    [Senate Hearing 107-309]
    [From the U.S. Government Publishing Office]

                                                            S. Hrg. 107-309

     WEAK LINKS: ASSESSING THE VULNERABILITY OF U.S. PORTS AND WHETHER THE
             GOVERNMENT IS ADEQUATELY STRUCTURED TO SAFEGUARD THEM

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

                                    HEARING

                                   before the

                                  COMMITTEE ON
                              GOVERNMENTAL AFFAIRS
                              UNITED STATES SENATE

                          ONE HUNDRED SEVENTH CONGRESS

                                 FIRST SESSION

                                   __________

                                DECEMBER 6, 2001

                                   __________

          Printed for the use of the Committee on Governmental Affairs

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                                WASHINGTON : 2002
    ____________________________________________________________________________
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                       COMMITTEE ON GOVERNMENTAL AFFAIRS

                   JOSEPH I. LIEBERMAN, Connecticut, Chairman
    CARL LEVIN, Michigan                 FRED THOMPSON, Tennessee
    DANIEL K. AKAKA, Hawaii              TED STEVENS, Alaska
    RICHARD J. DURBIN, Illinois          SUSAN M. COLLINS, Maine
    ROBERT G. TORRICELLI, New Jersey     GEORGE V. VOINOVICH, Ohio
    MAX CLELAND, Georgia                 PETE V. DOMENICI, New Mexico
    THOMAS R. CARPER, Delaware           THAD COCHRAN, Mississippi
    JEAN CARNAHAN, Missouri              ROBERT F. BENNETT, Utah
    MARK DAYTON, Minnesota               JIM BUNNING, Kentucky
               Joyce A. Rechtschaffen, Staff Director and Counsel
                  Dan Feldman, Counsel/Communications Adviser
                  Jason M. Yanussi, Professional Staff Member
             Hannah S. Sistare, Minority Staff Director and Counsel
              Jayson P. Roehl, Minority Professional Staff Member
                         Darla D. Cassell, Chief Clerk

                                C O N T E N T S

                                     ------
    Opening statements:
                                                                       Page
        Senator Lieberman............................................     1
        Senator Levin................................................     3
        Senator Collins..............................................    15
        Senator Cleland..............................................    30
        Senator Bennett..............................................    33
        Senator Thompson.............................................    36

                                   WITNESSES
                           Thursday, December 6, 2001

    Hon. Ernest F. Hollings, a U.S. Senator from the State of South
      Carolina.......................................................     6
    Stephen E. Flynn, Ph.D., Senior Fellow, Council on Foreign
      Relations and Commander, U.S. Coast Guard......................    10
    F. Amanda DeBusk, Miller and Chevalier, former Assistant
      Secretary of the Commerce Department and former Commissioner,
      Interagency Commission on Crime and Security in U.S. Seaports..    16
    Rob Quartel, Chairman and Chief Executive Officer, FreightDesk
      Technologies and former Member, U.S. Federal Maritime
      Commission.....................................................    19
    Rear Admiral Richard M. Larrabee, Ret., Director, Port Commerce
      Department, The Port Authority of New York and New Jersey......    23
    Deputy Chief Charles C. Cook, Memphis Police Department..........    40
    Argent Acosta, Senior Customs Inspector, Port of New Orleans and
      President, National Treasury Employees Union (NTEU) Chapter 168    43
    Michael D. Laden, President, Target Customs Brokers, Inc.........    47
    W. Gordon Fink, President, Emerging Technology Markets...........    49

                         Alphabetical List of Witnesses

    Acosta, Argent:
        Testimony....................................................    43
        Prepared statement...........................................   127
    Cook, Deputy Chief Charles C.:
        Testimony....................................................    40
        Prepared statement...........................................   120
    DeBusk, F. Amanda:
        Testimony....................................................    16
        Prepared statement...........................................    93
    Fink, W. Gordon:
        Testimony....................................................    49
        Prepared statement...........................................   138
    Flynn, Stephen E., Ph.D.:
        Testimony....................................................    10
        Prepared statement with an attachment and slide presentation.    57
    Hollings, Hon. Ernest F.:
        Testimony....................................................     6
    Laden, Michael D.:
        Testimony....................................................    47
        Prepared statement...........................................   133
    Larrabee, Rear Admiral Richard M., Ret.:
        Testimony....................................................    23
        Prepared statement...........................................   114
    Quartel, Rob:
        Testimony....................................................    19
        Prepared statement with slide presentation...................    98

                                    Appendix

    Slide presentation by Stephen E. Flynn entitled ``Bolstering the
      Maritime Weak Link''...........................................    80
    Slide presentation by Rob Quartel................................   107
    Letter (with an attachment) to Senator Collins from Captain
      Jeffrey W. Monroe, Director, City of Portland, Department of
      Transportation, dated October 26, 2001.........................   142
    U.S. Customs Service Optimal Staff Levels, Fiscal Years 2000-02,
      February 25, 2000..............................................   148
    Classification of U.S. Customs Districts and Ports for U.S.
      Foreign Trade Statistics.......................................   285

    Responses to questions for the record from:
        Mr. Flynn....................................................   248
        Ms. DeBusk...................................................   253
        Mr. Quartel..................................................   259
        Rear Admiral Larrabee, Ret...................................   270
        Mr. Acosta...................................................   275
        Mr. Laden....................................................   277
        Mr. Fink.....................................................   282

     WEAK LINKS: ASSESSING THE VULNERABILITY OF U.S. PORTS AND WHETHER THE
             GOVERNMENT IS ADEQUATELY STRUCTURED TO SAFEGUARD THEM

                                  ----------

                           THURSDAY, DECEMBER 6, 2001

                                           U.S. Senate,
                             Committee on Governmental Affairs,
                                                        Washington, DC.
        The Committee met, pursuant to notice, at 9:08 a.m., in
    room SD-342, Dirksen Senate Office Building, Hon. Joseph I.
    Lieberman, Chairman of the Committee, presiding.
        Present: Senators Lieberman, Levin, Bennett, Cleland,
    Torricelli, Collins, and Thompson.

                OPENING STATEMENT OF CHAIRMAN LIEBERMAN

        Chairman Lieberman. Good morning. Thanks to all of you for
    being here, particularly to Senator Hollings and our other
    witnesses. This is one of a continuing series of hearings that
    this Governmental Affairs Committee has held since the
    terrorist attacks of September 11 which have examined the
    Federal Government's ability to prevent, prepare for, and
    respond in the event of future terrorist attacks.
        In some ways, we ask questions that some have been hesitant
    to ask in the past, and I suppose some might wonder why we are
    asking them now--because they may reveal vulnerabilities. And
    yet, if we do not ask them, we will not close those
    vulnerabilities and we will be susceptible to further attack. I
    think all of us felt that, unfortunately, after September 11,
    we have to start thinking more like the terrorists do, and we
    are going to try to do it in a very thoughtful and
    comprehensive way today and we have the witnesses here to make
    that happen.
        Not since December 7, 1941, which is 60 years ago tomorrow,
    has the question of our domestic security so dominated national
    debate. The Committee has taken a hard look at whether the
    Federal Government is appropriately structured to meet those
    challenges. Specifically, we have held hearings on our aviation
    and postal systems, on cyberspace, and more broadly, on the
    safety of our critical infrastructure and how we should
    organize for homeland security.
        Today, we direct our attention to the security of the
    Nation's 400-plus ports through which 95 percent of all U.S.
    trade flows. The picture, unfortunately, is not a reassuring
    one. U.S. ports are our Nation's key transportation link for
    global trade and yet there are no Federal standards for port
    security and no single Federal agency overseeing the 11.6
    million shipping containers, the 11.5 million trucks, 2.2
    million rail cars, 211,000 vessels, and 489 million people that
    passed through U.S. border inspections last year.
        I just want to put an exclamation point there, that as I
    have studied this more, I must say it surprised me. There are
    no Federal standards for port security and no single Federal
    agency overseeing port security. Port security is largely a
    matter of State and local administration. The Coast Guard, the
    Customs Service, the Immigration and Naturalization Service,
    and other agencies all have a role to play, but the plain fact
    is that the movement of goods into the United States, five
    million tons a day, is now so efficient in the sense of goods
    coming into the country and moving rapidly as a matter of
    commerce to their destination that port security has been
    sacrificed.
        It is not possible to physically inspect more than a small
    sample of containers as they arrive in the United States. Less
    than 1 percent are actually examined, and that leaves our
    ports, unfortunately, vulnerable to attack. And not just our
    ports. Containers arriving from Europe, Asia, or Canada are
    more likely to be inspected at their final destination rather
    than at the arrival port.
        I am sure that would surprise most Americans, but that is
    the reality and it means that at any given time, authorities
    have virtually no idea about the contents of thousands of
    multi-ton containers traveling on trucks, trains, or barges on
    roads, rails, and waterways throughout the country. The ease
    with which a terrorist might smuggle chemical, biological, or
    even at some point nuclear weapons into one of those containers
    without being detected is terrifying.
        Even the physical security of ports is minimal. Last year,
    the Commission on Crime and Security in U.S. Seaports reported
    that of 12 of the Nation's largest ports, 6 had perimeter
    fencing that could be penetrated, 4 had no regular security
    patrols, and 10 never performed routine criminal background
    checks on employees. The Commission said the state of security,
    ``at U.S. seaports generally ranges from poor to fair.''
        The FBI told the Commission that ports were highly
    vulnerable to terrorist attack, although at that time, they
    considered the threat to be marginal. The assessment, of
    course, has changed since September 11 and 2,000 military
    reservists have now been activated to shore up port security.
        Part of the overall problem, as is so frequently the case,
    is the lack of resources to properly enforce port security.
    But, of course, we are going to be dealing with that on the
    Senate Floor in the Department of Defense appropriations bill
    and the homeland security funding that is part of that bill.
        The Coast Guard, for example, has 95,000 miles of shoreline
    to patrol but is at its lowest level of manpower since 1964.
    International trade has doubled since the mid-1990's, but the
    number of Customs inspectors has remained the same, just 8,000.
    The Federal Government is also handicapped by a lack of
    coordination and communication between agencies.
        I have heard that a ship with a--this is a hypothetical,
    but not too improbable--a shadowy record of ports of call, for
    example, carrying a cargo that does not square with its home
    port and manned by crew members on a watch list of people with
    suspected terrorist ties might not necessarily raise any red
    flags, and that is because the Coast Guard could know about the
    ship, Customs could know about the cargo, and INS could know
    about the crew members, but no one would necessarily have all
    that information, so the pieces would not be pulled together to
    form a picture that would set off alarms.
        Even if resources and coordination were adequate, the
    front-line agencies would still be handicapped by a lack of
    access to national security intelligence from the FBI and the
    CIA. That is a complaint that I have heard over and over again
    from local officials following the September 11 attack.
        The Committee is particularly pleased to welcome Senator
    Fritz Hollings and to thank him for his leadership and
    dedication--lonely, most of the time--to pursuit of better port
    security in America and the critical role that he has played in
    keeping this problem on our collective radar screens over the
    years. I am very pleased that he is with us today to testify
    about legislation that he and Senator Bob Graham have written
    to respond to the vulnerability of our ports. Their
    legislation, which I strongly endorse, addresses some key
    findings and recommendations of the Commission on Seaport
    Security. Our ports, goods, and citizens will be safer when it
    passes.
        I must say that the more that I study this issue, the more
    I realize how pervasive the problem is and how much work we
    have to do on it to make sure that we get our entire system of
    importing and exporting to a point where it is not only
    efficient, but it is also safe. The entire commercial structure
    may need to be addressed systematically, and as some of the
    witnesses we are going to hear this morning will suggest, the
    best answer may lie in an entirely new approach that relies on
    innovative technologies combined with security inspections
    starting at ports of origin, rather than ports of destination.
    I am going to be very interested to hear testimony on that.
        We may need, as one of our witnesses would put it, to push
    our borders back and create sanitized shipping zones for goods
    bound for the U.S. from overseas ports. We certainly need to
    put technologies to work so that containers can be
    electronically sealed and alarmed after they are inspected,
    then X-rayed for a baseline record of their contents. Global
    positioning satellite systems could be attached to all
    containers to monitor shipments, and a secure Internet tracking
    system could help place a shipment anywhere along its path.
        Fortunately, our ports are busy and they do not need a bail
    out. They just need a sensible strategy to keep them safe and
    sound as vital economic hubs, and I am hopeful that the
    testimony we will hear today will help the Congress do just
    that.
        Senator Levin.

