largely on how well we can protect our seaports. According to the 9/11 Commission Report, opportunities to do harm are as great, or greater, in maritime as they are at airports. Ports are also the only industry within this new Targeted Infrastructure Protection program that has a statutory mandate to comply with - the MTSA - and the only one for which there is a congressionally authorized grant program, which was also created by this Committee. A separate line item is essential to ensure that ports continue to be a targeted priority in our country’s war again terrorism. Cargo doesn’t vote and it is often not fully recognized for the value it provides to this country in state and federal infrastructure plans. While critical infrastructure protection is important, using it as the sole criteria for making decisions on funding for port security is a bad idea. DHS proposes to do this so it doesn’t have so many separate grant programs. We don’t oppose merging other programs together, just the lumping of ports into this program. Seaports, like airports, are key targets and deserve a separate program. We must focus on protection at all seaports since ports serve as an international border, and an incident at one would surely impact all ports. The MTSA has a system established to identify risks and vulnerabilities, and while some may question some of the DHS decisions on certain grants, the overall move to tying the grants to the MTSA is one that AAPA supports. This was not done in the first few rounds because the MTSA was not in effect yet. We urge DHS to refocus the program on the MTSA, while including a cross-check to the critical infrastructure plan and to keep this as a separate program, like the firefighter grants. We also urge this Committee to take a leadership role in advocating for stronger funding for the current port security grant program in the FY’06 Appropriations process. As noted above, the Coast Guard has estimated that ports would have to spend $5.4 billion over a 10-year period to comply with the new MTSA. AAPA urges a funding level of $400 million in FY’06. Recently, the House Appropriations Committee approved only $150 million, which is level funding. There is still much to be done to continue our progress in securing America’s ports. Ports are currently planning for a huge increase in trade in the future. Adequate federal funds will help us avoid an infrastructure crisis in the future. Industry analysts predict that within the next 15 years the approximately two billion tons of cargo that U.S. ports handle today will double. But ports are also challenged by the new security mandates of the MTSA and the need to continue to make improvements. Therefore, ports are using current dollars to pay for security, rather than capital investments needed to handle the future growth in international trade. We need the federal government to provide its share of these improvements now, so that our ports are secure today and will be able to meet the challenges and opportunities of accommodating the world trade needs of tomorrow. Finally, AAPA would like to voice its strong support for the Transportation Worker Identification Credentialing (TWIC) program, which was authorized in the MTSA. We urge increased funding for this program and encourage DHS to make the necessary policy decisions to implement this program quickly. The MTSA required all ports to control access to their facilities, but our U.S. member ports are still waiting for the TWIC requirements before installing new technologies. Thank you for inviting us to testify on this critical transportation security issue. Ports stand ready to do their part in protecting America. We urge your Committee to voice your support for a strong appropriation in FY’06 for a separate line item for the Port Security Grant Program. Thank you. I would be happy to answer any questions.