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




 HOMELAND SECURITY: FINDING THE NUCLEAR NEEDLE IN THE CARGO CONTAINER 
                                HAYSTACK

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

                                HEARING

                               before the

                   SUBCOMMITTEE ON NATIONAL SECURITY,
                   VETERANS AFFAIRS AND INTERNATIONAL
                               RELATIONS

                                 of the

                              COMMITTEE ON
                           GOVERNMENT REFORM

                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED SEVENTH CONGRESS

                             SECOND SESSION

                               __________

                           NOVEMBER 18, 2002

                               __________

                           Serial No. 107-224

                               __________

       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


                                 ______

87-868              U.S. GOVERNMENT PRINTING OFFICE
                            WASHINGTON : 2003
____________________________________________________________________________
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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             CAROLYN B. MALONEY, New York
JOHN L. MICA, Florida                ELEANOR HOLMES NORTON, Washington, 
THOMAS M. DAVIS, Virginia                DC
MARK E. SOUDER, Indiana              ELIJAH E. CUMMINGS, Maryland
STEVEN C. LaTOURETTE, Ohio           DENNIS J. KUCINICH, Ohio
BOB BARR, Georgia                    ROD R. BLAGOJEVICH, Illinois
DAN MILLER, Florida                  DANNY K. DAVIS, Illinois
DOUG OSE, California                 JOHN F. TIERNEY, Massachusetts
RON LEWIS, Kentucky                  JIM TURNER, Texas
JO ANN DAVIS, Virginia               THOMAS H. ALLEN, Maine
TODD RUSSELL PLATTS, Pennsylvania    JANICE D. SCHAKOWSKY, Illinois
DAVE WELDON, Florida                 WM. LACY CLAY, Missouri
CHRIS CANNON, Utah                   DIANE E. WATSON, California
ADAM H. PUTNAM, Florida              STEPHEN F. LYNCH, Massachusetts
C.L. ``BUTCH'' OTTER, Idaho          ------ ------
EDWARD L. SCHROCK, Virginia                      ------
JOHN J. DUNCAN, Jr., Tennessee       BERNARD SANDERS, Vermont 
JOHN SULLIVAN, Oklahoma                  (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 National Security, Veterans Affairs and International 
                               Relations

                CHRISTOPHER SHAYS, Connecticut, Chairman
ADAM H. PUTNAM, Florida              DENNIS J. KUCINICH, Ohio
BENJAMIN A. GILMAN, New York         BERNARD SANDERS, Vermont
ILEANA ROS-LEHTINEN, Florida         THOMAS H. ALLEN, Maine
JOHN M. McHUGH, New York             TOM LANTOS, California
STEVEN C. LaTOURETTE, Ohio           JOHN F. TIERNEY, Massachusetts
RON LEWIS, Kentucky                  JANICE D. SCHAKOWSKY, Illinois
TODD RUSSELL PLATTS, Pennsylvania    WM. LACY CLAY, Missouri
DAVE WELDON, Florida                 DIANE E. WATSON, California
C.L. ``BUTCH'' OTTER, Idaho          STEPHEN F. LYNCH, Massachusetts
EDWARD L. SCHROCK, Virginia

                               Ex Officio

DAN BURTON, Indiana                  HENRY A. WAXMAN, California
            Lawrence J. Halloran, Staff Director and Counsel
               R. Nicolas Palarino, Senior Policy Advisor
                           Jason Chung, Clerk


                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on November 18, 2002................................     1
Statement of:
    Ahern, Jayson, Assistant Commissioner, Office of Field 
      Operations, U.S. Customs Service...........................    38
    Allen, Hon. Thomas H., a Representative in Congress from the 
      State of Maine.............................................     2
    Bennis, Rear Admiral Richard, Associate Undersecretary for 
      Maritime and Land Security, Transportation Security 
      Administration.............................................    46
    Boyd, General Charles, USAF, retired, CEO and president, 
      Business Executives for National Security..................   127
    Hecker, JayEtta Z., Director, Physical Infrastructure Team, 
      General Accounting Office..................................     5
    Hereth, Rear Admiral Larry, Director, Port Security, U.S. 
      Coast Guard................................................    32
    Hyde, John J., director of security and compliance, Maersk, 
      Inc........................................................   138
    Kallstrom, James, director, New York State Office of Public 
      Security...................................................    72
    Maloney, Hon. Carolyn B., a Representative in Congress from 
      the State of New York......................................    96
    McDonough, Frank M., esq., president, New York Shipping 
      Association, Inc...........................................   119
    McGreevey, James E., Governor, New Jersey....................   102
    Nadler, Hon. Jerrold, a Representative in Congress from the 
      State of New York..........................................     4
    Rooney, Bethann, manager, Port Security, the Port Authority 
      of New York and New Jersey.................................    80
    Souder, Hon. Mark E., a Representative in Congress from the 
      State of Indiana...........................................     3
    Starer, Brian D., partner, Holland & Knight, LLP.............   128
Letters, statements, etc., submitted for the record by:
    Ahern, Jayson, Assistant Commissioner, Office of Field 
      Operations, U.S. Customs Service, prepared statement of....    40
    Bennis, Rear Admiral Richard, Associate Undersecretary for 
      Maritime and Land Security, Transportation Security 
      Administration, prepared statement of......................    49
    Hecker, JayEtta Z., Director, Physical Infrastructure Team, 
      General Accounting Office, prepared statement of...........     8
    Hereth, Rear Admiral Larry, Director, Port Security, U.S. 
      Coast Guard, prepared statement of.........................    34
    Hyde, John J., director of security and compliance, Maersk, 
      Inc., prepared statement of................................   141
    Kallstrom, James, director, New York State Office of Public 
      Security, prepared statement of............................    75
    McDonough, Frank M., esq., president, New York Shipping 
      Association, Inc., prepared statement of...................   121
    McGreevey, James E., Governor, New Jersey, prepared statement 
      of.........................................................   105
    Rooney, Bethann, manager, Port Security, the Port Authority 
      of New York and New Jersey, prepared statement of..........    83
    Starer, Brian D., partner, Holland & Knight, LLP, prepared 
      statement of...............................................   131

 
 HOMELAND SECURITY: FINDING THE NUCLEAR NEEDLE IN THE CARGO CONTAINER 
                                HAYSTACK

                              ----------                              


                       MONDAY, NOVEMBER 18, 2002

                  House of Representatives,
Subcommittee on National Security, Veterans Affairs 
                       and International Relations,
                            Committee on Government Reform,
                                                      New York, NY.
    The subcommittee met, pursuant to notice, at 11 a.m., at 
American Restaurant, Battery Park, New York, NY, Hon. 
Christopher Shays (chairman of the subcommittee) presiding.
    Present: Representatives Shays, Souder, Maloney, Tierney, 
Allen, and Nadler.
    Staff present: Lawrence Halloran, staff director/counsel; 
Chris Donesa, staff director; R. Nicholas Palarino, senior 
policy advisor; Grace Washbourne and Nicholas Coleman, 
professional staff members; Jason Chung, clerk; and Mackenzie 
Eaglen, fellow.
    Mr. Shays. The quorum being present is the Subcommittee on 
National Security, Veterans Affairs and International Relations 
hearing entitled Homeland Security, Finding the Nuclear Needle 
in the Cargo Container Haystack is called to order.
    The Government Reform Subcommittee on National Security 
comes to the Port of New York/New Jersey today for a firsthand 
look at multi-agency efforts to enhance security at critical 
seaports.
    We thank our hosts and welcome our guests.
    The volume of containerized cargo and the openness of 
massive, complex port areas represent inviting vulnerabilities 
that must be mitigated.
    The recent report of an independent task force sponsored by 
the Council on Foreign Relations called for a new emphasis on 
global trade security.
    According to the report, the system for moving goods 
affordably and reliably around the world is ripe for 
exploitation and vulnerable to mass disruption by terrorists.
    Ubiquitous cargo containers are of particular concern. An 
estimated 11 million containers worldwide are each loaded and 
unloaded 10 times per year. 21,000 containers arrive at U.S. 
ports each day. Each trip by a cargo container represents a 
potential vector of stealth attack. No security standards 
govern container transport.
    A recent event at this port complex underscored the peril 
posed by containerized nuclear cargo. 15 pounds of depleted 
uranium arrived here undetected.
    At a previous hearing, we learned enough fissile material 
to construct a nuclear device could just as easily slip by even 
the most sophisticated screening today because weapons grade 
plutonium and highly enriched uranium do not emit that much 
active radiation.
    In the aftermath of September 11th attacks, tightened 
security at ports and borders stalled the movement of parts and 
equipment essential to economic activity and growth.
    We learned from the dock strikes on the west cost a 
disrupted port means a disrupted economy.
    A qualitative, not a quantitative approach is required to 
improve port security. The general accounting office concludes 
programs already in place at U.S. ports for detecting illegal 
fissile material or nuclear weapons are limited, focusing n 
screening only a small portion of total cargo.
    Various estimates about the tiny fraction of imports 
actually inspected could be reassuring, not frightening, if we 
could be sure the right ships and warehouse were being 
inspected, those posing the most risk.
    Knowing that is a matter of intelligence at ports of 
origin, of diligence in the search for anomalies in a sea of 
routine trade data, and of vigilance in engaging high-risk 
cargos before they reach the dockside.
    As the subcommittee toured the New York/New Jersey port 
this morning, we gained a better appreciation of the enormity 
of the task before us, finding that nuclear needle in the cargo 
container haystack. Only a coordinator and sophisticated 
security program one, with an intense focus and international 
reach, will keep terror out of cargo containers.
    All our witnesses today understand the tension between 
tighter security and robust commerce and they are trying to 
strike a balance that will result in safer and more productive 
ports.
    As evidenced by our lengthy witness list, it is a complex 
job involving numerous governmental and private entities. We 
appreciate their willingness to join us today and look forward 
to their testimony. We look forward to their patience and 
waiting to testify and we request, given the number of 
speakers, that we be closer to the 5-minute rule rather than 
the 10.
    At this time, I recognize Mr. Allen who joins us from Maine 
and has obviously very real concerns about this issue coming 
from an important seaport State.

STATEMENT OF HON. THOMAS H. ALLEN, A REPRESENTATIVE IN CONGRESS 
                    FROM THE STATE OF MAINE

    Mr. Allen. Thank you, Mr. Chairman, for holding this 
hearing, and I would like to thank Jerry Nadler.
    As many of you know well, Chairman Shays has been working 
on the problem of terrorism for years, long before September 
11, 2001. He has been a tireless advocate for increased 
attention to terrorism preparedness.
    This is just one of many hearings that he has held in an 
attempt to get at our Nation's vulnerability and to call 
attention to vital security needs.
    I commend him for his hard work and dedication to making 
America safer.
    The issue of nuclear safety is one that desperately needs 
to be addressed. Even a small amount of nuclear material in the 
hands of terrorists could cause a great loss of life and 
property damage.
    It is imperative that terrorists not be able to smuggle 
nuclear material into this country. I look forward to today's 
testimony on port security conditions with respect to nuclear 
material and for our panelist suggestions for improvement.
    I also believe that many of the first responders who would 
have to deal with the nuclear or hazardous material incident at 
a port are not yet adequately prepared to handle such an 
incident. This is a problem of national scope. And it is 
appropriate and necessary to provide first responders with 
Federal assistance.
    I'm also concerned about the lines of communication between 
Federal, State and local governments as well as with port 
authorities.
    I hope our panelists will discuss this topic and touch on 
the problems that inevitably arise because of a lack of unified 
electronic communication system.
    Port security in general is a great concern to me. In my 
home city of Portland, Maine, we have a very active commercial 
port operation. In fact, the port of Portland is the second 
largest oil port on the east cost next to Philadelphia, taking 
in more than 30 million tons of crude and refined oil last 
year, much of it destined for Canada.
    Most of the oil used in the Canadian maritime for northern 
New England comes through Portland. Portland is also the 
largest international passenger port of New England, moving 
more than 200,000 passengers annually.
    Last year, Portland put through more tonnage than any other 
port in New England.
    Because we have such an active port and because of the 
glaring holes in port security, I take great issue in this 
issue and look forward to today's testimony and I hope it can 
shed some light on the possible solutions to the problem of 
port security.
    Thank you again, Mr. Chairman, for holding the hearing.
    Mr. Shays. Thank you, Congressman Allen. I appreciate very 
much your activity on this committee because you've been at the 
forefront of everything we've done.
    Also we're going to introduce another member of the 
subcommittee who also chairs on the subcommittee on Government 
Reform that's involved in our whole effort to combat drugs, and 
this time I appreciate your presence and work on the committee, 
Mr. Souder.

STATEMENT OF HON. MARK E. SOUDER, A REPRESENTATIVE IN CONGRESS 
                   FROM THE STATE OF INDIANA

    Mr. Souder. Thank you very much. It's good to be here and 
it's good to see each of our witnesses. I work with you on a 
number of issues that clearly, in addition to the question of 
catastrophic terrorism, they face a daily challenge of 
narcotics, Customs and Coast Guard, immigration, trade, and 
trying to look for this balance of how we can protect the 
American citizens and at the same time not wreck our economy 
and it's been one of the biggest challenges in funding and 
resource employment.
    We've held hearings in my subcommittee in Los Angeles Long 
Beach Harbor, looking at similar problems in New York and I 
wanted to come here today, my first visit here, looking at the 
problems facing New York in particular, where we see this 
interdependency of illegal activities that we need to address.
    We need to make sure while we're addressing one, we're 
simultaneously looking at that cross-correlation as we see the 
number and people and weapons of mass destruction, all 
interconnected in the same network.
    We look forward to hearing your testimony today and looking 
for creative ways of how we can best employ limited resources.
    Mr. Shays. Thank you, gentlemen.
    When the committee tours different parts of the country, we 
always are appreciative when the member of the district we're 
in attends the hearing, but we're particularly appreciative 
having Jerry Nadler here today because he is such an 
outstanding Member of Congress and also a very active member of 
the fiduciary committee, and this issue is right up his alley 
and we're grateful that you're our host Congress person.

STATEMENT OF HON. JERROLD NADLER, A REPRESENTATIVE IN CONGRESS 
                   FROM THE STATE OF NEW YORK

    Mr. Nadler. Thank you very much. Let me start by expressing 
my appreciation to Congressman Shays for conducting this 
hearing and for the interest and initiative, especially in 
issues he has shown over the last several years in this 
important area of port security.
    My district includes most of the waterfront of the west 
side of Manhattan and Brooklyn, which has port facilities, some 
of which you toured today, and I've been interested in this 
issue.
    Probably the most likely nuclear threat to the United 
States is not that someone will shoot a missile at us or a 
nuclear warhead, but that someone, rather a rogue State or a 
terrorist group will get a hold of a nuclear weapon and put it 
in a container or a ship.
    If we're willing to spend a lot of money on anti-missile, 
we should be willing to put comparable resources into what I 
believe the greater threat lies, which is nuclear threat to an 
American port.
    I am gratified that the Port Security Bill that Congress 
has considered, it takes steps in the right direction.
    I simply want to mention a bill that I introduced a few 
months ago, that probably goes further than anything else I've 
seen, and maybe someone can comment on the practicality of it 
or lack as they see it.
    The bill essentially would require two things. It would 
require that every container bound for an American port be 
inspected in the foreign port by an American security team, and 
sealed and certified as having been inspected by the American 
team in the foreign port, and then no container be admitted 
anywhere near the American port that isn't inspected by the 
American team of the foreign port.
    Second, that the Coast Guard inspect every ship step to 
stern bound for an American port, at least 200 miles offshore. 
It seems to me there's little sense of looking for nuclear 
bombs in the port of Newark or the port of Los Angeles. There, 
it's too late. You don't want to find it on the ship and have 
it blow up as you're finding it.
    I would appreciate any comment on that, as well as the 
adequacy of the Port Security Bill that Congress just 
considered and anything else.
    I look forward to this hearing and I thank you for your 
initiative.
    Mr. Shays. Thank you, gentleman.
    We'll be joined shortly by two Members in Massachusetts, 
but we will at this time recognize our witnesses and then I'll 
ask them to stand and be sworn in.
    We have Ms. JayEtta Hecker, director of physical 
infrastructure team, general accounting office.
    I believe, Ms. Hecker, you participated in our hearing in 
Tampa and we appreciate you being here.
    We have Rear Admiral Larry Hereth, director Port Security, 
U.S. Coast Guard. We appreciate the courtesy that your office 
has shown us.
    We have Mr. Jayson Ahern, Assistant Commissioner, Office of 
Field Operations, U.S. Customs Service, and we also have Rear 
Admiral Richard Bennis, Associate Undersecretary for Maritime 
and Land Security, Transportation Security Administration.
    At this time, I would request that you stand and we'll 
swear you in. We swear in all our witnesses.
    [Witnesses sworn.]
    Mr. Shays. I note for the record all our witnesses 
responded in the affirmative. Thank you for that.
    We'll start with you, Ms. Hecker.

      STATEMENT OF JAYETTA Z. HECKER, DIRECTOR, PHYSICAL 
         INFRASTRUCTURE TEAM, GENERAL ACCOUNTING OFFICE

    Ms. Hecker. Thank you, Mr. Chairman. It's a real pleasure 
to be here before you, the other member of the subcommittee and 
Mr. Nadler. We're here to discuss the major initiatives 
underway, to respond to what is really a grave threat and that 
is the potential smuggling of nuclear materials in 1 of the 6 
million containers that come into this country every year.
    I have to remark that this is such a moving setting. The 
symbols of the openness of this country right before us and the 
symbols really that have become targets and it's a very fitting 
environment for us to look at that balance of openness and the 
balance of protecting what have become such vulnerable targets.
    What we're talking about really used be unthinkable. It 
clearly is now before us to address some of these serious 
problems, and I'm able to comment on a broad range of GAO work 
that's addressed some of these issues.
    We have worked on nuclear smuggling, on Customs operations, 
on information systems, the proposal to reform homeland 
security and others, really a broad range of work across GAO to 
give the overview remarks that I think the scope of this 
hearing requires.
    Basically it covers three specific areas. The first is to 
review the current initiatives underway specifically to prevent 
nuclear smuggling. Then I'll talk about some of the newer 
initiatives that are being developed to go beyond the border, 
and finally I'll talk about some of the significant challenges 
representing moving forward in these areas.
    In essence, in the first area, our work shows that the 
current initiatives as you said are really limited. They're 
limited by the technology. They're limited by the vast volume 
of traffic coming before our ports. They're limited by the 
incomplete information that's available on what is in these 
containers.
    Most of all, I think several of you have noted, they're 
limited by the fact that screening at the ports for nuclear 
weapons and nuclear materials is too late. That is not the time 
you want to be finding out there is nuclear material about to 
go off or perhaps going off before you're even able to detect 
it.
    So this whole area of nuclear detection at the port, and we 
have a summary in our statement of the kinds of equipment, the 
kinds of concerns we have about the equipment, the kinds of 
limitations that are already there.
    We also have an interesting overview of the efforts 
overseas. As you know, there is a lot of effort overseas to the 
stop the nuclear material from even getting out of Russia, 
where it's stored.
    In fact, there are portals, more portals than we have in 
this country for detecting nuclear materials overseas. We have 
a report out on that. There's six different agencies doing 
that. We haven't been well-coordinated. The material is not--
the equipment is not often turned on. There was one that was 
delayed for 2 years to be turned on because there was a dispute 
over who was going to pay for the electricity.
    There are really some complications in the whole array of 
getting detention underway, not only here but overseas.
    That brings me to the second point, which is the new 
initiatives, and what is important about the new initiatives is 
that they represent a fundamental ship away from interdiction 
at the port to prevention and securing the supply chain in the 
movement of goods and creating a chain of custody.
    The initiatives that are listed in the report are 
important. There's a lot of administration attention to them, 
but underlying these efforts, we have to look at the fact that 
there are no standards for loading containers. There are no 
standards for the sealing of containers.
    There are no standards for the transferring of containers 
between loads. There are no standards for the documentation of 
the contents of containers. There are no standards for 
credentialing of cargo handlers.
    There are no standards for foreign ports, although there is 
an important new coverage in the new legislation for the Coast 
Guard do play a role in getting oversight and review of the 
vulnerability and the improvements in security at foreign 
ports.
    Most of all again, there is no accountability for the 
shipper to really know what the contents of their containers 
are and what they're shipping.
    As I said, there are multiple initiatives to try to deal 
with this. These are not new problems. The witnesses we will 
hear from today, most of them are working on different 
initiatives that I talked about. The two are the Customs, the 
inspection places overseas and to work in the partnership with 
firms to secure the supply chain.
    There is interesting leadership on the part of the private 
sector. We talked about the private sector resisting here. 
There is leadership before Federal money is even available, 
testing the secured, securing of the containers and testing new 
equipment.
    Legislation was passed in supplemental to make money 
available, but it hasn't--the rules haven't been finalized so 
the process couldn't really begin, but firms have gone ahead 
and are actually testing in this port, in Seattle and L.A./Long 
Beach, efforts are already underway.
    There is a real acknowledgment of how critical moving 
forward in this area is.
    Unfortunately, though, this is not an easy answer. There 
are at least four international organizations, if not five, 
where agreement is needed to make the progress of getting these 
standards. Note only is the international maritime organization 
a key getting security at the ports, porter handlers, the world 
customs organization, the international standards organization, 
the international labor organization, all of these 
international organizations are party and we have 
representation, moving in each of them.
    Luckily, there has been leadership by the GA and in the 
APEC, there has been debate about these issues, so it's 
elevated to an extremely high level of national leaders, but 
these organizations still have several processes and challenges 
are ahead to actually reach agreement, implement the agreement, 
oversee the agreement.
    Finally, the conclusions are that we clearly have major 
vulnerability. The vulnerability is vast. The risk is real, and 
the strategies and solutions to address these problems has to 
be sustained, systematic and global. It requires an 
orchestration of a complexity similar to the lunar landing.
    This is a focused, and attention of a commitment that 
really is requiring a major focus, a sustained focus and 
unfortunately, unlike the lunar landing, it's not going to have 
a day when we know we've reached it. This requires a sustained 
preventive effort for many, many years to come.
    That concludes my statement.
    [The prepared statement of Ms. Hecker follows:]

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    Mr. Shays. A wonderful way to get it started. Thank you 
very much.
    Admiral.