                   OPENING STATEMENT OF SENATOR LEVIN

        Senator Levin. Mr. Chairman, thank you. Thank you for these
    series of hearings that you are holding that are really a
    comprehensive series, and I think perhaps the most
    comprehensive look that is being given to our security issues
    in a whole host of areas.
        I also want to join you in welcoming Senator Hollings, an
    old friend of both of ours, or a dear friend, I should say, of
    both of ours. He has been, indeed, a leader in the subject that
    you are looking at today.
        We, who are on the Northern Border, are particularly very
    keenly interested in this subject. We have twice the Border as
    exists on the South Borderand yet we have a small, tiny
    fraction of the security which exists there, and that is
    inadequate, and you will be hearing more about that. The
    Northern Border receives about two-thirds of the truck traffic,
    about 85 percent of the trains, a large number of ships.
        We have the longest coast, actually, of all the four
    coasts. People sometimes forget that the St. Lawrence Seaway
    and the Great Lakes is the longest coastline that we have in
    this country. We have many ports of entry, lots of ships coming
    in from overseas, and it is a major issue for us. The issues
    that the Chairman has identified, are both the security issue
    as well as trying to move trade, because when we have long
    lines of trucks, for instance, coming into my home State and
    leaving my home State, with trade, it means that our plants are
    not able to run as efficiently when we have to wait 2 or 3
    hours at a bridge or a tunnel. What you are looking at today is
    mainly seaports, but I gather you are including all ports of
    entry, and I think the third panel will be looking at those, as
    well.
        What you have identified, Mr. Chairman, one of the issues
    that we are pushing very hard on is the reverse inspection
    issue. It makes a lot more sense to be inspecting cargo before
    it lands at our ports, before it goes through our tunnels,
    before it goes across our bridges, because it could be too
    late. If someone wanted to attack a port or a tunnel or a
    bridge, they would do so before they entered our country, not
    afterwards, and they would do it in the process of entering,
    not after they have entered.
        So the reverse inspections that we are pushing so hard for,
    getting our Customs people to get involved in much more
    actively, could be an important part of added security for our
    ports of entry, including our bridges and tunnels. Some of the
    technologies which the Chairman has identified are also very
    important and we must put more resources into those
    technologies to identify threats to our ports of entry.
        And also, we need more resources. We have a huge shortage
    of resources, particularly on the Northern Border, but I think
    that is true on the South Border, and also on the East and West
    Coasts. We have a large number now of temporary employees
    following September 11. We have got to have permanent employees
    instead of temporary employees. But we have both resource
    problems, technology challenges, and just plain common sense
    that push for those reverse inspections that could provide so
    much greater security.
        But while I must leave you, Mr. Chairman, I am very keenly
    interested in this subject. I want to again thank you for these
    hearings. I congratulate Senator Hollings for his usual
    steadfastness in staying with an issue for so long, and I think
    that, finally, tragically, probably, because it took September
    11 to wake us up, but nonetheless, finally, I think we are
    going to get to the point where Senator Hollings has been for
    so long.

                      PREPARED STATEMENT OF SENATOR LEVIN

        It took the tragedy of September 11 and the subsequent need for
    heightened security along our borders to draw attention to what many of
    us have known for years; there is an alarming lack of resources along
    our Northern Border. While much has been done over the last decade to
    improve security on our border with Mexico, the Northern Border has
    largely been ignored. For example, only 1,773 Customs Service personnel
    are present at our border with Canada, while 8,300 protect our Southern
    Border. Similarly, while 8,000 Border Patrol agents monitor our 2,000
    mile Southern Border, only 300 are stationed at our 4,000 mile Northern
    Border. So, 96 percent of our Border Patrol agents are assigned to a
    border that is only half as long as the one to which 4 percent of
    agents are assigned.
        Although hugely understaffed, we process a large percentage of the
    country's commercial traffic. The Northern Border has six of the top
    eight truck border crossings in the country, including the number one
    truck border crossing, Detroit's Ambassador Bridge. Our Customs
    officers on the Northern Border process 62 percent of all trucks, 85
    percent of all trains, and 23 percent of all passengers and pedestrians
    entering the country each year. However, our Customs inspectors
    represent only a small fraction of the currently deployed inspectors in
    the country, and their numbers have remained essentially static since
    the 1980's.
        The Detroit Region has half of all Northern Border crossing traffic
    yet has only 10 percent of the INS inspectors assigned to the Northern
    Border and 24 percent of the Customs inspectors assigned to the
    Northern Border.
        With this startling lack of resources, it's no surprise that the
    new security measures at the border have a tremendous impact on our
    region's economic well being. Auto plants wait days for critical parts.
    Hospitals can't perform vital services when supplies and staff are
    trapped in long lines at the bridge and tunnel. We need to find a
    permanent solution to the staffing shortfall at our borders so that we
    are able to perform essential security inspections without causing
    unreasonable backups that hurt our economy. We are grateful for the
    recent Federal commitment to increase the number of National Guard at
    the Northern Border and are relying on them to help protect our border
    and keep traffic and commerce flowing smoothly. However, we need to
    move quickly to put permanent staff and technology in place.
        Congress has taken some important steps to achieve this goal, but
    we are not there yet. The FY 2002 Treasury Postal Appropriations bill
    provides an additional $28 million for Customs to institute a Northern
    Border initiative including hiring approximately 285 additional Customs
    officers. The Commerce Justice State FY 2002 Appropriations bill
    provides for $66.3 million for 570 new border patrol agents across the
    nation and $25.4 million for 348 new land border ports-of-entry INS
    inspectors across the nation. Particular attention will be paid to the
    needs of the Northern Border. Congress also tripled staffing levels for
    INS, Customs and Border Patrol staffing on the Northern Border in the
    anti-terrorism bill. A portion of the $40 billion emergency
    supplemental should also go to staffing up the security at our Northern
    Border.
        But improved border security involves more than just more money. It
    requires changing policies and practices that don't make sense. On
    November 13 I held a hearing of the Permanent Subcommittee on
    Investigations to highlight an obvious gap in our border security. The
    U.S. Border Patrol is the uniformed law enforcement arm of the
    Immigration and Naturalization Service (INS) with the responsibility of
    combating alien snuggling and illegal entries other than at ports of
    entry. The Subcommittee looked at how people who attempt to enter the
    country illegally at places other than the official ports of entry are
    arrested and processed by the Border Patrol. When persons are arrested
    by the Border Patrol, the large majority voluntarily returns to their
    country of origin, usually Mexico or Canada. The others, perhaps as
    many as one-third of those arrested on the Northern Border, are given a
    notice to appear at a removal hearing. The Border Patrol decides
    whether the person should be detained, released on bond or, as is often
    the case, released on his or her own recognizance while awaiting a
    hearing. This hearing can take several months to occur.
        In FY 2001 at the Detroit Border Patrol Sector--which encompasses
    all of Michigan--the Border Patrol arrested more than 2,100 people. A
    significant percentage of these people were arrested while actually
    attempting to enter the U.S. illegally. Most of these 2,100 were
    voluntarily returned to their country of origin. However, more than
    one-third were given a notice to appear at a removal hearing. Reports
    from Border Patrol agents indicate that the vast majority of the latter
    group were released on their own recognizance pending their hearing.
    The INS wasn't able to tell us how many of the persons arrested in this
    situation and released fail to show up for their scheduled hearing.
    However, by looking at related statistics and ballpark estimates, we
    estimated that the number is at least 40 percent and possibly as high
    as 90 percent.
        The conclusion is inescapable: The vast majority of people arrested
    by the Border Patrol while attempting to enter the U.S. illegally who
    don't voluntarily return to their own country are released on their own
    recognizance. Most of those released don't show up for their removal
    hearing and little or no effort is made to find them.
        As I said at my Subcommittee's hearing, this is a dysfunctional and
    absurd system that makes a mockery of our immigration laws. When we
    release persons into the county who are without an address, without
    ties, without any record of who they are, we're abdicating our
    responsibility to the larger community. This is a practice that has to
    stop. On November 13, I asked the INS and Border Patrol to report to me
    on the steps they plan to take to close these enforcement loopholes. If
    the response is unsatisfactory, I plan to introduce legislation to
    accomplish it.
        There is much that needs to be done. Customs and INS officials
    shouldn't have to rely on temporary fixes--we need permanent workers
    and we need them now. We also need to find a way to compensate our
    local law enforcement volunteers and secure funds for technology. We
    should also consider performing reverse Customs inspections of vehicles
    entering tunnels and crossing bridges on the Northern Border. With the
    increased security risks to our nation's infrastructure in the post-
    September 11 climate, it seems obvious that inspecting vehicles for
    bombs or explosives AFTER they enter our tunnels or cross our bridges
    is illogical. To rectify this security vulnerability, we must work with
    our neighbors to establish a reverse inspection program to inspect
    vehicles before they have the chance to endanger or destroy important
    transportation infrastructure.
        And finally, we need to make common sense changes to our law
    enforcement and immigration policies to ensure the safety of our people
    and the integrity of our laws. We are an open and generous country and
    we welcome persons from around the world who want to contribute their
    hard work to help build a better America. But we also have a duty to
    protect ourselves and our country from people who would do us harm.

