[House Hearing, 107 Congress]
[From the U.S. Government Publishing Office]



 
 IMPROVING SECURITY AND FACILITATING COMMERCE AT THE NATION'S PORTS OF 
           ENTRY: SEAPORTS OF LOS ANGELES AND LONG BEACH, CA

=======================================================================

                                HEARING

                               before the

                   SUBCOMMITTEE ON CRIMINAL JUSTICE,
                    DRUG POLICY AND HUMAN RESOURCES

                                 of the

                              COMMITTEE ON
                           GOVERNMENT REFORM

                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED SEVENTH CONGRESS

                             SECOND SESSION

                               __________

                            FEBRUARY 1, 2002

                               __________

                           Serial No. 107-143

                               __________

       Printed for the use of the Committee on Government Reform


  Available via the World Wide Web: http://www.gpo.gov/congress/house
                      http://www.house.gov/reform

                    U.S. GOVERNMENT PRINTING OFFICE
                           WASHINGTON : 2003
84-230 PDF


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                     COMMITTEE ON GOVERNMENT REFORM

                     DAN BURTON, Indiana, Chairman
BENJAMIN A. GILMAN, New York         HENRY A. WAXMAN, California
CONSTANCE A. MORELLA, Maryland       TOM LANTOS, California
CHRISTOPHER SHAYS, Connecticut       MAJOR R. OWENS, New York
ILEANA ROS-LEHTINEN, Florida         EDOLPHUS TOWNS, New York
JOHN M. McHUGH, New York             PAUL E. KANJORSKI, Pennsylvania
STEPHEN HORN, California             PATSY T. MINK, Hawaii
JOHN L. MICA, Florida                CAROLYN B. MALONEY, New York
THOMAS M. DAVIS, Virginia            ELEANOR HOLMES NORTON, Washington, 
MARK E. SOUDER, Indiana                  DC
STEVEN C. LaTOURETTE, Ohio           ELIJAH E. CUMMINGS, Maryland
BOB BARR, Georgia                    DENNIS J. KUCINICH, Ohio
DAN MILLER, Florida                  ROD R. BLAGOJEVICH, Illinois
DOUG OSE, California                 DANNY K. DAVIS, Illinois
RON LEWIS, Kentucky                  JOHN F. TIERNEY, Massachusetts
JO ANN DAVIS, Virginia               JIM TURNER, Texas
TODD RUSSELL PLATTS, Pennsylvania    THOMAS H. ALLEN, Maine
DAVE WELDON, Florida                 JANICE D. SCHAKOWSKY, Illinois
CHRIS CANNON, Utah                   WM. LACY CLAY, Missouri
ADAM H. PUTNAM, Florida              DIANE E. WATSON, California
C.L. ``BUTCH'' OTTER, Idaho          STEPHEN F. LYNCH, Massachusetts
EDWARD L. SCHROCK, Virginia                      ------
JOHN J. DUNCAN, Jr., Tennessee       BERNARD SANDERS, Vermont 
------ ------                            (Independent)


                      Kevin Binger, Staff Director
                 Daniel R. Moll, Deputy Staff Director
                     James C. Wilson, Chief Counsel
                     Robert A. Briggs, Chief Clerk
                 Phil Schiliro, Minority Staff Director

   Subcommittee on Criminal Justice, Drug Policy and Human Resources

                   MARK E. SOUDER, Indiana, Chairman
BENJAMIN A. GILMAN, New York         ELIJAH E. CUMMINGS, Maryland
ILEANA ROS-LEHTINEN, Florida         ROD R. BLAGOJEVICH, Illinois
JOHN L. MICA, Florida,               BERNARD SANDERS, Vermont
BOB BARR, Georgia                    DANNY K. DAVIS, Illinois
DAN MILLER, Florida                  JIM TURNER, Texas
DOUG OSE, California                 THOMAS H. ALLEN, Maine
JO ANN DAVIS, Virginia               JANICE D. SCHAKOWKY, Illinois
DAVE WELDON, Florida

                               Ex Officio

DAN BURTON, Indiana                  HENRY A. WAXMAN, California
          Christopher Donesa, Staff Director and Chief Counsel
          Nick Coleman, Professional Staff Member and Counsel
                          Conn Carroll, Clerk
                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on February 1, 2002.................................     1
Statement of:
    Holmes, Captain John, Operational Commander, U.S. Coast 
      Guard, and Captain of the Ports of Los Angeles and Long 
      Beach; Audrey Adams, Director of Field Operations, South 
      Pacific Customs Management Center; and Thomas Schiltgen, 
      Director, Los Angeles District Office, Immigration and 
      Naturalization Service.....................................     8
    Steinke, Richard D., executive director, the Port of Long 
      Beach; Larry Keller, executive director, the Port of Los 
      Angeles; and Guy Fox, chairman of the board, Global 
      Transportation Service.....................................    45
    Winter, Jay, executive director, Steamship Association of 
      Southern California; Dennis Heck, corporate import 
      compliance and purchasing manager, Yamaha Corp. of America; 
      Captain Bill Wright, senior vice president for safety and 
      the environment, Royal Caribbean and Celebrity Cruise 
      Lines; and Moises Cisneros, legislative manager, Los 
      Angeles Chamber of Commerce................................    74
Letters, statements, etc., submitted for the record by:
    Adams, Audrey, Director of Field Operations, South Pacific 
      Customs Management Center, prepared statement of...........    19
    Fox, Guy, chairman of the board, Global Transportation 
      Service, prepared statement of.............................    61
    Heck, Dennis, corporate import compliance and purchasing 
      manager, Yamaha Corp. of America, prepared statement of....    84
    Holmes, Captain John, Operational Commander, U.S. Coast 
      Guard, and Captain of the Ports of Los Angeles and Long 
      Beach, prepared statement of...............................    12
    Keller, Larry, executive director, the Port of Los Angeles, 
      prepared statement of......................................    52
    Schiltgen, Thomas, Director, Los Angeles District Office, 
      Immigration and Naturalization Service, prepared statement 
      of.........................................................    25
    Souder, Hon. Mark E., a Representative in Congress from the 
      State of Indiana, prepared statement of....................     4
    Steinke, Richard D., executive director, the Port of Long 
      Beach, prepared statement of...............................    48
    Winter, Jay, executive director, Steamship Association of 
      Southern California, prepared statement of.................    78
    Wright, Captain Bill, senior vice president for safety and 
      the environment, Royal Caribbean and Celebrity Cruise 
      Lines, prepared statement of...............................    89


 IMPROVING SECURITY AND FACILITATING COMMERCE AT THE NATION'S PORTS OF 
           ENTRY: SEAPORTS OF LOS ANGELES AND LONG BEACH, CA

                              ----------                              


                        FRIDAY, FEBRUARY 1, 2002

                  House of Representatives,
 Subcommittee on Criminal Justice, Drug Policy and 
                                   Human Resources,
                            Committee on Government Reform,
                                                    Long Beach, CA.
    The subcommittee met, pursuant to notice, at 12:10 p.m., at 
Port of Long Beach, Port Administration Building, 6th Floor, 
925 Harbor Plaza, Long Beach, CA, Hon. Mark E. Souder (chairman 
of the subcommittee) presiding.
    Present: Representative Souder.
    Also present: Representative Millender-Donald.
    Staff present: Christopher Donesa, staff director and chief 
counsel; Nick Coleman, professional staff member and counsel; 
and Conn Carroll, clerk.
    Mr. Souder. Good afternoon. Thank you all for coming. Today 
our subcommittee will explore the status of the Long Beach and 
Los Angeles seaport border. Even before the terrorist attacks 
on September 11, 2001, this subcommittee was considering ways 
to improve both the security of our Nation's borders and the 
efficient flow of international commerce, travel and tourism.
    Continuing problems with illegal immigration and smuggling 
of drugs and other contraband over the Southern and Northern 
borders and into our seaports and the threat of terrorism have 
prompted calls to hire more Federal law enforcement officers 
and to expand the physical and technological infrastructure 
needed to allow those officers to work effectively.
    The attacks of September 11th and the heightened scrutiny 
of the last 4 months emphasized the urgency in dealing with the 
terrorist threat as well as the problems of narcotics 
interdiction and illegal immigration. Following the attacks, 
the Nation as a whole came together to quickly develop and 
implement added security measures at our land, air and sea 
borders.
    The teamwork and cooperation required and displayed among 
the many Federal, State and local entities throughout America 
was and still is truly remarkable.
    All morning long I have seen seaport activities from the 
water, the land and by air. I thank everyone who has been 
involved for working so hard these past 4 months to keep these 
ports secure and efficient.
    Our Nation's seaport borders today are more secure than 10 
September of last year, but the job is nowhere near done. We 
cannot let our guard down on vital border issues such as drugs 
and terrorism. We must continue to improve. We must continue to 
work together to work smarter and better.
    Our ports and borders must remain secure and prosperous in 
the years to come. Our prosperity clearly depends upon our 
ability to accommodate the global trade that is predicted to 
double or triple in the next 20 years. So government also needs 
to be attentive to minimize the disruptions and delays caused 
by Federal inspections and other requirements. There is no 
doubt that there have been costs associated with heightening 
our Nation's security at our borders.
    Delays at some border crossings and a reduction in 
commercial and commuter traffic from the increased security 
measures put in place after September 11th have raised concerns 
about the effect of these policies on trade, tourism and 
travel.
    A slowing of the flow of people, cargo and vessels is a 
major concern at our seaports. Congress has been considering 
numerous proposals to deal with these problems, and our 
subcommittee is open to exploring all of them. However, finding 
and implementing solutions is much more difficult than simply 
identifying problems. For example, the House of Representatives 
and the Senate last year passed anti-terrorist legislation 
that, among other measures, authorizes the tripling of the 
number of Border Patrol agents, INS inspectors and Customs 
inspectors along the Northern border.
    President Bush just proposed much needed comprehensive 
increases in our support to the Coast Guard. It is unclear how 
quickly any of these agencies can meet these added 
requirements. Moreover, it is unclear what the impact of the 
new emphasis on anti-terrorism will be on personnel decisions 
at each of those agencies.
    In the rush to protect our Nation's border from terrorists, 
we must not hamper our ability to protect our citizens from 
other dangers, as well as we must not slow down the lifeblood 
of our Nation's economic well being, that of international 
trade and commerce.
    This hearing is part of a series of field hearings which 
this subcommittee is holding at border crossings and ports of 
entry throughout the United States. At each location, this 
subcommittee is defining the problems facing the Federal 
agencies, local lawmakers and community and business leaders 
with respect to border policy.
    We will focus on what new resources are needed for the 
Federal Government most effectively to administer the border 
crossing and port of entry as well as what new policies could 
be pursued to ease the burdens placed on commerce, travel and 
tourism. We will last explore how the new emphasis on 
preventing terrorism may affect the ability of these agencies 
to carry out their other vital mission. These issues are all 
very important and extremely urgent, and I look forward to 
hearing from our witnesses today about ways to address them.
    We have invited representatives of the agencies primarily 
responsible for protecting our borders and seaports in this 
region; namely, the U.S. Coast Guard, the U.S. Customs Service, 
the Immigration and Naturalization Service, to testify here 
today. The subcommittee is vitally interested in ensuring the 
effective functioning of those agencies, and we will continue 
to work with them and their employees to ensure continued 
security and effective administration of our Nation's borders 
and seaports.
    We welcome Captain John Holmes of the U.S. Coast Guard, who 
serves as the Operational Commander of this area, and Captain 
of the Ports, Los Angeles and Long Beach; Ms. Audrey Adams, 
Director of Field Operations for the South Pacific Customs 
Management Center; and Mr. Thomas Schiltgen, Director of the 
Los Angeles District Office, Immigration and Naturalization 
Service.
    A big part of developing and implementing any seaport 
security plan involves the respective port authorities. No two 
seaports are alike. As such, input from the local port 
component and port personnel is important to evaluating changes 
to seaport border security policies.
    Today, our second panel is the individuals that manage day-
to-day port operations. We welcome Mr. Richard Steinke, 
executive director of the Port of Long Beach, and Mr. Larry 
Keller, executive director of the Port of Los Angeles.
    When examining seaport border policies, we must of course 
also seek the input of representatives of the local community 
whose livelihood is directly affected by changes to seaport 
security procedures. Our third panel is made up of 
representatives and port users. We welcome Mr. Jay Winter, 
Executive Director of the Steamship Association of Southern 
California; Mr. Guy Fox, chairman of the board of Global 
Transportation Services; Mr. Dennis Heck, corporate import 
compliance and purchasing manager for Yamaha Corp., Captain 
Bill Wright, senior vice president for safety And Environment, 
Royal Caribbean and Celebrity Cruise Lines; and Moises 
Cisneros, legislative manager of the Los Angeles Chamber of 
Commerce.
    We thank everyone for taking time this afternoon to join us 
for this important discussion. Congresswoman Millender-McDonald 
is on her way here. Maybe after the first panel we will have 
her recognized for her opening statement if she wants to do 
that.
    [The prepared statement of Hon. Mark E. Souder follows:]
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    Mr. Souder. Before proceeding, I would like to take care of 
a couple of procedural matters: First, ask unanimous consent 
that all Members have 5 legislative days to submit written 
statements and questions for the hearing record; that any 
answers to written questions provided by the witnesses also be 
included in the record. Without objection, so ordered.
    Second, I ask unanimous consent that all exhibits, 
documents and other materials referred to by Members and 
witnesses may be included in the hearing record, and that all 
Members be permitted to revise and extend their remarks. 
Without objection, it is so ordered.
    And, finally, I ask unanimous consent that all Members 
present be able to participate in the hearing.
    Now, this is an oversight committee of Congress and we 
always ask that our witnesses be sworn in. So would the 
witnesses on the first panel please rise. Raise your right 
hands, I will administer the oath.
    [Witnesses sworn.]
    Mr. Souder. Let the record show that the witnesses have 
answered in the affirmative. Each of you will now be recognized 
for your opening statements. We ask you to summarize your 
testimony in approximately 5 minutes, because we have lots of 
witnesses. And you can insert any--the full statement, any 
other additional materials you have.
    It is my privilege to first recognize Captain Holmes. We 
thank you for the courtesy of hosting us last night at the 
wonderful Point Vicente Lighthouse and other stops on our 
visit, including rousing me out of bed at 3:45 in the morning 
to go out with the sea marshals.
    But we appreciate your work here, as the others, and look 
forward to hearing your testimony for the official record.

STATEMENTS OF CAPTAIN JOHN HOLMES, OPERATIONAL COMMANDER, U.S. 
 COAST GUARD, AND CAPTAIN OF THE PORTS OF LOS ANGELES AND LONG 
   BEACH; AUDREY ADAMS, DIRECTOR OF FIELD OPERATIONS, SOUTH 
   PACIFIC CUSTOMS MANAGEMENT CENTER; AND THOMAS SCHILTGEN, 
    DIRECTOR, LOS ANGELES DISTRICT OFFICE, IMMIGRATION AND 
                     NATURALIZATION SERVICE