    STATEMENT OF REAR ADMIRAL LARRY HERETH, DIRECTOR, PORT 
                   SECURITY, U.S. COAST GUARD

    Admiral Hereth. Good morning, Mr. Chairman and 
distinguished members of the committee, Mr. Nadler.
    As the Director of Port Security for the Office of Marine 
Safety, Security and Environmental Protection at Coast Guard 
Headquarters, I want to thank you for the opportunity to appear 
before you today on behalf of the Commandant, Admiral Collins.
    As the President is on the verge of signing American 
Transportation Security Act, I would first like to thank 
Congress for passing this monumental piece of legislation.
    This is an important step for the Coast Guard for the 
security of our Nation's marine transportation system, as it 
introduces a systematic approach for addressing vulnerability 
of our seaports through critical activities such as port 
security assessments, requirements for security clearance for 
vessels and facilities.
    The comprehensive container security program involves an 
emphasis on the prevention and pre-emption of incidents, but 
also must stress the preparedness to respond to any problems 
that crop up.
    The prevention of container security incidents can be 
broken down into two parts.
    The intrinsic security of containers, which might include 
cargo identification, verification, sealing a container, and 
also intransit security, which gives more with the secure 
movement of containers through the marine transportation 
system.
    Both Customs and TSA have the challenge of improving 
container security from the point of origin to the point of 
destination. Coast Guard actively supports both Customs and TSA 
on a variety of initiatives that you will hear about from those 
representatives.
    I would, however, like to point out at least two Coast 
Guard initiatives contribute to security. First of all, our 
maritime domain awareness program. The key element of any 
protection program is situation awareness. Or in this context, 
maritime domain awareness.
    MDA seeks to have a full understanding of people, cargo and 
vessels involved in transmitting cargo to the United States.
    Under our MDA program, we spearheaded a variety of 
initiatives and interagency partnership to improve our 
information gathering and analysis capability. This includes a 
96-hour advance notice of arrival requirement for all seaborne 
vessels over 300 gross tons.
    This also includes requirements for vessels to provide 
Customs manifest information 96 hours in advantage of arrival 
in the United States.
    We believe this is a major step forward.
    Additionally, Coast Guard has taken the lead in 
international narcotics maritime organization. They developed 
worldwide standards for maritime security.
    We expect IMO will adopt these measures in just a couple of 
weeks. It will enhance the security of vessels in their 
international service, as well as the port facilities that 
service them, both foreign and domestic.
    Any security programs also needs a response capability to 
deal with any potential or actual threat that might crop up. It 
involves several working groups to address the response 
protocols.
    Unfortunately, the maritime environment provides unique 
challenges to impact the performance of radiation detector 
sensors.
    Coast Guard has been working with the Department of Energy 
and others to identify appropriate detection capabilities and 
protocols.
    In addition, measures, policy changes are being evaluated 
by an interagency work group led by the Office of Homeland 
Security.
    There's been significant progress in terms of clarifying 
roles and responsibilities, in defining how an organization 
comes together and deals with potential problems that crop up.
    In summary, the Coast Guard is the Nation's maritime 
homeland security leader and will continue to partner with 
other Federal, State and local agencies, maritime stakeholders 
and international organizations to improve security of our 
ports and containerized cargo.
    [The prepared statement of Admiral Hereth follows:]

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    Mr. Shays. Thank you very much, Admiral, and there's no 
question that the homeland security role of the Coast Guard 
will be far more prominent, as I think most member skills 
should be.
    Mr. Ahern.

 STATEMENT OF JAYSON AHERN, ASSISTANT COMMISSIONER, OFFICE OF 
             FIELD OPERATIONS, U.S. CUSTOMS SERVICE

    Mr. Ahern. Preventing the smuggling of nuclear weapons and 
radiological materials is the highest priority of the U.S. 
Customs Service. Customs has developed and implemented a multi-
layered defense in-depth strategy designed to prevent nuclear 
weapons and radiological materials from entering the United 
States.
    An important part of that strategy is pushing our zone of 
security outward, so that American borders are the last line of 
defense, not the first line of defense against such a threat. 
Two U.S. Customs initiatives that help extend our zone of 
security against the threat of nuclear terrorism are the 
Container Security Initiative, also known as CSI, and the 
Customs-Trade Partnership Against Terrorism, also known as C-
TPAT.
    The purpose of CSI is to prevent terrorists from using 
cargo containers to conceal nuclear weapons or radiological 
materials. With CSI, U.S. Customs partners with foreign 
governments to target and screen high-risk containers at the 
earliest point in the supply chain.
    The Customs-Trade Partnership Against Terrorism or C-TPAT 
initiative taps the resources of the trade community to further 
reduce the risk that terrorist weapons, including nuclear or 
radiological materials, could be concealed in cargo shipped to 
the United States.
    By partnering with U.S. importers, customs brokers, 
carriers and others, we can better protect the entire supply 
chain against potential exploitation by terrorists. The goal of 
C-TPAT is to provide increased security from foreign loading 
docks all the way to the U.S. border. To date, over 1,000 
companies have agreed to participate in C-TPAT.
    Under the direction of Commissioner Bonner, the Office of 
Border Targeting and Analysis, also known as BTA, was 
established. BTA is responsible for developing targeting 
criteria to identify high-risk containers and respond to the 
shifting and evolving terrorist threat. These targeting rules 
are applied by Customs sophisticated Automated Targeting 
System, also known as ATS, which processes commercial 
information regarding cargo and containers and assigns risk-
based scores to focus the Customs screening process.
    The effectiveness of ATS and the success of initiatives 
such as CSI and C-TPAT are directly proportional to the 
timeliness and accuracy of cargo information submitted to U.S. 
Customs.
    Therefore, Customs proposed a regulation requiring the 
presentation of accurate, complete manifest information 24 
hours prior to lading at the foreign port, and eliminating 
vague descriptions of cargo, such as FAK, freight of all kinds. 
This advance information will enable U.S. Customs to evaluate 
the terrorist of cargo containers before they are shipped to 
the United States.
    In addition to the C-TPAT and CSI as well as regulatory 
initiatives, Customs deploys multiple technologies to support 
our layered targeting and detection process.
    All cargo identified as posing a threat is screened for 
security purposes. To date, Customs has deployed 101 large-
scale x-ray and gamma ray systems that assist inspectors in 
screening cargo containers and conveyances for potential 
terrorist weapons, including nuclear weapon and radiological 
materials.
    Customs also has issued over 5,000 personal radiation 
detectors to provide coverage at every port of entry into the 
United States. We have ordered, and will be taking delivery of, 
over 4,000 additional personal radiation detectors.
    To further augment our detection capabilities, we are 
adding an additional layer to the screening process. U.S. 
Customs is working closely with the Department of Energy, DOE, 
the Transportation Security Administration, TSA, and other 
concerned agencies, to deploy portal radiation detectors, which 
are passive, non-intrusive systems used to screen containers 
and other conveyances for the presence of nuclear and 
radiological materials.
    We are also in the process of deploying radiation isotope 
identifiers for the purpose of further identifying the type of 
radiation present after primary radiation detection screening.
    This work will be integrated into the new Department of 
Homeland Security as proposed by President Bush to detect and 
prevent the transport of nuclear weapons or their components 
into the United States.
    U.S. Customs also recognizes the importance of ensuring 
that U.S. technology and hardware do not become part of the 
arsenal of international terrorist groups.
    Therefore, Customs agents are working under Project Shield 
America, to monitor strategic weapon components and sensitive 
materials being exported from the United States.
    U.S. Customs, in conjunction with its Federal counterparts, 
is also addressing the issue of enhancing seaport security.
    To meet the challenges of the seaport environment, U.S. 
Customs is working with the Department of Transportation to 
develop Operation Safe Commerce, a national seaport security 
initiative designed to test a common set of standard security 
practices governing the loading and movement of cargo 
throughout the international and domestic supply chains. The 
purpose of Operation Safe Commerce is to test innovative 
technology solutions to enhance and maintain the security of 
worldwide supply chains.
    In addition, Customs is also engaged with the Department of 
Transportation in the container working group, an initiative in 
partnership with the private sector carriers, shippers and 
importers focusing on improving sea container security.
    Last, in support of their high interest vessel program. 
U.S. Customs is working with the U.S. Coast Guard to identify 
high-risk cargo, passengers or crew on board vessels coming to 
the United States.
    Thank you again for this opportunity to testify. I will be 
happy to answer any questions you may have.
    [The prepared statement of Mr. Ahern follows:]

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    Mr. Shays. Thank you very much. We appreciate the work of 
the U.S. Customs Service. It's clear that your task has 
increased manyfold and I know that you're going to need 
cooperation from Congress to do your job.
    Admiral Bennis, good morning.

      STATEMENT OF REAR ADMIRAL RICHARD BENNIS, ASSOCIATE 
 UNDERSECRETARY FOR MARITIME AND LAND SECURITY, TRANSPORTATION 
                    SECURITY ADMINISTRATION

    Admiral Bennis. Good morning, Mr. Chairman, Congressman 
Allen and members of the subcommittee, Congressman Nadler.
    Since this is sworn testimony, I have to tell you how 
absolutely pleased I am to be home here in New York and it's 
good to be here today.
    Before discussing our specific efforts to secure cargo, I 
would first like to briefly mention that on September 11th I 
had the privilege to be stationed here in New York City and my 
position was acting commander of Coast Guard activity in New 
York and in that capacity, I was proud and honored to be part 
of the team, this tremendous team that came forth, the maritime 
community, Port Authority, Customs, all city agencies, NYPD, 
NYFD and organized the orderly evacuation of hundreds of 
thousands of estranged people in lower Manhattan.
    It is entirely fitting to return to New York City today to 
hold this hearing, just a short distance from Ground Zero which 
will forever be one of the most important reminders of our need 
to protect our homeland from all enemies.
    TSA is not only the Nation's leading administration charged 
with securing aviation security. We celebrate our 1-year 
anniversary tomorrow, in the United States, but it is charged 
with the security of passengers, cargo, infrastructure and our 
Nation's service transportation systems encompassing maritime, 
rail, highway, mass transit and pipelines.
    You asked us to come here today to talk about efforts to 
screen cargo containers entering U.S. seaports and the effect 
of these efforts on the free trade. In particular, you asked 
about efforts to prevent weapons of mass destruction, 
specifically nuclear bombs and radiological or dirty bombs from 
being smuggled into and used against the United States.
    This was first raised in a letter from Albert Einstein to 
President Roosevelt in the 1930's when he talked about nuclear 
weapons being smuggled on a ship before the days of containers 
into a port and in that letter, he said it could destroy that 
port and portions of any city that port resided in.
    In performing our functions, we take a risk based approach. 
TSA will work within the umbrella of organizations brought 
together by the Office of Homeland Security to set national 
standards and criteria for transportation security, while at 
all times working closely with State goals.
    Our goal is to not drive terrorists to the road of least 
resistance. We don't want the hardened aviation security to 
drive terrorists to the water, to the rails, to the highways.
    TSA will continue to work closely within the Department of 
Transportation.
    Immediately after September 11th, Secretary Manella 
mandated that the Department of Transportation work with U.S. 
Customs in forming a container working group charged with 
strengthening our container security protection efforts.
    Soon after the container working group became a cooperative 
effort between the TSA, Coast Guard, Customs, and private 
sector, including the top load centers of the United States 
like the Port of New York and New Jersey.
    Through this cooperative effort, the container working 
group created a program called Operation Safe Commerce. 
Operation Safe Commerce's goal is to design a commercially 
viable security system that not only detects weapons of mass 
destruction hidden in cargo but will also include redundant 
measures to ensure that at every stage of transportation 
terrorists are prevented from introducing weapons of mass 
destruction hidden in cargo.
    This is otherwise known as securing the supply chain.
    As you said, Mr. Chairman, we're diligently working to 
secure the supply chain. TSA also participated in multi-agency 
efforts involving radiological detection devices. This is an 
important program led by the Office of Homeland Security.
    The majority of initiatives we are considering are already 
underway in New York/New Jersey and none of these initiatives 
are duplicative or inconsistent with integrated initiatives 
underway in New York and New Jersey, create a multilayer line 
of defense inspectors.
    Other initiatives underway include container security 
initiative. TSA will participate pate in the sector by 
increasing the data, such as the Customs service and review in 
order to accomplish more thorough analysis of threats posed by 
containers shipped in commerce, consistent with our integral 
role of showing the Nation's transportation security.
    We want to be sure the cargo moved from load to load is at 
a consistent level of security of origin to destination.
    TSA is a corporation within the Department of Homeland 
Security, the closer partnership of the TSA is Coast Guard, 
Customs, who further strengthen our mission as set forth in the 
Aviation Transportation Security Act.
    Another important step that TSA took in its first year was 
the award for security grants, working closely with the Coast 
Guard, the maritime administration, TSA awarded grants to 77 
ports throughout the Nation, totaling $92 million.
    Here in the New York metropolitan area alone, I'm pleased 
to note TSA will award $8.9 million to the Port Authority of 
New York and New Jersey.
    Congress has appropriated an additional $125 million for 
TSA for security grants as part of the fiscal year 2002.
    TSA also announced a new round of port security grants in 
the near future.
    Even the intermodal nature of transportation address 
transportation of security and other modes of transportation. 
TSA's rail cargo security branch has identified hazardous 
materials initiatives, both as shipments, coordinated with 
other key participants in its review of the transport of 
hazardous material throughout the supply chain.
    The analysis and the conclusions we develop will enable TSA 
to identify best practices, and to propose standards and 
performance based regulations.
    We discussed earlier, which you heard, Coast Guard and 
Customs are working together. I think we're working together 
like we've never worked together before. Very closely, very 
well coordinated, determining who has responsibility for what 
and the same time assuring there's no duplication of efforts in 
preventing the unlawful importation of radiological weapons, 
other weapons of mass destruction in the United States. The 
challenge to secure cargo is formidable but obtainable. I 
strongly believe that transportation security is safer today 
than it was yesterday and will be safer tomorrow than it is 
today.
    I will be pleased to answer any questions that you may 
have.
    [The prepared statement of Admiral Bennis follows:]