        Chairman Lieberman. Thanks, Senator Levin. Thanks for your
    involvement in this. Because I know of the great interest in
    Michigan about this, I look forward to the questions you have
    raised, and to working with you on some responses.
        Senator Hollings, thanks so much for being here.

     TESTIMONY OF HON. ERNEST F. HOLLINGS, A U.S. SENATOR FROM THE
                        STATE OF SOUTH CAROLINA

        Senator Hollings. Thank you very, very much, Mr. Chairman
    and Senator Levin. I am grateful to the Committee for the
    chance to appear here.
        Let me ask consent that my prepared statement be included
    in the record.
        Chairman Lieberman. Without objection.
        Senator Hollings. I will get right into the advance check.
    I, frankly, had not heard of that, the concept of pre-clearance
    of cargo in foreign ports. Let me say, Senator Bob Graham of
    Florida and I, as you indicated, Senator Levin, we have been at
    it 3 years. We started off really in looking into drugs and the
    drugs coming in in containers. We were not thinking of
    explosives and terrorism particularly at the time. President
    Clinton, at our behest, put in a study commission. The study
    commission, comprised of 17 Federal agencies, made its report.
    We put in a bill in the last Congress with no further success.
    We have one in in this Congress that has been reported out of
    committee unanimously. And yes, we have been working to advance
    that bill forward as well.
        Along that line, the only reason for the hold-up on the
    floor is OMB. Our Republican colleagues embarrassedly have to
    stand up and object on account of costs. You can ship a
    container anywhere into the United States for $5,000, and bring
    in explosives or chemical weapons. We had one terrorist that
    was picked up in Italy in a marine container, he had a phone, a
    toilet, cooking and sleeping equipment, and plans and security
    passes for some of the airports, false documentation to get
    into any and every entry point into the United States and
    everything like that. He was living in the container.
        So either one can come in for $5,000, or you can get in the
    contraband needed to destroy our Nation. We have spent billions
    for the threats from outer space and a ballastic missile
    defense system but we do not want to spend port security. We
    know the cost of everything and the value of nothing.
        This is an emergency situation. Let me, if the Committee
    will please, read from an article in the London Times entitled,
    ``Secret Fleet Supplied Bombers,'' published over a month ago.
    ``Three years ago, nobody paid much attention to a crew
    unloading a cargo from a rusting freighter tied up on the K-
    side at Mubasa, Kenya. The freighter was part of bin Laden's
    merchant fleet and the crew was delivering supplies by the team
    of suicide bombers who weeks later would blow up the U.S.
    embassies in Kenya and Tanzania. Bin Laden's covert shipping
    interests were revealed at the trial of the bombers, but until
    now, security services have been slow to track down how many
    vessels he operates.''
        Well, we have tracked it down now and he operates over 20
    vessels, but he could easily hijack an oil tanker he does not
    own. Some company like Chevron, Exxon, or responsible owner's
    tanker could be hijacked and used as a weapon. You can operate
    one with four suicidalists, or martyrs, and run it right into
    the Golden Gate Bridge or the Brooklyn Bridge or any place in
    the United States.
        So we are into an emergency situation and we have to go to
    the 50 largest ports, at least, and very quickly. There are
    some 361 ports, and let me join in, in support of the very
    comprehensive opening statement made by the distinguished
    Chairman. He has covered the subject. We have 361 ports, we
    have 50 major ports, and we have got to really move forward as
    fast as we can to have a plan of security there. Currently we
    don't have Federal security plans.
        I think the big problem is that the whole thrust in port
    operations, and I used to operate one when I was a Governor and
    have been a big supporter of port facilities and economic
    expansion and everything else of that kind, but they are many
    splendored things. Some are owned privately. We are getting one
    privately developed right now in the State of South Carolina.
    Some are owned by the State itself. We have a State Ports
    Authority, and some are owned by the State Ports Authority but
    are leased out. For instance, the largest carrier in New York,
    Maersk lines, leases major portions of the port. Also
    associated in the operations of ports are the Customs Service,
    the Immigration Service, the Drug Enforcement Administration,
    the local police, the Coast Guard, and everything else.
        To show you the lack of attention we did have, and it was
    not Admiral Loy, the Commandant, but another admiral was before
    our committee just 3 weeks ago and we asked who was in charge
    of security at the port. He said he did not know. Under law,
    the Captain of the Port, namely the Coast Guard official, is
    really, under present law today, responsible for the security
    of the port, but it is joined in by the local FBI, DEA, all
    these other agencies that I mentioned.
        And what we really need and the thrust of our bill is to
    get them all together and submit as judiciously and as
    expeditiously as possible a plan, to the Secretary of
    Transportation, a plan for security. They are all required to
    do that in the measure. There is some $1 billion overall
    provided with respect to quadrupling Customs agents and so
    forth at the port, buying the inspection equipment for the
    screeners. To my knowledge, the best screening equipment is
    down in Miami. That not only X-rays, but it scans the heat and
    can pick up drugs and articles in there. They tell me down in
    Georgia they are producing one that can even do better than
    that.
        It requires the ocean shipping manifests of cargo coming
    in, but as I indicated, you can have a good check-off on an oil
    tanker, but it can easily be hijacked and brought in, so there
    is still that threat that has got to be taken care of, and we
    need maritime protection and to establish greater controls of
    foreign vessels.
        I would be glad to try to respond to any questions. We have
    to get this bill out, and Senator Bennett, I was just saying
    our Republican colleagues embarrassingly have to object to it.
    I know they are for port security, but OMB has got them putting
    up a hold.
        Incidentally, Senator Levin, it also includes the truck
    traffic coming in and the rail security and other modes of
    transport. We are trying our best to prepare the New York and
    Baltimore tunnels and so forth. You are going to hear before we
    leave about Amtrak and the tunnels over here in Baltimore,
    particularly going into New York and Grand Central Station.
    Those kinds of things have got to be cared for, or we will have
    problems.
        So we are trying our best to clear it, and pass the bill
    through the Senate, and ours was passed out totally bipartisan,
    unanimously from the committee, and I again, will be glad to
    try to respond to any questions you have.
        Chairman Lieberman. Thanks very much, Senator Hollings. So
    the bill is on the calendar now?
        Senator Hollings. Oh, yes. It has been on the floor twice
    now and asked for its consideration, but there has been
    objection and my best look-see at it has been at the behest of
    the Office of Management and Budget on the matter of cost. Like
    I said, you can get a container brought in that has 60,000
    pounds and thousands and thousands of those containers come in
    each day, largely unchecked.
        Incidentally, you cannot find out the ownership of those
    containers or the ship. I have been working on that as well.
    Some are owned by the Chinese, and we have got one port out on
    the West Coast operated by the Cosco, a Chinese government
    controlled company. Others are operated out of Hong Kong. Some
    are holding companies and everything else like that.
        The biggest difficulty I am having at the moment on the
    safety side of the equation at seaports is where the poor
    truckers that come onto the port facilities there and they
    spend 2 hours trying to get a safe container chassis, because
    nobody maintains the chassis. If they get an unsafe one that
    blows a tire, or has defective lights, the patrolman pulls them
    over and they have lost their livelihood because they have
    gotten a fine and penalties to their driver's license, and the
    poor truck driver trying to work around the clock to feed his
    family has lost out. So he has to come there 2 hours early on
    the lot at the port itself trying to find something safe, and
    we have been trying to get some kind of requirements and
    everything at the port itself to check these things out. But,
    ultimately, the maritime business operates under a cloak of
    secrecy.
        There are all kinds of problems, but the biggest is
    security, and there is no idea of security. The whole idea is,
    move it. If we can move it faster than New York can or some
    other port can, brother, we are going to get the business.
        Chairman Lieberman. So we have a very efficient but
    insecure system now at ports?
        Senator Hollings. Yes, sir.
        Chairman Lieberman. Is there money for port security in the
    $7.5 billion homeland security component of the DOD
    appropriations?
        Senator Hollings. The amount that is in that homeland
    security is only $50 million, but that will give us a good
    start to do the planning.
        Chairman Lieberman. A beginning.
        Senator Hollings. Yes, sir.
        Chairman Lieberman. I wonder, before Senator Hollings
    leaves, do any of my colleagues have a question?
        Senator Levin. Thank you.
        Chairman Lieberman. Senator Hollings, thanks very much. We
    look forward to working with you.
        Senator Hollings. I thank the Committee very, very much.
        Chairman Lieberman. We will share the results of our
    hearing today with you, and once again, we thank you for your
    leadership.
        Senator Hollings. Yes, sir.
        Chairman Lieberman. Do either of my colleagues have an
    opening statement, Senator Bennett or Senator Torricelli?
        Senator Bennett. No thank you.
        Chairman Lieberman. Let us go to the first panel, then, and
    I am going to call Commander Stephen Flynn of the U.S. Coast
    Guard, who is now a Senior Fellow of National Security Studies
    at the Council on Foreign Relations, to go first.
        In a very real sense, although I suppose we would have
    eventually found our way to port security as a result of this
    series of hearings, Steve Flynn's testimony before this
    Committee on the subject of homeland security really educated
    and alarmed us, and I think he has become something, at least
    in my mind, of the Paul Revere of 21st Century port security.
    So I do not want to work out whether the terrorists are coming,
    but they will come unless we raise our guard at the ports.
        So I am going to give you a little more time than the 5
    minutes because I know you have a presentation. I think it may
    frame a lot of the rest of the hearing. Go right ahead.