    Captain Holmes. Thank you very much. Good afternoon, Mr. 
Chairman. My name is John Holmes. I am the Coast Guard Captain 
of the Port for the Los Angeles-Long Beach Port Complex.
    It is a pleasure to appear before you today to discuss 
Coast Guard border security, particularly as it applies to the 
transport of people and cargo by sea into this, the country's 
largest and most active international cargo hub. I have a 
written statement I have submitted for the record, and I would 
like to summarize it here.
    What I would like to do today is provide you with a 
perspective of Coast Guard security efforts in the Los Angeles-
Long Beach Port Complex. To do this I will address several 
pertinent issues, including size and scope of the Port Complex, 
security efforts that took place prior to the September 11th 
attacks, immediate actions after the incident, current security 
measures in place, and long-term initiatives underway to 
address security challenges.
    Simply stated, the Los Angeles-Long Beach Port Complex is 
the Nation's super port. Individually, either port, Los Angeles 
or Long Beach, would rank as the largest cargo port in the 
United States. Cumulatively they represent the third largest 
cargo port in the world, handling over 35 percent of the 
Nation's containerized cargo, over one million cruise 
passengers, over 500,000 vehicles, and approximately 50 percent 
of the oil used in the western United States.
    Over 6,000 deep-draft vessels arrive here each year. And 
perhaps the most important statistic of container cargo is--
predictions indicate that container cargo will grow fourfold in 
the next 20 years from a figure of approximately 9 million 
TEUs, which is basically a 20-foot container, to 36 million 
TEUs by the year 2020.
    Prior to September 11th, the Port of Los Angeles-Long Beach 
had one of the most active harbor safety committees in the 
country. Upon review of a number of reports, including the DOT 
report and assessment of the U.S. Marine Transportation System 
and the August 2000 report of the Interagency Commission of 
Crime and Security in U.S. Seaports, another committee was 
formed, and that committee was the Marine Transportation System 
Committee.
    This committee was formed to facilitate the safe, efficient 
and environmentally conscious flow of cargo in and out of the 
seaport. In addition to this main committee, subcommittees were 
formed, which included a Port Security Subcommittee, which was 
made up of the port users and the Federal agencies which they 
interact with, and a Law Enforcement Subcommittee, which was 
made up strictly of the law enforcement agencies in the port 
area.
    I only mention this because this figures into the actions 
that the Port Complex took immediately after the September 11th 
tragedy. I will talk a little bit about the Coast Guard 
operations before September 11th, which some people are now 
referring to as the old normal, as opposed to what a lot of 
people refer to now as the new normal. And under the old normal 
the Coast Guard was conducting routine and--the Coast Guard and 
several other agencies were conducting routine water borne 
security patrols. Controls of vessels were exercised via unique 
State, Federal, user fee-supported Vessel Traffic Service. 
Shoreside security was ensured through facility inspections and 
roving vehicle patrols. A limited number of container 
inspections were being conducted by the Coast Guard, with a 
particular focus on hazardous material, and a very robust Port 
State-controlled Boarding Program was in place.
    As you probably are aware, the Port State-controlled 
Boarding Program is the program that the Coast Guard uses to 
board foreign vessels that come into U.S. waters to ensure that 
they meet the International Safety Standards.
    In the wake of the September 11th tragedy everything 
changed of course, and we started to view things in terms of 
threat, and we put those threats into three basic categories. 
First was the waterside threat of vessels approaching 
facilities or other vessels in the port, a shoreside threat of 
those vessels coming into the port, either from vehicles or 
trucks, and the internal threat of the vessels coming into the 
port that is represented by the crews, cargo and passengers on 
board.
    To mitigate the waterside threat posed by small vessels, 
additional floating resources were employed, around the clock 
harbor patrols were conducted and every vessel entering the 
Port Complex after September 11th was provided an escort, an 
armed Coast Guard escort.
    To mitigate the shoreside threat to facilities, terminal 
managers were directed to upgrade security, and around the 
clock, multi-agency vehicle patrols were set in place. The 
greatest challenge, however, posed itself in the internal 
threat posed by the crews, passenger and cargo on the vessels. 
In order to mitigate this threat, we had to identify every 
vessel coming into port, exert positive control over its 
actions using the Vessel Traffic Service, and conduct boardings 
to screen the vessels, passengers and crew.
    No one agency in the port, unfortunately, has the personnel 
to undertake a screening operation of this nature. So on the 
morning of the 11th, a multi-agency maritime enforcement 
effort, consisting of Coast Guard, Immigrations, Customs, FBI, 
ATF, California Highway Patrol, Los Angeles Port Police, and 
the L.A.P.D. and many others were used to screen the vessels.
    To give you some idea, on the 11th and 12th, this 
represented about a 4 to 6-hour delay on vessels coming into 
the port. After a week this was down to a delay of about 1 to 2 
hours, and presently no delay exists. Currently, multi-agency 
boardings are being conducted, although most are currently 
using Coast Guard Reserves and/or joint U.S. Coast Guard-Los 
Angeles Port Police sea marshal security teams. Vessel, 
vehicle, and air patrols continue with procedures refined 
daily.
    Multi-agency facility surveys have been conducted in 
conjunction with the Port Authority to identify and alleviate 
shoreside security shortfalls. Risk management procedures are 
used to identify and disburse resources. And our Harbor Safety 
Committee and the MTS Committee and subcommittees have been 
extremely active in developing standards and procedures to use 
around the port.
    In the long term, we are working with both ports to develop 
a security manual. We have recently developed security 
guidelines, minimal security guidelines for the terminals and 
facilities, and these guidelines deal with physical security 
issues, such as perimeter security, vehicle and personnel 
access, and control of visiting vessels.
    The next step we are working on is a--we are working with 
the DOT in a credentialing subgroup to identify the possibility 
of a portwide credentialing system, and we are working on the 
issue--the container inspection issue with our colleagues from 
Customs and other agencies.
    The security of the Los Angeles-Long Beach Port Complex has 
improved significantly in the months following September 11th. 
I am confident that to a large extent this is due to the 
phenomenal interagency cooperation that exists.
    I would like to take this opportunity to acknowledge this 
cooperation and thank my colleagues from the marine industry, 
the ports and particularly from the other Federal, State and 
local agencies for their untiring efforts.
    I also believe that this crisis has been benefited 
significantly from outstanding and unwavering leadership. 
Certainly Admiral Loy, Transportation Secretary Mineta, 
Governor Ridge and President Bush have provided superb 
leadership. From a field commander's perspective, it is always 
tremendously gratifying to have clear direction and unwavering 
support.
    In conclusion, the Coast Guard has taken a leadership role 
in coordinating the homeland security strategy, and I know you 
can see from your interaction with them today the men and women 
of the Coast Guard are committed to the protection of our 
Nation, its citizens and the marine transportation system.
    I want to thank you for your interest in enhancing homeland 
security and for holding this hearing. I certainly appreciate 
the opportunity to testify before you today. I will be happy to 
answer any questions you may have.
    Thank you.
    [The prepared statement of Captain Holmes follows:]
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    Mr. Souder. Thank you very much.
    Ms. Adams.
    Ms. Adams. Thank you. Chairman Souder, thank you so much 
for your invitation to testify and for providing me the chance 
to appear before you today. I would like to discuss the efforts 
of the U.S. Customs Service to address the terrorism threat and 
the challenges that exist at our Nation's airports and 
seaports. The specific challenges I will address today are 
those that U.S. Customs has encountered at the Los Angeles-Long 
Beach Seaport as well as at the Los Angeles International 
Airport.
    The issues we face at the seaport and airport here in Los 
Angeles are representative of those encountered at other major 
international air and seaports throughout the country.
    As Captain Holmes has stated, the Los Angeles-Long Beach 
Seaport complex is the largest seaport in the United States. We 
process an average of 7,400 arriving containers each and every 
day. Los Angeles International Airport is the second busiest 
international airport in the country, processing on average of 
23,000 arriving international passengers and cargo valued at 
$110 million every day.
    As a major participant in the protection of our Nation's 
borders, Customs has taken a lead role in efforts to deny entry 
to potential terrorists and the implements of terrorism into 
the United States from locations throughout the world. Our 
areas of highest risk are these cargos and passengers arriving 
from or departing to high risk countries, and those which might 
conceal explosives, nuclear materials and weapons of mass 
destruction.
    The Customs Service enforces over 400 laws and regulations 
for more than 40 Federal agencies. While fully enforcing our 
Nation's laws at this time of highest alert, the Customs 
Service also fully recognizes the impact of our enforcement and 
regulatory actions on international trade, which is so vital to 
our Nation's economy.
    International trade must continue to flow through our 
Nation's ports of entry. Expansion efforts which were underway 
prior to September 11th continue at our air and seaports and 
the demand for Customs resources is at an all time high.
    To use the Los Angeles-Long Beach seaport as an example, 
cargo valued at approximately $188 million arrives each and 
every day. Much of the arriving cargo is destined for the 
shelves of mass merchandisers throughout our country. Fully 
assembled automobiles and auto parts destined for further 
manufacturing in U.S.-based assembly lines pass through our 
port as do large quantities of wearing apparel, foodstuffs, 
electronics, bulk chemical and steel.
    In our global economy, corporations large and small rely 
heavily on imported merchandise to ensure the vitality and 
competitiveness of their organizations. Our security and anti-
terrorism efforts must take into account the need to ensure the 
smooth flow of legitimate trade and travel. Addressing the 
terrorist threat and security vulnerabilities as well as 
narcotics and currency smuggling requires a coordinated multi-
agency and multi-national approach.
    The Customs Service continues to buildupon an established 
cooperative relationship with the Intelligence Community, the 
other Federal, State and local agencies, as well as our 
partners in the International Trade Committee.
    Using a collaborative approach, we are employing targeting 
and risk management technologies to select people, vessels, 
aircraft and cargo for increased inspection. The Customs 
Service was addressing security and anti-terrorism well before 
the attacks of September 11th. We now know that the Los Angeles 
International Airport was the ultimate target of the Algerian 
terrorist, Ahmed Ressam, who was arrested in December 1999 by 
Customs inspectors at Port Angeles, Washington.
    In response to the terrorist attacks of September 11th, the 
U.S. Customs Service immediately implemented a level one alert 
for all personnel and ports of entry. This is our highest state 
of alert, calling for sustained intensive anti-terrorist 
operations. We remain at level one alert today. In order to 
meet the demands of maintaining this highest state of alert, we 
have deployed significant numbers of local Customs employees to 
other locations around the country, including the Northern 
border.
    These officers were immediately deployed following 
September 11th to ensure that there is adequate staffing 
available along the Northern border. In addition, we have a 
number of our officers detailed to various national programs to 
ensure a sound and cohesive national response to the threat of 
terrorism.
    Never has the demand for Customs resources been so great. 
To help us respond to the needs of the international trade 
community for expeditious release of their time sensitive 
cargo, we are relying heavily on nonintrusive technology, such 
as the full container gamma and x-ray devices, pallet x-rays 
and radiation detection pagers.
    We also rely heavily on accurate and timely advance 
information from the international trade community and both our 
air and sea carriers. This advance information coupled with 
available technology helps us screen cargo and passengers and 
enables us to use the principles of risk management when 
determining the best investment of our scarce resources.
    The vast volume of trade and traffic through our Nation's 
air and seaports as well as our land borders has put immense 
pressure on our ability to enforce the Nation's laws, while 
facilitating international trade even before September 11th.
    After September 11th, our challenge has risen to a new 
level. Although we have taken many steps to address these 
challenges, such as our recently announced Customs-Trade 
Partnership Against Terrorism, we still face many challenges. 
We continue to work and develop and deploy nonintrusive 
inspection technology to detect weapons of mass destruction and 
the implements of terrorism.
    We continue to look for the best ways to recruit, train, 
and retain our Customs officers. We continue to enhance our 
industry partnership programs to enable the trade, 
transportation and business communities to assist us in the 
overall security strategy envisioned by the U.S. Customs 
Service.
    I want to thank you, Mr. Chairman, for this opportunity to 
testify. The U.S. Customs Service continues to make every 
effort possible working with our fellow inspection agencies, 
with the administration, with congressional leaders, and the 
international trade and transportation community to address the 
concerns of the American people.
    I would be happy to answer any questions you may have.
    [The prepared statement of Ms. Adams follows:]
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    Mr. Souder. Thank you very much.
    Mr. Schiltgen.
    Mr. Schiltgen. Mr. Chairman, thank you for inviting me here 
today to address you on behalf of U.S. Immigration and 
Naturalization Service. I am pleased to appear before you today 
with two of our sister agencies in order to discuss port 
security issues.
    The United States has a strong history of immigration that 
we should be proud of. Our immigration process contains a 
degree of openness that is aligned with the freedoms this 
country has to offer. But in order to retain those freedoms we 
must be vigilant in our effort to enforce the immigration laws 
and secure our borders.
    INS has incredibly dedicated officers and support personnel 
facilitating immigration and commerce to the United States, 
while at the same time enforcing our immigration laws. We 
remain committed to our responsibilities, And a significant 
part of those responsibilities is to work collaboratively with 
Federal, State, and local law enforcement to secure areas of 
our borders like the seaport here in Los Angeles-Long Beach.
    Given the extensive nature of our operations, it is not 
surprising that the Los Angeles District is the largest INS 
district, with nearly 1,700 government employees, and over 500 
contract employees assigned to the various facilities 
throughout our jurisdiction.
    I know that you are familiar with the INS responsibilities, 
and today I want to focus on issues relating to the seaport 
here. The Los Angeles District seaport operations distinguishes 
itself from our seaport operations by the number of both 
commercial and passenger vessels that pass through the ports 
here.
    They are tasked with the job of inspecting over 300,000 
crew members and 500,000 passengers every year. The average 
daily arrival of 15 commercial vessels at the combined ports, 
results in over 5,400 vessels arriving per year.
    These vessels operate out of 46 different terminals at the 
port. In addition to inspecting container vessels, inspectors 
clear approximately five passenger vessels weekly, and each of 
those vessels brings an average of 2,500 passengers and 800 
crew members.
    Now, key to our efforts to secure our borders is the 
development, analysis and sharing of intelligence. Even before 
the tragedy of September 11th, INS seaport inspectors and the 
Customs Intelligence Collection and Analysis Team shared 
intelligence information. And thanks to this joint effort, INS 
officials continued to gather significant information regarding 
Chinese smuggling organizations which transport migrants to the 
United States from Asia. This has led to several successful 
prosecutions. And we have expanded our efforts to include the 
investigation of leads that may involve possible terrorist 
activity.
    We have successfully coordinated efforts between our own 
inspections and investigations programs, and will remain 
dedicated to working with other law enforcement agencies in 
developing intelligence related to smuggling operations, 
including smuggling in containers.
    Now, since the terrorist attacks on September 11th, the INS 
has operated under a threat level one security alert. This is 
the highest level security alert in which ports of entry 
operate. In response, we have established a 24-hour command 
element staffed to increase our responsiveness to law 
enforcement efforts against terrorism. Operations at threat 
level one involve a more intense inspection, as well as closer 
scrutiny of individuals and their documentation.
    Additionally, we have moved INS personnel and resources 
from our LAX operation to the seaports here. And vessels that 
are considered high risk are boarded by multi-agency teams, 
which include INS inspectors and the Coast Guard. And the Coast 
Guard provides INS with crew lists to run queries on all 
persons arriving on vessels prior to our boarding those 
vessels. And INS has also tightened documentary requirements 
for entry into the United States by crew members of cargo 
vessels.
    Now, clearly INS's responsibility is focused on the 
inspection of aliens and prevention of unauthorized entrants to 
the United States. However, we must continue to work closely 
with Federal, State and local agencies, particularly U.S. 
Customs and the Coast Guard, in order to foster and improve 
security and communications through multi-agency task forces.
    Currently, the INS is participating in the Los Angeles 
Mayor's Task Force for Security and Safety. This group consists 
of port officials as well as both civilian and Federal 
agencies, which face the challenge of ensuring that the 
waterfronts of both ports are provided with increased security.
    Topics currently being reviewed are the issuance of ID 
cards to those seeking access to port facilities, issues of 
potential security risks on utilization of existing security 
personnel, and inspection of empty containers. INS also attends 
a quarterly interagency regional meeting to aid in the 
prevention of human cargo smuggling and a quarterly law 
enforcement manager's meeting which is hosted by the Long Beach 
Police Department.
    In conclusion, the INS and the Los Angeles District are 
committed to securing our ports of entry against those who wish 
them harm, while facilitating legitimate commerce and travel. I 
want to commend the men and women of this INS district for 
their outstanding commitment to the INS mission in the face of 
increasing demands and finite resources.
    Thank you, Mr. Chairman, for allowing me to give testimony 
regarding the Los Angeles District Office. And as my panel 
members said, I am happy to take questions that you may have. 
Thank you.
    [The prepared statement of Mr. Schiltgen follows:]
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    Mr. Souder. Thank you very much, each of you, for your 
testimony. And let me first start with Captain Holmes. One of 
the things I wanted to--I am not sure I completely understood 
your distinction. Could you explain how, waterside, shoreside 
and internal? And I understood the internal, you said was the 
greatest threat, crews, items on the ships.