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    Mr. Shays. Thank you very much.
    Before I recognize our first witness, I think it's fair to 
say we're safer today than since September 11, 2001, but we 
don't feel safer because we had a false sense of safety before 
September 11, 2001, and my request to all our panels is that 
they be brutally candid with this committee and the American 
people.
    We need to speak the truth and in speaking the truth to the 
American people, they'll have us do the right thing. They need 
to know what the terrorists know and we need to know what the 
terrorists know.
    At this time, we'll hear from Mr. Souder.
    We're doing the 5-minute rule with a little flexibility. If 
you're on a roll, we'll let you continue.
    Mr. Souder. Mr. Shays, I want to followup on this. I have a 
small company in my district that is looking at container 
security standards to trying to improve them.
    Do you know, are there efforts underway, four or five 
international groups, are there efforts underway to do the 
same, similar to what we do on our fast pass on the border and 
that type of thing.
    If companies are agreed to certain minimum standards on 
container security, on clearance and other things, that they 
would be treated differently and there would be delays for 
companies that don't--when we have multiple countries, 
preclearance and ports, when you're looking at Customs with 
this lizard of a few main companies but then lots of little 
companies, that part of it is that you don't agree with the 
standards, you're going to be slowed down.
    Why isn't that an alternative in addition to trying to 
address the development of international standards? Otherwise 
it's going to take years.
    Ms. Hecker. I think you probably want to hear from Mr. 
Ahern because they're the ones running that program and how 
it's to be used.
    Mr. Souder. My fundamental concern is you may be charged at 
the very beginning that we have no international standards in 
four or five major categories and the question is how do we 
deal with that because within the foreseeable future, 10 years, 
every country in the world is not going to accept international 
standards even if we have international standards, so what can 
we do in the short-term to address that.
    Mr. Hereth. Two programs I outlined, specifically 
international standards that is precisely what you described.
    Through partnership programs, we know certain countries are 
maintaining security integrity through these entire supply 
chains and such, upon arrival at the U.S. borders, we can focus 
our technology and resources on those that are not.
    Mr. Souder. In some of these cases that were addressed, we 
have minimum to no international standards at this point. That 
puts the disadvantage of the system at Customs and it puts a 
small company at incredible disadvantage compared to a big 
company.
    Do you see us moving toward a standard where they can at 
least voluntarily ascribe to that standard, even if they don't 
have as much of a track record?
    Mr. Ahern. I would say our program does not necessarily 
discern large companies from small companies. Certainly some of 
the large companies have greater capacity, but certainly some 
of the smaller companies that have established a track record 
with Customs and have established relationships with importers, 
carriers, they have to go through mandatory security 
assessments, so we believe it does fit the small companies.
    Mr. Souder. You don't have a concern about the lack of 
international----
    Mr. Ahern. I think we have to have higher international 
standards to do what we can do with the relationships we have 
with carriers, importers, as well as foreign manufacturers.
    Mr. Souder. Do you believe their approach will address the 
questions satisfactory or is that a short-term approach or 
would you rather see a broader approach?
    Ms. Hecker. I think we have to move in many directions, 
including we have to move unilaterally and bilaterally, but the 
international direction is an important one, and one of the 
areas we've heard from different ports and firms is the 
potential to be disadvantaged, and I think that is what you're 
alluding to for smaller firms.
    There are ports, for example, that are raising a concern 
that as certain standards are tightened domestically, it will 
drive the traffic to Canadian ports, so the importance of 
moving globally is really that it's a level playing field and I 
think as Admiral Bennis said, you don't just drive the risk 
somewhere else.
    If it's easier to get containers in through Canada, and 
that's the avenue that's used to smuggle the nuclear weapons 
and gets across the border, what has it saved us to tighten up 
on our domestic ports.
    Mr. Souder. I would agree with that. I think the standard 
that's being used by Customs at the port, that's why I was 
looking for a general standard for all cargo that's targeted to 
the United States because we can't control other countries.
    I believe Customs is definitely moving in that direction. 
At the very least, we should set our national standard with 
rail, port or air and we're attempting to do that, but I don't 
know that we can get the international cooperation.
    Mr. Shays. You wanted to make a comment?
    Mr. Hereth. As we raise our standards for focus on a scheme 
that you have laid out, the standard will have a part A and 
part B.
    Part A will be required. Part B will be optional.
    For those that don't adopt those parts will be further 
scrutinized and delayed in transit. The scheme is not 
completely in focus yet, but it's still working in that 
direction.
    Mr. Shays. Thank you, gentlemen.
    Mr. Allen.
    Mr. Allen. Thank you very much for your testimony, all of 
you.
    Admiral Hereth, I want to ask you some questions about how 
the Coast Guard is going to maintain its traditional 
responsibilities while it's based on all the additional 
responsibilities of dealing with the issues related to 
terrorism, particularly the one we're focusing on today.
    When Captain Bohn had some of us out on the boat a little 
while ago, he pointed out--he made a remark, and I'm not 
quoting him, so don't--I'm trying to interpret what he said.
    He said on some days, we may be more concerned with a 
poorly maintained, poorly staffed tanker that is at risk of 
exploding than we are with the threat of a nuclear device 
coming in.
    It highlighted for me the challenge that the Coast Guard 
faces in dealing with some traditional safety issues versus the 
new threat of terrorism. Back in Maine, the Coast Guard is a 
vital part of keeping our fishermen safe, conducting rescues at 
sea and there is some anxiety about whether there will be 
enough resources available for that.
    I know you can tell me that if we have the resources we can 
do it all, but I'm really interested in probing where you think 
the problems may arise and what issues we need to focus on here 
in Congress.
    Mr. Hereth. I'll give it my best shot.
    I believe there are a couple of things that need to be 
addressed. One is our traditional mission obviously requires 
the support. We had great support from secretary of the 
administration, the Coast Guard to make sure we have all the 
competency, capability and capacity that we need to continue 
traditional measures in addition to security missions.
    That's a huge challenge. This first year, it seems like the 
funding is shifting up for a significant increase to the Coast 
Guard. That will be a big boost.
    I would also offer that as Captain Bohn may have discussed, 
the Coast Guard operates on a first base decisionmaking 
protocol in the field and having served about 10 years in not 
only field offices around the country in major ports, most 
recently from San Francisco, the balancing act of the staff 
requiring every day is challenging but necessary, but also a 
very efficient use of resources.
    Certainly the Coast Guard needs to grow capabilities and 
resources and we're seeing some positive movement in that 
direction.
    It's not so much of a stretch for the Coast Guard to 
perceive people like myself who have been in the field for 
years seeing how side by side, very competent, very capable.
    Mr. Allen. Could you comment, Ms. Hecker?
    Ms. Hecker. Yes. As we were talking about the hearing 
started, we recently completed a report reviewing in detail the 
balancing that the Coast Guard is having to manage on a daily 
basis between its traditional missions and the security 
missions.
    We'll be issuing that report tomorrow, and it's now at the 
Senate, so I can't really discuss it completely in detail, but 
we have various specific recommendations about bad reporting by 
the Coast Guard, about the balance of the mission and also an 
important opportunity to really look at alternative strategies 
including public partnership to address some of the tensions 
occurring daily in their missions.
    As I said, we would be happy to brief you and we hope it 
will be helpful because as many agencies are merged into the 
Department of Homeland Security, there are other missions and 
this is really one that's quite critical in terms of fishery 
enforcement, boating safety and many other areas.
    Mr. Allen. We look forward to seeing a report. Thank you.
    Mr. Shays. Mr. Tierney.
    Mr. Tierney. Thank you, Mr. Chair, and thank you for having 
these hearings. Thank you, members of the panel, for the 
testimony.
    Admiral Hereth and Ms. Hecker, the International Maritime 
Organization, we've been negotiating in a bilateral fashion 
with a good number of countries governing almost all of the 
high volume force.
    How were the standards to bilateral agreements measured up 
against the international standards in the IMO?
    Mr. Hereth. I think maybe the way to view that is the 80 or 
so countries that are involved in general security 
arrangements, port facilities, domestic and on vessels, are all 
agreed to a standard and those will be concluded at a 
diplomatic conference in December.
    As a result, a very comprehensive effort by multi-agency 
effort in the United States, are participating to design the 
standards.
    Once that is in place, I think it will set the stage for 
further refinement on the part of the security agreement. So I 
think you're going to see a lot of efforts talking about work 
with Customs to develop further standards.
    Mr. Tierney. The IMO standards being set for port security 
don't yet cover the containers?
    Mr. Hereth. No. In a general way, in terms of raising the 
general precautions around compartment security in general. 
Specifics are under development still.
    Mr. Tierney. What about the bilateral agreements that we've 
been engaged in, do those cover containers?
    Mr. Ahern. A couple issues I would like to speak to.
    World Customs Organization, they're working on supply 
chains security issues. We'll look at security standards for 
the supply chain to include some of the issues relative to 
container security as well.
    Certainly you take a look at what we're doing with the 
container security issue as well. We're looking into moving out 
to the 20 megaports throughout the world for establishing the 
ability to targeting, screening at the 20 megaports.
    I'm happy to say at this point we have 15 of those 20 ports 
already signatories to the CSI security issue worldwide.
    One point as well, I think certainly we need to move up and 
move up quickly ascertaining international standards. 
Currently, one of the things we did was look at specific data, 
which was important to us for our target system, submitted to 
us 24 hours prior to waiting in foreign location for vessels 
destined to the United States.
    Mr. Tierney. Tell me, approximately at least, what 
percentage of the exports to this country did those 20 
megaports constitute?
    Mr. Ahern. It flows between 65 and 70 percent, those 20 
megaports.
    We will not rest. Once we get the 20 megaports signed on, 
then we'll take it to the next ports, to further implement as 
necessary.
    Mr. Souder. You said you have 15 of the 20.
    Which 5 don't you have?
    Mr. Ahern. I'll submit it for the record. I don't have the 
remaining 5.
    Mr. Tierney. Do you have a time estimate by which you think 
you'll have all the exporting ports covered?
    Mr. Ahern. It's our hope to be within the next couple 
months. We had some progress within the last 2 months getting 
some of the initial signatories. The time table is not as 
precise as I would like it to be, but we're moving 
aggressively.
    Mr. Tierney. The remaining 35, 35 to 40 percent----
    Mr. Ahern. We would take that over the next 12-month cycle 
after that.
    Mr. Shays. The gentleman from New York is recognized.
    Mr. Nadler. I think the question is either for Ms. Ahern or 
Admiral Bennis.
    We're hearing that you're making agreements with foreign 
ports. We're looking at their manifests. We're inspecting the 
manifests, and we're looking at the operational safe commerce 
program to explore options to keep pace with expanding trades 
to develop practice technology to help secure cargo port of 
destinations.
    What would it take and why would it not be--let me put it 
this way: We seem either to not think it necessary or to think 
it impossible to inspect every container at every major port 
before it leaves the port.
    Which is it, that it's impossible or it's not worth doing?
    Mr. Ahern. I'll be happy to start from my point of view on 
that. Certainly it's not an impossible task. Logistically I 
think it's beyond our capacity right now. We would have to have 
the additional technology and resource to do it effectively.
    I will tell you that what I think we need to do is we need 
to make sure that the legitimate trade coming in and out of 
this country is not firmly impacted by overcontrolling or 
oversecuring.
    We need to have better information systems, better 
intelligence. We need to use our technology as efficiently as 
we can.
    What we have studied over the years is that the 
international trade coming into this country is highly 
compliant and we need to make sure we recognize that. We can't 
fall on any safe sense of security or make any assumptions 
without having random factors build into our----
    Mr. Nadler. Highly compliant reviewing possible nuclear 
weapons, highly compliant does not do the trick. You have to 
have 100 percent. One nuclear weapon, there goes chaos.
    My question is it shouldn't make sense to target based on 
risk based targeting until you get 100 percent coverage, but we 
don't seem to be aiming for 100 percent coverage.
    Why should we not be aiming for a situation, aiming for a 
system under which every container is inspected and certified 
before it's loaded on a ship bound for the United States.
    Mr. Ahern. I would offer one final point. One of the things 
I do want to address is this 2 percent, that we're looking at 2 
percent in the United States in containers.
    I think it's important to note 100 percent of the vessels' 
manifest information submitted to Customs has an ability to go 
through our expert targeting systems, go through a security 
screen----
    Mr. Nadler. I don't understand. Why doesn't every container 
need to go through security screening with technology. You're 
assuming people are telling the truth on the manifests. You're 
assuming that no dishonest employee is sleeping something in 
the container which he doesn't tell his boss he's putting on 
the manifest.
    In order to give real security, why is it not necessary to 
have every container inspected, physically inspected?
    Mr. Ahern. We rely heavily on our target system for the 
technology we have in place, and certainly as far as one event 
can be of massive consequences, but right now based on our 
security system we have in place, we need to do more.
    Mr. Nadler. You're not answering the question.
    Yes, given the resources, obviously you want to target the 
resources where they're most effective. That's not the 
question.
    The question is would it not be better to target a--have a 
lot more resources, even if it took us some time to get there, 
it took us a lot of money to do it, why is it not necessary to 
give us really good security to physically inspect with 
radiological equipment or with the eyeball or whatever every 
container before it gets put on a ship?
    Is there anything other than doing that can give us that 
assurance?
    Mr. Ahern. I would go back to your original question and 
the question that you just posed.
    I think immediately after September 11th when the container 
working group was put together, it did involve Customs, TSA, 
Coast Guard, VOT and all the State holders, all the industry 
folks, all the Federal, State, local and international people 
involved in the shipment and inspection of containers and the 
movement of containers, we tried to look at what the absolute 
safest way to achieve the 100 percent that you're talking 
about, that fine level of certainty.
    I think what we all came up with coming out of that is I 
guess in a perfect world, certainly 100 percent of all those 
containers were physically inspected, that would achieve what 
you're talking about, but after applying what that cost would 
be.
    Mr. Nadler. What would that cost be?
    Admiral Bennis. That cost would be huge.
    Mr. Nadler. What order of magnitude, are we talking about 
$1 billion, $10 billion, $100 billion?
    Admiral Bennis. We're easily over $10 billion.
    Mr. Nadler. $20 billion?
    Admiral Bennis. A lot is the answer. I'll get back to you 
on that.
    We looked at intelligence, bringing more information in 
with regard to each container, better means of securing the 
container, risk assessment, and I think as a community we all 
felt that we could have a higher level of certainty doing 
something other and better than 100 percent inspection.
    Mr. Nadler. Doing all these other things would give you a 
hire level of certainty than 100 percent inspection?
    Admiral Bennis. When you put together the intelligence, 
information we would receive, the actual greater amount of 
electronic data that we can provide to Customs and better 
partnership, working with the shippers, I think we'll have a 
very, much more comfortable level at a much more lower cost.
    I think the cost is prohibitive.
    Mr. Nadler. The cost is another question. I can't 
understand how you can have a higher level of certainty with 
all this.
    Admiral Bennis. I think the consensus was we gain an awful 
lot of intelligence, those things, are aside from the 100 
percent inspection. 100 percent inspection is a monumental 
task. You asked if it was impossible. It's not impossible, but 
it's certainly not easily doable.
    Mr. Nadler. Thank you very much.
    Mr. Shays. I want to start from the basis of just 
understanding whether we have the capability ever to locate 
the--discover a nuclear needle in the cargo container haystack.
    I want to know if this is a goal that is even achievable. I 
would like to ask each of you.
    Ms. Hecker.
    Ms. Hecker. We don't believe it's achievable with the 
equipment in place. We think it is limited. The radiation 
detention pagers that have been so prevalent, our analysis and 
our review with DOE, with real expertise in this technology, is 
that its capacity is limited. Its range is limited. Its 
sensitivity is limited.
    So that it is not a major detention tool. Similarly, the 
portals which has more promise, there is one of them in place. 
There are 400 planned to be in place by the end of next year, 
but there is one being tested at Detroit Winston Bridge.
    There are other detention devices that attach on the x-ray 
machines, but they're only for small packages, so the detention 
of nuclear materials is dependent upon technology that is 
limited and isn't working.
    I think that perhaps goes to some of your questions, Mr. 
Nadler, that if we get better security what goes into the 
containers, it potentially can be more assuring than scrutiny 
after the fact that is not consistently reliable.
    We have ongoing work looking at the targeting criteria and 
the screening technology more broadly than the one I've talked 
about that is used by Customs.
    That work has identified a number of challenges, both about 
the implementation of this targeting and the effectiveness of 
these initiatives. That's all I can say about it. The rest of 
the work is law enforcement sensitive.
    So the answer to the question of why don't we do every 
single one, I think we really have to deal with how well we're 
doing what we're doing and how it can be improved before we try 
to replicate it and have it on every container.
    We have to get it working better. We have to get the 
technology more fine-tuned. We have an outstanding 
recommendation for systematic training. A training is not in 
place. The strategy is not in place for the placement of the 
equipment and those are fundamental concerns that we have.
    Mr. Shays. Admiral Hereth, do you remember the original 
question? I just want to know is our objective achievable, are 
we going to ever be able to discover the nuclear needle in the 
cargo container haystack.
    Mr. Hereth. I don't know that anyone will give you a 100 
percent yes to that.
    I believe we can be significantly much higher and closer 
100 percent than we are today. I think the supply chain 
integrity improvements are key to this, along with a couple of 
other keys.
    One is intelligence and infusion of that intelligence 
information from a multi-agency source and maritime environment 
is a key, one of the keys to making sure we deal with things 
overseas or outside of the ports, and we're focused in on that. 
We're about ready to stand up to further complement the 
intelligence work.
    The supply chain work by Customs and others is an important 
piece of this. Pushing out the borders to the screening 
overseas, like Mr. Nadler was referring to, I think is another 
piece of this.
    While each of those individually is not a 100 percent 
answer, I think when you do the percentages and add them up, 
that you start to begin to approach that level where it becomes 
just not an acceptable alternative. It's a target. It's too 
hard.
    That's our assessment on things.
    Mr. Shays. Mr. Ahern, is it achievable?
    Mr. Ahern. We can certainly do a much better job than we 
currently are. Certainly, the Customs Service believes we need 
to continue to move borders back. I believe we're doing that.
    We believe we're doing that faster and we need to pick up 
the pace on it.
    One of the points, it does start with the information. The 
information that goes in more target systems. A lot of it was 
based on the fact that we were getting incorrect or incomplete 
manifest information. On December 2nd we will have a targeting 
system of getting this information submitted to us within 24 
hours in advance of lading in foreign location.
    As for technology, we want to have a layer system 
technology. We do not want to have a single system that could 
be potentially be concealment by terrorist organizations or 
narcotics and contraband. That's why we have a layered set of 
systems in place.
    We're not relying on personal radiation detection pagers as 
a sole interdiction source. First and foremost is the safety of 
our 9,000 officers getting close to a source of radiation that 
they know that with their personal safety.
    I will submit to that certainly as you were getting close 
to a source making your radiation pager go off, that will lead 
you to believe there is something there that warrants further 
review.
    Mr. Shays. What we're learning is a nuclear device is not 
going to set off that pager. Dirty radioactive material might, 
but not a nuclear device. That was unsettling to me when I 
learned it, but that's the fact. That equipment is basically 
useless.
    Mr. Ahern. I won't get into the capabilities of the system. 
I would happy to submit information on that.
    Mr. Shays. We'll come back to the material in a second.
    Admiral Bennis, is it achievable?
    Admiral Bennis. There are several keys to that point.
    One is beyond pushing back the borders. It has to be 
through the global operation. It's best achieved through 
technology, through intelligence, through manpower.
    And to go one step further, Congressman Nadler was asking 
radiological detection at the source is better than inspection 
at the source. It has to be done in combination.
    The next step from that is we inspect the source, close 
those doors. Then you have to rely on technology manpower to 
ensure that you have security and you maintain that security as 
opposed to the supply chain.
    To close the doors in Brussels and say it's safe and secure 
and let it go, I want to know there is technology and a system 
in place to ensure the security and integrity of that 
particular cargo is maintained through transit.
    We need to know once it's closed up that it's secure 
throughout the entire transit.
    Mr. Shays. Is there hope that someday we'll be able to x-
ray a container and have a pretty decent idea what is in it?
    Mr. Ahern. I think that will be something attainable. We 
need to make sure we have the technology and also have the 
capacity that we have facing our U.S. borders as we're securing 
the homeland.
    That's one of the things we need to do, a lot of this 
screening when we have some natural lag time prior to moving 
the vessels, as we move further modalities of trading, the 
greater capacity, greater technological system, something 
that's ideal.
    Mr. Shays. I didn't realize my time has run out. Leave the 
red light on. We'll do a second round.
    Mr. Souder. I think it's important that the record show you 
came up with an answer Mr. Nadler's question. I don't think $10 
billion even works.
    Admiral Bennis. I don't either.
    Mr. Souder. Because in addition to this goal that we would 
like to see, the container and see what's in it, we would have 
to do it at all locations, the train and anybody who touched 
that and had access to it while it was moving.
    But it doesn't cover Amtrak, it doesn't cover other 
shipments of biological weapons. That's our challenge as we 
look at this. We're not under attack from one type of weapon. 
What is clear, however, is we have to have tremendous 
technology investments.
    I think everyone understands, if I can ask you to 
elaborate, if you have a higher level than 100 percent coverage 
of the container is because we are completely confident that 
our equipment, all of the subparts of the risk, unless you're 
doing multiple or layered checking, you don't have the 
competence that any, whether it's access machine or hand search 
is 100 percent reliable because you don't know exactly what 
you're looking for.
    In other words, if you search every container it would give 
you one aspect of it but it doesn't tell you what you're 
learning from intelligence. It doesn't tell you what you're 
learning about other types of things coming through and we 
don't have confidence in even our best machines. It's just like 
plastic guns going through an airport screening and it's not 
like the bad guys aren't coming up with new things, too.
    Mr. Ahern. We need to make sure, there are a variety of 
different threats. You do have an array of systems that have 
different capabilities that you can detect some of the other 
threats that might be facing us on a particular day.
    Mr. Souder. The new portals, you said we were going from 
one to 400. Partly we're testing thing and moving them so 
rapidly because of the need right now.
    What does one of those portals cost?
    Mr. Ahern. Range of $80,000. The site work that is done is 
also similar in that range. It runs about $90,000.
    Mr. Souder. A portal is only a fraction of coverage. I 
understand that the 2 percent is merely a skim 2 percent.
    The new machinery we're putting in fits into three or four.
    The partial answer to the question is that if you're 
looking just at one thing, and that you can get near 100 
percent certainty in some areas with that, it is achievable in 
one category of risk.
    Mr. Ahern. You have to look at the configuration throughout 
the United States, airline and sea, to define the natural 
points are. We have close to 100 percent screening radiation.
    Mr. Souder. It's more obviously difficult in the north. The 
truth is that a good percentage of our traffic comes across 
Canada, Buffalo and Windsor. To control that is to reduce the 
risk.
    I think that correctly what Mr. Nadler was hitting on was 
to define things, you need to reduce that substantially, the 
monetary concern in Congress is a little less. It's only part 
of our high risk targets.
    Mr. Ahern. We agree.
    Mr. Shays. Mr. Allen.
    Mr. Allen. Thank you, Mr. Chairman. On September 11th, ABC 
news aired an investigation they conducted in which they 
smuggled into New York harbor a shipping container with 15 
pounds of uranium. It was not enriched, so it did not pose a 
threat. If it had been, it would have been enough for half of a 
crude nuclear device and more than enough for a so-called dirty 
bomb.
    The Customs commissioner claimed his inspectors singled out 
the ABC News container as it entered New York Harbor and said 
they checked it and they ran it for radiation and also did a 
large scale x-ray.
    If you can elaborate that for me, I would like to know what 
equipment Customs used on this particular container. And if you 
could address the question--as I understand it, the uranium 
came in anyway, and so if you could talk whether this is the 
case, where the equipment that we were using didn't work or 
whether it read the package properly, the container properly, 
or where reading was all right but human beings didn't 
interpret the analysis correctly, is it one of those two 
things?
    Is there some other explanation? Is there something that we 
can learn from that incident that would help us.
    Mr. Ahern. Certainly we learned from these types of 
exercise, but I would point out for the record that on that 
particular vessel, we believe there was 1,030 containers that 
were on board and our targeting systems did work because that 
was one of the few of those containers we don't get into 
specific numbers. We'll have to provide those to you later.
    It was one of the few containers there were targeted for 
further radiation. We did that radiation screening as well as 
the x-ray and we found there was no radiation emitted or 
anything significant in that container that drew us to do any 
further in that inspection.
    Mr. Allen. If it had been enriched radiation, would it be 
detected, do you think?
    Mr. Ahern. That's a question of science that I'm not 
qualified to answer, but I would be happy to have our research 
development people, scientist provide you with that.
    Mr. Allen. I would like to know the answer to that.
    Mr. Shays. Not to put you on the spot, it's kind of a basic 
question, and for us to have a committee--we didn't learn from 
the CIA or anybody else's intelligence community that plutonium 
or enriched uranium didn't give off a signal. We had to learn 
it from a public organization, and so is this--are you 
uncomfortable in talking about it.
    Mr. Ahern. I'm not uncomfortable talking about it.
    Mr. Souder. Thank you, Mr. Chairman.
    Mr. Tierney. Ms. Hecker, you mentioned a moment ago that 
there was an incident and it basically involves communication 
between a number of different agencies making a decision with 
respect to whether to allow them to move forward or not.
    Let me start by asking, if a ship were coming in that had 
suspected nuclear acid on it, how many agencies would be 
involved? You have the Coast Guard, I assume. You would have 
the FBI presumably.
    Ms. Hecker. Perhaps the Department of Energy.
    Mr. Tierney. The CIA, Customs?
    Ms. Hecker. Certainly.
    Mr. Tierney. So at least those five.
    Customs and Coast Guard are part of the new homeland 
security department, but the CIA, Department of Energy and the 
FBI are not.
    So how are we going to determine what coordinated effort is 
going to made to make a determination who is going to be in 
charge of the situation, who is going to make the decision?
    I know from your testimony the incident at hand, that boat 
sat there for 18 hours docked before a decision was made to 
send it further out.
    So I guess the first question is, who made the final 
decision to send it further out? Was it the Coast Guard?
    Mr. Ahern. Coast Guard in connection with the other members 
of that unified unit.
    First of all, CIA wouldn't have been part of that mix.
    Mr. Hereth. I don't believe they were part of the mix, but 
the other agencies are.
    Our response as coordinator, for marine responses is to 
involve the people who have the expertise to make a decision. 
The Coast Guard, DOE, FBI, Customs were involved in that.
    Mr. Tierney. Who was in charge?
    Mr. Hereth. The Coast Guard is the lead maritime Federal 
agency. We have the ability to control vessels, so we can tell 
a vessel not to come into a port if there is any suspicion that 
we need to deal with.
    That poses some dilemma having to deal with that, because 
it's difficult to get equipment out there, to get people out 
there, to get expertise out there to deal with a survey that's 
required on a container that has some radiation materials in 
it. So it's depending on where it's located.
    Mr. Tierney. Can somebody tell me why it took 18 hours in 
that particular incident for a decision to be made?
    Mr. Hereth. I understand there were a lot of details that 
went into that decision. We probably should respond for the 
record on that particular issue because it gets into some of 
the details.
    I guess to answer your question as directly as I can, the 
Coast Guard called in as soon as possible those people that 
have the expertise to help make the decision and evaluate the 
risk of that particular scenario. Getting the right equipment 
there, getting the right people there to get the survey was the 
intent of that response of the organization.
    There is a work group that has been set up by the Office of 
Homeland Security. That group is looking not only at what has 
happened in the east coast, but it's looking for protocol 
improvements, process improvements, procedure improvements. 
Those efforts are underway.
    Mr. Tierney. Someone suggested that one of the reasons the 
ship couldn't leave is because it required higher tide for an 
exit.
    If that's the case, are there provisions being made for a 
similar type of situation if that should arise again so if 
something comes in far enough, before the problem is detected 
and they can't get out because the tide isn't high enough? 
Seems like a fairly serious matter.
    Mr. Hereth. I don't have an answer to that particular 
question. I haven't heard that particular scenario, but in 
other ports I've been associated with, there are usually 
clearance requirements and they may or may not be affected by 
the tidal range of that particular port.
    Mr. Tierney. Before I close out, Mr. Ahern, you mentioned 
several times during your discussions, reliable manifests.
    Will you define that? What makes a manifest reliable? Where 
you would consider it reliable?
    Mr. Ahern. We believe when the new manifest regulation goes 
in December 2nd, the data elements specified in those 15 
specific areas, within our expert submission. We need to have 
those 24 hours in advance.
    Mr. Tierney. Can you tell me what those are?
    Mr. Ahern. I would prefer to give those to you as part of 
the record afterwards. They're very similar, shipper, 
importer's name, address information, other things that we've 
not been receiving.
    When you take those 15 data elements, based on certain 
factors in this, it gives us a risk determination.
    Mr. Tierney. All of those factors are provided on the 
manifest by some human being that enters them on, so they're 
only as good as the reliability of the person who is making the 
entry.
    Mr. Ahern. We do have a compliance test as well to make 
sure some of the data information is accurate, but you're 
correct. It's reliant on key stroking the information submitted 
to Customs.
    Mr. Tierney. Thank you.
    Mr. Shays. We have a 10-minute rule so that we're able to 
pursue the points to bring it to some conclusion.
    In the process of my asking questions I wanted, I got some 
long answers on things that needed to be part of the record. I 
was wanting to get a very clear sense of whether we're going to 
be able to find a nuclear needle in the cargo of a container 
haystack, and the answer is no. That's the answer.
    I think the answer is no because it's illogical for anyone 
to explain to me, unless you can, and I'm being a good 
listener, but when I--a larger containership contains how many 
containers?
    Mr. Ahern. 6,000.
    Mr. Shays. It's stacked--no? Yes? Do we have an agreement, 
6,000? It's stacked stories high in the interior of the ship 
and then you can have at least seven containers atop or even 
more?
    Admiral.
    Mr. Hereth. Six or seven.
    Mr. Shays. They're tightly fitted, you don't get to walk 
down the center of them, so I'm at a loss to understand when 
you board the ship how you're going to find out what is in the 
core of that ship in a container that has seven containers 
above it and seven below it. Or less, and how many on either 
side, you don't get to it.
    So what impression are we trying to give to the public 
right now as to our ability to search a ship once it has the 
container on it.
    Tell me how that happens. Do we have the ability of 
equipment to be able to go through all of those containers and 
know what each container is? Is this something you can't 
testify to publicly?
    Give me a little help here. I'm leaning to a point that 
says it's got to stare us in the face that we got to know what 
is in the container beforehand. If not, that's one thing, but 
my view is tell the American people the truth and they'll 
understand why we have to be there overseas. If we can, in 
fact, know what is in containers of the ship once it's loaded, 
tell me.
    Can we?
    Mr. Hereth. We still need work on sensors and detectors. 
You can get on the vessel, you can approximate and position 
equipment to determine exactly where the range and source may 
be located. So to that degree, we can locate the approximate 
location of the problem.
    The difficulty becomes how do you deal with it in an 
offshore environment, and that's where consultation and 
discussion has to play into this.
    Mr. Shays. Is it your testimony that we have the ability to 
detect a weapon grade material on a ship?
    Mr. Hereth. No, it's not.
    Mr. Shays. We do not have the capability?
    Mr. Hereth. I'm not a scientist. Lots of work is being done 
in that area. I'm not testifying to that particular fact.
    Mr. Shays. You're not testifying today that we have the 
capability to detective a nuclear weapon on board the ship?
    Mr. Hereth. I'm not testifying to that.
    Mr. Shays. Is anyone else testifying that they have that 
capability?
    So it gets us to this point, which is a point you're 
making, but I don't think it's emphatic enough. We have to be 
able to look at these containers before they get on the ship.
    Would you all agree?
    Ms. Hecker.
    Ms. Hecker. That's certainly the preferred way, and where 
most of the emphasis is.
    Mr. Shays. When you said preferred, it implies there is 
another way that's not preferred, but is somehow--in fact----
    Ms. Hecker. Clearly, there is still screening that will 
occur domestically and that should not go away. As Mr. Ahern 
said, it's certainly not what we want to be, anything but the 
very, very last line of defense.
    Mr. Shays. I'm attempting to pursue this line before I get 
the answer from the others, but in Miami, when I was watching 
containers being unloaded, it was an amazingly impressive 
thing. They come off the ship, the truck is there, they're 
loaded and they're sent off to St. Louis or whatever. One, 
after the other, after the other, so is it your suggestion that 
we have the ability without intelligence to know which one of 
these containers, the 5,000, 6,000 that come off the ship, 
we're going to inspect?
    By the way, in Miami, it's in Miami. It's already there.
    So I guess what I want is a little bit of candidness 
because we have to make decisions on this side of the table as 
to how hard we pressure our allies as to knowing is there a 
more effective way to know what are in the containers.
    I guess what I'm asking the rest of you is, is the 
preferred way to look at and then define preferred for me, is 
it really the best way, in fact really the only way as things 
stand now to make sure that we're protected?
    Admiral.
    Mr. Hereth. I would say in addition to that, supplement 
that with integrity and intelligence--intelligence has to play 
into the equation.
    Mr. Ahern. There's not a single solution to this problem. 
As I submitted as part of my testimony, it needs to be a 
layered set enforcement system. We believe it should originate 
in foreign locations, with megaports overseas to begin the 
enforcement screening for weapons of mass destruction or 
implement terrorism before they get laden on the vessels coming 
into the United States. We can take it one step further at the 
place of manufacturing and shipping consultation.
    Mr. Shays. Let me interrupt. My sense, as I listen to your 
testimony, is that many, 99 percent of the challenge basically 
is trying to know what is in that continuer before and then 
everything else is a secondary approach. If we have the right 
intelligence, if we had the right intelligence we can isolate 
that container hopefully before it arrives in the port.
    If it's on the ship, if the container is in the core of the 
ship, it's going to be a little more difficult.
    And so I guess I would like each of you, after I ask 
Admiral Bennis, I would like to you rank how much of the battle 
is doing it overseas before it gets here, and these are the 
Customs overseas, so I'm not going to put you out of business, 
Admiral Bennis.
    Admiral Bennis. I think it goes back to what I said before. 
The key is when you have a point of origin and maintain the 
security of the containers through the process. If you know 
what's it in from the point of origin, maintain it throughout 
the transportation, and you're all right.
    Again, as I said, that's intelligence, that's manpower. If 
you get intelligence and at some point in the movement of 
particular cargo there is a problem at that point, then you're 
doing it based on intelligence or you're targeting container 
row 8, 115, on cell 7, you're targeting a specific container, 
you know exactly what you're looking at.
    Mr. Shays. The purpose of this hearing is to educate us 
indirectly, the American people who have to tell their 
legislators how to allocate funds.
    Let me ask you this: In a scale of one to ten, tell me the 
importance of doing what Admiral Bennis has done.
    Let me put it in percentage. Is that 90 percent of where 
the effort is, 40 percent of where the effort should be. Or 10 
percent.
    I want each of you to do that.
    I'll start with you, Admiral, and go the other way.
    Admiral Bennis. I'm going 90.
    Mr. Shays. Mr. Ahern.
    Mr. Ahern. I believe it starts with information. 80 
percent.
    Mr. Hereth. 90 percent range, but let me supplement that 
with----
    Mr. Shays. Let me ask Ms. Hecker.
    Ms. Hecker. I hesitate to put it--I want to endorse the 
layered approach.
    Mr. Shays. I'm not going to allow you to hesitate. The 
question is pretty easy. We have to make a decision where we 
put our resources and our time.
    Do you think that most of this effort should be to stop it 
before it comes to the United States? We should know what is in 
the containers. Do you think we should put more pressure on our 
allies to cooperate? Do you think we should put more emphasis 
on trying to seal those containers up and knowing what is in 
them before they're put on a ship?
    Ms. Hecker. 80 percent.
    Mr. Shays. That's not at the end of the world, I hope.
    Mr. Souder. I thought you felt it should be on information. 
Did you say you felt it should be on internal ports? 80 percent 
of our emphasis should be on preclearance information.
    Mr. Shays. We're talking preclearance.
    The other, what that says to me, we already know how 
important intelligence is. We know how important those other 
things are. This tells me this is a big deal that we have to 
spend some time and effort on. That's what it's telling me. It 
tells me this needle in this haystack, let's get it before it 
becomes the needle in the haystack. If you want to tell me 
something different, you have time.
    Admiral Bennis. I would like to add the percentages are 
pretty high. This Operation Safe Commerce, it's pretty much the 
census we've come to since September 11th.
    Mr. Shays. It's logical. If you were doing all those things 
and told me it was 30 percent--any other comment?
    Mr. Hereth. One comment is to push the discussions AMO have 
focused on, pushing that issue on Customs organization through 
WCO, foreign countries that are shipping stuff to the United 
States to comply with our standards and raise their standards 
at the same time so we can develop resources overseas.
    This could be supplemented with a quality assurance 
program, such as foreign assessments to security levels of 
ports overseas.
    Mr. Shays. We asked all of our panelists if there is 
anything you want to put on the record. One of our panelists 
put on the record his biggest fear. His biggest fear was a 
small group of scientists developing an agent that if released, 
would wipe out humanity.
    My biggest fear and why I'm eager to have this hearing is a 
country has nuclear weapons and would not send them by missile. 
They will put them on five containerships or one containership, 
send them to five different cities in the United States and say 
good-bye if you don't change a policy on this.
    The president of the United States is faced with that 
horrific decision. It wouldn't be the country--it wouldn't come 
out of Iraq. It would be some distant terrorism in Indonesia 
acting on behalf of some source.
    Is that an unrealistic fear?
    Admiral Bennis. I would say no.
    Mr. Shays. Mr. Ahern.
    Mr. Ahern. I would say no. It's a fear we all share.
    Mr. Shays. Mr. Heckler, do you want to answer?
    Ms. Hecker. I believe it's a great danger.
    Mr. Shays. I want to put on the record you've been a 
wonderful panel.
    Is there anything you want to put on the record?
    Admiral Bennis. Only thing I would add, what I've seen in 
the last year is tremendous cooperation among the small 
agencies. It's been phenomenal.
    Mr. Hereth. No one can do it all, and in my experience 
around the country, I have just come from San Francisco to the 
east Coast and I've seen lots of cooperation at all levels of 
Federal, State and local government. We need to continue to 
push on that factor. No one agency can do it all.
    Mr. Shays. Thank you all very very much.
    Let's take a 5-minute break.
    [Recess.]
    Mr. Shays. We'll start. We have called before our panel Mr. 
James Kallstrom, Director of New York State Office of Public 
Security and Ms. Bethann Rooney, Manager, Port Security, The 
Port Authority of New York and New Jersey.
    We will swear our witnesses in, if you would both stand.
    [Witnesses sworn.]
    Mr. Shays. I would also note for the record that we have 
been joined by Carolyn Maloney who is a very valued member of 
the Government Reform Committee, and it's nice to have her here 
as well.
    This isn't quite your district, but you can throw a 
baseball and reach your district from here.
    Mr. Kallstrom, we'll start with you.