    TESTIMONY OF STEPHEN E. FLYNN,\1\ PH.D., SENIOR FELLOW, COUNCIL
          ON FOREIGN RELATIONS AND COMMANDER, U.S. COAST GUARD

        Mr. Flynn. Thank you very much, Mr. Chairman. It is a real
    honor to be back in front of you again today to talk about this
    very, very serious issue, and I certainly commend you, sir, for
    hosting these hearings, because at the end of the day, I think
    we are talking about not just trying to protect the American
    people from potentially another catastrophic terrorism event,
    but we are also talking here, as well, about the sustainability
    of global commerce, because how the terrorists do their work
    may force us to respond in a way that could sacrifice the
    movements of peoples and goods that are so essential for us to
    continue to prosper.
    ---------------------------------------------------------------------------
        \1\ The prepared statement of Mr. Flynn with an attachment appears
    in the Appendix on page 57.
    ---------------------------------------------------------------------------
        We saw that in the week immediately following September 11,
    when the United States had to do what no Nation could do to it,
    which was essentially to impose a blockade on its own economy.
    What we did was not just ground our aircraft, but we closed
    most of our major seaports and effectively sealed our borders
    with Canada and Mexico, and we did that because we did not have
    much confidence that we had the capacity to filter bad from
    good in all those flows coming our way.
        We started the engine back up again and we have done a good
    scrubbing on the aviation side, but in my view, the aviation
    sector is the virtual Fort Knox of security by comparison to
    the other two sectors. The maritime and surface sector continue
    to be extraordinarily vulnerable, and we really have not come
    to grips with those issues.
        I would like to talk a little bit about that, because I
    think what we have to take is another lesson from the September
    11 time frame, is what we saw here is not a singular event by a
    single crazed individual or a network of individuals. I
    believe, as I think some others in the national security field,
    which I am a part, believe that what we witnessed on September
    11 was really how warfare will be conducted in the 21st
    Century. What this means is that at the end of the day,
    regardless of what goes on in Afghanistan now, and it looks to
    be a very successful campaign, is that, essentially, we are
    only defeating the terrorists of the moment.
        The United States may be an unrivaled power in terms of
    global military and economic and cultural reach, but the fact
    of the matter is, there are limits to that power. There will
    always be corners of the world for terrorists to hide in or
    failed states or failing states that have corners in their
    rural countrysides or mega-cities.
        So we have to begin with the assumption here that there
    will be for the foreseeable future anti-American terrorists
    with global reach; that, second, they will continue, because of
    the age we are in, to have access to weapons, including
    chemical and biological, that could lead to a catastrophic
    terrorist attack here on U.S. soil; and we also have to
    conclude that terrorists and our adversaries who cannot take us
    on frontally in a conventional way because they will lose in
    that enterprise, that are thinking about attacking America
    asymmetrically, whatever their mode may be, will be inspired by
    what happened by September 11, inspired because these folks
    made it look easy, and equally inspired and more soberly,
    perhaps, by the amount of particular economic disruption they
    have caused as a result of that single attack.
        We have to realize at the end of the day that terrorism is
    not about just killing people or toppling buildings. There is
    military utility to engaging in a terrorist act if you can
    generate societal and economic disruption that weakens the
    power of your adversary and forces it to change its behavior.
    That is why, militarily, you would decide to engage in an
    attack in the way that we saw on September 11, or what I worry
    about, alternatively, potentially exploit or target our other
    very open and vulnerable systems.
        What we saw on September 11, I believe, is the exposure of
    the soft underbelly of globalization. That is the very thing
    that has made America so successful and prosperous, our global
    reach and the networks that feed energy and labor and transport
    goods and people. It is also a system that remains extremely
    vulnerable.
        The best way, I think, to illustrate that problem, and not
    just in our ports but in the broader issue, and I think this is
    the important point, I guess, I hope to leave, is that we
    cannot think about our transportation sector in isolated nodes.
    Unfortunately, our government is constructed that way. We look
    at surface, aviation, rail, and we divide it up and we often
    make these modes compete with one another for resources. The
    fact is, it is a network that allows for global commerce to
    move and global travel to move and it is almost interoperable
    in today's world. We call that intermodal.
        The best way to illustrate, though, our current security
    measures, I would argue, is by taking a look at the container
    problem that you have mentioned this morning, Mr. Chairman. Let
    me try to illustrate it a little bit more.
        Of course, we are talking about these 20-foot, 40-foot
    boxes that are so ubiquitous I think so few of us pay any
    attention to them. They are hurtling down the highways. They
    are on rails. They are on ships. We drive by them. But we think
    things so often that show up in Wal-Mart just magically appear
    there from a back room. They, of course, come from all corners
    of the world and they come to us via those containers. We are
    talking about, in 1999, they represented about 80 percent of
    all general cargo, but today, the numbers look to be well over
    90 percent of general cargo that comes into the United States
    transoceanic comes in a container.
        [A slide presentation was shown.] \1\
    ---------------------------------------------------------------------------
        \1\ Copies of the slide presentation by Mr. Flynn entitled
    ``Bolstering the Maritime Weak Link,'' appears in the Appendix on page
    80.
    ---------------------------------------------------------------------------
        Mr. Flynn. Now, a little over a year ago, I had written in
    foreign affairs and I brought this up here as a way to
    illustrate this, a scenario where I put this man's face up and
    I said, if I had been a consultant to bin Laden, he had done
    this little job on one of our embassies, but instead, what he
    might alternatively want to do, as I suggested, is to buy a
    company that had been moving ceramics in the New York area for
    the last 30 years and then load that out of the port of Karachi
    and the container would perhaps move on, like you see these
    throughout the Asia area here, one of these container movement
    operations, just from a barge that gets on one of these rusty
    freighters.
        And we bring it to a place like Hong Kong. This is just one
    of five major terminals in the Port of Hong Kong. It is getting
    almost cartoon-like as you see the numbers. We are talking
    about 1.1 million container movements a month in the Port of
    Hong Kong. They are going to be loaded on something like
    perhaps the Virginia Maersk. This is a 6,600 TEU. If you can
    imagine, that is right there 3,300 railroad cars, 3,300 18-
    wheelers that are sitting not just on top there, but in the
    hull of that ship. That could be loaded in under 30 hours in
    Hong Kong.
        And it would steam for Long Beach, perhaps, and then,
    because it is going to Newark, it would probably travel in
    bond. That means we would unload it right from the pier and it
    would go onto a rail car, like this, and it would head into the
    inland of the United States. Our Customs inspection system is
    built to inspect--it is confusingly called the port of entry,
    but it is basically the point where it enters the economy,
    which in this case would be Newark. So it would be the Customs
    inspector in Newark who would actually have responsibility to
    examine the manifest and to ultimately look at the container
    when it got to Newark.
        Chairman Lieberman. And that would be the first American to
    do so?
        Mr. Flynn. That is right. It would go directly from the
    ship. Customs could, if alerted, stop it, of course, in the
    port of arrival, but the routine is to allow it to move
    directly in and move it. And so it may travel through a place
    like Chicago. I have--you do actually see passenger freight, on
    that bridge there coming through is one. If I had a chemical
    weapon with a GPS transponder on it, I could set off that
    device. And what I would have done is, before anybody knows
    what is in the container and where it is from, I would have
    caused, obviously, a real catastrophic event near a major
    population center where--and this is a major rail hub, of
    course, near the airport, and that would be very disruptive.
        Now, let us imagine we just had some of that, even on a
    smaller scale, and it led America to ask the question, how do
    we know what is in these boxes? And I think most people would
    be rather mortified to realize that we do not really have real
    command on that. There are upwards of 500,000 entities out
    there that can load boxes around the world. There are 40,000
    freight forwarders that load the box, seal it with a plastic
    seal, typically with a number on it, and then it is off to the
    races. It goes from any where in the way I just illustrated
    onto a ship and is coming here. And then the verification is a
    Customs function done again at the port of entry.
        Now, we would then say, well, gee, if we do the inspection
    at the port of entry, what happens if there was a bomb in there
    that was triggered when you opened it up? If we take--and this,
    by the way, is sort of a rail yard. It gives you just a sense
    of what we are talking about trying to manage and sift through.
        But let us take the Port of Newark, for instance, and
    Admiral Larrabee will talk a little bit more directly about
    this here. This is the biggest container port, of course, on
    the East Coast, but this, I think, is a very important picture
    for us to realize what we are talking about.
        Let me step up perhaps and point out, these are the
    container terminals here. This is an aerial view of Newark
    International Airport. I call this an intermodal moment. In a
    mile, you have container ships coming in off-loading. This is
    actually one of the major rail hubs that spiders off to the
    Northeast and the rest of the continent, along with the New
    Jersey Turnpike, along with the Newark International Airport.
    So we inspect the container in Newark and it turns out to be a
    bomb. Where is the plume going to go? I think we could imagine
    where it could go.
        Out of that would be, I think most folks would suggest, let
    us not open the box and inspect it in Newark anymore. We do not
    want any uninspected boxes coming in. So, therefore, I guess we