    What would be some examples on--when you say waterside, if 
something attacking, for example a cruise ship or a tanker, 
that would be a waterside threat, something coming up and 
hitting it while it is docked, that would be seaside?
    Captain Holmes. Anything that could be affected by a 
vessel, whether it be getting in front of a vessel or coming up 
alongside of a vessel, that would be what we consider a 
waterborne threat. Then a shoreside threat would be a truck or 
large vehicle who does not normally access the terminal, coming 
on the terminal with perhaps something on it or in it that you 
don't want to have at the terminal.
    Mr. Souder. Your feeling is that programs like this, the 
Sea Marshals, are going to be potentially more fruitful. Then 
this morning we saw one of the cutters out going across the 
front of the harbor, because one of the fundamental questions 
is it is fine to do all of this on September 11th, but what is 
going to happen when the boating season starts and there is 
much more pressure on your resources?
    Captain Holmes. We are also very fortunate here during the 
boating season to have a number of other resources to deal with 
small boat search and rescue. We have both the--Long Beach and 
Los Angeles have fire departments which do search and rescue, 
the bay watch people, and most of the counties around here have 
search and rescue. So the boating season here is pretty well a 
year round season as opposed to other places. So we depend a 
lot on some of our partners in the search and rescue part of 
the partnership here to conduct search and rescue operations.
    But, basically as--I would indicate that when you came in 
this morning, you had a cutter that was alongside the cruise 
ship as well. And that is part of the--that is the cutter that 
would, of course, deal with any kind of waterborne threat. Once 
the cruise ship tied up to the pier, I am not sure you notice 
it, they are provided 24-hour a day on the water boat 
protection by either a Coast Guard small boat or a Port Police 
boat.
    Mr. Souder. We put--as the President just said the other 
day--a lot of new dollars in for the Coast Guard. But what you 
see, it is not just here, in Puget Sound where they have a 
number of the naval bases and in Detroit where they have lots 
of--whether it is nuclear power plants north of Detroit, you 
are increasingly seeing vessels parked.
    Come on up. Happy to have you here. I am going to wait 
until Ms. McDonald comes up. Great to be in your hometown. One 
of the concerns as we--we were neighbors 'till I moved over to 
the other building and spent many times walking back and forth 
across the floor and talking about different challenges, 
including here in Los Angeles. We were hoping to be able to--
when I chaired the Empowerment Subcommittee, we had lots of 
discussion about urban revitalization and a number of other 
issues.
    Ms. Millender-McDonald. You left me.
    Mr. Souder. Yes. I wound up chairman of this subcommittee 
and moved to a different office.
    Because as we increase the resources, one of our--but one 
of our concerns is that this is what I was trying to sort 
through. Are you going to have additional pressures as the year 
goes on, as we see these different boats parked, that 
previously the Coast Guard was already kind of tightened for 
their resources. Now, how much of your resources have been 
devoted, switched over to security from what was search and 
rescue and other types of operations? Do you know?
    Captain Holmes. Search and rescue operations are still the 
top priority for the Coast Guard. What has had to happen, 
honestly, since the 11th is resources which do other things, 
work with our fishing--local fishing fleet, law enforcement 
patrols, those initially were curtailed to almost zero. And 
then as we have been able to get some Reserves on board, use a 
little bit better risk management procedures, work with other 
agencies and covering some of those patrols, we have been able 
to increase the patrols to a certain state.
    But we certainly are not back to where we were before the 
11th, by no stretch of the imagination, and I don't think we 
will be there until we get some more resources. I think the 
figure was given that prior to the 11th we spent about 1 
percent of our budget on homeland security, and right now we 
are spending about 50 percent of our budget on homeland 
security. I think the Commandant is hoping to move that down to 
a more realistic figure, about 25 percent.
    But as you can imagine, that still represents a 25 percent 
additional increase in responsibilities that we are going to 
have to deal with.
    Mr. Souder. Are your most critical needs here personnel, 
and what equipment needs are your most critical?
    Captain Holmes. At this port, we--at the present time, we 
are fairly sustainable. But what we can't deal with is any kind 
of a surge operation. And in the homeland security arena, as 
you know, there is any number of surges that will occur as time 
goes on. Not too long ago we had some threats or perceived 
threats against the bridges in California, and we had to surge 
operations to add additional coverage for those threats.
    So what will happen is those surges now are basically borne 
on the backs of our people and our equipment, and what you end 
up doing is of course running the people more hours than they 
should and the equipment more hours than they should. So our 
needs are really across the board. We would need both more 
people and more equipment to do the job.
    Mr. Souder. I met a number of reserve officers in addition 
to people talking about overtime. Are you nearly--can you 
sustain that, or are you going to have to make some adjustments 
in those areas?
    Captain Holmes. We have 70 Reserve officers on board. And I 
believe about half of them are Sea Marshals, and we could not 
do the mission we are doing without the reserve officers. Any 
base--my baseline now really I consider it the people I have 
plus the 70 reserve officers that are currently on board. That 
is my new baseline.
    Mr. Souder. Ms. Adams, one of the things I want to make 
sure, Congressman Clay Shaw of Florida, who is a friend of 
mine, has legislation, along with Senator Graham of Florida and 
Senator Hollings of South Carolina, on a--it has been moving 
through the Senate, it is a homeland defense--it is port 
security legislation.
    And so in addition to our committee working on the border 
reports that we are doing, as pieces of these legislation move 
through we wanted to look at unique needs that we might want to 
be able to build into this type of law. And some of my 
questions may relate to that, some may be more general that we 
are trying to follow through in each hearing.
    As you can see, I was asking personnel questions as well as 
needs questions. But I have an--so a couple of kind of basic 
questions. First, it is clear, and I am sure we are going to 
hear in the later panels, that this port is expanding 
exponentially. Is Customs--do you have a plan that increases 
you at 40 percent to meet the cargo increases?
    Ms. Adams. Unfortunately, I don't think we are that far 
along. We do know that we have gotten some increased personnel. 
As you know, our budget has been relatively stagnant in recent 
years. We are adding about--I think it is 640 additional 
personnel this year, and that number may be wrong. And I 
probably have it written down somewhere. But I apologize for 
not having that nationwide at the tip of my fingers. But we can 
get back to you on that.
    There has been exponential growth in both the sea and the 
air environment as well as along the land borders in recent 
years, and Customs has had to work smarter. We employ the 
principles of risk management. We try to focus our activities 
on those shipments, those people of specific interest. Clearly 
in response to the events of September 11th we would like to 
increase those efforts. We are relying very heavily on various 
types of nonintrusive technology that we continue to work with.
    And every time you get a new piece of equipment it is a 
little bit more sophisticated. We learn more about the 
different capabilities. So to answer your question, our 
staffing needs have not diminished, shall we say. There are 
clear staffing needs. There is lots of demands on the Customs 
resources. But there is not a manager within the Customs 
Service or anywhere else who would tell you that they don't 
need more, want more, couldn't do better with more. But we are 
just trying to work smarter.
    Mr. Souder. Most places aren't looking at 40 percent 
increases in the demands. Now, yes, more efficient, and looking 
at how to become more efficient. One thing that I found a 
little disturbing earlier this morning was that if you--we went 
through the new x-ray machines, different variations. But if 
something is found and they need to do followup, my 
understanding, to take it apart it has to be transported 15 
miles.
    Ms. Adams. That's correct. We have two container exam sites 
located at very--two different locations in proximity to the 
seaport. But the demand for warehouse space is very, very 
great. We have a whole system where we establish these 
container exam stations. They are--people bid for this 
opportunity. The location is certainly one of the factors that 
we evaluate. And essentially it is the best combination of 
factors: Who can provide the best turnaround time, how long, 
how many cargo doors do they have? There is an infinite number 
of factors.
    But to answer your question, that is correct. We do have to 
take our cargo and the containers to remote locations.
    Mr. Souder. So if the little radiation thing, which is a 
great invention, goes off, and somewhere in this huge container 
there is something possibly nuclear, you have got to take it 
through 15 miles of city and can't take it apart. I mean, that 
is an extreme case. But it argues the illogic of not having 
something in the port, both for port security and the people 
around here do not want to see if these things are in 
containers, and that there isn't a lot of space. Obviously if 
there was urgency, you would clear out.
    But the truth is, is that when a device goes off, you don't 
know the level of urgency, and it is even dangerous enough if 
it is heroin or cocaine or if there were other questionable 
things inside that possibly--who knows what kind of weapons 
cache. You don't necessarily want those going through cities. 
That was a rather extraordinary challenge that has to be 
addressed here. I think the Federal Government is spending a 
lot of dollars in this harbor area and dredging and getting it 
ready, and one way or another, that is just too much 
separation.
    In one of the border crossing up in New York, in the 
Montreal to New York corridor, there was a concern that when we 
first spot something in the truck, they have to go around the 
corner. And when they corner it, we can't quite see them on the 
machine. Here they are going 15 miles.
    It is a totally different type of challenge than I have 
seen at most other places, and I think that is a concern.
    One other small thing I just wanted to say for the record, 
because I hope we can follow this up, too. That is that one of 
the new pieces of equipment for scanning was using a direct 
connection, and the new machines may need to be looked at. We 
are working through this kind of thing, because the computer 
really needs to be built into the equipment, and that was 
clearly expressed as something that we need to look at.
    Hopefully that is the type of thing when we look at the 
homeland security. Are there any other specifics that you would 
like to raise at this point in addition to the general points 
you have that might relate to your challenges here at Long 
Beach and Los Angeles?
    Ms. Adams. I concur with your concerns over the container 
exam site delays and the distances. There is no question that 
we would like to have container exam facilities at the docks, 
ideally at the premises of every carrier where all of this 
cargo is off-loaded. As you saw this morning, however, space is 
very limited. Space is very expensive.
    Up to this point, we have been somewhat unsuccessful in 
trying to locate permanent Customs facilities with some of our 
x-ray devices on the terminal property. There is I am sure a 
variety of reasons for that, not the least of which would 
obviously be their space limitations and the need for the 
waterfront space to be occupied by the container traffic that 
essentially generates the revenue. So, we would like to have 
those kinds of facilities much, much closer.
    The remote container exam site was a compromise that we 
went to a number of years ago, perhaps in the late 1980's, when 
it became very clear that we needed to look at more cargo as 
the threats were increasing, and we had no place on the docks 
to do it, and we therefore moved to the idea of the remote 
site. Again, it is not ideal. It is the best we can do right 
now.
    I would like to clarify a couple of things. If there is an 
exceptionally high risk shipment in terms of anything that 
would be radioactive or give any indication that it was 
dangerous, we would immediately take all of the necessary steps 
working with our partners at the Coast Guard, the Environmental 
Protection Agency, the military perhaps, whoever we needed to 
call to ensure that cargo, once it was identified as a danger, 
was not allowed to go unattended.
    When the radiation pagers go off, they do show the degree 
and the intensity of the hit. So ideally when most of them go 
off, they are relatively low.
    Mr. Souder. Can I clarify something you said there? You 
said you wouldn't leave it unattended. Does that mean you would 
escort it the 15 miles or that you would take it apart at the 
spot?
    Ms. Adams. I think it would obviously depend on--we would 
obviously be talking to the carrier trying to get more accurate 
manifest information, trying to find out who the importer was, 
find out what it was. Is there a reasonable explanation for why 
there is this indication on the radiation pager, just as we 
would if there was any other sort of alarming anomaly. If, for 
example, the threat would be perceived to be there was 
narcotics built into a false wall or the nose of the container 
or something like that, we would escort it to our exam site or 
another suitable location as close as possible where we could 
actually take the container apart, completely de-van it, take 
all of the boxes out and do whatever we needed to do.
    The whole concept of the radioactive material and the 
nuclear material, it is very frightening, and we have worked 
closely with the other agencies to have plans in place should 
something like that occur. But, no, I don't envision if there 
was any concept of any sort of a threat or a danger that it 
would ever be dragged to the exam site.
    Mr. Souder. Thank you. Ms. Millender-McDonald.
    Ms. Millender-McDonald. Thank you, and good afternoon to 
all of you. And I would like to welcome my good friend and 
colleague from Washington, Mark Souder, in this morning to 
examine the port here in Long Beach. And given with the Port of 
Los Angeles makes up--both make up the largest port system in 
the United States, and the third largest in the world. And so 
these are extremely important ports, not only to the region 
here, but to the country and indeed the world.
    You have some of the most important and very impressive 
people who are before us here. I have had the opportunity to 
meet with them on several occasions given September 11th, and 
know the plight and the arduous task that they have given not 
only September 11th, but just the mere fact of seaports and the 
problems that it employs.
    I am happy to see Captain Holmes here and Ms. Adams, two of 
the persons whom I have spoken with on several occasions. I am 
concerned about--let me first say, this make the 90th year 
celebration for the Port of Long Beach. And so we will be 
certainly doing things in grand fashion come the exact moment 
in time.
    I do see Larry Keller out in the audience, who is the fine 
Executive Director to the Port of Los Angeles, as well. But, 
Mark, what we have here is a system that carries over 35 
percent of our interstate cargo from the Ports of Los Angeles 
and Long Beach across this Nation. And certainly after we 
finished the dredging and the improvements that we wanted to 
have done here, it will then become even a larger percentage.
    Let me digress for a second to not only welcome you to Long 
Beach, the city that I share with our friend Dana Rohrabacher, 
but I am sure Dana in his absence welcomes you here, too.
    So as we listened to Ms. Adams and this urgent need for us 
to revisit this whole notion of the examination of the 
containers 15 miles away, I would like to perhaps entertain at 
another time this conversation. And perhaps when Larry comes 
up, he might have some of the same issues that we have.
    But indeed I think the Federal Government has to weigh in 
on this as well because of the importance of these ports to not 
only this region but also to the country, and indeed the world.
    We have talked about the ships that are coming into these 
seaports, both Long Beach and Los Angeles, most of whom are not 
American ships, as we know. And so we need to look at clearing 
the manifests on ships that are coming into our ports as we do 
now for the manifests now that we are going to clear on the--
with the international flights that are coming in.
    And so I am happy to have you here today. This is simply a 
revisionists of what I have been told, and I have come to know 
about the ports of both Long Beach and Los Angeles.
    And I welcome you and I working together, to make sure that 
we continue to have the strength of these ports for the 
American people, not only in this region but throughout the 
country. So thank you for being here this morning, and I will 
continue to listen, because what they are saying is what I have 
heard before. And I just want to reiterate the importance of 
your being here so that you can help me as I return back to 
Washington to tout the critical need for port security funds.
    As Captain Holmes said, they have had to divert a lot of 
their resources to take care of what happened on September 
11th. They can't continue to utilize 50 percent of their budget 
to do that. And so we must have the many pieces of legislation 
that is now coming forward, in the full House, full 
Transportation Committee. We need to look at that and garner 
the support of those who are not on the Transportation 
Committee, but who are in key positions to help us move this 
legislation, to give them the funding that they so badly need 
to secure our seaports.
    Thank you.
    Mr. Souder. Thank you.
    Ms. Millender-McDonald. I have a statement for the record, 
and I would like to submit that.
    Mr. Souder. Without objection, we will submit your full 
statement for the record, and any other materials that you want 
to put in.
    I wanted to ask a couple of questions of Mr. Schiltgen, and 
I neglected to ask Ms. Adams this question too, because you 
said directly in your testimony that you had--let me ask you 
the question first.
    Approximately how many of your people were diverted post-
September 11th? And are most of them back at this point?
    Ms. Adams. We immediately deployed 14 officers from--7 from 
the Los Angeles-Long Beach seaport and 7 from the Los Angeles 
International Airport to support the Northern border. We have 
maintained that commitment to this day.
    Mr. Souder. So you are down 14 basically?
    Ms. Adams. As far as the Northern border is concerned, yes.
    Mr. Souder. You didn't move any to any other part of the 
United States, like to New York or Boston?
    Ms. Adams. Not necessarily in their capacity as Customs 
officers involved in the inspection of people or merchandise. 
We do have several officers working at our national office. We 
have established a new Office of Border Security. We have two 
officers there that are participating in a national targeting 
program. There has been several other ongoing groups that have 
been put together, task forces to look at ways that we can 
identify our highest threat work, highest risk work, and 
somehow figure out a way to take care of the rest of it on sort 
of maintenance mode.
    There is a lot of risk management initiatives going on. 
There is a lot of looking at ways to measure compliance using a 
statistically valid random sample. Again, as I mentioned 
earlier, we are really trying to work smarter.
    Mr. Souder. So you are saying you weren't overstaffed, you 
are trying to work more efficiently, but a lot of that is at 
maintenance level, which is not sustainable long term?
    Ms. Adams. I think that is correct. Certainly we have used 
a lot of overtime. We have our officers working very, very 
hard, very long hours, and I worry very much about that. It is 
not sustainable. I don't care who the officer is or how good. 
In hour 15 of your 16-hour shift your senses aren't as sharp in 
they were in hour 1 or hour 4.
    Mr. Souder. This is a tough question we have to look at. We 