 STATEMENT OF JAMES KALLSTROM, DIRECTOR, NEW YORK STATE OFFICE 
                       OF PUBLIC SECURITY

    Mr. Kallstrom. Good afternoon, Mr. Chairman and 
distinguished members of the committee. On behalf of Governor 
Pataki and New York State Office of Public Security, I would 
like to thank you for the opportunity to discuss critical 
issues relating to port security.
    I would like to just take one moment and introduce John 
Scanlon, who is the Director of Public Security, and Mark 
Cohen, who is the deputy, and we actually have a number of 
staff from the office here that have worked so hard at all 
these issues for the last year.
    Mr. Shays. What is your title?
    Mr. Kallstrom. Senior adviser to the Governor for 
terrorism. They kicked me upstairs.
    The subtitle of these proceedings, Finding the Nuclear 
Needle in the Cargo Container Haystack, aptly describes what 
we're up against when an oceangoing containership arrives in 
the New York/New Jersey seaport.
    All terrorism is local. The Governor and the State of New 
York have an abiding and vested interest in close coordination 
of Federal counter-terrorism activities with those of State and 
local government. While many of the issues discussed today will 
involve Federal solutions, the local impact of any terrorist 
act or threat in our port cannot be overstated. When the 
Mayview Maersk arrived in Port Newark on September 22nd, to 
whom did Customs and the Coast Guard turn to investigate, clear 
and potentially render-safe its suspected explosive cargo? The 
Port Authority Police, the Newark Police Department and the 
Union County Police Department.
    Make no mistake about it. There's a distinct possibility 
that a nuclear bomb or fissile material can come to American 
shores via cargo container or ship.
    Al Qaeda has conducted maritime operations, employs suicide 
bombers, has expressed a keen interest in acquiring nuclear 
weapons and has conducted multiple large scale destructive 
attacks against western targets and civilians. Other terrorist 
groups are seeking to make similar claims.
    Our seaports and the maritime system are ripe for 
exploitation and vulnerable to mass disruption by terrorists. 
Trade and port security must be made a national and indeed a 
global priority.
    If a containership passes under the Verrazano Bridge with a 
nuclear, radiological or even conventional explosive device on 
board, it's too late. As the September 10, 2002 Palermo Senator 
incident demonstrated, there are no attractive options when a 
ship suspected of containing a weapon of mass destruction 
somewhere within the container that is among scores of other 
containers above or below decks is tied to your dock.
    Worse yet, if a ship were the delivery means of actual 
weapon of mass destruction, detonated anywhere in New York 
harbor or in the port, the consequences to human life, our 
area's habitability, our infrastructure, our national defense, 
our economy and global trade are enormously catastrophic.
    A seaport operator can only do so much. A comprehensive 
global maritime security strategy is required. We must know 
definitively the contents of each of the other 3 million 
containers that annually are handled in the port before they 
arrive. We need to be assured that the cargo containers have 
not been tampered with.
    The State of New York supports such initiatives as 
Operation Safe Commerce in order to develop dependable 
arrangements for securing and monitoring cargo, starting at its 
overseas point of origin to its final destination. We're 
pleased that the Port Authority is the local lead in this 
initiative.
    The new role that amends Customs regulators to require 
presentation of manifest information 24 hours prior to cargo 
lading at a foreign port is a step in the right direction. The 
Container Security Initiative in which U.S. Customs inspectors 
are placed at foreign seaports to prescreen cargo containers 
before they are shipped to America is also a step in the right 
direction.
    We look forward to the day when responsible government 
officials verify shipments as being free of terrorist 
contraband at their ports of origin prior to this dispatch to 
America.
    In essence, we should virtually roll back the borders of 
the United States so that necessary security checks can take 
place before our population is threatened by hazardous cargo. 
Keeping danger at a distance would also serve to avoid security 
bottlenecks that would paralyze our seaport.
    Accurate detective, monitoring and reporting technology, 
and electronic sealing of containers to verify the intransit 
integrity of cargo shipments will also serve to protect 
national and regional security while not hindering the 
processing of cargo in our port.
    We must be mindful of the passengers and crew members that 
arrive in our ports on oceangoing vessels. The U.S. Coast Guard 
and Immigration and Naturalization Service must effectively 
work together to ensure that only those passengers and crew 
with permission to land in the United States actually disembark 
the vessels.
    Of course, this permission to land must only be given to 
those who are predetermined by INS to not represent a threat to 
the United States. Having been checked against watch lists, 
etc., we believe this capability does not exist today.
    All concerned must pay scrupulous attention so that 
terrorists do not use our seaports as ports of entry into our 
country by a vessel gangway off the side of ships or even 
inside a container. Steps must be also in place to ensure that 
personnel authorized for temporary landing return to their ship 
before they leave port.
    We need to do logical common sense things to keep 
terrorists out of the United States.
    Our current structure of overlapping jurisdiction dealing 
with different aspects of a ship's arrival is to say the least 
not an efficient one. While we have Customs, the Coast Guard 
and INS ostensibly working together, consolidation of functions 
into the President's proposed Department of Homeland Security 
would clearly hold one department responsible for the ship and 
any of its potentially dangerous people or cargo.
    It has been over a year and 2 months since the horrific 
terrorist attacks on New York and America took place and we 
have yet to enact legislation to create this vitally important 
new department.
    Finally, a word must be said concerning the safety and 
security of activity in the harbor. The bombing of the USS Cole 
and the French oil tanker Limburg are pointed reminders that 
vessels transiting or berthed in our waterways are subject to 
external attacks. Ferryboats and cruise ships are vulnerable. 
Stepped up harbor security is a must.
    The Staten Island Ferry that we observe go by every 10 
minutes, holds up to 6,000 people.
    A seaport operator such as Port Authority, in close 
cooperation with Federal, State and local law enforcement, must 
provide a safe operating environment for the maritime industry. 
In the areas under its control, the port operator in 
partnership with the maritime industry, must adopt best 
practices to reduce vulnerability, prevent or deter terrorist 
or criminal activity and manage the risk should deadly and 
dangerous items enter our harbor after all else fails.
    In this regard, the Port Authority of New York and New 
Jersey is a proactive partner.
    We are pleased that Congress has passed the Maritime 
Transportation Security bill and we're looking forward to its 
enactment into law.
    Finally, as a related matter, the New York State Office of 
Public Security, together with the national Office of Homeland 
Security, is hosting a December 12th meeting with 10 
northeastern States homeland security advisors, to formalize a 
working group on port security, among other issues and to 
exchange ideas and experiences so that collectively we may 
contribute toward ensuring that global maritime commerce is 
conducted securely, safely and expeditiously.
    Thank you for the opportunity to testify before the 
committee. I'll be happy to answer any questions at the 
appropriate time.
    Thank you, Mr. Chairman.
    [The prepared statement of Mr. Kallstrom follows:]

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    Mr. Shays. Thank you very much.
    Ms. Rooney.

 STATEMENT OF BETHANN ROONEY, MANAGER, PORT SECURITY, THE PORT 
              AUTHORITY OF NEW YORK AND NEW JERSEY

    Ms. Rooney. Good afternoon, Mr. Chairman and distinguished 
members of the subcommittee.
    Thank you for the opportunity to testify at this hearing 
and discuss critical port security issues.
    The topic of port security was rarely discussed prior to 
September 11th, except in the context of drug interdiction and 
waterfront crime. However, the events of that day created a new 
and urgent focus on the worldwide vulnerability of the marine 
and intermodal transportation industry.
    The nature of the ports make it extremely vulnerable. Every 
container that enters or passes through our ports must be 
treated as a potential weapon of mass destruction. Every 
vessel, a crew member or passenger are potential terrorist and 
every port a potential target.
    Physical port security is absolutely critical, but it is 
just one piece of a much larger puzzle.
    Our collective mission must be to prevent our ports from 
being the conduit for which a container laden with WMB, or 
terrorists facets.
    Legitimate cargo must not be used as a means to transport 
potential terrorist devices.
    Interdicted container carrying a WM by inspection at the 
port of import is too late. Our goal should be to increase our 
confidence that we know exactly what is in each container 
before it is discharged. It is not possible to physically 
examine the contents of each of the 6,000 containers that 
arrive in the Port of New York and New Jersey each day.
    The key is finding a way of separating high risk cargo in 
the mass majority of legitimate containers and dealing with the 
exceptions.
    Creating a transportation system that balances economic 
concerns with national security is our challenge. We believe 
that every effort must be taken to verify the contents of the 
containers before they're even loaded on a ship.
    The process must include certifying that the container was 
packed in a secure environment, sealed to prevent tampering and 
transported under the control of the responsible party.
    A chain of custody must be established that ensures the 
cargo's integrity and that complete and accurate data is 
provided to Customs well in advance.
    As a way to test the validity of this theory, various 
Federal and State agencies also with private sector partners 
participate in the initiative referred to as Operation Safe 
Commerce which you heard about this morning.
    By verifying and securing monitoring, and sharing 
information about cargo from the point of origin throughout the 
supply chain to the final destination, it is our collective 
vote that if we can provide constructive and tested regulations 
to various domestic and international regulatory agencies on 
how best to secure the supply chain, without burdening the 
industry with unnecessary delays will impact international 
commerce.
    The Port Authority is one of the key players in this 
initiative. In addition to changes in business practices, we 
must leverage and able technology to secure the maritime 
technology.
    Today's technology and security are no longer the same 
issues. We must conduct research and development, followed by a 
group of concept projects for physical and data securities 
systems to identify and introduce areas of technologies.
    The solution should include a number of discrete 
technologies capable of being operable with other stand alone 
systems and the ability to analyze the data.
    Technology needs to include container tracking, smart boxes 
with electronic seals and sensors and non-issues of detection. 
We must not only look at what problems the technology solves, 
but also what problems it causes.
    Many of the technologies out there today claim to have 
false alarm rate of just 1 percent and are very proud of that 
number.
    That pride is perhaps understandable. We have to view it as 
totally unacceptable. A false alarm rate of just 1/2 of 1 
percent on detention equipment would equate to 36 containers a 
day in our port alone.
    Why is a mere 36 containers out of 6,000 a day a problem? 
Every container that's considered to be a high risk container, 
be it by intelligence reports or alarms generated by detection 
equipment requires a cooperative response effort on the part of 
numerous Federal stages and local agencies.
    Each incident is different, some taking hours or even days 
to render State. Most utilizing 20 to 50 percent for primarily 
a stand by mode in the event something does happen.
    In the case of Palermo Senator, the ship that was suspected 
of having on board radioactive material, which turned out to be 
ceramic tiles, it took 4 days and ultimately a team from 
Washington to render it safe.
    The determination to shut down terminal operations in the 
specific area and even to evacuate the facility, must be made 
on a case-by-case basis. Suspending operations in just one 
terminal for 1 hour costs close to a half a million dollars.
    And to say the obvious, a false negative can be 
catastrophic. That is why in addition to improvement in 
technology, we must have people with the expertise to use it to 
interpret the data and to identify the responses to any alarms.
    For the last 14 months, the maritime industry has almost 
been exclusively focused on the potential WMD laden container 
being transported to the United States.
    If a container can be used for WMD, why not the 610,000 
automobiles, trucks, buses and subway cars that pass through 
our port every year.
    In addition, we need to be just as concerned if not more 
concerned, about a vessel being attacked like the USS Cole and 
the French oil tanker Limburg for being used as a weapon 
itself.
    I don't believe that other ports have the resources to 
detect, deter and prevent such incidents. The Federal 
Government has a clear role to play in that regard.
    It is also important to note that all freight loads have 
the means to deliver a WMD; maritime, air, highway and rail. 
Major gateways must pursue a defensive strategy that 
complements overseas interdiction and intransit cargo security 
measures within an array of sensors, screening and inspection 
methods employed at key points throughout the free 
transportation system.
    Focusing on securing maritime containers and the related 
supply chain to the exclusion of other vulnerabilities could be 
our downfall. As you would expect, the Port Authority works in 
close cooperation with the appropriate State and local 
agencies.
    However, through its office of operations and emergency 
management and our public safety department, the Port Authority 
has reached out to Federal agencies for help in tackling the 
problems of monitoring, interdicting, mitigation and 
consequence management that gateway facilities along key 
interstate corridors.
    The cooperation has been strong in the regional Federal 
relationship. We have found the Department of Justice, Energy, 
Customs, the Coast Guard and TSA to be willing and creative 
partners in our efforts to apply existing methods to assist in 
the tremendous challenges we face as to the transportation 
agency.
    We're eager to engage in discussion on original approaches 
for interdiction and welcome being considered for any group of 
concept or projects.
    We and other ports earnestly hope that Congress followup 
with actions, substantial appropriation to match the 
substantial needs of the American gateways.
    Beyond the enactment of the legislation, the international 
maritime organization international code for security of ships 
and port facilities is another essential means to which achieve 
progress in maritime international freight sectors.
    I hope my comments today have been helpful. The Port of 
Authority is prepared to offer any additional assistance you 
may require. Thank you.
    [The prepared statement of Ms. Rooney follows:]