    do not have any boxes coming into Newark. Forty-million people
    within 200 miles would have a very disrupted market as a
    result.
        So I lay that out as a sense of what we are talking about
    is not just simply that we have a vulnerability and that
    somebody could bring something in and cause disruption, but
    really, this is again about the sustainability of global
    commerce. How we respond and are set up to respond to this
    threat could, in fact, itself have real ripple effects.
        Out of those scenarios, I think there are three key things
    that we have to have in regard to the hearing today. First is
    that seaports cannot be separated from the international
    transport system to which they belong. Ports are really just,
    in essence, nodes in a network where cargo is loaded or
    unloaded from one mode, a ship, into other modes--trucks,
    trains, and on occasion, planes. Therefore, seaport security
    must always be pursued against the context of transportation
    security, and this has been very difficult because we have been
    taking this rather balloon effect approach to it.
        Second, the port security initiatives must be harmonized
    within a regional and international context. One of the major
    ports for the Northeast is Montreal and Halifax. They bring in
    about a million containers between the two of them, half of
    which come into the United States. If you only regulated ports
    inside the United States, you may push some of these problems
    offshore into Canada, Bahamas, Vancouver, or even into Mexican
    ports that could come online here. So we have to be talking
    about this network not just within the U.S. domestic context,
    but also overseas.
        Finally, since U.S. ports themselves are perhaps America's
    most critical infrastructure, they should not be viewed as the
    primary line of defense in an effort to protect the U.S.
    homeland. They are essentially the last line of defense.
        Now, the fact that seaport security must be considered
    within the broader transportation logistic context that
    includes ports outside U.S. jurisdictions has obvious
    implications for how the U.S. Government is organized to
    safeguard them. First, I would argue we have three major
    structural impediments.
        One is that the agencies with responsibilities for a
    specific transportation mode rarely communicate with their
    counterparts in the other modes. In fact, there is a pervasive
    culture of competition among the modes, often reinforced by the
    Congressional advocates, I think most rather dramatically
    illustrated just this last couple of weeks, when the House has
    decided to bankroll additional airport security by taking $60
    million out of the supplemental monies promised the U.S. Coast
    Guard to pay for port security. It's a little bit, from my
    view, here of the classic horse leaving the barn and closing
    the gate afterwards on that one.
        The security challenge associated with seaports is not just
    one posed by conveyances, ships, but the operators, passengers,
    and cargoes on those ships. So we have a complicated problem of
    we have to get a handle on people, we have got to get a handle
    on conveyances, and we have got to get a handle on goods. But
    people is an issue of consular affairs. That is State and INS.
    Goods are U.S. Customs, USDA, and FDA. Ships and the non-land
    side of the ports are Coast Guard, but the land side is a
    smorgasbord, depending on what port you are here, of local,
    State, and private entities. And then there are the trucks.
    About 10,000 trucks come into the Port of Newark each day,
    entirely unregulated activity.
        And then, finally, since the jurisdiction of most of these
    agencies runs out at the water's edge, they tend to approach
    the regulatory enforcement issue with some strictly domestic
    contest or framework, rather, than an international one, and
    the international security community pays no attention to this
    problem.
        So that is the state of affairs we are in, in a very quick
    framework, as I think many of the witnesses can fill in the
    blanks. But I think the key here, I hope that this illustration
    provided highlights the importance of not thinking that we can
    achieve homeland security in this regard at home. We have to be
    looking at this as a network and for what it is, which is one
    that moves overseas.
        Our ultimate objective should be, go to the point of
    origin, and how we get to this is, I think, first, with some
    standards about how one gets to load a container, who gets to
    load it, and the process that is done. It has to be done in a
    sanitized way. Standards have to be identified in that and
    pushed through, whether it is the International Maritime
    Organization or the World Customs Organization, to say, if you
    stuff a box and you want to be off to the races to come to a
    port in the United States or in any of the other large ports in
    the world, you have to meet some basic requirements, and if you
    cannot do it there and we cannot feel comfortable with that,
    you have to restuff the box at a place that we feel comfortable
    that we know what is there and that there is a trusted partner
    who is doing that loading.
        Second, when it is loaded, we want you to track it. We want
    you to know where it is. This is sort of what I call in-transit
    visibility and accountability, using technologies like GPS and
    electronic transponders and so forth. As soon as it leaves the
    factory, it goes from there to the terminal and we can account
    for it every step of the way.
        There are two purposes for in-transit accountability and
    visibility. One is ideally to deter it. There is not much time
    for a bad person to bring something in. But most importantly,
    as well, is that when you have intelligence that there may be a
    compromise, which is perhaps the only way we are going to find,
    in many instances, a problem, it becomes actionable
    intelligence, that you can pinpoint immediately where the
    problem is and go in and, working with the carrier, you will be
    able to identify and figure out where the best way to manage
    that compromise might be.
        Then the terminal operator itself would have to have
    accountability of the box. That happens as a matter of routine
    in most places. And then the ship mills where it is, and then
    the same on the receiving end when it is loaded off, and in the
    case of in bond shipment, again at trails along the way.
        Then we have this complete control, sanitized control, and
    if that is done with the technologies and the cooperation--and
    the final piece is sharing data about who and what you are up
    front to allow agencies to assess that against any watch list
    they may have--if you do those three things, security up front,
    in-transit visibility and accountability, and the sharing of
    data, you get the easy trade lane. We are going to move you
    quickly, which makes sense from a security standpoint, because
    goods that rest often are most vulnerable to crime. So you
    actually have a security incentive, not only a market one, to
    accelerate if you can be confident up front.
        That is why I am confident this is going to be workable if
    we think in these terms, because we can really--it has always
    been a false proposition in my view, openness versus control.
    Without control, the whole system is in jeopardy. That is what
    we saw on September 11. With smart controls, there actually is
    a national security rationale to fix things that have been
    broken for a long time, agencies that have paperwork
    requirements that make no sense or that are duplicative and
    redundant, bottlenecks in infrastructure that should not be
    there. We need to fix that from a security standpoint, and
    that, I think, parades an opening for this to be dealt with,
    not just here at home, but also overseas.
        Thank you very much, Mr. Chairman.
        Chairman Lieberman. Dr. Flynn, thank you for an excellent
    opening statement. The country is fortunate that you have had
    the practical and academic experience you have had and you have
    brought them together at a time when, post-September 11, we
    need that very much, so I look forward to questioning you.
        I am pleased to say Senator Collins is sitting today as the
    Ranking Republican Member of the Committee, and I think it is
    appropriate that I ask her now if she would like to make an
    opening statement before we go on to the other witnesses.

                  OPENING STATEMENT OF SENATOR COLLINS

        Senator Collins. Thank you very much, Mr. Chairman. I
    apologize for being a few minutes late for the hearing.
        I want to thank you for convening this important hearing.
    Coming from the State of Maine, as I do, the vulnerability of
    our ports is of particular interest and importance. Our
    seaports are as important in the war against terrorism as the
    safety of the food we eat and the security of the planes we fly
    in. With more than 95 percent of our imports flowing through
    our ports and with millions of passengers and maritime
    containers passing through them with only limited inspections,
    we must have a far better security system in place than we do
    now.
        Correspondence that I recently received from Captain
    Jeffrey Monroe, the Director of Ports and Transportation for
    Portland, Maine, makes the need for better port security very
    clear. Captain Monroe, in commenting on the security of our
    ports, put it bluntly. ``Our local, State, and Federal agencies
    were, in many cases, ill prepared for September 11 and the
    coordination of information and effort was almost
    nonexistent,'' he wrote. Captain Monroe's letter includes a
    series of specific recommendations and I would ask that this
    correspondence be made part of the record.\1\
    ---------------------------------------------------------------------------
        \1\ The letter from Captain Monroe with an attachment submitted by
    Senator Collins appears in the Appendix on page 142.
    ---------------------------------------------------------------------------
        Chairman Lieberman. Without objection.
        Senator Collins. Since September 11, the Coast Guard has
    expanded its patrols in Portland's harbor and has increased its
    surveillance of ships entering the port. But given the volume
    and the lack of personnel, this is a daunting and exhausting
    task. We must improve coordination between Federal, State, and
    local agencies, as well as the private sector. We must have
    highly trained and a sufficient number of employees. We must
    have a clear chain of accountability to achieve port security.
        It is evident that we have a great deal to do and I am very
    pleased that the Chairman has assembled such a distinguished
    list of witnesses to assist us in this goal today. Thank you,
    Mr. Chairman.
        Chairman Lieberman. Thanks, Senator Collins. I really look
    forward to working with you on this. I think this is an area
    where the Committee together can make an important contribution
    and I thank you for that excellent opening statement.
        The next witness is Amanda DeBusk, now with Miller and
    Chevalier, former Assistant Secretary of Commerce, former
    Commissioner, Interagency Commission on Crime and Security in
    U.S. Seaports. Thanks so much for being here.