are looking at a deficit this year. We have tremendous needs in 
Social Security with more people aging, more people are out of 
work. That is going to put more demands on our Medicaid and 
welfare systems and support systems, unemployment insurance. So 
we have all kinds of pressures on the budget. We are not trying 
to look at it.
    But I have explained to Mr. Ziglar, to Asa Hutchison, Mr. 
Bonner to Admiral Lloyd and others, that when you divert 
resources and then say you are able to sustain it, it doesn't 
make a big compelling case to Congress about the need for those 
resources. Now, the fact is you are also under tremendous 
pressure not to make a lot of requests to us and to work within 
the establishment. I understand that. But that is what we are 
trying to hear on the balance. And, yes, we need to all work 
smarter. We have had to do that in the social service support 
systems. We have had to do that in many parts of government, 
and all of us have a little bit of leanness.
    On the other hand, in talking to people in the field, you 
can see that they are working overtime, there are pressures on 
the system, the Reservists, we are seeing it in the military as 
well.
    In INS, had you had people transferred to the Northern 
border from this region as well?
    Mr. Schiltgen. Since September 11th we have only had two 
inspectors from our LAX operation that have been temporarily on 
detail to the Northern border. But what we have done is 
transferred an additional 10 from LAX temporarily to the 
seaport operation here. Very significantly understaffed here. 
And as we picked up part of our operation post-September 11th, 
I think the fortunate thing that we have going for us, as you 
may know, the user fee account placed for the first time a fee 
on passenger ships, on cruise ships, which will provide 
additional dollars to our agency.
    And that in combination with the fiscal year 2002 budget, 
we are seeing additional inspections resources coming into our 
agency. I don't know at this time how many of those will be 
coming to Los Angeles or the seaport. Certainly there is a 
focus after September 11th on the Northern border, an 
understanding that we have vulnerabilities or we have certain 
concerns about areas of illegal entry into the United States 
that haven't necessarily been the focus of previously.
    But to some extent there is a bit of hope for us for 
additional resources in the near future.
    Mr. Souder. Have you lost any staff to Sky Marshals, to 
other services? Have you been able to maintain fully staffed 
and fill the potential new slots?
    Mr. Schiltgen. Yes. We have been able to keep 100 percent 
of our inspectional staff here in Los Angeles. We have had a 
very aggressive hiring program over the last couple of years. I 
think unlike other agencies we have been growing. Our budget 
has been increasing and we have had a very aggressive hiring 
situation going on.
    We have lost a few folks to the Sky Marshals, not to the 
number that the Border Patrol has. I know that they have lost a 
lot of people or are in the process of losing people, but we 
have lost only one or two.
    Mr. Souder. In the check--in the background checks like the 
people on the cruise of the--the ships, and so on, let me ask 
you two questions related to that. One is, are there any 
particular things that we should be looking at in Congress as 
far as information, and do you have any stumbling blocks on 
information sharing?
    And the second--well, let me ask that one first. Clearly 
things have improved nationwide since September 11th. Where are 
your greatest difficulties?
    Mr. Schiltgen. I think the thing of maybe greatest concern 
is to make sure that we get the advanced passenger lists on all 
incoming vessels. We are to the point now where we have for a 
few years now received that on many of the incoming air flights 
into the United States. We are getting from the Coast Guard 
copies of lists of individuals, and we are doing our data base 
checks prior to the individuals coming in. I don't believe at 
this time, however, that under at least INS regulations that 
advance--or Customs--that advance passenger information is 
required for ships. I think that is going to be critical as 
we----
    Mr. Souder. That counts crew when you are saying passenger?
    Mr. Schiltgen. Yes.
    Mr. Souder. It was clear when we boarded this morning that 
down in the engine room that none of the people spoke English 
and none of them spoke Spanish. Do you have programs for 
language diversity and the challenges, whether it is Sea 
Marshals, INS? One of the things that we have seen in Los 
Angeles is a huge melting pot of multiple Asian languages. How 
are you going to handle this long term, in addition to the 
whole question of the Middle Eastern languages?
    Mr. Schiltgen. Well, first of all, we provide Spanish 
training to all of the immigration officers, and we have since 
I can remember. We recruit both for our inspection personnel 
and our special agents, investigatory personnel, from 
individuals who speak a wide variety of languages. However, as 
you know, there is no way one or two inspectors are going to go 
on any ship and have language capabilities. We utilize the 
resources on each of those vessels for translation when we need 
to, and I have to say that I think that we have got very astute 
officers who at whatever point in the process make 
determinations of the validity of information, the fairness of 
the translations that are going on on the ships and interviews 
with the crew. And if, in fact, we have concerns, an officer 
has concerns, then we have the opportunity to bring in our own 
translators.
    Mr. Souder. If I could ask each of the panelists, and if 
you want to add anything else, I will yield to Ms. Millender-
McDonald, if you want to add anything else that I missed in the 
questioning. But I focused on this language question, in 
particular with Middle Eastern languages, as we look at the 
terrorist questions. But here you are dealing with all sorts. 
Because it came up on the Quebec border that we didn't have 
anyone who was certified to speak French, we focus so much on 
Spanish, legitimately because of the south border.
    But one of the gentlemen told me something very 
interesting, and I wonder whether more of each people in your 
agencies would respond if we made this adjustment. He was born 
in Quebec, spoke French as his first language, English as his 
second, but couldn't pass the State Department test because 
what they expect you to do is have a formal--be willing--you 
know, it is a different standard than you would need to have to 
talk to somebody in an engine room.
    Yet, to get the bonus pay, what a number of people have 
told me is to get those grade level pay increases by taking the 
language courses, it requires so much intense study, immersion, 
that it is just not worth the time diversion when you have a 
family. Have you heard of and do you think people would respond 
if at certain times, like now, on Middle Eastern languages, we 
had kind of somewhere in between colloquial here of basic 
words, such as anthrax, you know, point of origin, where are 
you from, there is some of that type of thing? But some kind of 
range between there and being able to be Deputy Ambassador to 
Saudi Arabia.
    Mr. Schiltgen. I guess I will start out. I think there is 
certainly a need for additional language assistance for the 
INS, and I would think for all of the agencies.
    We have on our--either by contract or on staff, 
interpreters, language specialists that we hire at a lower 
graded position, that is their job.
    Certainly individuals as we go through and we are 
addressing the issues of terrorism, issues of smuggling, 
putting together criminal cases, we need to have interpreters 
that we can trust. Our interpreters go through background 
investigations just like INS employees.
    I think with regard to the language training for the 
officers, certainly any training is beneficial. But I would 
have to think that either native or proficiency in a language 
is really critical when you are talking about some of the 
issues that we get into. And having a working language or 
working capability like maybe I do in French and Thai, 
sometimes it gets me in more trouble than it aids.
    So clearly we have a significant need.
    Mr. Souder. Comment from the Captain or Ms. Adams?
    Ms. Adams. I think there is no question that language 
capability is very, very important, and it would again be a 
perfect world if we had officers that were multilingual, that 
spoke a variety of languages. Customs does have a program where 
we pay a bonus to employees, and I believe it is 10 percent, 
but I am not sure, who have a level of proficiency in a 
particular foreign language, and who use it more than 10 
percent of the time in their work environment, and that has to 
be certified.
    Your discussion is the first I have ever heard about the 
testing being too difficult and that people don't----
    Mr. Souder. I heard it from Customs agents in the field at 
a couple of borders.
    Ms. Adams. It is the first time I have ever heard of it. I 
have certainly spent a lot of my career on the Southern border, 
a lot here, and I have never heard that. I do know that the 
demand for Farsi and some of the different dialects in the 
Asian languages has been very, very pronounced as in terms of 
we see announcements coming out on a regular basis. Do we have 
anybody who speaks this particular dialect or speaks Mandarin 
Chinese or whatever language they need. And it is--frequently 
we do those canvasses on a national level.
    But I wanted to pick up on something that Mr. Schiltgen 
just said. We work very, very hard to ensure that we have a 
diverse work force. By having a diverse work force, they do 
bring those basic language skills, if not the ability to 
communicate perfectly in writing or have the best grammar, at 
least they have some skills that enable them to survive in 
their communities. So I just--I happen to have a chart that 
talks about the work force diversity of our South Pacific 
Customs Management Center area, which includes the Los Angeles-
Long Beach seaport as well as the Los Angeles International 
Airport. Essentially 19 percent of our employees are of 
Hispanic origin, and another 14 percent of Asian and Pacific 
Islander. We try very, very hard to ensure that we have the 
demographics of our organization resemble the demographics of 
the community at large, and that has served us well.
    Similarly to the experience that INS has, though, we rely 
very heavily on interpreters perhaps from the airlines, from 
the steamship companies, if we have to get someone from the 
State Department or from a consulate perhaps. We don't stop 
because we can't speak the language. Unfortunately, that person 
or that cargo would have to be delayed until we could get the 
appropriate information.
    Ms. Millender-McDonald. Ms. Adams, what percentage of 
Latinos do you have in the U.S. Customs?
    Ms. Adams. I don't have Customs-wide figures. I am sure 
that our people----
    Ms. Millender-McDonald. You just mentioned a percentage of 
Latinos, I think.
    Ms. Adams. Here in our area, it would be Los Angeles 
Seaport and Los Angeles International Airport, 19 percent of 
our work force is Hispanic.
    Ms. Millender-McDonald. And of that 19 percent, do they 
come fully skilled for the work to be done given the 
multilanguage expertise that they have?
    Ms. Adams. Oh, no. This is just the demographics of our 
work force. If they bring the language expertise to the job, so 
much the better, and they are compensated for it if they work 
10 percent of their time at work in that language.
    Ms. Millender-McDonald. But do you utilize some of that 19 
percent to train for any security measures that you might need?
    Ms. Adams. Not specifically. It wouldn't be limited to 
those 19 percent that are of Hispanic origin. We may have 
outstanding Spanish speakers or French speakers or people with 
other language skills that are Anglo or have other backgrounds. 
My point in raising the diversity issue is it is just one way 
that we are able to help ourselves in terms of for----
    Ms. Millender-McDonald. Well, it is good business too, of 
course.
    Ms. Adams. It helps us interact effectively with the people 
that we interact with in the committee.
    Ms. Millender-McDonald. That's correct. I hope I pronounced 
your name correctly, sir, Mr. Schiltgen.
    Sir, given that when I was here right after the September 
11th, I was gathering information and data on the type of cargo 
that comes into this seaport and both seaports, Long Beach and 
Los Angeles, and I was told that there is a lot of human cargo 
that comes in here. What percentage of illegal immigrants comes 
through the seaports? Can you give me that?
    Mr. Schiltgen. Well, I really cannot give you any real hard 
and fast information on that, partially because to some extent 
we don't know. Over the last 2 years, we have, I believe, had 
18--I believe it is 18 containers where we have found--here in 
this area where we have found that were used for human 
smuggling.
    And each of those is--I am sure you very well know--are 
just horrific conditions inside of those containers after 
people have been on very long voyages. But, again, given the 
volume of the containers coming in here, I don't know that we 
have got a good indication of really what the volume is.
    Ms. Millender-McDonald. Is that something that we should be 
looking at? And perhaps if not, why not?
    Mr. Schiltgen. Well, it is something that we look at on a 
daily basis. We have got a portion of our seaport unit here 
that is focused on gathering intelligence and targeting 
containers for human smuggling. And, again, I think where we 
need to continue on with this is the interagency coordination 
and the development and the analysis of intelligence to try to 
determine which of those millions and millions of containers 
are coming in potentially carry human cargo.
    And, again the stakes are different with regard to human 
cargo. And I think it is something that we need to be very 
sensitive to.
    Ms. Millender-McDonald. I must say, and I would like to get 
with you, to perhaps see how we can best--I serve too on the 
Homeland Security Task Force, and we need to see how we can 
best integrate all of this intelligence so that you can be 
better equipped, if you will, to try to get those persons who 
are smuggling others and those who are coming in in those 
containers to get them and arrest them.
    We also need to look at what nationalities they are, 
because I am told that they are coming from far away, and to be 
able to sustain themselves inside of a container is a question 
in and of itself.
    Mr. Schiltgen. It is a remarkable process. If one should 
see the containers and the kind of the aftermath when 
individuals arrive here, somewhat primitive, somewhat 
sophisticated methods to keep the people alive through the very 
long process: The air ventilation, the water and the food 
systems that they have, batteries in the containers to run fans 
to circulate air, the waste material. You know, you can hardly 
stand close to one of those containers because of the stench 
after we find individuals in those containers.
    Just a horrific means by which, you know, the smuggling 
organizations, and the majority of the individuals that we see 
coming in here are Chinese, but just horrific conditions that 
those criminal organizations are benefiting by human cargo.
    Ms. Millender-McDonald. Absolutely. My question again to 
you, sir, is does the INS use your INSPASS card system at the 
port here, and if not, why not?
    Mr. Schiltgen. We don't use it here at the port. To the 
best of my knowledge, we do have one at LAX at the airport, and 
we use it quite extensively. I haven't heard of a use at the 
seaport of the INSPASS process. I don't know that I can answer 
why.
    Ms. Millender-McDonald. Would it not be at this heightened 
security environment that we find ourselves in, would this not 
be an appropriate time to revisit that?
    Mr. Schiltgen. It may. I am thinking back at the 
implementation of INSPASS, and the fact that it was directed 
toward frequent business--primarily business travelers, 
frequent travelers into the United States. I would have to give 
some thought as to the frequency of which individuals return to 
the United States through the seaport here. I know that we have 
crews that come back on a regular basis, but I don't know that 
the volume of individuals traveling would be sufficient to 
warrant the use of INSPASS here. It may be, but it is certainly 
something that we can look at.
    Ms. Millender-McDonald. Captain Holmes, during your time--
both you and Ms. Adams can answer this. Given the heightened 
security awareness that you are now and we are all in, and even 
the pronouncements of the Secretary of Defense Rumsfeld on 
yesterday saying that we must continue to keep this, and 
actually California is a very high target State, what is the 
impact when you have a diversion of your attention taken from 
your regular duties to perform duties at the border or 
whatever? Are we prepared to intercept any terrorist attempts 
given the position that I have now demonstrated that you might 
be in?
    You might be doing something--your diversion, as you said 
to me once when I spoke with you, that sometimes you have to 
take--you have go up to the Northern border to try to protect 
that region given the heightened security that we are now 
trying to seek in the ports.
    While you are one way or the other, do we have enough 
personnel in the event that interception of a terrorist right 
in the middle of the ports here? Do we have enough personnel to 
combat that?
    Captain Holmes. Yes, I would say that we do. What would 
suffer, as I said earlier, would be the other mission areas. I 
mean, we would--if we had to protect several areas at once, 
which we are doing right now, what happens is those resources 
are solely functioning as homeland security resources, and they 
don't do law enforcement patrols and some of the other things 
that we do.
    Ms. Millender-McDonald. Drug trafficking and those types of 
things, you will not be able to do some of that because you are 
having to go to try to protect the terrorists?
    Captain Holmes. That has been the case since the 11th. Our 
mission areas have shifted, and homeland security went from a 
No. 5 on the scale to No. 2, right behind search and rescue. So 
we have never been in a situation where we don't respond to oil 
spills or chemical spills, but there are a lot of other 
missions that the Coast Guard does, which is working with the 
fisherman, working with the State Fish and Game, anti-drug 
patrols down in the San Diego area, which we have had to 
curtail to put the resources up here in L.A. Harbor, Port 
Hueneme, which we also cover, and then we also cover near Morro 
Bay as well, the El Diablo area.
    Ms. Millender-McDonald. This is why in the committee I kept 
stressing the need for personnel enhancement and increased 
personnel at these ports, because of the diversion that 
especially you have had to do and the U.S. Customs, and yet we 
are so threatened right here that we need more personnel.
    Ms. Adams, did you want to comment on that?
    Ms. Adams. Certainly. We know that in our recent allocation 
of personnel for fiscal year 2002, a large number of those 
allocated officers will go to the Northern border. And we are 
hoping that when they complete their training at Federal Law 
Enforcement Training Center in Glynco, Georgia, and go through 
their on-the-job training that we will be able to return our 14 
officers back to our area.
    The second highest area of priority, though, in terms of 
additional staffing, we understand, after the Northern border 
we understand will be the Nation's seaports.
    And we are certainly looking forward to having the 
availability of additional personnel.
    Ms. Millender-McDonald. Thank you.
    Mr. Souder. Well, I want to thank each of you for 
participating in our hearing. If you could also convey again 
our thanks to your personnel that basically have been working 
overtime and at high stress levels, I personally do not think, 
nor does our leadership or our President think this is going to 
end shortly. They have been coming at us about every 6 months 
for 5 years on bases overseas. They have now had success on our 
domestic soil and are likely to continue to do so. And we have 
to become smarter and better and stay ahead rather than behind.
    We thank you for your work and thank your people for their 
work, and thank you for testifying today.
    Ms. Millender-McDonald. I would like to add to that, too. 
Thank you all for what you are doing to make this region and 
seaports more secure with your limited resources. Thanks.
    Mr. Souder. If the second panel could now come forward. Mr. 
Richard Steinke, Mr. Larry Keller, and Mr. Guy Fox.
    If you could remain standing, I will do the oath.
    [Witnesses sworn.]
    Mr. Souder. Let the record show that the witnesses have 
each answered in the affirmative.
    Mr. Steinke, you are recognized for 5 minutes.