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    Mr. Shays. Thank you very much.
    I'm going to recognize Mr. Allen first. We're going to do 
the 10-minute.
    And we'll just go to Mr. Allen, Mr. Tierney, Mr. Souder and 
then Ms. Maloney who has joined us and then I'll go.
    Mr. Allen. Thank you, Mr. Chairman.
    Thank you both for your testimony today.
    Were you both present during the testimony given by the 
prior panel?
    Mr. Kallstrom. Yes.
    Mr. Allen. Do you have any comment on any of the questions 
or the answers they gave? We would like to at least give you 
that opportunity.
    Mr. Kallstrom. I through the line of questioning was very 
poignant. I would agree with most of what I heard.
    There is one thing I would add. I might have got the 
impression that the majority of the work was overseas and not 
much needs to be done in the United States.
    I would rebalance that notion a little bit, that we have an 
awful lot to do in the United States. We haven't had borders 
that have been very tight for a long, long time. We haven't had 
gateways that are tight.
    Obviously, the discussion we're having today, we all know 
that things can come and go.
    My concern and the Governor's concern and State and local 
concern is what is already here. So we should not lose track of 
that also at the same time we talk about overseas.
    Ms. Rooney. I would add on this issue of no standards, 
similar to Mr. Kallstrom, is that we go back to this notion of 
defense, where we need to have interdiction, intransit cargo 
security, domestic cargo security and then use the technology 
to have an array of sensors, screening and inspection of 
containers where appropriate.
    Mr. Allen. I want to begin with you, but I would like Mr. 
Kallstrom's response as well.
    We talked a lot about interagency cooperation, and 
certainly that was a theme of the prior panel from the Federal 
agencies, but back in Maine, I can tell you there is great 
concern at the local level, but at the State level the 
cooperation is not extending to the flow of funds in the way 
that it should. It seems to me in the long term in order to 
maintain the right kind of cooperation between Federal, State 
and local authorities, there's got be a way to make the--get 
the allocation of resources right.
    I'd be very interested in both of you commenting on that, 
how that's worked for you so far and what you think needs to be 
strengthened vis-a-vis the relationship.
    There's been a great deal of talk in our level how we have 
to be beef up the national security, and I think there's a 
recognition in Congress that a good part of the additional work 
needs to be shouldered by the Federal Government.
    That isn't necessarily happening, at least with the local 
and State agencies I've been talking to.
    Ms. Rooney. I think your question raises two points. One is 
in regards to the communication and coordination among the 
State and local agencies. The second is regard to funding.
    I can say that we have been rather successful in both of 
those regards. We have an incredibly successful working 
relationship with our partners in security, both on the local 
level and national level.
    We have a variety of--we are participants in a variety of 
committees that have polled all of these organizations 
together.
    On the funding side, through our office of operations and 
emergency management, we have been very successful again in 
working with the Department of Justice, Department of Energy 
and TSA in securing funds for some of the projects that we're 
looking at doing in the area of needs assessment and deploying 
and testing some technology that is out there that could assist 
us in our maritime, air and rail and highway systems.
    Mr. Allen. For the State, what has been your experience?
    Mr. Kallstrom. Well, I come from 28 years in the FBI in my 
prior life, so I think we turned the corner. I think we now 
understand the necessity to have better information, better 
communications. I think there's a long way to go.
    We have close to 700,000 State and local police in the 
United States. We have 70,000 here in the great State of New 
York and we need to get them more engaged in the terrorism 
business. They're the eyes and ears of our citizens and they're 
our first line of defense in many ways.
    Two days before the tragedy that happened right up here, 
one of the terrorists was stopped on Route 95 doing 90 miles an 
hour. He was written a summons and let go. Police generally 
don't have access to data bases. That's relevant as to them 
taking any kind of action or making logical decisions on the 
scene.
    I think that's been widely discussed. We need to move to a 
new paradigm of assisting and helping and empowering State and 
locals to play a bigger role. False identification, which may 
be a little bit off point, is totally out of control.
    The ability to acquire identification pretty much anywhere 
in the world, including this great State and other States--
Federal identification doesn't have the technology and Social 
Security cards, the State identification, birth certificates, 
it's things that get into a baseline I.D., most of us don't 
have that type of technology.
    They get you on an airplane. They get you on a boat. They 
get you a whole new identify. It's a local issue that has wide 
ramifications.
    Mr. Allen. You said you were open to regional cooperation 
with other communities. Mr. Tierney is from the Boston area. 
I'm from Portland.
    Has there been much going on, much exchange of information 
among different port directors up and down the east coast in 
dealing with some of the issues you're confronting?
    Ms. Rooney. Yes, there has. One organization is the North 
Atlantic Port Association, which is really from Maine to I 
believe Maryland, and the other is through the American 
Association of Port Authorities.
    Both of those organizations have been focusing quite a bit 
on port security pre September 11th actually and certainly 
stepped up those efforts post September 11th.
    The FAA has a port security committee and task force that 
is working on port security, in particular on the legislation, 
on the Federal rulemaking and the Coast Guard regulations, 
Customs rules and programs that have come out.
    There is quite a bit of discussion among myself, with 
myself and with my counterparts around the Nation in 
coordinating more activity.
    Mr. Allen. Thank you.
    That's really all I have.
    Mr. Shays. Mr. Tierney.
    Mr. Tierney. Thank you.
    I think you've done a great job rounding up what went on in 
the first discussion and adding your comments to it.
    We're asking to reach out and extend our borders to a lot 
of other countries and have them go along with the standards we 
are going to set for security.
    Are we prepared for this?
    Mr. Kallstrom. Well, I assume we are. That's logically a 
Federal issue. I don't know how those talks are going. I 
suspect we are.
    The recent events of the last week in the U.K. and 
elsewhere, there have been terrorist acts in the last 2 weeks. 
Everyone has been coming to the same conclusions we've come to 
already.
    I suspect we are.
    Ms. Rooney. We certainly agree. We're going to be required 
to do the same thing that we're asking our foreign counterparts 
to do. Many of the comments that the port operators and the 
shipping lines and the like have had is in evaluating these 
international requirements and regulations is are we able to do 
the same thing in return.
    So we have been very active in those discussions.
    Mr. Tierney. You've included those discussions with people 
from the industry?
    Ms. Rooney. Yes.
    Mr. Tierney. Thank you, Mr. Chairman.
    Mr. Shays. Mr. Souder.
    Mr. Souder. Does the State have special efforts on 
protection on security system other than Pugent Sound and there 
are many more people here during rush hour that are vulnerable 
on the ferry system.
    Have you taken steps to beef that up? Has the Federal 
Government helped you with any of that? What type of protection 
do you people have?
    Mr. Kallstrom. It's one of our highest concerns. We have 
taken steps. We've done a lot of coordination.
    I prefer not to share the technical details of that here 
today. Clearly, we need a much larger Coast Guard.
    I know there's a huge budget approval in the next fiscal 
year. If I was empowered, I would triple the size.
    Mr. Souder. You think the greatest threat would be, the 
whole problem with these hearings, I would like you to say 
publicly what you don't, but we talked about the USS Cole, but 
rather than internal threat, have you stepped up efforts 
internally in passenger screening?
    Mr. Kallstrom. Within the resources available, Coast Guard 
and NYPD that paroles that harbor out here, I think we're 
taking logical reasonable steps.
    Look out here and look at the number of vessels just going 
by here during this hearing and they're voluminous and a lot of 
them are packed with tourists and citizens of this great city 
going back and forth and we're very concerned about it.
    The type of venue, and it's on our radar screen and it's on 
our first page of things that we care about. We need more 
resources to adequately deal with it.
    Mr. Souder. One of the challenges that we have at the 
Federal level is that this would be predominately intrastate or 
interstate rather than a Federal jurisdiction and at the shame 
time, and obviously what you're doing is very diverse, upstate, 
downstate, type of things, and figuring out how to deal with 
the ferry system and it's such a huge risk, such a high point 
that in the United States would you see possible ways of 
addressing this--have efforts for response biological and 
chemical attacks.
    We have other types of--we have something that can be 
tapped into for any type of screen or protection in that type 
of system?
    Mr. Kallstrom. We mentioned that on numerous occasions when 
we had the opportunity, obviously all these issues we talked 
about for hours are issues that here because we have terrorists 
in the United States of America. They lived among us for many 
years.
    We need better adequate controls to keep terrorists out of 
the country or we wouldn't be having the discussion about not 
enough NYPD, not enough Coast Guard. That's why we need much 
more resources.
    We're dealing with the individual issue like the port, we 
need to keep in furtherance of our mind the fact that we need 
control and do the best we can. I believe we can do a lot 
better under our existing rules and under our Constitution, 
under our new process.
    I don't think we have to give up our way of life to try to 
do a better job of keeping people who want to kill us out of 
the United States.
    Mr. Souder. We dealt with the cruise ships because they're 
so large. We have all kinds of procedures on cruise ships.
    One of the struggles that we dealt with and it's always 
going to be a challenge is how to have information sharing 
because of different ways of collection, because of concerns 
the State is getting too much information on individuals, 
because of the particular risk, the more you have that 
information spread over a lot of people the easier it is to get 
it compromised, all those kind of debates.
    I don't think the average American understands why we can't 
have a system that when a policeman arrests somebody you don't 
get specific information, they pop up that says this person, 
any kind of basic warning system that somewhere in a system 
where it's a pop-up.
    You haven't seen that yet at this point, even if you could 
call in and say we'll turn this over, something came up on my 
screen.
    Mr. Kallstrom. That's an outstanding comment. We go from 
one extreme to the other in this country. We go from no one can 
get any information for certain reasons, and then we shift back 
the other way. We need some logical middle ground.
    If a State trooper stops somebody on the parkway, who has 
reasonable suspicion, because maybe the identification, what 
they see in the car, or whatever, that person could be on a 
watch list of the U.S. Government and the State trooper does 
not know that.
    We need a green light or red light response back from 
Washington. We don't really need the information. We just need 
to know should we hold onto this person. Should we bring them 
to the station and FBI will show up later to interview them.
    So I think you hit on something that is important, and I 
think there are ways around dealing with this information.
    Yes, there are reasons why we don't share information, but 
I think we can build walls around the sensitive part of the 
information and still provide responders on the street a better 
opportunity to make decisions.
    Mr. Souder. Prescreening overseas, we've seen what a short-
term strike can do in the west coast to our business in the 
United States to greatly push it overseas, are we prepared and 
have we analyzed how do we prepare for this type of thing and 
study it adequately as we're aggressively pushing, could it 
slow down the process, could it put us more vulnerable to 
stoppages or will they move to the Caribbean or other places of 
entry and come by train.
    Ms. Rooney. Our Customs office in New York and New Jersey 
has been able to quantify what increase just in the port of New 
York and New Jersey would be. If they increased that from the 2 
percent physical inspection that was talked about earlier to a 
5 percent physical inspection, that would equate to a backlog 
of 4,500 containers a month that otherwise would be going out 
the facility that would be delayed.
    It would require 400 additional inspectors and cost $1.2 
million per month. That's the most that we can do to qualify or 
rather quantify the cost in terms of delay and dollars of 
additional inspections.
    And therefore, when you look at that, you go back to doing 
it overseas, and we've got to have this layered approach to 
security that people have talked about.
    Mr. Souder. If we put the pressure, might they look to go 
to another port of entry and never come to New York?
    Ms. Rooney. One thing we're afraid of is if we don't have 
regulations at our borders, at our land borders in Canada and 
Mexico, that cargo coming across our land borders will be 
diverted and that is clearly a fear, that we cannot allow this 
to be diverted to Canada and Mexico.
    We need to have the same regulations at our border 
crossings as we do at our seaports of entry, but if you look at 
the foreign point of origin, and when you talk about Operation 
Safe Commerce and CSI and C-TPAT and some of these initiatives, 
if you put those all together and have this layered approached 
to security, we believe that you will be able to have 
reasonable assurance on the majority of the containers that you 
don't have to stop and inspect them here.
    We need to ensure at the point of origin what is going 
inside that container. There's a program in place in I believe 
23 other ports around the world right now that requires 
precertification of all import cargo, and that's being done.
    The United States and shippers that are exporting from the 
United States to these other countries are participating in 
that program today. And it's a person who is witnessing the 
containers, taking photographs, doing a sampling of the cargo.
    If we do a program like that and have the intransit, 
witness the intransit visibility and you have the inspection 
that Customs is not getting the information 24 hours in 
advance, they have the ability to do the prescreening.
    We believe that we can do a lot to solve the problem and 
not do the inspections here in the United States because it is 
too late for doing it here.
    Mr. Souder. I would like the chairman visiting different 
ports and different places around the world to look at this 
from a narcotics standpoint, from the terrorist standpoint, 
from a trade standpoint, immigration, at the same time at 
Vancouver, for example, the American Customs facility, even at 
the harbor you have to further move some of the items that 
protection at the harbor does not meet the standards that 
Vancouver would be more than some of the others.
    We shouldn't think this is all of a sudden going to fix all 
the risk. We're a long way, even if they meet some of the 
standards, even some of our best allies and advance systems are 
not as advanced as our own 2 percent is not even what they're 
used to meeting.
    This is a multi-year process as we're moving into overseas.
    Ms. Rooney. If we're going to eliminate the risk 100 
percent, I don't think anybody expects that we are or that we 
can. It's a multi process and we have to have other measures in 
place. And that would be the screening and the detection here 
and all of our modes so that we can provide an extra level of 
assurance.
    The primary detection has to be overseas.
    Mr. Shays. Thank you.
    At this time, the Chair recognizes Ms. Maloney.

   STATEMENT OF HON. CAROLYN B. MALONEY, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF NEW YORK

    Ms. Maloney. Thank you, Mr. Chairman.
    Thank you, Mr. Kallstrom, for your many years of service 
with the FBI. We worked together as a special agent with the 
terrible TWA crash and I'm glad you're still serving our city 
and State.
    Ms. Rooney, thank you very much for your professional 
presentation.
    I must thank Chairman Shays for coming into what I believe 
is the most beautiful port in the world. The most beautiful 
setting to have this important hearing.
    I thank my colleagues on the Government Reform Committee, 
many of whom have traveled a great distance to be here today, 
and I really join the President and others shining a much 
needed spotlight on the security weaknesses of our seaports and 
our cargo containers from abroad.
    Just this morning, Secretary Manella instituted a new 
program for screening baggage that goes onto our planes. They 
had an event at the airport this morning. We're inspecting our 
bags now at the airports, but as you pointed out, we're letting 
thousands of 10-ton containers into our port without even a 
glance at their contents.
    I truly do believe that our Nation's ports are more 
vulnerable to terrorism than our airports are. As Ms. Rooney 
pointed out, less than 2 percent of shipping containers are 
inspected when they enter one of a dozen of our ports, and our 
port security should be in my opinion just as strong as our 
aviation security is becoming.
    The ABC News investigation demonstrated how vulnerable we 
are with 15 pounds of uranium being transported into the 
country successfully without a single hint of its movement 
through our border.
    My first question, that I do not want to depend on the port 
of export. I don't want to depend on them. I would like the 
same screening process that we're literally implementing today 
at our airport to be in our country for our containers.
    I must say that I've never seen our Congress more united or 
determined as we have been since September 11th, and we've 
joined in a bipartisan way the Maritime Security Act, and in 
that act was a $90 million, it was an amendment put in by New 
York Senator Schumer for new technologies to increase our 
screening capabilities.
    GAO recommended that we needed $2 billion for such an 
effort, but we did get $90 million.
    So my first question, exactly what is in place now that we 
can screen these containers, not with a bodily search but with 
a screener like we're doing in airports.
    Do we not have any technology? What can we prepare in the 
future? I applaud the efforts of our country and every country 
to be very vigilant at the port of export, but as we learned 
from September 11th, we have many elements already in our own 
country that would be willing to work to undermine our 
government and our security.
    I would like a line of defense at our own ports. Many 
people tell stories, you can put a bomb in the container and 
detonate it over here or time it to go off.
    What type of technology do we have in place now? What can 
we use this $90 million to do? What more do we need to do to 
come up with screening technology similar to what we're doing 
now at our airports?
    Mr. Kallstrom. I don't know how much the $90 million will 
do for us. It's probably a drop in the bucket. We're a very 
rich Nation, and I think I would agree with the Port Authority, 
we need a layered approach and that layer overseas is important 
for the reasons that we don't want to take this thing off the 
Brooklyn pier and have it blow up there.
    We have sophisticated technology in the United States, we 
can interrogate containers in transit. Containers can talk to 
us if someone has penetrated the container and then the Coast 
Guard can take appropriate action.
    Clearly, also, we need a second or third layer here in the 
United States. There's no question. But I think probably the 
most important layer is overseas, but we should have another 
layer somewhere else.
    I guess the other thing I would say is this is going to 
take a long time. Unfortunately, this is such a great country 
with a great heart. This has been going on for a long time.
    Let's go back to 1993 when they blew up the World Trade 
Center. The tunnels, United Nations, FBI office, barracks in 
Saudi Arabia, USS Cole--this is not new. I wish we had started 
doing this many years ago.
    I don't say that for any kind of retribution. Only to make 
the points that we have a lot to do and it's going to take a 
long time to do it and we have to do a lot of things 
simultaneously.
    Ms. Maloney. Shortly after September 11th, the Intelligence 
Committee came to City Hall and a hearing was held with the 
police commissioner, fire commissioner and our former Mayor 
Giuliani. He was very disturbed about the passage of classified 
information, and he felt that the City did not receive the 
necessary classified information that they should have in the 
aftermath.
    I know that the FBI has I believe maybe 14 offices around 
the country, one is here in New York, which is supposed to be a 
multi-tiered approach from the FBI to CIA, the City, fire, 
police, working really in an anti-terrorism effort to share 
classified, all types of information in the event you have a 
September 11th, you have a working team in place to respond.
    Could you comment on that program? Do you think it's 
successful?
    I know that sharing classified information is particularly 
difficult because of sources, etc., but we want to be as 
prepared as possible.
    Do you think that system has worked well to be expanded to 
other cities? My colleagues raised it, it's sharing the 
information so that we're really right for it and could you 
comment on this FBI model and whether or not you think it's 
been successful.
    Mr. Kallstrom. You're talking about the terrorist task 
force.
    The first one dealt with terrorism issues, and I think it's 
worked quite well.
    The problem is--it's not a problem of not passing 
classified information. I can tell you right now when I had the 
honor to run this office, there wasn't anything of substance 
that I didn't share with the Mayor and the police commission, 
regardless of their classification.
    That's not the problem. The problem is there isn't enough 
information about terrorists and what they're doing.
    If you look at the FBI for instance over the last two or 
three decades, it's a miracle the FBI solved as many cases as 
they did when you look at the Attorney General guidelines.
    We need better intelligence. Now we need to figure out, in 
this city we have about 200 State and local police on the task 
force. That leaves 69,800 not on the task force. We need to 
figure out a way to get to them.
    Not exactly classified information, but relevant 
information of what the government knows about certain things. 
Green light, red light, things like that.
    Ms. Maloney. You mentioned in your testimony the need to 
really clamp down on our systems so that what happened in the 
past, we had these villains basically living in our country 
with false IDs.
    Would you elaborate on that? I remember when we caught one 
of these people and they found the man who had given him the 
false IDs and they gave him a fine of $20. Maybe we should 
clamp down on the people who are giving these false IDs.
    How can we be more vigilant in finding the other people who 
are living in and planning to destroy human life, innocent 
human life.
    Do you think we should have a national ID card?
    Mr. Kallstrom. Yes.
    Ms. Maloney. Can you elaborate things we can do in this 
country that we can be safer on the ID issue.
    Mr. Kallstrom. The falsification of IDs is out of control. 
We had an operation to get our task force, we made 400 arrests 
in Queens in 90 days. It's out of control.
    Ms. Maloney. When was this?
    Mr. Kallstrom. Within the last 6 months. It's totally out 
of control in the United States, and the world for that matter.
    We need to insist that the baseline documents in this 
country have security features put into them. And that's not 
Big Brother. That's common sense. In this age that we live in, 
it's a disgrace what we do with identification.
    We have terrorists that live among us. They were observed 
daily by police, shopkeepers and all kinds of people, a trooper 
in Maryland--they were stopped and ticketed numerous times. Two 
people that were put late on the watch list, the CIA put them 
on late, they were in the phone book in San Diego.
    We have so much information in the United States kept away 
from our law enforcement because some subset of people think--
clearly we should not have personal information put willy-nilly 
into the public.
    It's not that we don't connect the dots because the FBI 
didn't talk to the CIA. The FBI talks to the CIA. My best 
friends are in the CIA. The data bases don't talk to each 
other.
    You can't get any of the data to really connect the dots. 
When you're talking about billions and billions of data points 
in the Federal Government, that's not a function two people 
want to take about. That's a bunch of data bases not doing the 
analysis.
    Ms. Maloney. Thank you so much and thank you, Mr. Chairman, 
and my time is up.
    Mr. Shays. Thank you very much.
    I would like to ask you both of you if you could in a 
fairly concise way describe to me the world that exists today 
versus the world that will exist 5 years now as it relates to 
port security.
    What do you envision in port security 5 years from now that 
you don't see today?
    Ms. Rooney.
    Ms. Rooney. Starting here and working back overseas, I 
would imagine that everybody in the port maritime 
administration and airway transportation will have a worker's 
identification card. Whether we have a national ID card by then 
is another question, but everybody in the transportation 
industry will have an ID card.
    That ID card will provide access to sensitive information 
and sensitive security areas.
    I would imagine that we have more sensor and detention 
equipment than we have today. That certainly has been piloted 
and prototyped and demonstrated to detect the radiological, 
nuclear, biological and chemical threats that we're faced with.
    I imagine that we'd have more personal government 
resources. Clearly, we need additional resources, Customs, 
agents, Coast Guard, officers and boats. I would imagine that 
as we work our way out overseas that's we have provisions that 
we've talked about, where there is a chain of custody from the 
point of origin to destination, where there is a preinspection 
of cargo overseas when required that would be determined on 
Customs having information ahead of time and perhaps on the 
certification of cargo at the point of origin and through the 
preinspection of cargo.
    I would imagine that we'd have the electronic seals and 
sensors that was talked about, deployed on the containers so 
that we can determine at any stage in the transportation chain 
that they have been tampered with.
    There will be sensors for the containers. We all know and 
recognize that it's very easy to get into a container without 
opening the doors. The only way to detect something inside of 
them would be with a sensor inside the container.
    Building this layered approach of security with the 
adequate processes, procedures and personnel in place, in order 
to create a complete secure transportation system.
    Mr. Shays. Your point would be at this point we don't have 
that.
    Ms. Rooney. We don't have that to the extent that we need 
to have that. We don't have it all. We're making the right 
steps to get there.
    Mr. Shays. I agree that we are moving along in the right 
direction. The question is we have a long ways to go. And it 
will take at least 5 years, correct?
    Ms. Rooney. I would say so, yes.
    Mr. Shays. Mr. Kallstrom, would you like to add to that?
    Mr. Kallstrom. I think we'll feel relatively good 5 years 
from now knowing what is in the containers when they're packed. 
I think we'll have the type of security on the containers that 
is fairly foolproof.
    There is no reason why we can't have things put inside the 
containers that provide intelligence to us, but this is about 
life and death of our country and our citizens.
    I this the containers will be interrogated by overhead 
assets in route. They will report back to an intelligence 
center that will let the Coast Guard and Customs and others 
make better decisions.
    Obviously, anything we're concerned about we'll try not for 
offload in the United States. We'll offload it somewhere else. 
Inspect it somewhere else.
    We'll have a more robust central intelligence agency, and 
we'll have an FBI that is much more proactive, better 
intelligence. We'll have improved coordination of our 
intelligence throughout State and local police and corporate 
America and business communities, and we'll protect our civil 
liberties.
    I think the biggest risk to our civil liberties is the 
action over decades. We have big problems and now we'll have 
big solutions.
    I think there's ways of doing these things. Clearly, we 
don't want to give up our privacy. We don't want to give up on 
our way of life. Five years, I think is probably optimistic.
    Mr. Shays. Five years is probably optimistic?
    Mr. Kallstrom. Yes.
    Mr. Shays. One of the folks in the audience would have 
liked me to ask this question of the previous panel but I would 
like to ask it in the context of your expertise. It's a very 
important question.
    Routinely, legal shipments of components of the United 
States's own weapons of mass destruction come into this and 
other ports upon flagged vessels. Due to the responsible 
agencies currently tracking these legal routine shipments, so 
at least they're accounted for.
    That's the question I couldn't ask the previous panel but 
what I can ask you is are you told when this happens? Is the 
State of New York told? Is the State of New Jersey told? Is the 
Port Authority told?
    Mr. Kallstrom. There are certain things we're notified 
about. Probably not the whole list, but there's certain things 
of a sensitive nature that we have been notified about.
    I think we need to explore that notion and we're putting 
work together on these issues, so that we can better anticipate 
the actions we have to take at the State and local level.
    Mr. Shays. We have the Governor here from New Jersey who is 
going to testify.
    Ms. Rooney, do you feel you were told?
    Ms. Rooney. We're told when it's important. There are some 
certain shipments that are quote unquote restricted in the 
harbor and when necessary we're told that they're coming and 
that's through the Coast Guard.
    Mr. Shays. You're told there are restricted shipments. You 
may not be told what they are.
    Ms. Rooney. Correct.
    Mr. Shays. Anything either of you would like to put on the 
record before we adjourn for 15 minutes?
    Mr. Kallstrom. I think it's been a very timely hearing. 
Talking about one of the major vulnerabilities that we have to 
deal with, and we are dealing with.
    I think everything we talked about today has been discussed 
in many, many venues, both in State and local level and in 
Washington.
    It's just a big thing to deal with. It will take some time. 
I think we're on the right track now to deal with these issues.
    Mr. Souder. I have one quick question.
    Do you know if there is any subgroup that studies what they 
think the terrorists will do in port security if we take the 
steps we talked about in the next 5 years?
    There's this feeling that we do things and we don't figure 
out how the other guy is going to react.
    Mr. Kallstrom. That's a baseline mechanism in our business 
to do that in all aspects of our security.
    Mr. Souder. So the answer is yes?
    Mr. Kallstrom. Yes. I don't think there is a particular 
group in Washington that mandates that, but clearly, what we 
talk about when we get into New York, we talk about all of 
those issues.
    Mr. Shays. Any comment?
    Ms. Rooney. I would like to add a point on the equipment 
that we have in the port for cargo.
    I want to note that the TSA has provided grants of over $5 
million, that we have received in the port of New York/New 
Jersey for passenger and ferry security to increase those 
measures.
    In addition, many of the pilot projects that are going on 
around the country under the TSA grants are to prove technology 
that can be used to increase cargo container security.
    I think we need to rely on those pilot protects and more 
that will come out in future rounds in order to help begin to 
close the gaps.
    Mr. Shays. Thank you both. You've been wonderful witnesses. 
We're going to have an 11-minute break and we'll start at 15 
after.
    [Recess.]
    Mr. Shays. This hearing will convene to take care of some 
business that we haven't done. Members will be permitted to 
place an opening statement in the record and that the record 
will remain open for 3 days for that purpose.
    Without objection, so ordered.
    All witnesses will be permitted to include their written 
statement on the record.
    Without objection, so ordered.
    At this time, the Chair is delighted to recognize and 
acknowledge the presence of our third panel, the Honorable 
James E. McGreevey, who is the 51st Governor of the great State 
of New Jersey and as an elected official for many years in 
Connecticut, pays attention to what happens in New York and New 
Jersey.
    Governor, your reputation is a very positive one and it's 
well deserved. I know the State of New Jersey is fortunate to 
have you serve as Governor and we're fortunate to have you here 
to give testimony and then respond to our questions.
    As you know, we swear in all our witnesses. Over the 8 
years I've sworn in every witness but one and that was Senator 
Byrd.
    Governor McGreevey. You swore at him.
    Mr. Shays. I chickened out, but if you could stand.
    [Witness sworn.]
    Mr. Shays. It's wonderful to have you here. We'd like to 
hear your statement and then we'll ask you some questions.