    TESTIMONY OF F. AMANDA DeBUSK,\1\ MILLER AND CHEVALIER, FORMER
       ASSISTANT SECRETARY OF THE COMMERCE DEPARTMENT AND FORMER
     COMMISSIONER, INTERAGENCY COMMISSION ON CRIME AND SECURITY IN
                             U.S. SEAPORTS

        Ms. DeBusk. Thank you very much. I am honored to be here
    today. I am speaking to you as a former Commissioner on the
    Interagency Commission on Crime and Security in U.S. Seaports.
    President Clinton established the Commission by executive order
    on April 27, 1999. Senator Bob Graham was particularly
    instrumental in the Commission's establishment. I served on the
    Commission as the Commerce Department representative in my
    capacity as Assistant Secretary for Export Enforcement. The
    Commission issued a report in August 2000 with 20 findings and
    recommendations. I would like to highlight those that are most
    important for this Committee post-September 11.
    ---------------------------------------------------------------------------
        \1\ The prepared statement of Ms. DeBusk appears in the Appendix on
    page 93.
    ---------------------------------------------------------------------------
        Let me provide some background. One of the underlying
    concerns was how wide open our seaports are compared to our
    airports. In most cases, there is free access to the seaports.
    The Commission found that significant criminal activity was
    taking place at most of the 12 seaports that we surveyed. At
    many seaports, it is legal to carry firearms, so criminals with
    arms may have access to terminals where passengers embark for
    cruises.
        Concerning cargo, because of misreporting and lack of
    reporting, no one knows in a timely fashion, if ever, what is
    in those containers at our seaports. One of the cases my former
    office investigated involved a riot control vehicle that was
    exported to China as a fire truck. The vehicle, it was a huge
    thing. It resembled a tank. It had a turret on top for spraying
    pepper gas all around. It was all boxed up in a container and
    at the time of export, no one knew what was inside the
    container and so it was exported as a fire truck.
        The Commission approached the crime and security problem
    with the possibility of terrorist activity associated with the
    new millennium. Thankfully, nothing happened.
        At that time, the FBI considered the threat of terrorism
    directed at any U.S. seaport to be low. However, even though
    the threat was low, the FBI considered that our vulnerability
    to attack was high. The Commission found that the state of
    security at seaports generally ranged from poor to fair, with a
    few exceptions where security was good.
        We looked at fundamental activities for combatting
    terrorism, protective measures, crisis management, and
    consequence management. These activities require comprehensive
    interagency coordination. They involve law enforcement,
    intelligence agencies, emergency response agencies, and if
    needed, the military. Outside the Federal context, coordination
    is needed with the State and local authorities and the private
    sector.
        Today, I would like to highlight recommendations in four
    areas relevant to this Committee: Enhanced interagency
    coordination, physical security at the ports, better and more
    timely information about cargo transiting the ports, and
    increased use of technology.
        First, we need better interagency coordination. There are
    361 seaports. Most ports are chartered by States or local
    government. Some terminals are operated by public port
    authorities. Others are private. There is no central Federal
    authority. There are at least 15 Federal agencies with
    jurisdiction at the seaports. In addition, there are State and
    local agencies and the private sector. Every single group is
    important for combatting terrorism and has something to
    contribute, but coordinating these groups is a monumental
    undertaking. Perhaps a Department of National Homeland Security
    could play a leadership role in this coordination.
        The Commission found that there needed to be a
    comprehensive and definitive statement of Federal
    responsibility. The Federal Government needs to conduct threat
    assessments to determine where the threat is greatest and where
    we urgently need preventive measures. The Federal Government
    should strengthen coordination to more effectively address
    terrorism. It should work with all stakeholders. Key
    information available to the Federal Government should be
    disseminated to others, as needed.
        Let me provide an example of where better coordination
    would be useful. The FBI has excellent regional
    counterterrorism task forces that consist of Federal, State,
    and local agencies. However, at the time of our study, these
    groups did not focus on the seaports. They should do so.
        S. 1214, an amendment to the Merchant Marine Act, has some
    good proposals on establishing local port security committees.
        Second, the Commission found that we need better physical
    security at the seaports for both vehicles and people. At many
    ports, access is virtually uncontrolled. At one of the ports I
    visited, we saw a line of vehicles that was parked right beside
    the vessel. We were told that these were the dock workers'
    vehicles that were parked there for convenience. At the time,
    and as Senator Hollings alluded to, we were trying to figure
    out if this is someplace where drugs could be hidden for things
    coming off of vehicles, or coming out of containers and being
    stashed into the vehicles. But now what we have to do is think
    about the possibility that these vehicles lined up right beside
    the vessels might contain a car bomb or even a ``dirty nuclear
    weapon'' that could be hidden inside them.
        Many ports do not have ID cards for personnel. I observed
    all sorts of people that were milling around at dockside. There
    was no way we could tell who should be there and who should
    not. The Commission found that at one point, pedestrians could
    freely walk through the purported access control points without
    even being questioned. We did not even want to contemplate a
    group of terrorists taking over a cruise ship, but it is a
    possibility.
        Training of security personnel is also a problem. Many
    seaports use private security personnel who lack crime
    prevention and enforcement training.
        The Commission recommended developing regulations to create
    a secure area where passengers board and disembark vessels. We
    also recommended proceeding with an INS project to manage risk
    with respect to both passengers and crew. We recommended
    creating shared dockside inspection facilities so that all
    relevant agencies have ready access to conduct inspections. The
    Commission called for the establishment of minimum guidelines
    for physical security, such as fences, lights, gates,
    restrictions on vehicle access, restrictions on carrying
    firearms, the establishment of a credentialing process so you
    would know who is supposed to be there, considering criminal
    background checks for those with access to sensitive areas of
    the port, and development of a private security officer
    certification program. S. 1214 moves in the direction of these
    recommendations, but it does so through voluntary security
    guidance. The Committee should consider making some of those
    requirements mandatory.
        Third, we need better information about cargo transiting
    the ports. On the import side, information is often vague and
    import entries may be filed 5 days after arrival. On the export
    side, information tends to be very general, with descriptions
    like ``general merchandise'' that really do not tell you
    anything, and is required 10 days after export. One of the
    concerns with providing earlier and more detailed information
    is that it would allow specific cargo to be targeted for theft
    by those with access to the information, and this concern needs
    to be addressed.
        Fourth, we need better technology at the seaports. Better
    technology is needed for a whole variety of applications, which
    include X-raying containers, using computer systems to target
    cargo associated with high-terrorist risk, collecting data on
    crimes at seaports, and providing real-time information for
    tracking high-risk cargo and personnel.
        In sum, the Commission said, ``A terrorist act involving
    chemical, biological, radiological, or nuclear weapons at one
    of these seaports could result in extensive loss of lives,
    property, and business, affect the operations of harbors and
    the transportation infrastructure, including bridges,
    railroads, and highways, and cause extensive environmental
    damage.'' We need to take action now to reduce the risk of
    future catastrophes.
        Thank you for inviting me here today to testify on this
    important subject.
        Chairman Lieberman. Thank you, Ms. DeBusk, for excellent
    testimony, which, unfortunately, continues to paint a harrowing
    picture as I listen to it.
        Rob Quartel is our next witness. He is the CEO and Chairman
    of FreightDesk Technologies and a former member of the U.S.
    Federal Maritime Commission. Thanks for being here.

       TESTIMONY OF ROB QUARTEL,\1\ CHAIRMAN AND CHIEF EXECUTIVE
       OFFICER, FREIGHTDESK TECHNOLOGIES AND FORMER MEMBER, U.S.
                      FEDERAL MARITIME COMMISSION