STATEMENTS OF RICHARD D. STEINKE, EXECUTIVE DIRECTOR, THE PORT 
 OF LONG BEACH; LARRY KELLER, EXECUTIVE DIRECTOR, THE PORT OF 
    LOS ANGELES; AND GUY FOX, CHAIRMAN OF THE BOARD, GLOBAL 
                     TRANSPORTATION SERVICE

    Mr. Steinke. Mr. Chairman, Member Millender-McDonald, thank 
you for this opportunity to address you on port security, one 
of the most important issues of the day.
    Security has always been a paramount concern to the Port of 
Long Beach. Prior to the events of September 11, 2001, our 
focus was primarily crime prevention with an emphasis on cargo 
theft. Following the tragic terrorist attacks on the World 
Trade Center and the Pentagon, the focus of our efforts to 
protect the port and facilitate commerce and travel has been 
broadened to include prevention and response to acts of 
terrorism.
    Long before the events of September 11th we realized the 
need for maintaining the highest levels of security possible in 
the port. To that end the Port of Long Beach has proactively 
developed a port security plan to create and maintain a level 
of security that might serve as a model for the maritime 
industry.
    Over the last decade, the Port of Long Beach created a Port 
Crime and Security Committee, made up of industry stakeholders, 
terminal operators, Federal, State and local law enforcement 
agency representatives, terminal security officials. And we 
meet on an ongoing basis to discuss issues related to crime, 
safety and security.
    These meetings shape the infrastructure and open lines of 
communications among industry and law enforcement responsible 
for the safety of the people who work in the ports and the 
security of the cargo that moves through it.
    Since September 11th, we have been operating at a 
heightened security level, as has been mentioned before by 
other people who have testified. We have increased the number 
of committees and task forces to address the greater needs and 
the new charge for greater protection of our port.
    Greater security is not limited simply to the movement of 
cargo through the port. Every capital project that we undertake 
now has a new element built into it. Our plans for a new bridge 
or a pier, widening of a channel, erecting a crane all must now 
include considerations for security enhancements.
    We have recently completed a detailed security assessment 
of our waterfront facilities with the Long Beach Police 
Department and the U.S. Coast Guard and expect that the 
assessment will suggest further improvements and upgrades. 
Those refinements will require funding not heretofore 
anticipated.
    Basically what I am saying is that the new demands for 
security will require new sources of funds. Funding 
considerations also should be given to supplement the manpower 
needs of the participating Federal and local law enforcement 
agencies. We especially would like to emphasize our support for 
increased funding for the U.S. Coast Guard and the Customs 
Service.
    Approximately 35 percent of all waterborne cargo that comes 
into the United States comes through this port complex. So the 
workload of these two agencies is many times above the level 
expected of them in other ports throughout the country, once 
again an expense to be reviewed in reconsidering the status of 
our efforts to prevent and suppress acts of terrorism against 
shipping and to improve maritime security.
    It is my honor to serve as chairman of the American 
Association of Port Authorities this year, and we are on record 
in full support of greater security at all ports. Because each 
port has unique characteristics, however, control for security 
should be determined and maintained by the captain of the 
individual ports.
    The Association is aware of the funding challenges of any 
new legislation, but stresses that grant funds need to be 
adequate to allow for mandated security enhancements. According 
to the Report on Crime and Security in U.S. Seaports, the 
estimated cost of security for a model port, of which I would 
think the Port of Los Angeles and Long Beach are, ranges 
anywhere between 10 million to 38 million per port. That would 
include physical security, cargo-crew security, military 
mobilization, and contraband detection.
    Military load-out capabilities in port is a key to our 
national security, and must be kept in the forefront in any 
security decision. There are a number of other initiatives that 
could be examined in a review of seaport security issues as 
they relate to international maritime traffic into and out of 
the Port of Long Beach. Automatic identification systems that 
provide a ship's identity, position, course and speed; seafarer 
identification and background check; port of origin container 
examinations, a means of ship alerting may be items that reach 
beyond the scope of this committee.
    I would be remiss if I did not make special note of the 
exemplary job done by the Coast Guard and U.S. Customs 
following the tragic events of September 11th. They deserve 
recognition for taking the lead in exerting positive control 
over the port at a time when confidence and assurance were 
needed. The Coast Guard and Customs continue to play an 
instrumental role in our efforts to keep our people and the 
Port of Long Beach safe.
    In closing, I thank you, Mr. Chairman, and all of the 
members of the subcommittee for your interest and concern in 
seaport security issues and for choosing the Port of Long Beach 
to hold this hearing. Thank you.
    [The prepared statement of Mr. Steinke follows:]
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    Mr. Souder. Thank you very much.
    Mr. Keller.
    Mr. Keller. Thank you, Mr. Chairman, Congresswoman 
Millender-McDonald, ladies and gentlemen.
    Thank you for the opportunity to discuss the Port of Los 
Angeles and the subject of seaport security, as it relates to 
international maritime trafficking into and out of the San 
Pedro Bay ports of entry. This hearing's goal is extremely 
important to improve security, facilitate commerce and travel 
between the United States and other foreign countries of 
paramount importance to our port.
    The Port of Los Angeles is a remarkable story. In 1984, 
after the main channel was deepened, the Port of Los Angeles 
was ranked 8th in the Nation. With the help and cooperation and 
partnership of our customers, the Port of Los Angeles today in 
an environmentally responsible way handles more than 5 million 
containers in a year while creating hundreds of thousands of 
jobs.
    Last year's total of more than 5 million TEUs marked a 
national record. This growth has been particularly important 
because the rest of the Nation and the State of California 
experienced a dramatic economic downturn several times during 
that developing period.
    We are in the midst of an incredible construction activity 
as we prepare for the challenges and opportunities of the 
future. The Alameda Corridor will open in April; the first 
phase of an almost 500-acre terminal for America Sealand. As 
has been said before, 35 percent of the U.S. ocean commerce is 
moved through the two ports.
    However, the events of September 11, 2001 have shifted our 
focus from efficiency to security, while at the same time 
continuing in the throughput, which is important to our 
Nation's economy. Led by the Coast Guard and our Port Police 
force, our response was immediate as we teamed with various law 
enforcement agencies, as well as the INS, U.S. Customs and 
other Federal agencies to safeguard cargo, people, and 
property.
    Our national crisis has mandated security precautions and 
permanent changes in how we do our business. This is a new day 
with enhanced security standards for our maritime community. We 
have experienced only slight delays caused by understandable 
security measures, but commerce has continued unabated. As Dick 
said, we can't thank our Federal agencies, particularly the 
Coast Guard, INS and U.S. Customs enough for their assistance 
in making this thing happen.
    Since September 11th, the Port of Los Angeles has had in 
place 12-hour shifts for our Port Police with two patrol 
vessels on duty at any given time, increased fixed port 
security at the cruise passenger terminal, the addition of two 
explosives trained canine dogs, increased liaison with the 
Federal, State and local law enforcement officials, regular 
dive inspections of the passenger terminal and other sensitive 
areas of the port, establishment of the Joint Port Police, U.S. 
Coast Guard, Sea Marshal Program to board incoming and outgoing 
vessels, increased inspections of truck traffic, placement of 
security barriers around the perimeter of our Harbor 
Administration Building, with increased security offered to the 
port offices and support to various legislative, industrial and 
neighborhood communities on port security matters.
    I have provided you with an assessment of the costs related 
to additional Port Police, operations and equipment. The city 
of Los Angeles Major James Hahn has taken the lead in 
establishing a Port Security Task Force to look at the San 
Pedro Bay Port and evaluate new challenges and opportunities 
for providing much more secure ports. In our open society the 
challenge is to provide security yet effectively facilitate 
commerce and travel.
    Our future security needs call for increased cooperation 
and support from Federal, State and local governmental bodies 
and agencies. Mayor Hahn's Port Security Task Force is looking 
into how we can more closely monitor who and what enters our 
country through its seaports. Securing our borders and our 
seaports is vital to the protection of the United States.
    Some other areas of port security we would like to put in 
place include a portwide identification system to control 
access and positively identify users of the port, increased 
Port Police personnel and equipment to adequately deploy and 
maintain increased operation security and policing functions, 
development of systems and legislation to support the sharing 
of the passenger information, development of data bases and 
legislation to support acquisition and analysis of information 
about persons and products arriving by sea, development of 
improved public relations programs to communicate credible 
terrorist threat information to the public and to dispel 
unsubstantiated rumors, development of new technologies to 
adequately inspect more shipping containers, funding for 
improved audio and video surveillance and monitoring systems, 
creation of a secure Internet Web site for law enforcement 
agencies to act as a terrorism warning clearing house, and 
establishing a data base and central repository for 
intelligence that is currently being collected by several 
separate Federal and State agencies.
    Because of all of those factors and the new vulnerability, 
it is imperative that we must concentrate on maintaining and 
enhancing security awareness of our maritime environment. We 
also strive to encourage a more open information sharing base 
among local, State and Federal law enforcement agencies in 
order to be better prepared, to fight the new terrorism.
    Thank you very much.
    [The prepared statement of Mr. Keller follows:]
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    [GRAPHIC] [TIFF OMITTED] T4230.024
    