     STATEMENT OF JAMES E. McGREEVEY, GOVERNOR, NEW JERSEY

    Governor McGreevey. Thank you very much, Mr. Chairman.
    On the outset, I would like to thank the chairman and 
members of the committee for focusing today on a critical 
concern of homeland security, and namely the protection of our 
cargo containers.
    Also, I would like to express my gratitude to the 
leadership of Governor George Pataki of New York, a dear friend 
who today is represented by Senior Advisor James Kallstrom.
    The allusion to the metaphorical needle in a haystack along 
with our recent experience regarding the Palermo Senator and 
the Mayview Maersk underscore the immediacy of security threats 
we face in protecting the seaports of the Port Authority.
    The Port Authority deserves our continued support, 
particularly in understanding the dual risk in terms of 
potential loss of life.
    There are 18 million individuals served locally by the 
port. The port serves a larger population of 80 to 90 million 
citizens. Potential loss of life would be devastating, as would 
be the economic impact.
    It's been estimated that the damage to U.S. economy could 
run as high as $1 trillion. In light of the west coast labor 
strikes, that was approximately $1 billion.
    The implements for potential terrorist attacks are 
hypothetical. Refined petroleum products at any port face 
potential threat for terrorists. In addition, there exists 
substances that enter a port in extremely small quantities that 
could have a potential for a dire impact.
    A dirty bomb, for example, two ounces would have a 
devastating impact if it exploded in lower Manhattan. 6,000 
containers arrive in port on a daily basis so the haystack 
metaphor is appropriate.
    Prior to September 11th, 2 percent, or more than 3 million 
containers were actually inspected. Intelligence lead efforts 
increased to 5 percent, yet I understand clearly that this 
stream of cargo containers is higher than that percentage.
    We can clearly do better. The Nation aviation industry 
receives $6.1 billion Federal appropriations. The association 
of port authorities has calculated and assessed the security 
cost of $2 billion and again, we understand from the home ports 
the importance, we need to buildupon the container security 
issue, which is collaborative and critical in high risk cargo 
before it's shipped to the United States.
    We must also focus on tightening Customs performance to 
minimize the possibility of tampering, and clearly, it is 
necessary to tighten rules related to cargo manifests, as well 
as to expand the scope of those cargo manifests.
    We also need to be proactive at home. Obviously field 
tests, x-ray, as well as next generation, scanning sensory 
equipment.
    Our ports are intermodal. It's critically important that 
Federal grants for detective equipment being applied be 
diversified, not only through containerized shipping cargo, but 
also rail and truck transportation.
    Again, I think Port Newark is perhaps the most powerful 
example for the necessity for an intermodal detection network.
    We also need obviously to continue the integrity of leaving 
or entering U.S. ports and roadways. Again, upgrading the 
licensing standards, provide for better coordination, 
developing and integrating FBI, INS, Customs and Coast Guard 
and to maximize our abilities to detect and deter reports, 
establish a tear line system, disseminating intelligence, great 
information to State and local authorities on a need-to-know 
basis, which we contend is critically important.
    Also providing for the necessary critical review of that 
tear line system so it's done in a simple, thoughtful and 
efficient manner, as well as the integrating State and local 
response teams, and in addition, the necessity of specialized 
Federal equipment inventories that cannot be shared with 
States, we need to have the State to share with our Federal 
counterparts. This could potentially significantly accelerate 
our critical response time.
    Finally, it makes no sense to take action in a piecemeal 
and disjointed manner. Security procedures at the 50 largest 
ports leaves more than 300 as unguarded back doors.
    Personally, I have witnessed the discrepancy in distinction 
of operations between for example New Jersey ports and Delaware 
river, port of Camden, port of Philadelphia and accepted 
protocols of manifests that are readily evident in Port Newark, 
Elizabeth Port Authority operations.
    Again, I also want to say thank you for your time and also 
urge the importance of understanding increased as Governor 
Ridge as the president support for Coast Guard operations.
    New Jersey has 127 miles of coastline. Certain perimeter 
Coast Guard operations have been stretched beyond rationale 
capacity, and again, we need to understand the completeness of 
the Coast Guard mission and not merely respond to the focus 
here today and potentially exacerbate risks to security issues.
    Thank you.
    [The prepared statement of Governor McGreevey follows:]

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    Mr. Shay. Thank you, Governor.
    We'll start with Mr. Tierney.
    Mr. Tierney. Thank you for joining us today. I share your 
concern about the Coast Guard coming from the north shore of 
Massachusetts, and I know Tom Allen from Portland asked 
questions of the earlier panel on the same issue, So you don't 
stand alone on those concerns.
    Governor McGreevey. Governor Pataki and I with Governor 
Rolland have attempted to prevail in support of Govern Ridge 
for his efforts, and the Coast Guard is being stretched, and we 
need to understand the reality of those circumstances.
    Mr. Tierney. It's being stretched considerably and we'll 
have to deal with the resources. I have issues that we won't 
get into--we're going to see a report that's going to be put 
out by the General Accounting Office tomorrow. You may want 
your office to track down a copy of that. We'll be happy to 
share that with you when it comes.
    If you had to prioritize what was the single most important 
thing the Federal Government could do for the sate of New 
Jersey at this point in time, what would you list?
    Governor McGreevey. As regard to port operations or 
security operations in general?
    Mr. Tierney. In support of the port operations right now.
    Governor McGreevey. Tear line information.
    Mr. Shays. I'm sorry, I will need to swear you in.
    [Witness sworn.]
    Mr. Shays. State your name and title slowly for the record. 
We'll make sure the transcriber has your official title.
    Mr. Caspersen. I am director of the Office of Counter-
Terrorism for the State of New Jersey and my name is Sidney 
Caspersen, S-i-d-n-e-y, J., C-a-s-p-e-r-s-e-n.
    Mr. Shay. Nice to have you. I should have sworn you in 
before.
    Mr. Caspersen. We spoke about this earlier, I heard other 
speakers speak about the sharing of information.
    What we really need in the State of New Jersey for port 
security or for all securities, is relevant information from 
our security asset for the CIA or FBI, actionable intelligence 
that we can operate from.
    It's one thing to say we have a threat of some significant 
value coming from overseas or maybe or maybe not it has 
anything to do with the ports, but if they can give us more 
specific information what type of threat, whether it be 
biological or chemical so that we could deploy the appropriate 
resources.
    We can't deploy our resources as all of the critical 
infrastructure. What we're for from the Federal Government is 
some kind of guidance and help being able to deploy those 
limited resources that we have to those areas which have real 
actual intelligence where we can deploy resources.
    Mr. Tierney. This sounds reasonable. What sort or response 
are you getting when you make that request?
    Mr. Caspersen. We're getting generalized information, and 
when we ask for specificity, we don't get any.
    Maybe the Federal Government doesn't have it. What we're 
looking for, we've had discussions with the Department of 
Energy and they agreed to do a private project on our critical 
infrastructure where they will look at our intrastructure and 
based on the threat design particular protocols to help our 
response.
    We also like to see the Federal Government maybe come 
forward and designate some of the critical infrastructure as a 
national security asset. It's unfair to expect the private 
sector to put up their money to protect assets that really have 
to do with the national security of the United States.
    We're talking about either power or financial or other 
critical infrastructure.
    Governor McGreevey. We're asking--obviously post September 
11th, there is a basic requirement to take every threat 
seriously. Yet the State has a reasonable interest to 
understand the applicability of that State, applicability of 
that threat to our respective State and the nature of that 
threat to make a critical judgment as to how best to respond.
    And so again, tear line system would be able to provide for 
this dissemination of actionable intelligence on a need-to-know 
basis so that this information would be targeted in a coherent 
manner to those regions of the Nation and/or States where the 
threat has a potentially higher impact or for potential attack.
    Mr. Tierney. What Ms. Hecker was testifying from the 
general accounting office, she was pretty clear about the need 
for that, the fact it was lacking also, but when you look at 
the President's executive order, he basically refers to port 
security expressly and indicates that Governor Ridge helped 
facilitate the exchange of information.
    I would guess what we have here is a failure to 
communicate, as some would say, and that maybe this committee 
could ask of Governor Ridge----
    Governor McGreevey. Congressman, we applaud Governor 
Ridge's leadership----
    Mr. Tierney. I don't mean to put you in a position of 
criticizing Governor Ridge. I'm trying to put this committee in 
a position of finding an answer that we can get Governor Ridge 
to respond to written questions or directly come in and talk to 
us about where in that operation of his office would you go for 
the kind of information that you want and how could we 
facilitate some type of protocol for that so we can expedite 
that. I think that might be a healthy approach for it.
    Mr. Caspersen. The data information center that is up and 
functioning, the problem, as you well know, he doesn't have an 
agency yet, he is the advisor to the President, there's not 
really any funding there, and the other agencies that are 
working there are working part-time right now.
    I think they're waiting to get that whole thing up to 
speed. We're in contact with him daily and we furnish as much 
information as we can. We try to keep them fully advised.
    What we're really talking about here is maybe CIA, FBI 
sitting down with the foreign services and getting more 
analysis of the information instead of just scaring the bejesus 
out of everybody in the public.
    Mr. Tierney. The problem we're going to have there is that 
neither the CIA or FBI are going to be under Governor Ridge in 
this new department that's set up. That's an issue that we'll 
raise in another context.
    I thank you for your testimony today and I thank you for 
your exchange.
    Mr. Chairman, thank you.
    Mr. Shays. Mr. Souder.
    Mr. Souder. I would like to briefly comment on two points 
you made, coming from Indiana, where our risk is probably less 
than here.
    First, you said the ability to target based on potential 
damage and high risk is politically difficult right now because 
we don't know for sure whether the terrorists will move to 
softer targets, but political pressure on those of us who 
aren't from the highest risk areas, if something happened in 
our home area and we voted to put more money in another area, 
we don't know how to work through this as a country right now.
    So the common question I get is are we going to get hit 
over here or over there and trying to figure in an unknown 
world, politically we're trying to work through this.
    I agree with the fundamental statement that there needs to 
be some hard logic applied to this or we'll be on the road 
chasing every new aircraft, new chemical threat problem, 
nuclear--because if you don't prioritize it, you don't do 
nothing well.
    At the same time, this has more political risk and that's 
partly why it's been difficult. Similar to the intelligence, 
and this kind of scaring everybody every weekend. It's the 
little boy who cried wolf story all over again, yet part of 
this is because everybody wanted to put a finger on who is 
responsible for September 11th and there's little tidbits of 
information that the FBI and CIA should have been able to 
figure out September 11th in advance.
    Now we have every agency so afraid that they're putting out 
announcements any time they get any kind of bit of information 
and the general public is becoming immune to it.
    Governor McGreevey. I think the success of our efforts 
should be based upon not necessarily eliminating information. 
Distributing information is a good thing, but it will be in a 
critical evaluation as to how we respond to that spectrum of 
information.
    It is invaluable that we undertake the necessary strategic 
analysis as to when we apply for critical review based upon 
what information and how those critical judgments are made and 
when do we disseminate those judgments to whom.
    Mr. Souder. I agree with you that needs to be done at the 
local level. We had a fiasco in San Francisco, California 
bridges, in that some of the information that is leaking out 
does come from local officials, that now have the political 
pressure that previously was on the Federal officials.
    In other words, they have information. If they don't share 
it, they're worried they're going to get blamed and we're in a 
terrible box. The general public needs to understand there is a 
level of risk and sometimes it's slightly higher. The 
communities are trying to figure this out.
    We absolutely need to share a risk if we can; otherwise, 
you don't know where to put your resources and everybody has 
this higher level of anxiety and they don't know what to do.
    We have to figure out as a society how to deal with that.
    I want to ask you a couple of specific questions.
    You had one line in your testimony, it says making shippers 
accountable for their cargo contents. Do you have any specific 
recommendation how to do that?
    Governor McGreevey. Manifest.
    Mr. Caspersen. When shippers ship overseas, the testimony 
earlier from Coast Guard and others about a trusted shipper, we 
need to know what is on that manifest and if that person is 
doing this--if the company is in the United States, we have 
ways of verifying that, so what we're looking for is a manifest 
ahead of time, well ahead of time, coming into the port.
    Almost like an easy pass system. Something that Customs and 
the Coast Guard----
    Mr. Souder. Would you propose heavy penalties if they 
don't--in other words, if you're going to get--there's a 
penalty because we're not going to screen as much, we're not 
going to put as much pressure on.
    Mr. Caspersen. If you're asking me if the penalties should 
be stiffer, that's a Federal issue.
    You mentioned earlier about the midwest and other areas 
being targeted, even though the port is a Federal issue for the 
majority of it, anything that happens there is a local issue 
and the State of New Jersey and the State of New York are going 
to be the ones that have to respond and be the ones who have to 
clean it up until we get Federal help.
    What I'm saying is when it comes to trusted shippers, 
that's a Federal issue we can work out. We in the State try to 
help out with our businesses.
    Mr. Souder. One other question, we talked about driving the 
information collection of ports overseas which we agree need to 
be a part of, key part of all this.
    We also talked about intercepting boats prior to them 
coming in so if they do have something overseas, it doesn't 
blow up in the United States.
    How would this work in Camden and Philadelphia? Is there 
any kind of screening coming up, Delaware River, any kind of 
checkpoint that we have to some degree here?
    Mr. Caspersen. We have other major issues.
    This is a major trafficking place for jet fuel. So that's 
an issue where that port, that naval station is where we have 
our major trafficking places, coming in and out of there all 
day.
    Mr. Souder. Any other suggestions? We probably aren't going 
to have a hearing in the foreseeable future. If you can give us 
your challenges there, and how it's different from the kind of 
traditional harbor where you're coming in right off the ocean.
    Governor McGreevey. You can ask Governor Ridge that.
    Ms. Maloney. Thank you for your testimony.
    I know that you've made security issues a top priority of 
your administration, particularly port security, and I know 
that you were probably as troubled as I was with the ABC report 
that showed that 15 pounds of uranium was literally smuggled 
into this very port without any movement across many borders.
    I would like to ask what are your idea of what the Federal 
Government should be doing to make sure this doesn't happen 
again.
    Earlier, there was a lot of testimony that we should focus 
on the port of export, that we should spend a lot of time 
making sure that which leaves another port is reviewed, yet I 
for one do not want to rely on the port of export or some other 
government to secure the people and the life of Americans here 
in New Jersey, New York and across our country.
    What are your comments on that?
    Governor McGreevey. I would go back to what was said 
earlier, particularly regarding rules governing cargo manifest.
    We need to ensure the integrity of container operations, by 
ensuring that manifest practices are acceptable and for those 
overwhelming number of companies that deal in large measure, 
that also cargo manifest provide for valuable private economic 
function as well as security function, so I believe that is 
perhaps among the most reasonable method to track, preserve and 
monitor cargo, and then in addition, to provide specifically a 
tear line system for disseminating accurate intelligence on a 
need-to-know basis on a case specific, so that we can act 
quickly and efficiently.
    It's the greatest degree that we can expand rigid, 
stringent cargo manifest guidelines. That is to our advance and 
provide for tear line information which will assist us in 
making a critical determination as to the significance of a 
threat.
    Mr. Caspersen. One of the things that has been around for 
hundreds of years is Lloyds of London, they have people in all 
the ports around the world and these are agents of Lloyds. They 
can tell you what ships come and go and whether they're in 
drydock or in repair and that they should be there or shouldn't 
be there.
    These are the resources that we have to reach out to and 
glean information from, and I'm sure the Customs and Coast 
Guard are aware that these are the things, we need people 
overseas to tell us what that ship is doing there.
    Being aware where the containers are being packaged, of 
what is in those containers before they're put on the ships.
    Ms. Maloney. You mentioned in your testimony the aviation 
industry receives $6.1 billion in Federal appropriations to 
upgrade security, but ports received only $125 million, and I'm 
sure you agree with many of us who see that the vulnerability 
of our ports literally is far greater than that of the aviation 
areas.
    Just today, they are announcing a total new screening 
operation for our airports, so I just wondered, this appears to 
be exactly the type of discrepancy that might be remedied if 
Governor Ridge performed the competence of threat and risk 
assessment.
    Would you support this kind of assessment and would you 
join the members of the committee, and I believe the chairman 
in calling on this type of assessment to take place for our 
ports?
    Governor McGreevey. I would just contend much of our 
respective shape by September 11th, insofar as the tragic use 
of those airliners, as well as the dramatic fear that citizens 
have mentioned regarding airline security.
    In addition to be responsive to those legitimate security 
concerns, we need also to have such a thoughtful nationwide 
assessment of threats happening in multiple areas and I would 
just also suggest that it's been said earlier, the importance 
of the private sector.
    95 percent, we've utilized this statistic so often, 95 of 
the infrastructure is controlled by the private sector. Clearly 
they have to be at the table to ensure best practices in 
determining what constitutes the most strategic investment and 
the beneficial investment of limited security dollars.
    Ms. Maloney. My time is up.
    Thank you very much, Mr. Chairman.
    Mr. Shays. I would like you, you responded to the tear line 
system and Mr. Caspersen has responded as well.
    I'm unclear still as to what exists today. Let me just open 
it by saying as a Member of Congress it's assumed I'm given 
clearance. I would in own mind think that anyone who is elected 
Governor of the State would have automatic clearance.
    Mr. Caspersen. That's not the case. What is the case in 
reality is this, is the Office of Homeland Security sent out 7 
or 8 months ago a request to all States to identify five people 
that they would like to have cleared. To my knowledge, no one 
yet has received a clearance there based on those requests. Jim 
Caltry was cleared based on his past job.
    Governor McGreevey. If I can, Mr. Chairman, it's also been 
receiving specific information, say, for example, when a threat 
is transmitted to the State of New York or anyplace, is to 
having a greater level of insight when that threat is unique to 
the region.
    Mr. Caspersen. These threats that we get, like when we just 
recently got the ones against the railroads. We were talking 
about in New Jersey, we send 400,000 people across the water 
every day from New Jersey into Manhattan to work, a lot by rail 
and by bus and we're concerned about that. How do we know what 
that threat really means?
    Mr. Shays. What I'd like to do is have a better idea of how 
it can be helpful. We need to try to get a handle on the 
Federal backlog we have of security clearances.
    But it seems to me that in this war against terrorism, 
there are only five people that they're trying to identify in 
each State. I make an assumption one of them would have to be 
the Governor, and I would think I guess the first question is 
five enough and if five is enough, should this committee be 
working overtime to try to get those clearances to happen.
    Governor McGreevey. I believe five is enough and again, 
Governor Ridge's efforts, Mr. Chairman, I think while five may 
be enough, it's a separate and distinct question in determining 
how information is given to this State center on a regional 
basis.
    Mr. Shays. The purpose of our having these hearings is to 
make sure we're listening to you, and as soon as I get beyond 
this point, that's what I want to get to. I just want to know 
if you--your statement before us is none of the five have yet 
been cleared other than one----
    Mr. Caspersen. We were talking about New York, not New 
Jersey. There's a variety of agencies that can issue 
clearances, and we have the FBI, CIA, DOE, there are a variety 
of agencies giving clearances.
    Mr. Shay. Let me interrupt you. I understand a good part of 
that. What we are trying to do is have a coordinated effort to 
fight this war on terrorism.
    We're asking the Governors to identify five people, 
correct, in each State who are instrumental in fighting this 
war on terrorism.
    You're saying this is our highest priority. It strikes me, 
and this is not a criticism with Ridge, it's just a statement, 
that we as a committee would like to play a role in having that 
happen.
    Has the Governor been cleared?
    Governor McGreevey. We have not received a form.
    Mr. Shays. We will just try to speed up that process, not 
just in New Jersey but everywhere and that it be given a higher 
priority. That's helpful to know.
    The next point, you say you need more information and you 
need to understand the logic of the information, you need to 
put it in some context so that you can respond to it in a way 
that makes a contribution.
    Is that what I should be hearing you say?
    Governor McGreevey. Again, Mr. Chairman and Congressman 
Tierney, folks, it's also with what we suspect will be increase 
notices to the States and to regional offices, is by virtue of 
the plethora of those notices not to diminish our vigilance and 
the best manner in which to maintain a level of vigilance, to 
provide information, to provide all information, particularly 
to flag the States as to where it has potentially focused 
impact on that respective State.
    And that is not happening to a sufficient degree necessary.
    Mr. Shays. In your statement, you mentioned obviously about 
the Port Authority in New Jersey and New York. I had never 
focused on when I invited you, I'm sure my staff did, about 
your expertise and concern obviously with Camden and the 
Philadelphia port system.
    When I look at you as Governor, you have a hefty 
responsibility what comes in the United States and what leaves 
the United States, so this is obviously a primary concern to 
you and we thank you for being here for that reason.
    I'm trying to imagine what, you have given a number of 
points in terms of, you talk about the port tracking, 
containerized cargo shipments from ports from origin to final, 
you talk about integration of Federal data base that will 
enable cross-checking of shipping records.
    Governor McGreevey. For example, in Port Camden, 
communications were not totally integrated between port 
operations, State police, and Coast Guard, so clearly the 
integration of those communications systems per se provide a 
critical service in and of itself.
    Mr. Shays. Do most of the security functions of the State 
and local communities get funded out of the income of these two 
ports and are these two ports major sources of revenue to the 
State of New Jersey.
    Governor McGreevey. The port operations happen, Delaware 
River, Port Authorities, there's the State of Pennsylvania, 
State of New Jersey, port authorities respectively.
    Mr. Shays. Do I make an assumption that as Governor, if you 
want to make sure that anything related to security costs are 
paid for by the authorities or do you also have to provide some 
of your own resources to the State?
    Governor McGreevey. The Coast Guard provides for critical 
operation. Port Authority New York, Jersey police support as 
well as the State, actually there are different protocols with 
respect to Port Newark and Port Elizabeth, Port Camden, Port 
Philadelphia.
    The concern being is that the Coast Guard as the lead 
agency, receives adequate funding. In my perspective and 
Governor Pataki's perspective, we find the States shouldering 
an increasing burden for the perimeter Coast Guard operations 
for cargo operations.
    Mr. Shays. If you were to give me the thing that is the way 
you feel the most progress has been made in port security and 
the least, is there an area that you think significant progress 
has been made?
    Governor McGreevey. There has been substantially greater 
cooperation between Federal, State, local and private law 
enforcement agencies which has been seismic in change in the 
level of cooperation and a level of integration of effort, 
which has proven invaluable, where I believe it is still 
important, is in tear line information, such that while we may 
have greater integration of efforts, there's not necessarily 
the sharing of critical information to State authorities on a 
targeted basis.
    Mr. Shays. And had you not come and testified, I'm not sure 
that message would have been really known to this committee to 
the extent it needs to be, so it's very nice.
    I basically asked the questions I need to. I don't know if 
you need--is there anything you feel we should have asked you 
that we didn't touch on?
    Governor McGreevey. Again, my perspective is the need for 
meaningful uniformity, and again, I clearly see the distinction 
between Delaware River, Port Authority operations and Port 
Authority of New York and New Jersey and obviously there are 
significant substantial distinctions, but yet best practice is 
in protocols ought to be implemented nationally by virtue of 
the force of this committee.
    Mr. Shays. I'm going to make a bit of a prediction, there 
was tremendous desire on the part of Democrats and a number of 
Republicans in Congress to have a department of homeland 
security. Eventually I think they became convinced of the 
logic, and there are always going to be I think disagreements 
as to how we go about it.
    I have tremendous hope that you're going to see a much more 
invigorated Coast Guard. I believe that you'll see lots more 
resources going toward it. I'm I'm wrong, it will be a gigantic 
disappointment because I think there is logic to taking them--
Department of Transportation to a Department of Homeland 
Security.
    The other thing I think you're going to see is one of the 
pillars of this operation is the first line of defense, the 
State and local governments. And if the new secretary is doing 
his or her job the way they need to, you're going to see one 
source to get resources and one source to get information, one 
source to turn to that hopefully will be very, very helpful.
    We in our capacity as oversight committee will be 
monitoring that to see that it happens and we'd love to have 
your continued input.
    Governor McGreevey. Thank you. It will be so critically 
important for a Governor to have one-stop shopping, to have one 
access point.
    Governor Pataki and I were successful in securing 
substantial dollars for operations, get it, it was 
exceptionally difficult to have OMB release those dollars.
    Mr. Shays. Thank you.
    Mr. Tierney. I just want to add, by and large, there are 
many of us thanks to his leadership over the last several years 
on top of this terrorism issue before the chairman was able to 
get the attention of this administration, but one of the things 
we wanted was to empower someone like Governor Ridge to take 
the position of the equivalent level of the Office of 
Management Budget--one of the problems we have is we have 133 
agents and only 22 of them can be put in this department.
    So we're still concerned that when it comes to getting 
money for the Coast Guard or getting money for another critical 
area, it may not come because that particular secretary does 
not have the ability to override the budget, and the best 
example of that was the Department of Energy asking for a 
significant amount of money to safeguard nuclear facilities in 
the transport of nuclear materials only to have it overridden 
by OMD and came up with a fraction of that.
    I think we're going to see some improvements of concern, 
that unlike World War II when we tried to reorganize the army, 
navy, air force in 1947 we're tying to do it now.
    There's still some idea of whether or not we properly 
empowered Governor Ridge or whoever may succeed him on that, 
but I know we're going to work on this committee to make it 
work, however it comes out and be as helpful as it can.
    Mr. Shays. I'm trying to get the last word. Just to make 
sure on the reorganization of the military was in response to 
the new threat of the Soviet threat, but I do agree with your 
point.
    Thank you.
    We'll call on our next panel. Mr. Frank McDonough, 
President, New York Shipping Association.
    General Charles Boyd, U.S. Air Force, retired, CEO and 
President, Business Executives for National Security, referred 
to as BENS.
    Mr. Brian D. Starer, Partner, Holland & Knight.
    Mr. John Hyde, Director of Security and Compliance.
    Why don't we stay standing and I'll swear you in right now.
    [Witnesses sworn.]
    Mr. Shay. I don't want to be disingenuous and say I saved 
the best for last, but I sometimes learn the most from the last 
panel, in part because some of the last panel have been here 
all day and have heard all the other comments and go right to 
points that you think need to be made.
    This is a wonderful panel and we're very grateful that all 
of you are here.
    Mr. McDonough, you'll go first.