        Mr. Quartel. Thank you, Senator. The last time I think I
    saw you up close was about 6 or 8 months ago at Sutton Place
    Gourmet, and I cannot remember what you were buying----
    [Laughter.]
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        \1\ The prepared statement of Mr. Quartel with attachments appears
    in the Appendix on page 98.
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        But I would observe that probably half of what you and I
    bought came in on a container. The meat probably came from
    Australia. The flowers and other vegetables probably came from
    Latin America, and so on and so forth, so this is a problem
    that is right here, wherever you are, every day. You are
    standing there in the middle of the system. It is probably a
    good thing you cannot remember what I was buying.
        Chairman Lieberman. I certainly cannot remember what I was
    buying.
        Mr. Quartel. I know that what I was buying was something
    fattening.
        Chairman Lieberman. Senator Collins and I were saying, I
    wish I could say it was all American, but I am sure it was not.
    [Laughter.]
        Mr. Quartel. But that is the beauty of the system----
        Chairman Lieberman. Yes.
        Mr. Quartel [continuing]. The fact that we are able to
    access all these markets worldwide, whether they are food,
    whether they are the subcomponents of manufacturing. That is
    really what makes us efficient as a country and contributes to
    the national economy.
        I would like to thank you for the invitation. I have got a
    quick slide show, and because of the time, what I am going to
    do is kind of truncate some of this and really kind of talk to
    the slides.
        But I think based on Commander Flynn's and Ms. DeBusk's
    statements, this is really a scary issue and I would like to
    make one point of policy that I think the Committee ought to
    adopt, which is very straightforward. Every container destined
    to either land in or go through the United States, and the last
    point is really important, in my mind should be treated as a
    potential weapon of mass destruction, every ship that carries
    it as a delivery device, and every port as a potential target,
    and that suggests several things.
        First, it suggests you cannot let a terrorist container get
    into the port. The port is the target. You saw the map where
    you had everything within a mile there in the Port of Newark,
    which, by the way, is what makes that a very efficient port,
    because you can switch from mode to mode to mode, whatever
    happens to be the most efficient way to do it.
        It also suggests you cannot let it on a ship, and so one of
    the concepts I would like to talk to today is the notion of
    pushing the border back electronically. Ms. DeBusk talked about
    the fact that we collect a lot of data. Every part of the
    process is documented. This slide I am going to talk to in a
    minute shows the complexity of it, but you need to bear in mind
    that everything in the process is documented.
        From the time it is purchased, a buyer or seller
    transaction creates a purchase order that says what it is, how
    many you want, the weights, eventually all the rest of that, to
    the trucker who picks it up, to the train who moves it, to the
    ship that carries it, to the train that delivers it, or truck
    in the United States, all of that is documented in a series of
    documents. What does not happen, as Ms. DeBusk said, is that it
    does not all get there to Customs or anyone else early. It gets
    there strung out across the process.
        [A slide presentation was shown.] \1\
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        \1\ Copies of the slide presentation appears in the Appendix on
    page 107.
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        Mr. Quartel. This first slide really is intended to talk to
    the issue of complexity. The international trade process is
    hugely complex. It is not like domestic trade, which goes from
    point to point. You have in every single trade 20 to 25
    involved parties, whether they are the buyer, the seller, the
    transportation modes, all the rest of those. You have as many
    as 30 to 40 documents. You have a couple of hundred data
    elements. The messages all arrive in a variety of different
    kinds of platforms, some electronic, some fax, some by E-mail.
    But it is a tremendously complex process.
        Admiral Loy has pioneered a concept called Maritime Domain
    Awareness, and I think that is very relevant to this port issue
    here.
        By the way, I also would ascribe to what Commander Flynn
    said earlier. I view the port as really too late. In my mind,
    the port is the least of the problems. Yes, you have to protect
    the port. Yes, you have to protect the physical integrity of
    it. Yes, you have to have all the security measures. The real
    problem is at the beginning of the cargo. That is where you
    have to interdict it.
        I would take Admiral Loy's thought and actually press it a
    little further. I really suggest that there are five domains in
    international trade. The first is the origin of the cargo. In
    manufacturing today, you might have a company that does virtual
    manufacturing in Asia, where they will have 20 different
    factories that are all subcomponents of the process. It starts
    in one. It moves by truck to another. It moves by truck to
    another, by train to another, and another to another to
    another, literally that many, and then is assembled in one
    place and forwarded to the United States. So that is part of
    the process that includes inland transportation, all of the
    parties engaged in manufacturing.
        The second, at the port of loading. And on this chart, by
    the way, one of the things I have done is just very quickly,
    and it is not necessarily 100 percent accurate, I did it on a
    plane in the middle of the night the other night, is to talk to
    some of the agencies on the issue of where some of their
    authorities might lie in the process, U.S. Government agencies,
    and also, as has been said earlier, these authorities tend to
    be sort of stovepiped. They are aimed at a specific part of the
    process. That is really all they can do under the law.
        The second part of it is in transit. There are a number of
    protective things you need to do there.
        One of the things from end to end, of course, is
    visibility. Companies are going to that, to tracking the cargo,
    though tracking is not nearly so pervasive as we seem to think
    it is, based on when we go to the web, we seem to know where
    everything is. One of the reasons is that much of what we think
    of as being tracked is in FedEx packages, typically air
    freight, which is different than ocean and land, which are in
    containers.
        The fourth is the port of discharge, which is really, I
    think, the point of the hearing today.
        And then finally, multiple destinations.
        If you want to figure out what is happening to a cargo, you
    really need to know what it is, where it came from, where it is
    going to, who has touched it, what did they do with it, what
    did it cost, who paid for it, and that is all the kind of data
    that is collected in a system.
        The information process itself provides an attraction
    because, if you work at it, you can hide the transaction. This
    really kind of talks to the issue of how cargo moves. Forty or
    more days before it gets here and just in time, you may have a
    buyer-seller transaction. They generate a letter of instruction
    and a commercial invoice.
        On this slide, the red documents are reported to Customs.
    It goes to a warehouse. It finally gets to a ship and the ship
    creates a master bill of lading. A single container might
    contain as many as 10 or 20 different cargoes. It may be 10
    containers which are the same shipments, they are all the same
    thing to the same manufacturer. Containers are not just packed
    by one person. They may be packed by multiple people. You have
    people at each end who consolidate what is in a container. You
    have people at the other end who deconsolidate it and send it
    off in a bunch of different directions.
        Carriers generate documents. Throughout the process today,
    you typically have an intermediary, a freight forwarder or a
    customs broker or a third-party logistics provider. That, by
    the way, is one place that I think in the future we need to
    focus some of our thinking about how you manage the process for
    the government, because they are the ones who typically handle
    the paperwork as well as the financial documentation. You have
    additional carrier reporting at the end. And then, finally, you
    have another set of documents generated.
        What I would like to suggest to you is today, we tend to
    think of the border at the bottom there as being the physical
    border where the ship comes in. The concept I would ask the
    Committee to consider is to push that border to the top of the
    page between the warehouse and the port of embarkation and to
    do that electronically.
        The next two slides--this is a sample of the kinds of data
    that comes out of the documents that are generated in a typical
    commercial transaction. By the way, when a ship lands in the
    United States, it drops off 40,000 documents.
        Chairman Lieberman. Forty thousand?
        Mr. Quartel. Documents for 6,000 containers. So that is my
    10 to 20 to 30 documents per container.
        Chairman Lieberman. And who gets those documents?
        Mr. Quartel. Customs gets some of them. The shippers get
    some of them. Letters of instruction and financial letters go
    off to the people who handle that. So there is a lot of data.
    That is one of my key points to you. This is not a new process.
    Part of what we have to do and the opportunity here is to
    manage the data process, and we can talk to that.
        If you go across this, you can get everything I am talking
    about. You can find out--and this is the other part of it, is
    another 60 different elements. You could find out who paid for
    it, what it is, what it weighed, where it was coming from, how
    it went, by truck on the way, on the way back, the ship. If you
    go to the ship, you can actually tell what was going with it
    side by side.
        Now, the process I would like to suggest to you--I am going
    to go actually one slide further and then come back. The
    process I would like to throw at you for your consideration is
    a kind of profiling process. You create a commercial database
    from the kind of data which is currently provided by the
    commercial sector, some of which goes to the government and
    some of which does not, and some of which should not go to the
    government because it is essentially competitive data. But you
    can create a commercial database.
        We already have a database and bases of government data.
    The Coast Guard, for example, has what is called a fusion
    center, where they fuse conceptually data from a variety of
    different kinds of law enforcement sources. Right now, that
    data is not always compared against each other and it is
    certainly not compared when a cargo originates.
        What I would suggest to you is that you create a new
    process, perhaps driven by Customs, in which you collect the
    commercial data, you collect the law enforcement data, and you
    run it through a decision algorithm which basically says, well,
    what is wrong with this? Is it--and I can show you back here
    two slides--is the cargo something that is said to be coming
    from a place where it is not manufactured? Is it steel coming
    from Romania, where they do not have a steel factory? Is it
    coming from Afghanistan but going to the heart of New York? Is
    it something going by a nuclear power plant?
        If you go through the documents, and this is just kind of
    an example of it, you can actually see where you can find these
    anomalies, and while I am not an expert in the mathematical
    profiling aspect, I do know a lot about the data management
    process. But there are people who are expert in profiling and
    we are dealing with some of those and I have been working with
    the National Defense University, which looked through some of
    this, who create the kinds of algorithms which can help you
    decide, and we use some of this today with drug enforcement,
    but not to this extent.
        Chairman Lieberman. Mr. Quartel, excuse me, but you have
    gone beyond the 5 minutes now----
        Mr. Quartel. I am sorry. I am going to finish right now.
        Chairman Lieberman [continuing]. So if you can begin to
    think about wrapping up.
        Mr. Quartel. I am done, virtually.
        Chairman Lieberman. That was good timing.
        Mr. Quartel. Thank you.
        Chairman Lieberman. Thanks very much for very thoughtful
    and helpful testimony, which we will look forward to
    questioning you on.
        Our final witness on this panel is Richard Larrabee, who is
    a retired Rear Admiral of the U.S. Coast Guard and now Director
    of the Port Commerce Department of the Port Authority of New
    York and New Jersey, so a person with great experience and
    right in the middle of the topic that we are discussing today.
    Thanks so much for being here.