    Mr. Souder. Thank you.
    Mr. Fox.
    Mr. Fox. Thank you, Mr. Souder and Representative McDonald, 
ladies and gentlemen. I am honored to have been invited to 
testify here at your investigative hearing concerning the 
seaport border issues as it relates to maritime logistics that 
is being held at the Port of Long Beach on behalf of the 
international business community in southern California.
    Global Transportation Services, Inc. and Global Container 
is a company that is involved in international transportation, 
both by sea freight and air freight. We are also licensed 
customshouse brokers as well as licensed international 
freightholders. We act on behalf of commercial companies to 
move cargo from door to door to and from any point in the 
world.
    Security has always been an issue in the movement of 
international freight due to pilferage, and lately due to 
stowaways of human beings in containers. Our company has always 
taken a firm stand on the security of all cargo for our 
customers.
    However, we fully understand that under today's 
circumstances this is not business as usual. It is virtually 
impossible to inspect each and every container that moves in 
international trade. If that would happen, international 
commerce would face severe injury with delays in the supply 
chain.
    Global handles shipments from door to door, including 
placing containers at the vendor's door in China for loading, 
picking up the container, processing the export documentation, 
loading on the vessel, and shipping to the United States where 
we perform the Customs clearance and the delivery to the 
customer's door.
    In doing this, we have agent partnerships throughout Asia 
with individuals and firms that we have known and have had 
experience with over the past several years. These are 
reputable firms that are fully licensed and committed to the 
highest quality performance and ethical practices.
    Global receives a purchase order from our customers. This 
information is sent electronically to our agents for arranging 
shipment. They will call the factory; that is, the shipper, to 
coordinate the movement. If this is an unknown factory and has 
not had any shipping experience, they will visit this factory 
to make sure that everything is in order and to make sure that 
they are a legitimate supplier for commercial goods. If 
everything checks out, then shipping will be arranged.
    When a container is placed at the factory for loading, the 
loading is supervised by the management of the factory. As the 
container is loaded, the container is sealed with a specific 
container seal with a unique number on that seal. The number of 
the seal is placed on the bill of lading that is used in the 
movement of the container. Our partners are always on the 
lookout for any anomalies that may exist. If and when those 
anomalies do occur, the authorities would be notified 
immediately to check them out.
    You also have to understand that our partners are 
knowledgeable people and thoroughly understand the process, and 
anything out of the ordinary would be readily identified. 
Anything that does not look right is investigated.
    Global also has the other scenario of consolidating 
containers, which is freight that is less than a container load 
from various suppliers to various consignees in the United 
States. We again deal with known suppliers, and I have to 
emphasize that, known suppliers, factories and known consignees 
in the United States.
    Less than container loads are picked up from the factory 
and transported by truck to a container freight station where 
the goods are received and checked in. If the goods are from a 
factory that is not known, then our partners will visit the 
factory to make sure that they are a legitimate supplier. They 
again will look for any anomalies and report such anomalies to 
the authorities for investigation. They do not take any 
chances.
    The LCL cargo is then loaded into a consolidated container 
where a load plan of cargo is made. Each LCL cargo is given a 
sub-bill of lading number and is manifested on a cargo manifest 
that will go forward with a master bill of lading and the 
export documentation to the Global office in the United States.
    When those documents are received, they are immediately 
processed the same day, and our people also look for any 
anomalies. The documents are broken down by LCL shipment and 
each consignee is notified of the arrival of these goods, and a 
copy of the shipping manifest is given to U.S. Customs for 
their review. Manifests will have the name of the consignee, a 
full description of the cargo, weight, size, name of the 
shipper, and port of origin. We do this as a matter of course.
    There are some consolidators that do not follow this 
practice, and it is usually the Asian-based consolidators who 
do not understand our laws and regulations, yet we license them 
to do business in the United States and we do not have the same 
privilege in their country.
    In cases such as these, security can be compromised as they 
will take freight from any shipper to any consignee in the 
United States. I only bring this up as it is not a level 
playing field for consolidators that are an American-based 
firm.
    When the goods arrive in the United States, the 
consolidated container is moved to a CFS, which is the 
container freight station, and the CFS is a Customs-bonded 
warehouse. So the goods are under Customs custody until they 
have been cleared for delivery to the consignee. This is 
another opportunity to look for anomalies. Due to the security 
steps we have taken, we have not run into any anomalies, but we 
are ever vigilant for such anomalies if they exist. If any are 
discovered or if there is implicit feeling about any shipment, 
we would immediately notify the authorities.
    If the proper procedures are followed, this will minimize 
the possibility of any breaches in security. Nothing is 
perfect, and a certain amount of risk has to be taken in order 
to move cargo to keep trade goods flowing. Due to Customs 
procedures, Global is able to pre-file Customs entries 5 days 
prior to the arrival. All information concerning any given 
shipment is given to Customs. We understand that they have the 
resources of checking out the shippers, consignees and the 
cargo itself.
    We make sure they have all of the information in order to 
process the Customs clearance. This also gives Customs a chance 
to review everything and anything that has to do with any 
individual shipment. Security will perhaps become tighter and 
importers will still want to and need to use the just-in-time 
concept. However, we will see importers while still using JIT 
will also use a just-in-case concept.
    Importers will start warehousing more goods to have on 
hand, which will increase the cost of goods and will ultimately 
be passed on to consumers. Importers refer to this as an 
operational buffer.
    Security in today's environment is based on the knowledge 
of who you are dealing with and the faith that you have in the 
factory or individuals. Reputation of ethical practice also 
plays a large part and a role in this process. Due diligence on 
the part of the importer in the United States is absolutely 
necessary to be able to spot any inconsistencies that may 
exist.
    In southern California the international business community 
is working together very closely. This includes all of the 
international trade associations, the U.S. Coast Guard, U.S. 
Customs, Immigration, the Marine Exchange, the Vessel Tracking 
System, and many of us are or have been officers at the 
International Trade Association and are on the cutting edge of 
what is going on in our ports. We also have the opportunity to 
participate in getting the word out on security measures, and I 
would like to compliment Captain John Holmes of the U.S. Coast 
Guard, the Marine Exchange and Vessel Tracking System, and also 
Larry Keller and Dick Steinke of the Ports of Los Angeles and 
Long Beach.
    I hope this report will give you some insight on the 
process, because I think it is very important in understanding 
where security measures must take place. If you understand the 
process, then we know where to focus.
    But we need to make sure that security is absolute as much 
as it can be. If you have any further information you require 
or if there is any questions that I may answer, I will be 
available to do so.
    Thank you.
    [The prepared statement of Mr. Fox follows:]
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    Mr. Souder. Thank you, Mr. Fox. On the licensing question 
that you mentioned, some of the Asian-based consolidators, is 
that a license that goes through Customs, through the Commerce 
Department, through Transportation? Who issues the license?
    Mr. Fox. There are licenses to become a Customs broker. 
There are also licenses to become an FMC, which is a Federal 
Maritime Commission. And we issue these licenses to foreign 
companies. They may have a U.S. citizen that is the qualifying 
party. But then in many cases those individuals don't have much 
of a say.
    Mr. Souder. Mr. Steinke or Mr. Keller, are you familiar 
with what he was raising there, and is that a--how much of a 
problem is this that we may have different standards on 
overseas shippers compared to American shippers?
    Mr. Keller. Frankly, Mr. Chairman, this isn't an issue that 
rises to our level. This is something that Mr. Fox can address. 
I am not even sure that is----
    Mr. Steinke. I would agree.
    Mr. Souder. I wanted to say, too, Mr. Fox, I appreciated 
your comment about the just-in-case concept. I think that 
reflects what is happening across the board in the business 
community, not just in shipping, but in trucking and airport 
type of things. Businessmen are going to make an adjustment. 
There are hidden costs as well as overt costs to the American 
people of security.
    I don't think that changes their attitude that they want 
more security. But I don't think there has been quite a 
realistic risk assessment, cost assessment in the public mind. 
But in fact it is going on, and it is important that we get out 
in front of us so that we can really do wise risk assessment, 
what the real costs are. And I appreciate that concept, because 
in fact there are going to be slowdowns here and there. And 
that means that if your whole factory is going to shut down, or 
your store is not going to have things on the shelf if it got 
slowed down at a given point for whatever reason, you have to 
have some sort of an emergency thing.
    I have an MBA, and just-in-time inventory--I am old, that 
was kind of new coming in then, the critical path method and 
all of that kind of stuff. There is going to be those 
adjustments, and those margins are tight. So I appreciate that. 
That is the first time I ever heard a kind of public record 
acknowledgment of that, but it is a very logical change that is 
likely to occur. And obviously we are all trying to keep that 
down as a percentage.
    That, I think the next panel, I am going to focus a little 
more on the manifest question, on the goods. But could Mr. 
Fox--I am not sure whether the two port directors may have a 
comment on this too. You heard us raise it at the beginning. 
One is a people manifest for INS checking and for security, 
whether it be crew or a cruise ship passengers, but there are 
difficulties that I saw today, in just the few cases that I saw 
of manifests with specific goods being mentioned by item to be 
matched up. We require that in the trucking area. I have seen 
it on multiple borders. They match up item by item. And 
anything that looks like an anomaly is caught. But if the 
manifest is too general, then what you have is a much longer, 
much more expensive to the taxpayer, which means that we are 
either paying more to process it, which means the American 
taxpayer is paying for it, or it means that fewer points are 
being checked, or the backlog goes up, all of which are 
expenses that are borne by different parts of the public.
    Do you see that as a problem in your business and the 
people you work with as being able to provide detailed 
manifests? I would assume that, for example, I grew up in the 
furniture business. We didn't want a truck coming in that says 
you got a bunch of bedroom furniture coming in. We wanted to 
know how much dressers, how many chests, how many three-drawer 
chests and how many five-drawer chests so we could match up--as 
a kid, I helped unload the trucks. It was a family business. My 
dad said learn every part. Clean the restrooms, unload the 
truck, ride the service truck, do every part of it. Then we had 
to check off when we got each two-drawer chest and each three-
drawer chest.
    Why are we having a problem with that here?
    Mr. Fox. I think it all starts at the point of origin. You 
have to have complete descriptions of the cargo that you are 
shipping. We make sure that we have complete descriptions on 
the bills of lading. We need to have that on the manifests, 
because when we are submitting those manifests to Customs, they 
have to have complete descriptions. If there is anything out of 
the ordinary, they are going to spot it and designate those 
shipments for examination.
    While there might not be anything wrong with that shipment, 
if there is not a proper explanation, they are going to pull it 
aside to examine it, because something isn't right there. So it 
is up to our people on the other end to make sure that we have 
complete descriptions.
    Further, you know, when you are talking about description 
of goods and having to do a lot of extra work, we receive a lot 
of inbound cargo here in the Port of Los Angeles, sent inbound 
to inland points. And I think if you have just more of an 
editorial description on those cargos, and I think there is a 
bill before Congress now to put harmonized tariff numbers 
against those, that would just cause--it is really of no use. 
If you have a verbal description of that, you have got a ship's 
manifest, you certainly don't need to go to all of the trouble 
and expense to put those harmonized tariff numbers on a Customs 
inbound form.
    And I think it is up to again the people that are handling 
the door-to-door shipping to see--when we take responsibility, 
we take responsibility from the supplier's door, including the 
transportation, the Customs clearance, and delivery to the 
customer's door, whether it be here or in Chicago or 
Minneapolis, or what have you.
    So these are just some of the things that--this is why I 
say, if you understand the process of shipping and the supply 
chain, then you can understand the areas to focus on as far as 
security is concerned.
    Ms. Millender-McDonald. Mr. Fox, this is a concern that I 
have always had. When the containers are loaded at the point of 
origin, that doesn't mean that you will not have others being 
boarded at different intervals before it gets to this seaport; 
am I correct on that or once it is boarded at the point of 
origin, nothing else is disturbed, either on or off before it 
gets to the Ports of Los Angeles and Long Beach?
    Mr. Fox. When it is loaded at the supplier's door, then it 
is trucked to the port that--it is accepted and received there 
under a bill of lading number. It is on book that they know 
what they are receiving. The seal is put on the container at 
the factory. If any of those seals are busted or what have you, 
they won't put those containers on board. So nobody else is 
touching that.
    Ms. Millender-McDonald. No one else is touching it, nor--
will there be any more cargo put on that ship at any other 
point outside of the initial point of origin?
    Mr. Fox. If it is a feeder vessel, say going from China to 
Hong Kong, then it would be off-loaded there and put on a 
mother ship coming to the United States.
    Ms. Millender-McDonald. I suppose this is a concern that we 
have as to how much security is given to those various points?
    Mr. Fox. Well, that again is--the seaport security of those 
particular countries, you know, like here in the United States, 
when you have a shipment that is the transient, it is in bond, 
so it remains within the custodial area. It is not moved. And 
then when it goes on rail, it is going on the carrier's bond. 
They accept full responsibility for it.
    Ms. Millender-McDonald. Thank you. Well, yes, thank you, 
Mr. Chairman.
    Richard, you spoke of these new devices. I tell you, they 
are just great.
    You spoke of the fact in your statement that because of the 
heightened security now, it is a possibility you might have to 
do new bridges or piers, widening of a channel, erecting 
cranes. Did I hear you correctly in saying that these will be 
added types of--increased types of things you will have to do 
to secure the region, or would these be things that you would 
just ordinarily do in the improvement of the port?
    Mr. Steinke. Congresswoman, my statement was that as we are 
doing improvements to the infrastructure here at the Port of 
Long Beach, and I am sure at the Port of Los Angeles too, 
security has taken on a whole other meaning with respect to 
contracting and the construction contracts that we let.
    Contractors are being informed about security measures, you 
know, having a better sense of what they are doing, looking for 
unauthorized vehicles that might be coming to the work site, 
those types of things, which was not of paramount importance in 
previous years.
    So we have broadened our net with respect to security 
concerns, not only as far as cargo goes, but also the other 
work that takes place on a day-to-day basis here in this harbor 
complex.
    Ms. Millender-McDonald. Given all of those scenarios that 
you are talking about and the increase given the improvement as 
well as the heightened security, and your having to inform the 
many entities that are directly involved in that, be it the 
contractors or construction folks, are you also keeping in 
touch with your Chambers of Commerce in the region to let them 
know, because a lot of this might spill out over a cost factor 
to them, given the increase in what you will have to do to 
secure the ports?
    Mr. Steinke. Congresswoman, as Mr. Keller said, there is a 
public relations element to the whole security issues, making 
sure that the public is informed. I know that we have been 
working very closely with the Long Beach Police, and they have 
been working with the Chamber of Commerce so that they can 
inform business members and the community in general about 
measures that they may see or that may be taking place. Added 
security in certain locations, as was testified earlier, there 
were some concerns about the safety of bridges in California. 
And that needs to be communicated to the general public and 
businesses around the port as to what is taking place so that 
there is not any undue concern when they see a heightened 
security presence.
    Ms. Millender-McDonald. Speaking of bridges, Larry, let me 
first thank all of you for being here. I suppose I just wanted 
to go right into the questions here. But let me thank you for 
the work that you do in providing our Nation as well as the 
people who work at and around this place, close to our maritime 
centers, the type of, I guess, satisfaction that they have. 
They really do depend upon you guys, your expertise, your 
ability to move quickly at the sight of any problems. And so I 
really want to personally thank all of you for the work that 
you do here while some of us are back in Washington trying to 
bring the bacon in to you.
    But the information sharing, Larry, that has been a concern 
that we have had since September 11th, that a lot of the 
agencies were not integrating their intelligence whereby one 
did not particularly know what the other was doing. Given the 
September 11th, how much information sharing are you now 
getting from the Federal agencies, you know, the CIA, FBI and 
others?
    Mr. Keller. We believe that as a part of the task force 
there has been vast improvement. As Captain Holmes said, when 
the Port Security Task Force came out about a year and a half 
ago, many things were pointed out. At that time, this port 
community, which is a particularly active one, a real 
partnership with the ports, the shipping companies, the freight 
forwarders, the security agencies began looking at those 
things. And what we found is we didn't know too much.
    And leading up to September 11th----
    Ms. Millender-McDonald. Neither did we.
    Mr. Keller. But leading up to September 11th there was a 
lot of work that was done, particularly between the Coast 
Guard, INS, Customs, and then with FBI and some other more 
arcane Federal agencies where this information sharing began 
taking place. Starting on September 11th, as a result of the 
work that has been done before, all of the parties came 
together. And as Captain Holmes said, the initial response was 
to stop each ship and anchor it outside of the port, go on 
board, check the documents, make sure that in fact the captain 
and the crew were who they said that they were, and that they 
were in fact in charge of this ship.
    And we had those delays in the first week or so. And those 
delays are something that frankly, while they made sense from a 
security point of view, aren't something that we can sustain as 
a trading society. We have grown prosperous over the efficiency 
that we have built in, the logistics efficiency that we have 
built in.
    Following that, however, as this information sharing got 
better and better, what then happened was that INS, Customs, 
Coast Guard were feeding information back and forth. And Coast 
Guard was, for instance, requiring earlier and earlier 
notification calls in from the ships as to who was on board, 
what the manifests were, and that information was then shared 
out to the agencies and came back essentially a clearance to 
allow a vessel in without anchoring, or to anchor the vessel 
out far enough where it could do no harm until such time as the 
individuals and the cargo manifests were checked.
    So information has made this whole thing work. I am going 
to guess that we can always do a better job. One of the things 
that I have said, and it is a little out of my purview, but I 
don't think so, is that I would like to see the Congress and 
the Senate fully fund the ACE computer system, that is the 
Automated Customs Environment system, which has been requested 
to be replaced for about the last 5 years. And while our 
Legislature and the President have put in 100 million and 200 
million here and there, this is about a $1.2 billion project. 
And the type of information that it affords in profiling, if 
not in specific, and these were some of the things that you 
were discussing with Mr. Fox, allows Customs and the other 
agencies to make a decision as to whether they are dealing with 
a reputable known party who has patterns of integrity or 
someone who is just trying to slip something through. And those 
type of enhancements frankly are--and this information sharing 
that you have referred to, Congresswoman, are what allowed 
Congress to move.
    When we speak to our railroad brethren, they talk about 
velocity. When that velocity slows and you are moving 9 million 
containers as we through these two ports, someone is going to 
hurt. Some factory is going to slow down. Some retail store is 
going to run out of materials. And while the buffer stocks are 
probably something that should be better considered, the fact 
is that our standard of living and the efficiencies at which 
transportation and retailing and manufacturing are done have 
delivered a remarkable economy in the way we do business, and 
it has given a remarkable economy to our citizens.
    Ms. Millender-McDonald. You are absolutely right. This is 
why it is critical for folks to recognize the importance of 
those ports and how they do transport cargo and if, in fact, it 
has to be held in abeyance because of some manifest and we 
cannot get the goods in here and sent across the Nation, then 
it is absolutely a--it will be a hinderance and a disaster in 
my view.
    Let my say a couple of things. I see the--I hate to see 
this device. I thought we only saw it in committee in 
Washington. But let me see that permanent change costs. I need 
to get some assessment of that, a list of that. I think you 
spoke about a cost that will now be permanent given the 
heightened security that you have.
    The portwide identification system and the control access 
and positive identification, if you can speak on that perhaps 
at the time maybe the chairman comes back in to raise 
questions. But I will say that we understand that there is 
going to be a cost because of the heightened security. Now 
permanent things that you are going to have to put in place. I 
need to know this for one of the Congress folks who represent 
you down here, along with the one who really actually 
represents the port; that is, Congressman Rohrabacher. We would 
like to have that so we can best understand what we are going 
after as we go back to fight on your behalf.
    I would like to have you look at the bill that I have, and 
you too, my friend, Mr. Chairman, the threat assessment bill 
that I have that looks at the clear--the threat assessment of 
all transportation so that we can get a better understanding of 
what we need, the type of funding that is needed, and the 
critical aspects of those threats. And so I have that bill 
pending. I have talked with the Secretary, and I have talked 
with some of the administration folks about it. And so that 
will help us in really getting some idea of the costs that will 
be imposed, permanent costs, given the heightened security that 
we are asking for.
    Mr. Fox. I would like to, if I may, emphatically second 
what Larry Keller had to say about the Customs, so that is it 
on the record, because it is really a critical part of our new 
environment.
    Ms. Millender-McDonald. Thank you.
    Mr. Souder. Currently intelligence and the ability to share 
information is going to be the critical component, because we 
can't chase everything.
    I, too, want to thank the port directors for your--I mean 
it is amazing to see the size and scale of what you are doing 
here and the expansion with it. It is clearly important to our 
trade. I was intrigued by one of statements from Mr. Steinke, 
and I--just because I am not familiar enough with ports.
    You said because each port has unique characteristics, 
control for security should be determined and maintained by the 
captain of the individual ports. As opposed to what we are 
doing now?
    Mr. Steinke. Mr. Chairman, I think it is important to note 
that unlike airports, individual ports have multiple points of 
entry. As you go through an airport, you have an individual 
concourse that can be controlled at a certain point. I think 
Captain Holmes and other people in the profession would agree 
with me when they say that here in the Port Complex of L.A.-
Long Beach, you can probably get in landside 15 or 20 different 
ways, and waterside, you know, multiple ways. We have 46 
terminals that was mentioned before. And so I think the 
security plan that would be endorsed and approved should be 
done on a localized basis as opposed to a cookie cutter 
approach that would say that Port Hueneme in Ventura County 
should be looked at the same way that the Port of Long Beach-
Los Angeles should be looked at, the same way that San Diego 
should be looked at.
    Each has a unique need. Each has a different control point, 
and the captain of the port should be working with the port 
authorities on a local basis to approve a plan that fits the 
right size of the individual port.
    Mr. Souder. Do you and your association sense that this 
isn't happening?
    Mr. Steinke. No. I think it was one of the concerns 
expressed by the association early on as to some pending 
legislation that said there would be mandated requirements for 
each and every port, and those mandated requirements may not 
apply to a bulk dock that is dealing with coal or petroleum 
coke or some kind of aggregate versus a container terminal that 
has very specific requirements and controls on those types of 
things.
    So we wanted to make sure that those differences were 
recognized in any legislation that was passed. I think that the 
Hollings bill reflects that.
    Ms. Millender-McDonald. The Hollings bill is the bill that 
reflects that?
    Mr. Steinke. The Senate bill was revised to reflect that.
    Ms. Millender-McDonald. The companion bill is--
Representative Brown out of Florida has the companion bill to 
that in the House.
    Mr. Souder. You also made a reference to the AIS--I think 
that is the Shaw. Since we are in the majority, it will move in 
the House under a Republican name. But Ms. Brown is certainly a 
key player.
    The AIS system, in your statement you described some of 
what that is. Is there anything else you want to add to that? 
One of the things you said is it may be beyond the scope of 
this committee. One of the things that frustrates this 
committee is hardly anything is beyond our scope, because we 
have commerce and the others. I just wanted to make sure 
because some of this we are backing into areas to get at what 
we are doing here. We are saying, oh, well, just like on INS, 
when we go to the embassies overseas, what we are learning is a 
lot of the preclearances who we are clearing at the embassies 
or who we are rejecting at the embassies, garbage in, garbage 
out, in the sense of background checks. And often it is 
Congressmen beating on them to clear somebody, and they clear 
somebody and then we have got them in our system and they are 
cleared. They are not even illegal, they are legal because some 
constituent called us and we said, hey, we have got someone who 
is a friend of someone who lives in my district in Pakistan, 
who is from Pakistan. Similar on some of the trade things, as 
we move to the points of origin, not only on our close borders 
but elsewhere.
    Did you have anything that you wanted to add to that 
comment?
    Mr. Steinke. Well, Mr. Chairman, I think the AIS system, as 
I understand, it is basically for cruise mariners, and I think 
it is something that the Maritime Administration is working on. 
I would see that would be a stepping stone toward a broader 
identification system. And I know there has been some talk 
about advocating a national transportation identification 
system, where all transportation workers would have some kind 
of a system. So the AIS is a stepping stone toward that 
process.
    Mr. Souder. For individuals, basically much like a 
variation of this Fast Pass stuff that you have on workers.
    You heard me commenting in the last panel regarding the 
inability of Customs to do more detailed taking apart of--kind 
of the second tier of investigation at the actual ports. That 
is a subject in both of your ports. I know the arguments can go 
both directions; in other words, what comes in here goes all 
over the country, we all have a stake, and the money comes from 
Los Angeles to Washington. In the first place it is not 
Washington's money, it is money that stays here. But we are 
putting a lot of Federal dollars in here as well.
    And do you think this can be worked out? I mean, it is 
inconceivable to me that it is 15 miles. It is even 
inconceivable that it would be several miles. As I said, at 
most places we are concerned about it going--vehicles going 
around a corner from the site once they have been identified as 
a potential risk.
    What do we need to do to make this happen?
    Mr. Keller. Perhaps I could answer that. We are in a new 
reality. I mean, years ago each of our terminals had warehouses 
onsite because we were handling non-containerized cargo. So 
this would have been easy. As we have redeveloped our 
facilities, those have disappeared, and you only have to look 
at the old photos and the new photos to see how much that has 
been the case.
    But for efficiency's sake, as I think Customs has stated, 
you know, they have chosen sites for their physical 
characteristics to handle a mass of containers, both for 
storage and for individual inspection for a variety of reasons.
    It is not unreasonable to assume that there probably are 
some facilities that are closer. That is not going to be on 
each terminal, I don't imagine. Some terminals do have what we 
call tailgate facilities where they can actually examine the 
tailgate of the container. While they may not have space to 
unload the whole container at that site if there were something 
suspect inside it, it would give the ability to do that.
    The other thing that comes to mind, just as I was listening 
to the conversation is that Customs recently moved, and GSA has 
put up their property for sale, which is right on Terminal 
Island, and that is very, very central to both ports and could 
possibly give a site, in a limited space environment, where 
this might be possible.
    But again, I can't help but agree with you. 15 miles is 
clearly too far if you have a container threat of some kind, 
particularly if there is a public health threat of any kind 
involved. The last thing you would want to do is drag it 
through neighborhoods.
    Ms. Millender-McDonald. Given the quadrupling of containers 
coming after the dredging has taken place, the spot that you 
have just identified as an interim place for the container 
inspection would not be adequate at all. Then is there anything 
else that we would have on a larger scale for the container 
ships--for the containers that we will have given the large 
volume that we are expecting?
    Mr. Keller. Well, we certainly have a large volume of 
containers. There has to be a differentiation, Congresswoman, 
between the inspection of suspect containers which probably at 
this point is best done by some of the portable equipment that 
Customs has acquired, the gamma ray equipment as opposed to the 
solid almost bunker type equipment that works at the border, 
because the trucks are streamed through, and at any given time 
you can--you have power to take them through a fixed facility.
    But in an identified threat, after that has been done, I am 
going to guess that you are probably talking a very, very small 
number of containers. Not 15 or 20, but say one container that 
sets off a geiger counter or some other sniffing devices that 
would show that there is a biologic or something inside that 
would be threatening. In that case I think a small central 
facility probably would suffice.
    Ms. Millender-McDonald. We are speaking about--while there 
will be quadrupling of the containers, We are speaking about a 
small percent of those that really will need to be further 
examined in this place?
    Mr. Keller. I think so. The quadrupling or the doubling 
over the next 20 years from our 9 to 20 million is going to be 
occasioned by the growth in trade and manufacturing and 
consumption. The bad guys only have to send one in to give us a 
really bad day.
    Mr. Souder. It is going to take more than an acre. I am not 
arguing that site--in fact I have similar questions about that 
site. But it is going to take multiple acres. Secondary is the 
most critical. Secondary is where the stakes really go up. It 
isn't the first part where they go through on the border where 
they are scanning them, it is when they send them over to 
secondary to take it apart, to send guys in. That is when all 
of the danger occurs. If there is a shooting, that is where it 
is going to be. If there is bribery, that is when it is going 
to be. If there is an explosion, that is when it is going to 
be. If there are people who are going to flee, that is when it 
is going to be, because it means that we have identified them 
beyond the first part, and that part of the cooperation is the 
Federal Government is going to invest more, but there is going 
to have to be investments by the local ports, the local city, 
the local business people.
    And let me--I know we need to get to the third panel, and I 
want to raise this, this point which I am going to reiterate on 
the third panel. They can hear it on this one, too.
    One of the things my home city does is a lot of 
reinsurance. We have lots of major companies there in 
reinsurance. And security and terrorism have become a huge 
question in the insurance industry as to whether anybody is 
going to be able to afford insurance any more. One of the 
things is that those who don't, who have additional 
vulnerabilities, are going to either pay premium rates on 
insurance or get no insurance, and that is just the bottom 
line.
    Most of these companies right now are opting out of any 
terrorism insurance and asking the Federal Government to pick 
it up. Some are looking at the risk and the cost to business, 
much like what happened to doctors, when they couldn't get 
catastrophic coverage, individuals, it is incredible. We have 
to figure out how to do this. And the businesses that--whether 
they are cruise lines or ports or whoever who become more 
difficult targets are going to have a competitive edge. It 
isn't just that there is a cost of security, it is going to 
become a competitive edge, in your rates and insurance, in 
whether people take your cruise or not your cruise, your 
airlines or not your airlines, because for the business side, 
you will be able to get insurance probably at a cheaper rate 
and people haven't done it, and from the advertising side, for 
clients who want to use you, it is a different market.
    Instead of security being a liability, all of a sudden 
having better secondary facilities, being able to say--it is 
almost like a Good Housekeeping Seal that what is coming 
through here has an advantage over other ports, and a bad 
housekeeping seal if you don't have it. It is a different 
commercial reality that is just kind of dawning on everybody in 
the business area, and insurance is going to be one of our huge 
first tests that can just bust the bank, like it is happening 
in medicine, if we are not careful where you are going if you 
get hit and don't have insurance.
    So those are new dynamics, and I wanted to make sure I 
raised that because these issues are important. Anything any of 
you want to add before we conclude, or do you have any 
additional?
    Ms. Millender-McDonald. No. I just want to thank them and 
want to continue to work with them so that we can make sure 
that you have what you need for the safety of our folks and the 
work that you are doing and the businesses here. Please, stick 
with me, and of course Dana Rohrabacher and I will be working 
together with you.
    Mr. Souder. I wanted to make one final plug that is 
security, but also a historic landmark. You have got some great 
lift bridges. I know the Coast Guard was arguing that they are 
part of their secondary emergency route, but I hope you can 
preserve those. I know there is a push to be efficient, and we 
are doing that all over America. But as somebody who really 
appreciates historic landmark opportunities, it is a vital part 
of your community if you can figure out how to make it work 
commercially.
    Ms. Millender-McDonald. Funding from the Federal 
Government, Mr. Chairman.
    Mr. Souder. You can tell which party she is from.
    Can the third panel please come forward? Mr. Winter, Mr. 
Heck, Captain Wright, Mr. Cisneros.
    [Witnesses sworn.]
    Mr. Souder. Let the record show that each of the witnesses 
responded in the affirmative.
    And Mr. Winter, you are first. Thank you for coming.