  STATEMENT OF FRANK M. McDONOUGH, ESQ., PRESIDENT, NEW YORK 
                   SHIPPING ASSOCIATION, INC.

    Mr. McDonough. Thank you very much. I appreciate the 
opportunity to be here today.
    I want to throw a little bit of cold water on what we've 
heard today.
    First of all, cooperation among government agencies is not 
necessarily coordination. Those of us who are on the ground, 
that's a very important issue.
    As president of the New York Shipping Association, I have 
the pleasure of representing the people who drive the ships, 
move cargo, run the terminals, provide and maintain the 
equipment, train and employ he labor that moves almost $90 
billion of cargo throughout the port each year.
    Port security has long been an issue that has confronted 
us. It's been relatively easy for us to ship to this new focus.
    Obviously, the best place to start is at the point of 
origin. If we apply Customs efforts to develop inspection 
programs at foreign ports, much of testimony today has been 
directed at that, we stand behind that 100 percent.
    Presceening of cargo, containers, manifests, even crew 
members is a huge step forward. As you learned today, 
containers are not placed on vessels in a random manner. Cargo 
storage requires a high level of sophistication. There is very 
little point to point vessel movement in today's world. Vessels 
are shared. Multiple destinations are plotted. Containers are 
loaded, off-loaded and transhipped at a number of stops in a 
single trip.
    Customs needs the people and the equipment to establish and 
support a consistent method and timeframe in which to screen 
those cargo containers before they get here. If they want us to 
submit our manifests 24 hours in advance, that's all well and 
good but they also have to respond back to us in sufficient 
time to tell us they are going to target a container before we 
sail. It's too late after we sail.
    In the event the information on a suspect container is 
acquired after loading, Federal agency involved needs to talk 
to the vessel owners and operators before acting precipitously. 
Simply ordering the vessel to stand to or make berth while 
everyone figures out how to approach the situation may only 
serve to increase the exposure.
    If a specific container destined for Newark happens to be 
targeted for inspection by the authorities in Baltimore and it 
just so happens that container is buried under several hundred 
or even 1,000 other containers, we need to work with the ship 
owners and masters to develop a rational approach.
    We also need to think about the impacts to the system.
    If a ship with suspect cargo sits at anchor for several 
days while the pertinent agencies try to figure out what to do 
with it, consider the effect on the ship's schedule, the 
customers, and the 20 to $40,000 per day that it costs to 
operate that ship. Those are costs that we will all pay. Again, 
what of the prolonged exposure?
    We need to develop rapid reaction response teams that can 
quickly clear a suspect ship or a suspect cargo. We want that 
to happen as much as anybody else in this room does. We need to 
have a single agency in charge. We don't have that.
    We need to know who is in charge among a dozen Federal and 
State agencies, because they all respond in those cases.
    We need the right expertise and training. If you've got 
some Navy Seals on our ships, you better keep in mind the 
biggest ship those guys were on before was made of runner. We 
need to have them trained.
    We need someone who is going to be operating detection 
devices that not only can detect the readings but interpret the 
readings. The government needs to partner with the experts.
    No one knows this industry better than we do. It seems 
we're the first ones that the agency shuns aside when they 
think there's a problem. Its approach from the law enforcement 
perspective and we heard it somewhere--in one case it was 
suggested take them off the ship.
    We need technology. We must develop cargo tracking systems 
and all the gee whiz stuff you heard about today. We have to 
have that. Guards and guns aren't going to help us.
    When we inspect boxes at this end, we need to use the best 
equipment available. The best equipment available. Not the 
least cost. I know how we do things on the low bidder.
    Protecting our ports while allowing free flow of trade is a 
daunting task. As we develop new technologies and meet these 
challenges, cooperation and coordination, to preserve the good 
in the system, is as important as enhancing our security.
    Thank you.
    [The prepared statement of Mr. McDonough follows:]

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    Mr. Shays. We've been waiting for the cold water.
    Do you have anything else you want to say?
    Mr. McDonough. I'll wait for the questions and answers.
    Mr. Shays. General Boyd.

   STATEMENT OF GENERAL CHARLES BOYD, USAF, RETIRED, CEO AND 
      PRESIDENT, BUSINESS EXECUTIVES FOR NATIONAL SECURITY

    Mr. Boyd. Your committee is focused today on a principal 
security risk of this country today. I commend you for taking 
this issue up. I would add today it's gratifying for us to see 
so many of our recommendations ought to be implemented, 
including establishment of our homeland security.
    There is no question that the Nation will be more secure as 
a result. The work in which I am presently engaged seeks to 
enhance the national security by marshalling greater 
capabilities in support of the government's efforts to protect 
the citizens. Particularly the organizational, business 
executives for national security seeks to mobilize intellectual 
and material resources, and business community in support of a 
Nation's security efforts.
    20 years of Congress have been aware of efforts, primarily 
related to the Department of Defense and the intelligence 
community. Today we're expanding our attention just as the 
Nation is doing into areas, not considered the front lines of 
our defense, since the objective of terrorism is in civilian 
sector disruption of those things, people focus and common 
purpose, then the civilian sector should have added incentive 
to participate in the common defense.
    BENS, since September 11th, has energized business across 
country, has become involved in the crucial battlegrounds, 
threats, bioterrorism, financial tracking of terrorist money.
    Our most important project may also serve the area of 
concern for this congressional hearing for security. I don't 
think Governor McGreevey mentioned in his testimony, but in New 
Jersey, BENS has established a major partnership with him and 
the State government's organization for homeland events.
    It's called BENS New Jersey business course, the central 
purpose is to marshal resources to assist the State in areas 
that are vulnerable and to address that need.
    All of the business leaders we've approached so far express 
interest, even enthusiasm, for two basic reasons.
    I think they truly want to make a contribution from a 
purely patriotic obligation and because they understand that 
their own companies share in the risk posed by this new set 
of--the most recent area in which we're investigating in New 
Jersey has to the triangulation; university, government sector 
and business.
    There's much that can be done here. I recommend that 
triangulation is an area of concern.
    The Stephens Institute of Technology of New York and New 
Jersey has a major project of looking at integrated system for 
maritime status and I think as an example, this new and 
existing technology, this project is funded by the Office of 
Research, is directed at providing port protection of the U.S. 
Navy, use of high resolution surveillance, vessel traffic, 
oceanic atmospheric conditions in a prescribed area.
    These techniques have great value in the commercial sector. 
We have another form of government private partnership.
    I would conclude also, because of recent time, we can talk 
about some other things in the Q and A, but I would emphasize 
that I believe in the organization I lead, and believes that we 
cannot find a solution to the Nation's problem in port security 
without having private business sector deeply involved, sharing 
solutions and in the cost as well.
    I believe this hearing will be a platform for exploring 
some ideas or events and others are thinking about. I look 
forward to your questions.
    Mr. Shay. Thank you.
    Mr. Starer.

  STATEMENT OF BRIAN D. STARER, PARTNER, HOLLAND & KNIGHT, LLP

    Mr. Starer. Good afternoon. I wish to thank you for the 
opportunity to address you on the important topic of maritime 
security.
    I'm Brian Starer, national practice leader for the maritime 
group of our firm. Ours is the oldest and largest maritime law 
practice in the United States, founded in 1830, a few blocks 
north from here.
    Our New York office is about 300 feet east from Ground 
Zero.
    Five years ago, Haight Gardner Poor & Havens combined with 
Holland & Knight, which is now the sixth largest law firm in 
the Nation.
    Our clients include most of the major domestic and foreign 
ship owners and operators carrying cargo to and from the United 
States. Since the horrific events of September 11, 2001, we 
have been in the forefront of advising our clients and the 
maritime industry in general on maritime security issues.
    My firm's Washington office maintains an internet site 
exclusively devoted to this issue, tracking Coast Guard 
security zones and new security requirements so as to allow the 
maritime industry worldwide to quickly be informed and adapt to 
these rapidly changing developments.
    I will focus my testimony today on Federal Government 
efforts to screen cargo containers entering U.S. seaports and 
the effect of these efforts on the free flow of trade.
    I must start by saying that my firm supports all reasonable 
efforts of the Federal Government to enhance maritime security 
of the United States.
    Not to unfairly single out any particular group, I've asked 
Charlie Brown and some of his friends to help me emphasize what 
I think is the heart of the issue here. I call it, what's in 
the box, Charlie Brown.
    Charlie Brown is walking toward Lucy's house carrying a 
beautifully wrapped present to give Lucy at a birthday party. 
Linus sees Charlie with this fancy box. Linus yells, what's in 
the box, Charlie Brown?
    Charlie Brown replies, don't know.
    Linus: What do you mean you don't know?
    Charlie Brown: I really don't know. My mom bought it in 
this big fancy store in Toledo where it was boxed, sealed and 
gift wrapped. And she only told me that Lucy would enjoy it.
    Linus persists. Could it be a football? A new blanket?
    Charlie Brown: Look, I told you I don't know. It could be 
anything.
    Linus: Let's open the box, Charlie Brown. It's the only way 
we're going to know.
    Charlie Brown says, we can't open it now. We'll be late for 
the party and we'll miss the cake.
    Linus: Well, the only way we're going to know what is 
inside without opening the box is to ask your mom. She'll know.
    Neither Linus nor Charlie Brown nor Lucy know the contents 
of the box.
    In today's supply chain world, Charlie Brown represents the 
ocean carrier. Lucy is the ultimate receiver. Mom is the 
shipper from Indonesia. Linus is U.S. Customs.
    It seems simple, doesn't it? Linus should only have to ask 
Charlie Brown's mom and they would know what is in the box.
    U.S. Customs Service is requiring ship owners and 
operators, I think on December 2nd, to submit electronic 
manifests 24 hours prior to loading the cargo at a foreign port 
if the ship is bound for the United States.
    I understand Customs' hope is in this early warning, it 
will allow the agency to direct its certain suspicious 
containers not be loaded until they are examined.
    I'm convinced that the burden of this is misallocated. The 
manifest is nothing more than a compilation of information 
derived from shipping documents prepared by someone else.
    Virtually all cargo these days with the exception of bulk 
liquid and solid cargos, such as oil and coal are packaged 
generally in sealed containers. The master of the ship has no 
way of knowing what he or she is being asked to carry.
    All that is provided other than the cargo itself is a 
shipping document prepared by the shipper. Having the master 
owner or operator provide Customs with a manifest is, to use 
the legal analogy, merely hearsay evidence regarding what is 
actually being shipped.
    The best indication of what is being shipped other than 
visually examining the cargo itself is the original shipping 
document. The Customs Service should be obtaining copies of the 
shipping documents from the shippers or intermediaries rather 
than the manifest if it truly wants to know what is being 
shipped to the United States.
    By obtaining these documents from the shipper or 
intermediary, rather than a manifest from the ship's master, 
the agency would have the cargo information sooner and would be 
obtaining it from the source most likely to know what is being 
shipped. In legal terms, this would be consistent with the best 
evidence rule.
    Every player in the international supply chain should also 
adopt meaningful security plans, rather than just provide a 
certificate to be framed and put on the wall.
    Security measures should be only--should only be adopted if 
they provide measurable increases in deterrence against 
terrorism at a reasonable cost.
    Absolute transportation security is only achievable by 
shutting down the international transportation system. Just 
think in a small way about the west coast lockout a couple of 
months ago. A balance must be reached between reasonable 
security levels and efficient maritime transportation.
    As you noted, the purpose of this hearing is to examine 
agency efforts to screen cargo containers entering U.S. ports 
and the effect of these efforts on the free flow of trade. From 
my perspective, this has been a mixed bag.
    Certainly maritime security is vastly improved since 
September 11th. There is plenty of room for enhancement.
    Also, the cost today of these efforts has far exceeded 
that. Ships and cargos have been needlessly delayed. Ships, 
crews and the environment have been put at risk. Burdens such 
as 24-hour advance manifest notice had been enacted with little 
thought to the true costs and benefits or whether the agencies 
slowly prepared to implement requirements.
    I strongly recommend that Federal agencies meaningfully 
involve the maritime industry in its security initiatives at 
the planning stage rather than to apologize later for the 
errors and implementation. Prevention of maritime terrorism is 
a group effort and all players should be involved at all 
stages. It is only then we, as a secure maritime Nation, will 
be able to provide the answers, the answer to the question, 
what is in the box.
    I respectfully request my submitted written testimony be 
made part of the record of this hearing.
    Thank you for listening. I will stay to answer questions.
    [The prepared statement of Mr. Starer follows:]

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    Mr. Shays. All your written statements will be in the 
record. That's taken care of.
    Mr. Hyde.

STATEMENT OF JOHN J. HYDE, DIRECTOR OF SECURITY AND COMPLIANCE, 
                          MAERSK, INC.