    STATEMENTS OF JAY WINTER, EXECUTIVE DIRECTOR, STEAMSHIP 
  ASSOCIATION OF SOUTHERN CALIFORNIA; DENNIS HECK, CORPORATE 
IMPORT COMPLIANCE AND PURCHASING MANAGER, YAMAHA CORPORATION OF 
AMERICA; CAPTAIN BILL WRIGHT, SENIOR VICE PRESIDENT FOR SAFETY 
   AND THE ENVIRONMENT, ROYAL CARIBBEAN AND CELEBRITY CRUISE 
 LINES; AND MOISES CISNEROS, LEGISLATIVE MANAGER, LOS ANGELES 
                      CHAMBER OF COMMERCE

    Mr. Winter. Good afternoon. Chairman Souder, Congresswoman 
Millender, it is always wonderful to have you back in the 
district.
    Chairman Souder, we are honored to have you spend the time 
and take the time and the interest to look at our seaports, 
which we feel very strongly are a very unique part of southern 
California, and frankly a very important part, I think as you 
are learning, of not only California as a whole, but the 
Nation.
    The Steamship Association is made up of the shipowners, 
operators that provide deep sea ocean transport service to 
southern California's ports in San Pedro Bay. Our members also 
include the pier operators and stevedoring companies that 
provide service in this harbor.
    Primarily, the focus of our membership is the liner-
container trades that serve us here. I want to say every one of 
the major container carriers that comes into Los Angeles-Long 
Beach is a member of our organization. Frankly, we are rather 
small. There is only about 45, and of those, the container 
carriers, the major container carriers run probably 25. So the 
industry, frankly, in terms of numbers isn't quite as large as 
people often think.
    I always like to mention, and I think I did when I spoke 
with Mr. Rendon on the telephone, frequently people, when 
talking about our industry, tend to confuse the vocabulary and 
refer to us as shippers. We are not the shippers, we are the 
ocean carriers. The shippers are our customers, the people who 
tender freight and merchandise to us to transport.
    Since September 11th, our members have had quite a 
revelation here, and I think it is appropriate Larry Keller and 
Dick Steinke certainly and Guy Fox mentioned that the role of 
the Coast Guard and the Customs in particular and the other 
agencies played. They stepped right up and provided the 
leadership necessary, frankly, to keep our members and this 
port and the community and the economy moving on a very smooth 
basis.
    You mentioned the delays we had right at the beginning. I 
think those were worked out very quickly, and we have found 
ways to operate. Because of the global nature of the ship 
operating business, we have seen security all over the world.
    In the United States, it is frankly somewhat new to us. In 
other parts of the world we have to deal with pirates, we have 
to deal with gangs that come aboard the ships and steal and 
murder crew, and so forth. So we have always thought of the 
United States, I think like the rest of us, as a safe haven. 
Today of course these things have changed.
    In our business here in Los Angeles-Long Beach, and I think 
throughout the United States, and I don't want to speak for the 
United States, but primarily here, what happens on the line 
side of our operations I think is our primary concern.
    The shipowners that have just mammoth investments today are 
very responsible, conscious business people. But we come into 
seaports, and particularly I think here, West Coast and 
California in particular, we have always had a rather open 
feeling about our ports and anybody who wanted to could 
basically come in. As a result, we think it is very important, 
other people have mentioned also, that there be developed a 
standardized ID system for all port laborers, truck drivers, 
what have you, that want access to our facilities.
    Those IDs and standardized system of checking the people 
should include a reasonable background check. We don't have to 
go back to their childhood, and so forth, but I think we need 
to have a good idea who the people are that are having access 
to these vital assets that we have here in the harbor.
    We think also that random drug testing should become an 
important part for people who provide service in the harbor, 
whether it is truck drivers--most of the truck drivers already 
do. Some of our other port workers today don't. Most parts of 
the transportation industry require some type of random drug 
testing, and I think that would be appropriate given today's 
circumstances that be included.
    The trucks that pick up the containers and deliver them in 
the harbor. The system that we should be working with them, 
because it is a constant flow, needs to be a real-time system. 
By that, we don't want to have systems where the information is 
put in, it stays in there 5 years and nobody ever updates it. 
You have to have a system that ties into the other law 
enforcement agencies. So if, say, an outside person that's 
coming into the harbor has created a felony since their 
identification went into the system, they are flagged, they get 
a new no-entry type of process.
    Above all, we think that we have to be sure that we come up 
with essentially one system that is going to work. As you know, 
there has been a lot of concern, different agencies, levels of 
government, everybody is pushing for it. Let's not--let's put 
all of our energies into one system and make sure that we get 
one that works.
    Cargo security and the flow of commerce here. I think 
Customs has certainly touched on it, everybody has touched on 
it. It is very important with the volumes that we deal with 
here to use sound risk management approaches to security.
    An absolutely crucial item that Larry Keller mentioned was 
updating of the computers that the Customs Service uses. As 
good as they are, and I think the people that work with the 
port will tell you that Customs has better information than 
most people give them credit for today. But those systems are 
still outmoded. The Customs folks that are here, Eileen, you 
can correct me if I'm wrong, I wanted to say the system that is 
still in place, the old ACS system, does not connect directly 
with the ocean manifest that we are using. We provide Customs 
with electronic manifest information, and that information has 
to be essentially hand input to the rest of the system.
    That is where the Automated Commercial Environment System 
that we started to get funding is very crucial. We have to have 
a system that ties it all together.
    I think now on the Customs issue, I think Audrey Adams was 
being kind. We are terribly understaffed here. If you look at 
our manpower relative to the Port of New York, which is less 
than half of our size, New York has more people than we do in 
the Customs Service. I mean it is appalling. As you know, the 
East Coast of course is where this country was born, and I 
think a lot of manning and staffing of the government agencies 
still reflect that mentality. We have never moved west where 
the growth is. It is very important that Customs and probably 
Coast Guard--frankly, I don't know the Coast Guard numbers 
compared to those others areas, but I would guess that we are 
lower.
    Another item I always like to touch on, too, is TEUs, 20-
foot equivalent units. My apologies to Mr. Steinke and Mr. 
Keller. They like to talk in TEUs because those are big 
numbers. It is like we like to say in oil pollution, people 
like to talk in gallons rather than barrels and tons because 
they are a bigger numbers. When we talk TEUs, bear in mind that 
approximately 75 percent of the containers that come into this 
area are 40-foot containers. So if you translate it back, we 
are handling really total container volume somewhere in the 
neighborhood of 5\1/2\ to 6 million containers that come 
through this port, import and export.
    On the import side alone, it is somewhere in the 
neighborhoods of 3.2 million containers. And again nobody, I 
don't think we have a hard number, but a good working figure is 
that 75 percent of our containers are 40-footers.
    This means though when we hear people talking about 
increasing the examination of containers here, that is still on 
the import side over 31,000 containers someone has to look at. 
There's seaports in the United States that aren't handling that 
many in a year. The volumes here are significant. That is where 
risk management and new technology becomes critical. We just 
cannot start to do the job of looking at the risk cargo, not 
the everyday cargo, not the Mattell, the Barbie dolls, not the 
Nikes, the Dell computers, the Toyota components. We have got 
to do a better job of identifying the people we don't know and 
that pose the risk.
    As you may have seen on the border down at Otay Mesa and 
San Ysidro, they worked down there with the manufacturers and 
the maquiladoras to develop essentially a Good Housekeeping 
Seal of Approval for those manufacturers that have good 
procedures in place. We think with effort, the same type of 
procedures and recognition can be adopted for the overseas 
cargo that comes into this area.
    You have mentioned the price tag. And some day it is--we 
are all going to have to reckon up to it and figure out what 
this is costing, And this is where good management and good 
risk management is going to play a role.
    I wanted to thank you for the opportunity to address you. 
In addition, I would like to leave with you, if you haven't 
seen by chance the World Shipping Council, which is really our 
master organization for container and liner trades in the 
United States, their position and their position paper that 
they have used in the Senate with the Hollings bill. I will 
leave copies of that here.
    Thank you again.
    [The prepared statement of Mr. Winter follows:]
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    Mr. Souder. Thank you. We will look to at least take the 
summary recommendation and put that in the record if we can.
    Mr. Heck.
    Mr. Heck. Yes, Representative McDonald and Mr. Souder, I 
really appreciate this opportunity to address your committee 
about seaport security from the perspective of a medium size 
importer. Now I am maybe one of the smaller fish in the supply 
chain, but I want to just give you some perspective from a 
company that imports maybe 3,300 of these 40-foot containers.
    My name is Dennis Heck, and I am the corporate manager for 
purchasing and compliance for Yamaha Corp. My primary 
responsibilities are purchasing inbound logistics, Customs 
clearance and compliance for our shipments out of Asia and 
Europe and Canada.
    Each year, Yamaha imports approximately 3,300 of those 40-
foot containers containing our pianos, musical instruments, 
components and things like that to our corporate headquarters 
here in the Los Angeles area, and the parts to our factory, our 
musical instrument factory in Grand Rapids, Michigan, and our 
piano and speaker factory in Thomaston, Georgia. Some of these 
parts also end up at an OEM musical case factory in Elkhart, 
Indiana.
    You can see that our shipments are not only important for 
our U.S. sales efforts, but for the continuation of our 
assembly lines and for the safety and employment of our valued 
U.S. factory workers and support staff.
    I am glad to report that since September 11th Yamaha has 
not experienced any appreciable delays in clearing Customs or 
in picking up and delivering these containers to our 
warehouses. Part of that I feel is due to my close working 
relationship with U.S. Customs.
    Virtually all of Yamaha's purchases and shipments are 
related party transactions from our parent company in Japan or 
from Yamaha factories throughout Asia. Since the majority of 
the containers for these shipments are stuffed and sealed at 
our factory door, we feel reasonably comfortable as to the 
security and safety of these shipments from the foreign origin 
to U.S. destinations.
    The few unrelated transactions that we purchase from non-
Yamaha suppliers are further controlled by requiring the use of 
our U.S. Customs broker's freight forwarding divisions in the 
foreign ports of departure. Since September 11th we have 
implemented a procedure that, as a condition of purchase, our 
purchase orders to unrelated foreign suppliers state they must 
surrender their shipments and documents to our selected freight 
forwarder in the foreign countries. Our U.S.-based freight 
forwarder and his foreign office will then be responsible for 
coordinating the export to the United States.
    This process, we feel, increases the security of our 
shipments and dramatically reduces the chance of introducing 
unwanted problems into our supply chain.
    I have several proposals that I would like to discuss. 
Since September 11th there has been a flurry of activity by 
many Federal agencies to address the security of our Nation. We 
are concerned that, unlike Customs, most other Federal agencies 
may be preparing their respective initiatives without input 
from the trade and without a coordinating lead agency.
    It would seem appropriate for U.S. Customs to be given this 
task since they have the expertise in handling and inspecting 
passengers and cargo. In addition, Customs should be given 
priority funding to ensure expedited implementation of their 
new ACE system to assist them in their enforcement functions 
and to ensure faster clearance of imported products in the 
future.
    In an effort to tighten security at the ports, I am hopeful 
that background checks and identification be required of all 
employees in and around our air and seaports. This should at 
least include crew members, dock workers and trucking 
companies.
    Since almost half of my 25 years in the international trade 
arena was spent with U.S. Customs, I must admit that I am a bit 
biased in my support of their endeavors. However, Customs 
recently has linked--proposed linking commercial compliance to 
supply chain security. These are two separate issues of 
international trade that I feel should not be linked.
    For example, the related party aspect of commercial 
compliance is one issue that must be overcome by an importer to 
qualify as a low-risk importer. But, on the other hand, supply 
chain security in a related party shipment should be considered 
a low risk importation. Consequently, I urge Customs not to 
link commercial compliance and supply chain security, since I 
feel it would be very difficult for more importers to qualify 
as a low risk importer under these two buckets.
    Thank you again for giving me this opportunity to speak 
with you.
    [The prepared statement of Mr. Heck follows:]
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    Mr. Souder. You still have a little bit of time on your 5 
minutes. Because I am not familiar with the term, could you 
explain what exactly you mean by the related party? You mean, 
like a parent company, a co-shipper?
    Mr. Heck. Exactly. Related party transaction in Customs 
lingo means that there is a relationship between the parent and 
the subsidiary. That is what the transaction is.
    Mr. Souder. Captain Wright.
    Captain Wright. Good afternoon, Mr. Chairman, and 
Representative Millender-McDonald. My name is Captain Bill 
Wright. I am the Senior Vice President for Safety and 
Environment for Royal Caribbean Cruises, Ltd., comprised of two 
brands, Royal Caribbean International and Celebrity Cruises.
    An additional responsibility of my position requires that I 
continue to sail regularly as a Master on Royal Caribbean 
ships.
    I am pleased to appear before you today regarding security 
at our Nation's seaports, particularly in the Port of Los 
Angeles and Long Beach. I am here not only to testify on behalf 
of my company, but also our industry, our trade association, 
the International Council of Cruise Lines.
    Mr. Chairman, I have written testimony that with your 
permission I would like to submit for the record and summarize 
in an oral statement. The International Council of Cruise Lines 
is a North American industry trade association representing 16 
of the largest cruise vessel operators.
    Last year ICCL members carried over 7 million passenger on 
over 90 ships calling at ports around the world. The majority 
of those passengers were carried out of U.S. ports, and the 
majority of those from the Port of Miami and Port Everglades 
and Ft. Lauderdale.
    Mr. Chairman, before September 11th, passenger ships 
calling on U.S. ports and U.S. terminals were required to 
maintain comprehensive security plans that are acceptable to 
the U.S. Coast Guard.
    ICCL worked closely with the Coast Guard a number of years 
ago to provide a security plan template for use by our members 
to assure that each of these plans contains the required 
information in a similar format to ensure consistency and 
thoroughness.
    Because these plans and the industry's existing security 
posture, this industry was able to immediately increase its 
security measures to the highest level immediately after the 
tragic attack on our country on September 11th.
    In addition, ICCL initiated daily telephone conference 
calls between cruise companies' security and operations 
managers and government agencies. Participants included the 
Coast Guard Atlantic Area Command, Coast Guard Pacific Area 
Command, Coast Guard Headquarters, Coast Guard Marine Safety 
Offices, Department of Transportation, U.S. Immigration and 
Naturalization Service and other agency representatives as 
needed.
    Again the purpose was to harmonize actions around the 
country, facilitate the ship relocations when the Port of New 
York was closed to cruise ships, identify best practices for 
use by everyone, to share information, control rumors, and to 
standardize requirements and procedures.
    Each ICCL member line has officers at my level who are at 
the front line of these conference calls and who are the front 
line facilitators responsible for stepping up security, 
relocating ships to alternative ports and ensuring the 
consistent safety and security of our passengers, not only here 
but around the world.
    Mr. Chairman, I have mentioned harmonization and 
consistency several times now. These elements are absolutely 
critical to the success of all efforts addressing terminal, 
ship, passenger and cruise security.
    We are currently working with the Coast Guard at several 
levels to identify and implement a long-term security posture 
that is not only high but also sustainable, one that is 
flexible enough to meet the demands of each of the unique ports 
that we visit, either as turn-around ports or as ports of call.
    Because our members trade worldwide, it is important to 
assure that appropriate and adequate security is provided at 
each port of call in whichever country we visit. To assist in 
obtaining consistency around the world, ICCL has recently sent 
to all Caribbean states urging a review and a timely upgrade of 
security at these ports.
    We have and will continue to participate fully in the U.S. 
Coast Guard initiative at the International Maritime 
Organization to develop worldwide security regulations and 
guidelines.
    Mr. Chairman, ICCL members continue to operate at the 
highest level of security. The visible measures that passengers 
will see actually exceed those at airports. Not only are 
passengers and hand-held items screened by x-ray and 
magnetometers, all baggage, 100 percent, is screened by x-ray, 
hand searches, explosive sniffing dogs or other methods.
    All stores coming on board are screened and all personnel 
passengers, crew and visitors are thoroughly identified and 
vetted before boarding. Passenger lists with pertinent 
information are provided to the Coast Guard, Customs and INS at 
least 96 hours in advance of sailing for their screening.
    Key side terminal and waterside security, where necessary, 
is coordinated with the Coast Guard and other Federal, State, 
and local authorities. At this time I would like to applaud the 
support and close cooperation that our industry has received 
form the three Federal agencies represented here today. The 
benefits derived from our longstanding relationships with these 
agencies in responding to the events of September 11th is one 
of the real success stories of the last 5 months.
    Mr. Chairman, a lot has been accomplished since September 
11th. However, our task is by no means over. Let us assure you 
that ICCL and its cruise line members will be at the forefront 
of these activities, development and implementation of 
technology and striving in partnership with responsible 
agencies to assure that cruising remains a safe and secure 
vacation option.
    Thank you, Mr. Chairman. I would be pleased to answer any 
questions you may have.
    [The prepared statement of Captain Wright follows:]
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    Mr. Souder. Thank you very much. Mr. Cisneros, you get to 
bat clean-up.
    Mr. Cisneros. Good afternoon, Chairman Souder, 
Representative Millender-McDonald. It is a pleasure for me to 
be here and speak on behalf of the Los Angeles Area Chamber of 
Commerce, where I serve as the International Trade Manager. We 
are the largest Chamber in the Los Angeles region, speaking for 
companies who employ over 750,000 individuals.
    First off, I would like to mention that we are in awe and 
admiration of the diligence and hard work that we have 
witnessed in the southern California international trade 
community. They have strived to efficiently balance two very 
important issues, which is the timely delivery of goods and the 
heightened security risks.
    And as some several speakers mentioned before me, one-third 
of all containers entering the United States passes through the 
Ports of Los Angeles-Long Beach complex. Any outgoing hub in 
the transportation shake here would adversely affect local 
economies throughout the United States.
    We are keenly aware that international commerce has played 
a dramatic role in the shaping of Los Angeles' business 
landscape. In fact, one out of seven jobs in California is 
directly related to international trade.
    International trade affects so many different industries in 
southern California that any impediment to international 
commerce would have a detrimental effect on all of our 
economies.
    September 11th has made all of us reevaluate everything 
that we do. Security and vigilance has increased. The U.S. 
Coast Guard took immediate action when they improved the way 
that they identified vessels, cargo, how they identified the 
ports from where these vessels are coming from, and where they 
are going to.
    Now the Coast Guard, Customs, Immigration or the FDA board 
all incoming ships before they actually reach their berth. The 
idea of all crew and passenger lists aboard cruise ships are 
closely scrutinized. The shipping industry has also agreed to 
deliver manifest and crew information 96 hours in advance to 
U.S. Coast Guard officials, and since September 11th, many 
procedures like smart examinations have been implemented 
rapidly and effectively, thanks to the cooperation of the 
Federal agencies, the steamship industry, the Marine Exchange 
and the harbor commissioners of both the Port of Los Angeles 
and Long Beach.
    We would like to especially acknowledge the leadership of 
the Captain of the Port, John Holmes, of the U.S. Coast Guard 
and Captain Mannie Ashmeyer of the Marine Exchange, their crew 
and colleagues for their fine work under these new and extreme 
circumstances. We are confident that they will continue to do 
everything humanly possible to protect us from security risks 
without plugging the flow of our economy.
    However, we must understand that these increased security 
risks must also be met with applied new technologies. Unless we 
implement new technology solutions, we will be forced to use 
manual processes and techniques that will delay shipment and 
cause a negative ripple effect in our economy.
    We need to purchase smart technology like the gamma 
machines that use X-rays to examine the hull of vessels and 
help pinpoint suspicious cargo efficiently. Currently we only 
have two such machines. And at the cost of $1 million each, we 
urge Congress to help offset the increased cost of securing our 
Nation's busiest seaport as we use technology to protect our 
home front.
    We believe this is a national problem with national 
solutions. Much like the government has developed rapid 
response to the risks at airports, so too must it focus on sea-
based transportation. The risk that security breaches pose both 
to human life, cargo security and potential environmental 
consequences require that we be diligent in all three of these 
areas.
    The fact that we are holding these hearings today is a 
reflection of your interest in this, and we welcome your 
commitment to continue to work with our local community to find 
sustainable solutions to these new challenges. I am available 
for questions.
    Mr. Souder. Thank you very much. If I could start with Mr. 
Winter with just a--first a comment. Your comment was very 
interesting. I'm not arguing. New York does make sure that they 
get covered on their fair share. But every single State will 
make the argument they are underfunded. And in fact, California 
is not underfunded compared to the dollars that are coming in.
    I think much of the numbers are--in some areas you are up, 
and some areas you are under. I am not arguing the port 
question. I think you diverted a lot of yours to water. And 
different States are--everybody--one of the funny things that 
we have dealt with as Republicans, as we got in the highway 
bill, for example, California gets I think 89 cents on the 
dollar and argued that they weren't getting their full dollar. 
But that is like fourth. Everybody else was below 89. The 
problem is the Federal Government takes off of everybody. That 
is why some of us believe that we ought to take less in at the 
Federal level and leave it at the State.
    But there is no question that you made an interesting point 
about historic use of resources not adjusting to contemporary 
conditions; in other words, when there is movement and growth 
in one area and there are certain categories where is it very 
difficult. My bet is, and I wanted to ask you this question, 
that it isn't the business community that is necessarily 
resisting the background checks.
    Mr. Winter. No, I don't think it is the business community. 
The business----
    Mr. Souder. So why isn't it being done? Is it because of 
the unions oppose it?
    Mr. Winter. Historical baggage there, should we say, and 
that goes back to some of the waterfront practices during the 
McCarthy era and some resistance by laborers on the West Coast 
and some of the ports in general back--there were some witch 
hunts and there were some concerns that they were just 
unnecessary intrusions into the background of people.
    Mr. Souder. Because the illustration that I was going to 
use, because clearly this is a California political problem, it 
makes eminent sense that--particularly as--one of the people 
when I was a staffer in the Senate who drove the drug testing 
for transportation, I carried the workplace bill that helped 
fund small businesses, in particular, how to set up drug 
testing, which also would have to include some treatment type 
of proposals or it would never be held up in court, for one 
thing, and equality of management and labor.
    But those type of things seem very logical. I also don't 
believe that either of the ports or any official organization 
of any type here is prohibited from doing it. What seems to be 
being asked is for the Federal Government to mandate it because 
there is not the ability to execute it here at the local level.
    And the corollary I wanted to make is, it is a similar 