    Mr. Hyde. Good afternoon, Mr. Chairman. My name is John 
Hyde, and I am director of Security and Compliance for Maersk 
Sealand. I appreciate the opportunity to appear before you and 
your committee to give the perspective of an ocean carrier in 
an international terminal on this very important subject.
    Maersk Sealand is the largest container shipping company in 
the world. We operate more than 250 container vessels and more 
than 800,000 containers through a worldwide transportation 
network. We provide transportation to and from six continents 
and we maintain 325 offices in more than 100 countries.
    Everything we do is captured by the watchwords of our 
founders, which is constant care. The security of our 
containers and the integrity of our transportation network are 
essential to our operations at Maersk Sealand.
    Mr. Chairman, you and other members of this panel know that 
our national maritime transportation is a worldwide business 
and it is inherently intermodal in nature. A container that is 
unloaded at a U.S. seaport today can be efficiently transported 
to another location in America in a matter of days.
    This presents many challenges.
    We've always been security conscious. The evens of 
September 11th have only made us more concerned about security 
threats and their potential impact on our fellow citizens, our 
employees, our port facilities, our containers, our vessels and 
our customers' cargo.
    Also, the Nation's economy has slowed dramatically as 
result of the September 11th events. Our global trade posture 
has been affected in dramatic ways. We cannot ignore the very 
real potential that terrorism will again visit our Nation, and 
to the greatest extent we must take steps to ensure the safety 
and security of our ports, our containers and our vessels.
    We must do this while still maintaining a vibrant maritime 
trade, which is the life of our economy.
    We are responding to the challenge. We embarked on an 
aggressive proactive campaign to prepare against security 
threats. These include our voluntary entry into a number of 
U.S. Government programs and pilot projects, such as the U.S. 
Customs supercarrier issue program, business anti-smuggling 
coalition, the Customs trade partnership against terrorism and 
we are poised to begin participating in Operation Safe 
Commerce.
    It is not enough to make our operations within this country 
secure. We are intensifying our efforts to secure our global 
cargo network. We have a security officer within our company 
responsible for providing security challenges.
    Inasmuch as we have a presence in more than 100 countries, 
we've established regional security offices throughout the 
world. We have security that includes people from our hazardous 
cargo operations, our intermodal, terminal, logistics, 
container, operations, information technology, legal and 
government affairs offices as well.
    Certainly one aspect of our interest and concern addresses 
specific subject matter of today's hearing, which would be 
unknowingly transporting nuclear weapons and materials.
    We at Maersk Sealand combatted smuggling of all items, but 
the potential harm from nuclear weapons and material is a 
provision of their smuggling is especially significant.
    Please let me respond to several of the various specific 
questions raised.
    First you inquired as to the existence of screening 
programs to prevent illegal fissile material or nuclear weapons 
from being smuggled into our country. The inbound cargo 
declaration that is provided in each manifest identifies among 
other items the contents of the container or the cargo carried 
on-board the vessel, as well as the identity of the shipper, 
the port of origin, the destination within the United States.
    Advance information is critical to the U.S. Government's 
efforts to detect a container anomaly before it is loaded for a 
U.S. port.
    In addition to manifest details, carriers can and often do 
provide additional data to the government agencies regarding 
cargo and shippers and other relevant information about goods 
on the vessel. This supplements the required manifest 
information.
    Pinpointing high risk containers is at minimum daunting 
challenge. The manifest does provide a great deal of specific 
information. We should remember that carriers, ocean carriers 
in this context do not generate the manifest information. It's 
provided to them by the shippers.
    Carriers simply act as a conduit to such information to the 
government. Under current law, a shippers generally assume no 
liability when poor manifest information is provided to the 
government.
    We think this aspect should be reconsidered. We think the 
shippers should be much more accountable for what they're 
carrying on board the vessels.
    We support a system that would require advance manifest 
information, credible advance manifest information as far up 
the supply chain as possible.
    Your questions also highlighted critical element in the 
deterring the transportation of dangerous nuclear weapons and 
materials. The need for coordination, compatibility of 
containers screening program, Federal, State, and local 
authorities and commercial interest.
    I regret to say in these areas we are not doing as well as 
we could. It is often not clear which Federal entity is leading 
the effort in maritime security incidents in screening.
    This confusion is further complicated by the overlay in 
State and local requirements. At times carriers do not know 
exactly what information must be provided and to whom. A lead 
agency must be designated and there must be better coordination 
among various government entities.
    I say that in the context of it is improved--it's not 
simply bad and will never get better. We see improvement but we 
would like to see it improving quicker.
    Mandatory Federal guidelines must be issued if cargo 
security is to improve and they must balance the burdens fairly 
among all the participants in cargo security.
    Biggest obstacles facing the agencies in the maritime 
security area are their numbers. We will believe that real good 
faith partnerships between government and industry must be 
enhanced. Partnerships result in force multiplies and more 
efficient and effective methods of achieving higher security.
    If full partnerships are not permitted, the government will 
deprive itself of crucial knowledge and information and 
resources to accomplish their critical mission.
    Government agency partnerships can be very useful in 
confronting challenge of personnel training. Government 
personnel will be familiarized much better with the industry's 
operations if they were afforded and accepted the opportunity 
to be trained within the industry itself.
    We spoke about all the technological advances that are out 
there. I'm not going to take them over again, but I will say 
that all the advancements and new technology that is coming out 
needs to be appropriate to what we're trying to accomplish to 
answer the way we're doing business.
    We can adjust. It has to be the determined who is 
responsible for implementing some of these things. Seal 
technology--again, who puts the seal on this extremely 
difficult task.
    These advancements must be thoroughly evaluated and tested. 
We do not want to have a sense of false security.
    Maersk Sealand has committed itself to an intensive effort 
to make our seaports as safe as possible. This is in the 
national security interest of our country, our own commercial 
interests and the interest of providing a safe and secure 
workplace environment for our employees.
    I will be happy to attempt to answer any questions you may 
have and I appreciate very much the opportunity to appear 
before you this morning.
    [The prepared statement of Mr. Hyde follows:]

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    Mr. Shays. Let me call on Mr. Souder to go first.
    Mr. Souder. I want to qualify your manifest shipping--I 
come from a retail background. Are you saying that the shipping 
document would be like four tons, armchairs, this much two side 
shares, table--the manifest would be given to the trucking 
company would say a box that says chairs, in other words, the 
detail is greater and are you saying the manifest is not 
specific?
    Mr. Starer. The manifest oftentimes is not specific. I 
mean, also, the big problem is every manifest that the ship 
owner operates under, generally the bills of lading is what 
they take the information off of. It starts with freights, all 
kinds, or general household goods, it's not specific enough.
    Also, it's putting the burden in the wrong place. It's 
putting it on the conduit rather than the supplier of the 
goods.
    Mr. Souder. I understand that point, but what I'm trying to 
understand now is----
    Mr. Starer. The specificity.
    Mr. Souder. Yes. Could part of this be addressed by having 
the bill of lading, the manifest, be more specific to 
management? What does that do?
    Mr. Starer. It's possible. Again, you're not going to the 
source. You're using--we see it time and again in the industry 
that as good as the transfer is from the shipping documents to 
the manifest, mistakes are made and you're putting the emphasis 
and the emphasis is being placed on secondary evidence.
    Mr. Souder. I understand. I'm trying to figure out the next 
question is, why didn't you do that, because the number of 
shippers substantially smaller than the number--in other words, 
if there is a problem in the manifest, unless you've doctored 
the manifest, we go back to the next part, is that correct?
    Mr. Starer. I think that I understand what you're asking. I 
think the reason that the 24-hour advance rule is the way that 
it's been written is in some respects it's Customs, it's 
business as usual. That's what they're used to, and to come 
with a radical idea of going back to the original shipping 
document, I'm sure didn't cross their mind because it would 
require complete change in how they approached the problem.
    Mr. Souder. What I would appreciate then, I want to yield 
to the chairman, but I would like to pursue this further 
because I chair another subcommittee that deals with INS border 
control, narcotics and a lot of border issues.
    It's a broader question as to how to deal with this, we 
need, you're absolutely correct, we don't need the private 
sector involved. We try to fix it, fix it later, but bottom 
line is when the government comes in to correct it, we're going 
to increase costs to the system. What we need to do is figure 
out the most efficient way to fix it and the critical path 
methods comes through, the shippers, you're not liable, 
obviously for the stuff in the container. That's a separate 
point.
    But what's the best place to do the 24-hour rule, because 
we also have the manifest question on airlines, we want to see 
the list of people coming in. We're having this discussion on 
trains and cruise ships. We want to see manifests, and we need 
to work with the industry to figure out what is the best way to 
do that, how to get that information to the most efficient way, 
because they put the cost pressure back, one it's so diverse, 
we're going to ask you at the port to pay for those Customs 
officials so you might gain short term, but you don't gain long 
term.
    What we need is to hold the people accountable for exposing 
us to terrorist threats and when we find the most efficient way 
to do it, it will be worth it to the private sector.
    I think you made a good point with it. I'm trying to figure 
out how to get to this point, we need to look at a greater way 
to do that.
    Mr. Starer. Quickly, you couldn't even think of doing this 
10 years ago. Electronically, it's not only doable, it's very, 
very doable. Again, Customs is going to have to change the way 
they think about clearing cargo into the United States. It will 
make a huge, huge difference.
    Mr. Shays. I'm going to jump in.
    One of the messages I'm hearing loud and clear is that you 
do not believe, Mr. McDonough, you do not believe that you are 
being listened to, and I want to say to you that I'm adding to 
that feeling. I hear your message. I would like to see how our 
committee can be a little more proactive, proactive in making 
sure that you are a voice to be heard.
    Mr. McDonough. It's not just you. John, by the way, is the 
only person in the room who drives ships and operates 
terminals, and we sat here this morning and we listened to all 
the government agencies, talking about all the things they're 
doing and we think that's wonderful. We pat them on the back.
    We're not at the table. We haven't been invited to the 
table. There are 56 corporations, operating in and out of the 
Port of New Jersey. They should be at the table.
    Mr. Shays. That's a major, major frankly liability to 
whatever program we hope to succeed if you're not being 
included, and what I should be doing, the committee should be 
doing in future hearings is asking the government folks how are 
you being included and forcing them to think that way.
    Because I honestly don't know how we're going to succeed 
unless you're being included.
    I want to understand a few things about the manifest. A 
manifest can be simply doctored, correct? What I'm having a 
little bit of trouble understanding is you're given a manifest, 
but is it reliable?
    Anybody want to answer?
    Mr. McDonough. That's our problem, and the reason it's our 
problem is because our steamship lines, our carriers are the 
ones we're asked to essentially verify that manifest because 
they're the one who have to submit the manifest and frankly we 
don't know exactly----
    Mr. Starer. You don't have the accuracy that you would 
like. The steamship company or the carrier does not know what's 
in the box.
    Mr. Shays. The issue of 24 hours, the ship is already long 
left the port, correct, and is heading to the United States.
    Mr. McDonough. That was my point, Mr. Chairman, if we 
submit it 24 hours in advance, that's all well and good and 
electronically, it is very feasible, but we have to have a 
response back before the ship departs because otherwise you're 
at sea and then you get some ridiculous recommendation that 
we're going to take boxes off the ship.
    Mr. Shays. You're saying a single agency in charge is a 
positive thing?
    Mr. McDonough. Yes.
    Mr. Shays. No silver bullet--I make an assumption we'll 
never have total security unless we simply have no trade. But 
we can make it infinitely more difficult, and that has value, 
correct? Does anyone disagree?
    When I think of BENS, I think of an organization that cares 
about national security, just wants to make sure our dollars 
are spent there.
    Are you concerned there is going to be a lot of ways to end 
this effort to fight terrorists?
    Mr. Boyd. Mr. Chairman, I think your characterization 
depends on the early basis is accurate, and that was narrow 
focus.
    What we're principally doing at this phase of our history 
is bringing business leaders and wisdom and their ideas into 
application on discrete problems. Mostly in the department 
which focused a great deal on the acquisition of business side 
of defense and intelligence commission.
    Now, we're focusing much more on this new brand of threats 
and it turns out that we have a wonderful array of members in 
our organization, about 400 business leaders, CEO, Coast Guard 
who are willing to give back and want to give back something in 
the way of their experiences.
    Mr. Shays. Let me tighten your answer a bit. So is the 
bottom line what?
    Mr. Boyd. Bottom line is we can help, just as we're it 
doing it in New Jersey, marshalling business leaders to help 
volunteer with these various problems.
    Mr. Hyde mentioned the Customs trade, a voluntary program, 
but one, as far as we can gather, that's a rather weak set of 
principles or standards that companies can adopt--be rewarded 
in some way. There's much more to review than that.
    Mr. Shays. Am I hearing that you believe that there are new 
things that we can do to--you're frankly outside the maritime 
industry. Are you basically saying that you think BENS, based 
on business experience, can provide some new innovative ways to 
deal with this whole issue?
    Mr. Boyd. That's what I understand.
    Mr. Shays. Mr. Hyde, I don't know if it was you who said 
security should be done at a reasonable cost.
    Do you want to elaborate on that whole issue?
    Mr. Hyde. Since September 11th, to speak fairly bluntly, a 
lot of people have come out of the woodwork with new and 
innovative devices that are impressive, but the question is 
what will they do, are they effective and if they are, who's to 
use them, who is to monitor them, who is to make sure they're 
doing the job that they're intended for.
    We have a concern about putting bells and whistles on 
containers, and we're not sure that they can add that much to 
the security, but we are concerned that they would give a sense 
of false security.
    Until we can get those questions that I just articulated 
answered, we're not real sure how we should support some of the 
high tech innovations that are out there that are dreamed up 
every day.
    We believe there's a place for high tech industry. We're 
not so sure that what is out there is addressing it correctly 
and how it should be faced.
    Mr. Shays. Let me say to all of you on this panel, the 
national security subcommittee program has a special task of 
fighting terrorism at home and abroad. That's in our--we're the 
only committee that looks at both the State department, as well 
as the defense, and looks at any aspects of terrorism.
    If you all are not feeling your voices heard, I would like 
to make sure that the director of my committee and others are 
aware of it. Mr. McDonough, I would welcome you to be very 
aggressive with my committee, and we'll start to be very 
outspoken.
    So maybe I can say to you the contribution that you're 
making to this committee, that I would like you to see a result 
on, if we met 4 months or 5 months from now you would able to 
make that same claim.
    Mr. Tierney. Mr. McDonough, the chairman was correct, you 
were the first to speak on the issue of not being listened to.
    As I understand, you took over your possession in December 
2001?
    Mr. McDonough. That's when I joined NYSA. I came president 
on January 1st.
    Mr. Tierney. Of?
    Mr. McDonough. 2001.
    Mr. Tierney. Post September 11th?
    Mr. McDonough. Yes, yes.
    Mr. Tierney. A little research on the Shipping Association 
shows our staff that association hasn't always been in favor of 
security measures, but that since September 11th, this position 
has changed considerably.
    Mr. McDonough. I will join Mr. Hyde in saying we get lots 
of bells and whistles that are offered to us but they're not 
necessarily cost effective.
    Mr. Tierney. You mentioned in your testimony that you don't 
think there is any single plan that will work for a report, 
that each port security needs to be assessed individually.
    Mr. McDonough. Yes.
    Mr. Tierney. What is your opinion of the international port 
security being developed by the international maritime 
organization?
    Mr. McDonough. I think it's a step forward. There's no 
question about that. Right now there are no standards.
    I think as we go forward, we have to work very hard, Coast 
Guard, others working on the IMO, to include those in the IMO 
international standards ultimately so all the ports that we 
have to deal with are compliant, if you will. We have to have 
international standards that are equally applicable and 
enforced at all ports.
    Mr. Tierney. Mr. Hyde, you said shippers should be more 
accountable for what they're shipping, and I want to have you 
explore that a little bit more.
    How would you recommend they be held accountable?
    Mr. Hyde. Maybe a little background. Ocean carriers are 
held accountable now under the Tariff Act of 1930, and the part 
of that act that held us accountable provides penalties for 
inaccurate manifests. That act was passed when shipping was 
different than it is today, when the carrier would know what is 
being put on board by visually seeing it.
    I think that we have an opportunity here to look at how 
some of these laws apply, who they apply to. The ocean carrier 
simply mirrors whatever information is provided on the ship. 
The shipper is the person that knows what is going in the 
container and the shipper is the person who has to declare to 
us what's in there and the shipper is the person that is the 
first step of securing that and we believe that it's an 
appropriate time now to look at what the shipper's 
responsibilities should be, but the U.S. Customs does not have 
a lot of rules and regulations obviously with the 24-hour rule 
that are affecting overseas operations, so we believe it should 
be looked into by whatever appropriate government agency, I 
think Customs would be the best, and in fact maybe tie in with 
what some of my colleagues were saying, before this shipper can 
present a load for shipment, would have to be provide the 
information to Customs.
    Mr. Tierney. Do you think the carrier might have some 
responsibility also?
    Mr. Hyde. Well, I don't see the carrier as a law 
enforcement agency obviously. I see the carrier as a powerful 
instrumentality if working with the agencies involved, as we've 
been saying, more involved.
    Mr. Tierney. They're going to have a lot of say about who 
they do business with.
    Mr. Hyde. Carriers? We have to accept cargo that is legally 
tendered, so we're not in the business of turning away cargo. 
We do have programs in place and they're related to some of the 
things I mentioned.
    I don't know that I would want to suggest that an ocean 
carrier should be able to authenticate what's in that 
container.
    Mr. Tierney. How do you recommend that the shipper be held 
accountable in some meaningful way?
    Mr. Starer. I think right now the way the system works and 
the ship's manifest is created, the ocean carrier has no 
alternative because he does not know, the operator or owner, 
does not know what's in the container to necessarily declare 
under a set--it's a legal term of art. If the carrier leaves 
that off, the carrier can be responsible as guarantor, so they 
virtually never leave off their bills of lading and manifests.
    To carry it one step back further, to the shipper, if the 
shippers know when a particular cargo has to reach the United 
States, whether it's supply chain running beer or it's the 
latest toy for Christmas, Customs knows they have to get those 
through at a particular time.
    It seems to me that a system, almost independent of the 
present ocean carrier system would work and it could be set up 
electronically in a preclearance manner to where virtually all 
of the cargo that moves in routine, to and from the United 
States could be identified and cleared in a routine manner, and 
it would also show using the example of Heinekin beer, Heinekin 
beer from Rotterdam to various parts in the United States is 
routine. If suddenly Customs saw that Heinekin container moving 
from Istanbul to New York, that would show an anomaly that 
would require it be kicked out right away and cause Customs to 
go back to the shipper and say what is going on here.
    And at that point in time, they would either explain it or 
not explain it. But the point is, it would never get to the 
point of coming on dock side from someplace in the world.
    It hits to the heart of the issue. How to do it is 
something that's beyond my capabilities, most certainly. 
Electronically it can be done, and I'm sure a program can be 
worked out, it will make it work, it's going to require moving 
the time forward so that shipper knows they've got to have 
Customs clearance by X date if that cargo is going to be taken 
in a sealed container to a local port and then transferred or 
transported to the United States.
    Mr. Tierney. Generally, are you in agreement with the 
earlier panelists who indicated when it comes to security 
matters concerning containers, that the most important thing we 
can do is try to get the inspection done back at the point of 
loading?
    Mr. Boyd. All the people, I went to Long Beach 2 weeks ago, 
and people on the docks, the people in the harbor, everyone 
seemed to concur that the long-term approach would be one in 
which things are container sealed in a real way, with 
surveillance equipment inside, and at the point of which it's 
loaded and between that point and the point which it comes to 
Long Beach, for example, then it is immediately suspected.
    Mr. Tierney. Thank you all for your testimony here today. I 
have to excuse myself, but I appreciate you being here, I value 
your testimony.
    Mr. Souder, I believe, has some further questions before he 
closes the hearing.
    Mr. Souder. I think you've all made good points. We need to 
check, and we'll talk further of the shippers and get back, 
because I don't understand why they wouldn't be a key part of 
the chain as well.
    It's a different liability. You shouldn't be liable for 
something you can't control. We're using you to control both 
parts, and that furthermore, it tends to be the smaller 
companies who aren't identified and don't have the pattern. 
That's why the risk ought to be concentrated, and we clearly 
need this for individuals that cross on the border--this is 
kind of a new zero tolerance error.
    I can also say on behalf of the Federal Government having 
come out of the private sector, I understand your frustration.
    I had two very particular things I wanted to ask, because 
it makes sense, I haven't thought about it as much before, I 
heard one of you said in the top 20, 65 percent comes from 
transport, transshipper, what percentage would you say is port 
of origin?
    Mr. McDonough. I don't have the answer to that question.
    Mr. Hyde. I would think originating cargo out of Singapore 
might be less than 10 percent. In an operation like Singapore, 
doing any of this is extremely difficult in terms of the 
operation. The information needs to be transmitted by, as it 
stands now, on the ocean carrier trying to load it on the 
mainline vessel leaving Singapore, which we can do, but that 
does not go far enough. We need that information transmitted 
before it loads anywhere. That would be the responsibility of 
whoever loaded that box.
    Mr. Souder. We may have some additional written questions, 
but this is my last one that relates directly what I just said.
    I heard someone say in earlier testimony that on this very 
point of the holding, that you could be held in Newark based on 
something somebody wanted in Baltimore?
    Mr. McDonough. What happens is you'll get a shipment that's 
fully loaded and someone asks how many containers do these 
ships carry? Some can carry up to 6,000. Majority or two-thirds 
don't do that right now.
    In any case, what can happen is you can get information 
from any number of sources, and one of the ships stopped here 
recently in the harbor was based on information that was 
gathered in Halifax and they stopped the ship and wanted that 
box or boxes off-loaded at some intermediary point.
    And when you do that and you're sitting there with a ship, 
let's say 6,000 TUs, that means 13 to 21 TEUs across and 
another dozen up, it happens to be in the one in the hole, then 
you're going to have an issue. It may sit there, what happened 
in John's terminal a couple weeks ago, off-loading a box at a 
time, taking an entire day to get to the box that you want. 
That's an issue.
    Mr. Souder. You're talk about the additional cross 
instructions coming to the Federal Government by the private 
insurers putting pressure on you to take action to make sure 
you get terrorist insurance.
    Mr. Hyde. Getting terrorist insurance post September 11th 
is difficult. I don't deal every day in terrorist issues. Thee 
has been a lot of pressure on our insurers to insure that we 
are operating at a level that they're comfortable with.
    We are obviously participating in some of the things that 
helps us. The insurance issue has been very difficult. I don't 
know much about it.
    Mr. Hyde. We can't get sufficient coverage to cover their 
capital investment, unless they want to pay virtually the 
amount of the insurance. It's become a very critical issue for 
us. It's becomes a critical issue not in terms of so much how 
much it costs you to get the coverage, but also if you can't 
get the coverage, you're not going to get the kind of bank 
support, financial support, you need. It's a real dog chase.
    Mr. Souder. They're not asking you to do certain things.
    Mr. McDonough. They're not giving it to us. They're giving 
it to us at unreasonable dates.
    Mr. Souder. Thank you. Any additional materials you want to 
submit are very helpful.
    The subcommittee stands adjourned.
    [Whereupon, the subcommittee was adjourned.]

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