political problem in how to downsize the Port of Philadelphia 
or Connecticut or New York, or places because you have the same 
difficulty in the historic structure that views it as a job 
threat. It is one of the difficulties of when things become 
consolidated in government of the ability to move, or when 
there are large institutions.
    So hopefully we can gradually over time catch up some of 
those balances. Maybe if there is additional security threats 
we can move toward more background checks, but my bet is that 
politically both of those things, while good sounding ideas, 
are difficult to move ahead. And I wanted to comment on some of 
the complexity and some of the numbers that you hear thrown 
around.
    In fact, often one State gets one thing and one State gets 
another. In Indiana we lose in a lot of other categories, but 
we do OK on agriculture. There are some countervailing things.
    I also really appreciated your comments on risk assessment. 
You know, I already heard both of us talk some about that. And 
this has been an emotional reaction. But one message, in 
talking with Mr. Bonner yesterday, because apparently he is 
going to be giving a speech here Monday to many in the 
community, and I urge each of you to take this back to the 
business community, we are in a political environment that is 
different than anything that we have been in in my lifetime, 
arguably Pearl Harbor was but I wasn't here yet. And that is at 
this point there is a zero tolerance expectation out of the 
general public, which is nearly impossible to execute. And with 
that zero tolerance, it requires us to think more and more in 
our budget sense of risk assessment, and you all have given us 
some good suggestions about how to do that.
    You have had to do it in your businesses already, and we 
have to do that. But you need to understand a fundamental 
thing, that this is different than what you would do in the 
private sector, in the public arena, because you would make a 
more logical dollar risk assessment and figure there is going 
to be a certain number of losses. We are in a zero tolerance 
situation. If anything happens in any port in the United 
States, it will be automatic almost shutdown of the commerce 
because--same thing at the airports. Same thing if they hit an 
amusement park.
    OK. We gave you guys in government 6 months and you still 
didn't protect us. And that is why there is going to be kind 
of--hopefully we can be logical and then ramp up one notch post 
logical.
    Because this isn't logical at the grass roots level. If we 
successfully kind of fend off some of these attacks for a 
period of time, perhaps we can have a more realistic 
discussion. But I can feel in town meetings here in January as 
I went through, they believe there is the one unifying 
legitimate function of government, and that is to protect them 
from external and internal attack. And a clear nonparty 
differentiation, nonpolitical. It has put us, when you are 
trying to figure out how to do your businesses in a logical 
way, your costs in a logical way, all of a sudden, as I 
mentioned, last panel, insurance rates, the companies are going 
to be asking you now proactively what are you doing to make 
yourself less of a hard target? What are you doing? It is 
changing our phenomena, at least in the short-term and probably 
somewhat over the long-term.
    I wanted to make some of those comments. You have given a 
lot of good information, and if I could ask one more specific 
thing of Mr. Heck following up my other question to you. When 
you said that if these are parent or related companies, and you 
said it we would be very difficult to get preclearance for 
any--I forget your--you said it would be--there would be 
problems in the supply--the related party to get a low risk 
importation. Are you saying that most people who ship have some 
affiliation somewhere with somebody who wouldn't be cooperative 
or it would be considered somewhat of a risk somewhere?
    Mr. Heck. No. I was trying to make the point that in 
related party transactions, the supply chain security aspect of 
that would noticeably be less of a risk, because in a related 
party transaction your parent has gotten the container and it 
is sealed and it is shipped to the subsidiary. So a lot lower 
risk than dealing with an unknown shipper shipping to someone 
else in this side where the U.S. import has no control.
    Mr. Souder. It would be almost like a regional Wal-Mart 
store compared to the parent Wal-Mart, maybe a little more 
independence, depending on the company.
    Well, I yield to you, Ms. Millender-McDonald, for 
questions. Then we will get closing.
    Ms. Millender-McDonald. Thank you so much, Mr. Chairman. 
Please, Mr. Winter, don't delay those Barbie dolls, for 
heaven's sake.
    Mr. Winter. That goes back to the related transactions.
    Ms. Millender-McDonald. My grandchildren will be a little 
floored.
    The first thing that I suppose--I am trying to get to the 
notes that I wrote here. You spoke of sound risk management 
approach. And I suppose you said that so that we would not have 
the propensity to try to examine every cargo, but those that 
are potential threats. Or may I ask you to expound on what you 
mean by sound risk management approach?
    Mr. Winter. I think you interpreted exactly what I meant. 
But I think sometimes today there is--you will see in the media 
and the press concerns that Customs is only looking at 1 or 2 
percent of all of the containers that come in.
    Ms. Millender-McDonald. That is what is reflected back in 
Washington.
    Mr. Winter. Exactly, yes, and I think Customs officials 
will say that the 1 or 2 percent that they are looking at, they 
are looking at for a very good reason.
    Now, maybe they can go up a little higher, but then it 
becomes redundant. You start looking at the Barbie dolls and 
the Toyotas, and the things that--those are manufacturers and 
business people who have spent millions of dollars developing 
the integrity of their brand names and so forth. They are not 
going to allow bad things to happen, and I think the example we 
used like down in the maquiladoras when Senator Feinstein had 
some concerns, and they developed some programs there that--
where they went to these major manufacturers. They surveyed, 
you know, their shipping systems and watched the logistics 
chain from the plant to the border, and they saw that those 
were good sound practices that they were putting in, and there 
is no need then for the examination.
    Ms. Millender-McDonald. Irrespective of a new heightened 
awareness that we have now with the security, you still think 
that what they have is sound enough where we will not need to 
go through all of them?
    Mr. Winter. We just can't look at--the numbers are just too 
large.
    Ms. Millender-McDonald. Indeed, you are right that we 
cannot slow up commerce either, because people are waiting for 
whatever it is on the other side of this.
    Mr. Winter. You combine that with practicality. And I think 
one of the points that Dennis is trying to make, when you have 
Yamaha shipping to Yamaha, that is probably a poor use of 
resources to open up every Yamaha container and start looking 
at it.
    Ms. Millender-McDonald. Very well put and duly noted.
    Background checks. I will say to the chairman, we have 
grappled over this given the fact that there are some persons, 
unions who are concerned about background checks, not 
necessarily to have background checks, but to not use that 
adversely against them if in fact--if there was an arrest, this 
arrest was not a criminal one. And so this is what the whole 
notion is of the background checks and the concerns.
    Mr. Winter. I think you have some ideas. The word is 
reasonableness. That is exactly that. Our industry has kind of 
come to a quasi-understanding that you don't have to go back to 
a person's childhood, or if they had a juvenile or something 
arrested for smoking marijuana, say you can't have a job. Today 
they have a family they are raising, they are responsible 
citizens. That person's background is going to get cleared.
    Ms. Millender-McDonald. Absolutely. That is the sentiments 
of those whom I have spoken with.
    Mr. Souder. What I wonder is, clearly people change, and so 
one way to deal with this is the period of time, depending on 
when it is. But other transportation workers do in fact have 
drug and alcohol background checks. That is part of it.
    Ms. Millender-McDonald. By no means are we on the 
Transportation Committee stating not to have background checks, 
but we have got to have some reasonable provisions that we 
impose. I think that is what it is.
    Mr. Winter, the general feeling among shippers regarding 
the 96-hour notification requiring the Coast Guard to come 
aboard the ship, do you have any feelings on that whatsoever?
    Mr. Winter. I think it is--on the whole, most of the 
information our industry today provides both Customs and Coast 
Guard is electronic, and it is--other than a few unusual 
exceptions where the distance say from a foreign port to the 
U.S. port is very short, less than 96 hours, it is--then it 
gets difficult of course.
    But I think your ocean transits across the Pacific, for 
instance, providing that type of information I don't think has 
been a major challenge. They have it. They are used to 
providing it. It is just a matter of maybe sending it a few 
days earlier. I wouldn't be surprised if the vast majority of 
the companies were already sending it that early.
    You have to watch in that 96 hours as the ships get faster. 
What used to be a 15-day trip from Japan to the West Coast is 
now a 9 and sometimes 8-day trip.
    Ms. Millender-McDonald. Again, duly noted. I want Mr. 
Chairman to know as he returns back and certainly speaks on our 
behalf, that he does recognize--he recognizes that the growth 
here is in California. And therefore California needs more 
resources given that growth and given the request that is 
imposed here on these two ports to move cargo is just enormous. 
And so we have got to make sure that you recognize the 
necessity of California calling upon this Congress for more 
financial resources, Mr. Chairman.
    Thank you so much.
    Now, Mr. Royal Caribbean. You spoke of your security plan, 
and indeed it seems like you really do have something rather 
ironclad. But given the heightened security, would you be 
opposed to having either sea marshals, and what would be your 
public reaction to that, or undercover law enforcement on these 
cruise lines? And did you have any fewer people going aboard 
the cruise lines after September 11th?
    Captain Wright. Well, I will answer the last question 
first. You are speaking in terms of guests? The industry has 
been dramatically impacted. Our business I think was affected 
very much in the same way that the airline industry was 
affected, and partially the relationship is because of all of 
our guests or majority are coming through the airlines to us.
    But the good side of that story is it seems to be 
recovering nicely. We are not where we would have been had 
September 11th not occurred, but we are on our way.
    In terms of the sea marshals, we are very appreciative for 
the Coast Guard's efforts and their concerns in trying to 
provide that type of security.
    I would question, looking at the current loads that are on 
Coast Guard resources, the need to necessarily direct those sea 
marshals toward cruise vessels. Our crews we feel that we 
have--given the background checks that are in place, all of our 
crew members are in possession of U.S. visas issued prior to 
becoming crew members or boarding our ships.
    The controlled environment of a cruise ship, the access 
control that we have on and off the vessel. All of our vessels, 
for example, crew members and passengers alike have access 
cards that have electronically embedded photographs, facial 
photographs of the crew members and the guests, which are 
checked every time the crew member or guest leaves or boards 
the ship.
    So there is a whole slew of efforts that are going into 
maintaining a highly structured security organization on board 
the ship.
    So, again, I am stating this based on the known and limited 
resources that the Coast Guard is working with, that perhaps 
there are other merchant traders that don't have similar types 
of controls over their crews, that effort might be more 
appropriate.
    Ms. Millender-McDonald. And last, Mr. Chamber of Commerce. 
I have not--Mr. Cisneros, thank you for being here.
    What impact has September 11th had on tourism and travel? 
And what impact has it had on our local businesses?
    Mr. Cisneros. It has been pretty devastating. The southern 
California area travel and tourism industry, hotels, the 
convention bureaus, the trade conferences, some other--the L.A. 
Convention Center and others areas have suffered dramatically. 
I know for a fact that the hotels all over the Los Angeles area 
have declined at one point down to 60 percent. And those 
numbers, although they are getting better, it is still--it 
hasn't changed back to where it was at all.
    And so we have been very concerned. There is a lot of 
people being laid off. And trying to get back into a work force 
is a concern for the Department of Commerce.
    Ms. Millender-McDonald. I have a resolution that is going 
in, as I return back, asking people to revisit your State and 
all of the great things that are in your State and do the due 
diligence of going to hotels, staying over the weekend, and 
doing some things that we think that we Californians can do to 
help us during this time of getting back on our feet, if you 
will, in terms of tourism. And then we are inviting folks to 
come in and not be concerned about the air travel or the bus 
travel or rail, whatever it is coming into California, or to 
any other State. This is not just endemic to California, it is 
talking about to revisit your own State, meaning your 
respective State.
    I was late coming in because I had the great opportunity to 
be with a company in my district that has done breakthrough 
through providing a type of container now that will be in the 
hull of the aircraft, that will circumvent any explosive 
devices that would be in luggage to dismantle the plane. This 
is just great breakthrough. They will be coming to Washington 
next week, and hopefully you will come and meet with them, as I 
will be inviting Members of Congress to come.
    But this is what we are trying to do to get that type of 
satisfaction and the fear taken from that flying passenger as 
well as the ship passenger, to try to see what we can do in 
terms of technology. So that is a new breakthrough that is 
coming in. It will be for aircraft. And certainly the amount of 
passenger travel and tourism that we have had has come from 
aircraft as opposed to sea, in my opinion. I might be wrong, 
sir.
    But, nevertheless, we are trying our desperate best to get 
people back on planes, on ships. Mr. Royal Caribbean, my 
husband wants to take a cruise, and so I am going to see 
whether we can do this to help you out.
    But let me again thank this chairman for his sensitivity. I 
have known him to be this way. He goes outside of his State to 
come in to see just what can be done to help us. While he is 
not a Californian, he is a committed Congressperson for trying 
to find the answer. So thank you for being here today.
    Mr. Souder. Thank you. I have to make sure those Yamaha 
parts gets to Elkhart, which is in my district, and for my 
son's keyboard.
    I wanted to ask two more brief things, one on the cruise 
lines, on your background checks. Would you agree that an INS 
background check has access to information that you in the 
private sector do not have in a background check, and that 
really the Federal Government would not want to share?
    Captain Wright. I would assume so, yes. I would almost want 
to say I would hope so.
    Mr. Souder. Because one of the--the reason is right now in 
this heightened security times, while I tend to kind of 
superficially agree that you are not a prime target, in 
actuality you have--I will just say this--what I saw this 
morning was a higher degree of security, and probably better 
clearance than at any airport. What we are striving for is to 
get to that level in an airport. With the one exception that we 
are trying to do at the airports as well, and quite frankly as 
a conservative Republican I have some concern that the 
information we are collecting on people could actually leak out 
and really isn't the business of the general public and needs 
to be kept in the Federal realm.
    In the area of background checks, because a lot of it is 
basically--I mean, the fundamental problem we are trying to 
deal with in the United States right now, there isn't any other 
way to say it, with latent cells. And what in the world is a 
latent cell? In other words, we are not just chasing--in the 
19, 2 of those guys on September 11th had done something 
before. But others were interconnected. This isn't the type of 
information that all can find out in your background checks, 
only the Federal Government will have it.
    That is why at least for a period of time it actually gives 
your cruise people additional support that we are running those 
lists of your crew members and others with those background 
checks, because you wouldn't have it. It is not a lack of, 
well, in fact, your willingness to work with ports. Is it 
unfortunate that you got caught up in your weakness in our 
airlines system, because from what I can see here, you are way 
ahead. With the sea marshals you are double that. By having 
people watching, probably unnecessarily because you already had 
security on board as you come into a port, you are able to do 
the background checks. If they can't penetrate that, they are 
basically going to look for a softer target.
    But that is one thing that I wanted to point out, because 
of your ability to do a background check is different than the 
government's ability to do a background check.
    Captain Wright. We are fortunate that the government is 
doing it though. I think the way that it is being processed now 
is that all that is happening, if there should be a hit, that 
the government is simply indicating that is an individual that 
they would like to look more closely at. The reasons for that 
are not communicated.
    Mr. Souder. And then the other thing is I think that the 1 
to 2 percent figure is more of a national figure from what I 
can tell. And believe me, just learning a little about ports is 
almost worse in some cases than learning nothing, because 
whether it is counted one container or two containers, and how 
to convert the 31,000 that they are going through or trying to 
move up to 40,000 into the units looks to me more like a third 
of a percent that is being checked. But what the bad guys need 
to know is they never know which parts are likely to get the 
highest risk. We are moving that up. The question is how to 
move that up from that even to the 1 to 2 percent level or 
higher. I am one who believes that--I don't know whether it is 
1 percent, 2 percent. It is certainly higher than probably 
where it is at in Los Angeles and Long Beach.
    You have so much stuff going through here that you have to 
have a higher load than 31,000 even to get it up to the 
national average. But how to do that is really the question 
with the system, with the new radiation devices, with the 
equipment that people can drive through faster. We can probably 
look at a higher percent with more accuracy without 
compromising a lot of that if we do a logical ramp-up. Because 
our supposition in the government is--and I have been working 
on the terrorism issue for about 5 years in this oversight 
committee and around the world, and Larry Johnson and others 
have been in front of our committee both in closed session and 
open session for years looking at that--is they are going to 
increasingly get more sophisticated, but we are, too.
    And that now that we have new tools to be able to identify, 
it isn't necessarily a win-lose situation here if we work it, 
because what I call the kind of the--everything seems to a baby 
boomer like another repeat of Vietnam, where we are always not 
quite doing enough to get over the hump. In this case we may be 
slightly ahead of the curve if we stay at it and work together, 
with hopefully the least impact on commerce.
    Do any of you want to make a final statement before we 
adjourn?
    Mr. Heck. I would like to make one comment about this 2 
percent figure. It is really important to understand that 
importers transmit data to Customs on virtually every line on 
every invoice that we ship through Customs, and that along with 
the manufacturer ID number of the factory, the IRS number of 
the importer, the country of origin of the product of every 
line on every invoice, that is all transmitted to Customs. That 
data, with the help of business analysts at Customs and their 
computer, that is why this ACE system is so important to make 
it even more efficient. That is where they come up with this 2 
percent.
    So people may think that this 2 percent, they just throw 
darts at a board and they pick 2 percent and the other 98 
percent go through. That is really not true.
    Mr. Souder. Our political problem is that system didn't 
work on September 11th, that we thought we did a better job of 
identifying risk factors, and what we found is that we didn't 
know them. They were moving back and forth across our border, 
some of them three and four times. We have been up meeting in 
Ottawa to try to address their questions. This has gotten 
beyond where we had an ability to identify the risk, And this 
is not unusual in international trade.
    The biggest narcotics--well, one of the biggest narcotics 
busts in Detroit were narcotics inside a load of worms. In the 
reporting, what looked like was going through looked like 
worms, not narcotics. In Vermont--that was the kind of the worm 
story. And the other one in Vermont, there they are looking for 
cheese, because that is important to their people. In other 
places they are looking for fish. This isn't just terrorists, 
but the fact is that--and then the last point is because all of 
the information is coming in doesn't mean that the Federal 
Government--that this is typically coming from the business 
side, this is typically what you think anyway, but that all of 
information coming in doesn't mean that we actually have the 
ability to sort it.
    When we are looking at those college kids who came in and--
illegally sometimes, and we don't know what university they are 
going to, yet the university sent it in to the INS, it doesn't 
get looked at because we haven't had the ability to have enough 
agents to go through it to track it. So the universities say, 
well, I don't know about all this paperwork, and some of the 
business goes well, so what if I kind of don't make it real 
clear on this manifest, because who knows whether they are 
going to check it anyway. And we have kind of bred that system, 
which all now is kind of getting a little tightened up, and we 
have to figure out how to tighten that up without putting you 
out of business.
    I think your fundamental point is correct. Probably we have 
a lot of this paperwork already in the system. By managing it 
better, by doing what the private sector does, this is a 
government that at the Social Security System we have regional 
computers that couldn't talk to each other and we had a company 
stealing us blind in four regions and we didn't know it. That 
was a government that still reenlists servicemen who have 
been--I mean, I remember working on this a number of years ago. 
We reenlisted rapists who were busted in one zone, and then 
they reenlisted in another branch of the military because we 
weren't sharing family information.
    It is expensive to get everything up to speed. We are 
working on terrorism. We are behind the business sector. But we 
are trying to catch up. We have a mandate from the American 
people: Stop the terrorists. We are trying to do it because 
they also want a good job and a good paying job. If we don't 
have international trade, we aren't going to have that either. 
And your message is today help us sort that through.
    You were also very specific in a number of things that are 
just very helpful too, and helping me understand, and as I say, 
it comes out in the committee print and the report, too.
    Anything else you want to add?
    Captain Wright. On behalf of the ICCL, I would like to say 
that we fully support the need for the nationwide ID, and to 
what degree that requires background checks or what type of 
background checks that can be done, that can be discussed, but 
that we have a consistent way of identifying port workers is of 
critical importance.
    An investigation was done not so many years ago in Miami, 
the Port of Miami. I cannot quote you the exact statistics of 
that investigation, but it showed a shockingly high percentage 
of port workers who were actually convicted. That raised great 
concern.
    Mr. Souder. It is scary.
    Captain Wright. These workers are at times being given 
access to all areas of our vessels due to loading.
    Ms. Millender-McDonald. Mr. Chairman, the one thing that I 
would like to ask Mr. Winter and Mr. Heck to do for me is to 
give me some type of a white paper, if you will, on those 
percentages that we talked about, because those of us who are 
on the Homeland Security tend to think, and I, until I have 
heard from some of you over the times I have been here, that 
the 1 percent is just atrocious in terms of investigating.
    But, when you speak of it in the realm that you have today, 
and others have in recent meetings I have had, it is 
efficiency, and efficiency is what is going to help us to 
identify a small percentage as opposed to those of us who 
thought it should be a 10 percent, 15 percent. You always think 
in large numbers, but not necessarily does that always cash in 
to efficiency and also security protection.
    Mr. Winter. If is it any comfort, I was speaking to the 
Century Plaza this week and they were sold out. So they were 
very optimistic. They wouldn't renegotiate some rates for May.
    Mr. Souder. One of things you can tell politicians too, and 
we complain about the 1 or 2 percent, that we often make 
decisions based on a national sample of 600 people. Good target 
sampling is a principle in marketing research. The only 
question here is, are we getting the right mix? That is what we 
are struggling with right now, because we have had our 
confidence shattered.
    Mr. Winter. Mr. Chairman, you touched on, and I tried to in 
my comments, the role that using the technology and new 
technology that is going to enable these percentages to be 
increased. Because I think what people have been looking for in 
the past is usually--people that lie about the value of their 
merchandise or drugs and things like that, and we are looking 
at a new world of what we are looking for, too. And I think in 
every industry where it has been challenged, we have been able 
to find the technology, whether it is better gamma rays, faster 
and so forth, that we can increase the percentage of the 
freight that we are looking at without being intrusive in the 
stream of commerce. I think that is absolutely critical.
    Mr. Souder. Thank you very much for coming. I thank 
everyone for being patient, and those who came here today to 
listen. And with that, our hearing stands adjourned.
    [Whereupon, at 3:25 p.m., the subcommittee was adjourned.]
    [Additional information submitted for the hearing record 
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