        TESTIMONY OF REAR ADMIRAL RICHARD M. LARRABEE,\1\ RET.,
     DIRECTOR, PORT COMMERCE DEPARTMENT, THE PORT AUTHORITY OF NEW
                          YORK AND NEW JERSEY

        Rear Admiral Larrabee. Mr. Chairman, thank you. Members of
    the Committee, good morning. Thank you for the opportunity to
    testify this morning.
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        \1\ The prepared statement of Rear Admiral Larrabee appears in the
    Appendix on page 114.
    ---------------------------------------------------------------------------
        I have provided written testimony and would ask that that
    would be placed in the record.
        Chairman Lieberman. It will.
        Rear Admiral Larrabee. What I would like to do is just take
    a couple of minutes in the interest of time to touch on some of
    the things that the prior testimony has talked about, but do it
    from a ports perspective.
        Mr. Chairman, as you said before, the ports of this country
    are a vital intermodal link in our transportation system and a
    large part of our economy. The Port of New York handled about
    three million containers last year, about 560,000 automobiles,
    and over 30 billion gallons of petroleum products, the largest
    petroleum port in the United States. That system, as the
    Chairman suggested, is based on speed, reliability, and cost,
    and we are living in a ``just in time'' society where the
    movement of those goods are critical.
        On the morning of September 11, the Port of New York and
    New Jersey was closed. It was closed by the Coast Guard captain
    of the port. Other law enforcement agencies were involved in
    that decision, but it was done in a very orderly way. There was
    a tendency in the port from one perspective to keep the port
    closed because of the fear of the threat of terrorism. On the
    other hand, the pressures that Commander Flynn talked about of
    keeping commerce moving were obviously part of that discussion.
        Because petroleum resources were going low, because of a
    shortage of other supplies that would normally come through the
    port, we felt a great deal of pressure to open the port up as
    quickly as possible, and on the morning of Thursday the 13th,
    we reopened the port with a large number of security measures
    in place--all ships boarded by the Coast Guard at sea, all
    manifests, both cargo and crew manifests, checked, tug escorts
    into the port, and an extensive cargo inspection program by
    both Customs and Coast Guard and other law enforcement
    agencies, a heightened level of activity in terms of spot
    checks and patrols in the port.
        That level of activity, along with an extensive effort by
    the Coast Guard to protect vital assets of the Port of New York
    and New Jersey, certainly was an extraordinary effort on the
    part of all of those Federal agencies, but it simply was not
    sustainable, and today in the Port of New York, we are seeing
    far fewer resources doing those kinds of things when today the
    level of our security might have to be higher than it was
    perhaps the day after September 11.
        I want to talk just briefly about this notion of who is in
    charge, because we certainly heard Senator Hollings talk about
    that. I think we have other models that we can look at. In my
    own experience, I can tell you that in the wake of Exxon
    Valdez, the U.S. Senate and the administration at the time
    certainly supported efforts to improve that system. The end
    result was OPA 1990, and since that time 10 years ago, we have
    seen a dramatic decrease in not only the number of spills and
    the size of spills, but an increase in our ability to respond.
    One of the key issues in that legislation was answering the
    question: Who is in charge?
        As it was suggested this morning, I believe the Coast Guard
    Captain of the Port currently has the jurisdiction to do a
    number of things that we have heard about. Perhaps his position
    needs to be strengthened, but I believe the Coast Guard is in
    the right position to manage both the prevention and the
    response to an incident like the one we are talking about this
    morning.
        We have heard an awful lot about this notion that perhaps
    the greatest threat in one of our ports is not a large tanker
    hitting one of our bridges but the entry of a weapon of mass
    destruction using our very efficient container movement system,
    and there is no question about that.
        I believe that last week, Admiral Loy, the Commandant of
    the Coast Guard, addressed the Assembly of the International
    Maritime Organization and proposed that a working group be
    established to look at port security and terrorism,
    specifically at the issues of cargo visibility and
    accountability. We certainly support the Coast Guard's proposal
    and believe that the IMO is one of those appropriate forums to
    address the issues of international concern, and I think there
    certainly are parallels in this area, too.
        The shipment of hazardous materials these days is a process
    that has seen dramatic improvements over the last 20 to 30
    years. Today, the kinds of accountability and responsibility of
    moving those kinds of materials certainly gives us
    opportunities to look at parallels when it comes to moving
    other cargoes.
        We have heard a little bit this morning about this notion
    that communications is the foundation of coordination, and
    certainly there is a real need to share intelligence and threat
    assessments among the Federal, State, and local agencies, and I
    would have to say to you this morning that as Director of the
    Port of New York and New Jersey, I am not in a very good
    position today to tell you whether our measures that are
    underway right now are adequate for the threat that is out
    there. We simply are still not sharing the kind of threat
    assessments that I think need to be in place.
        Chairman Lieberman. That is a very important statement.
    Forgive me for interrupting, but I hope we all listened to it.
    That is an unacceptable situation. You just feel you are not
    getting the intelligence information you need?
        Rear Admiral Larrabee. As Senator Hollings said, this is a
    system that really is being managed day to day by the private
    industry, and it is not only the Port Authority, but more
    importantly, terminal operators and shipping lines which need
    to be brought into this circle and be made more aware of what
    the threats are and what they can be doing in a practical way.
        I think there is a need for standards, and Senator Hollings
    talked about that this morning. My Port Authority Board is
    asking me what I should be doing and my answer to them is--I am
    waiting for Federal legislation. We desperately need to pass
    the Hollings bill in the very near future and I would ask you
    to support Senator Hollings' efforts.
        Just to conclude my statement, this is a system that, as
    you have heard this morning, is the responsibility of an awful
    lot of people, whether it is the paperwork or the number of
    agencies involved or the number of hands that move this
    particular cargo. It simply is a system that requires the
    diligence and responsibility of an awful lot of people. We
    believe that there are ways to make the system more secure. We
    believe that we have to do that.
        We are very appreciative of the kind of support that we
    have gotten from agencies like the Coast Guard, the FBI, and
    Customs, and we are very hopeful that you are going to be able
    to give them the kind of resources that they are going to need
    to do their job.
        Finally, I want to thank Senator Torricelli and others for
    supporting us in the local New York area. Supplemental
    legislation has been passed, and I know, for one, we are going
    to be getting some extra resources in the port in order to
    improve our security level. Thank you.
        Chairman Lieberman. Thanks, Rear Admiral, for very helpful
    testimony from a particularly important perspective.
        Let me focus in on this question of coordination. It is a
    fascinating and, in many ways, troubling picture, even from an
    organizational point of view. And again, as I said in my
    opening statement, when I got more into this, I was surprised
    to be reminded that there is no Federal coordinating role here,
    that the ports are State and locally overseen, that there is a
    lot of private interests involved. Ports in Connecticut, for
    instance, most of them are owned privately, the harbor
    facilities.
        Give me a sense of what happens at a typical port, either
    privately owned, and/or locally regulated. Are there Federal
    agencies present at the major ports? Are they coordinating now?
    Maybe, Rear Admiral Larrabee, you could give me a picture of
    what is happening at a typical port of entry.
        Rear Admiral Larrabee. Well, I do not think there is any
    question that there is a great deal more coordination today
    than there was on September 10.
        Chairman Lieberman. Yes.
        Rear Admiral Larrabee. The boardings that I talked about
    that the Coast Guard is conducting, vessels are being boarded
    on a priority basis based on an analysis of that vessel and
    what sort of threat it might pose to the port 96 hours before
    the vessel arrives, and my understanding is that both Customs
    and the Coast Guard and INS are looking at cargo manifests and
    crew manifests, ports of destination, and making decisions
    about whether or not to board and what to look for. So that is
    there.
        Chairman Lieberman. Is that the universe we are talking
    about, Customs, Coast Guard, and INS, of Federal presence at
    the ports?
        Rear Admiral Larrabee. I think, for the most part, that
    covers all of the issues that we have talked about this
    morning.
        Chairman Lieberman. Let me then ask what can be done to
    either facilitate better communications between the front-line
    agencies in securing our ports, and more broadly, whether you
    think there is a need for active Congressional involvement here
    through legislation to create some kind of new overarching
    Federal organization to be concerned about the ports and to
    guarantee coordination. Ms. DeBusk.
        Ms. DeBusk. Yes. First to answer your question, I do think
    there is a very strong need to have an umbrella to coordinate
    all this, perhaps through homeland defense.
        Let me just sort of give you a little vignette of what
    happens there. You have 15 Federal agencies with some sort of
    authority at the port, and----
        Chairman Lieberman. Fifteen, well beyond the three I
    mentioned.
        Ms. DeBusk. Absolutely.
        Chairman Lieberman. Just name a few more.
        Ms. DeBusk. You have the Commerce Department and you have
    the Agriculture Department, you have the Food and Drug
    Administration, you have all these, and let me just take a few
    of the older ones that you do not necessarily think about, like
    EPA, for instance.
        Let us just take the Agriculture Department. They would
    perhaps know how to be on the lookout for contaminated food
    coming in. Let us just think about a terrorist who decides to
    sprinkle a little cyanide in all the Cheerios, right. They
    would know how to be on the lookout for that, but that is not
    the expertise of the Coast Guard.
        In my former office, Export Enforcement, we knew how to
    target, to look for things that might be used for weapons of
    mass destruction or chemical or biological agents. But again,
    that is not the job of the Coast Guard. The Customs folks, they
    know how to look very well for the drugs that are coming in or
    going out. That is one of their specialties, and obviously the
    drug trade supports terrorism.
        But again, no one is bringing all these pieces of the
    puzzle together and I think there is a strong need for perhaps
    the Office of Homeland Defense or some other body to be able to
    do that.
        Chairman Lieberman. Dr. Flynn, I know that you and Mr.
    Quartel are asking us to consider pushing the border back, a
    very interesting idea which I know the Committee will want to
    get to in a few moments. But what about the border where it is,
    even if you push it back? What do you suggest from your
    experience and work as to what we should do, if anything, to
    facilitate better communications and coordination among the 15
    Federal agencies and the State and locals and privates involved
    to guarantee a more secure and efficient situation?
        Mr. Flynn. Let me say, Senator, that while I am talking
    about pushing the border back, that we think about this problem
    as one that starts much farther away than our border. I am not
    calling for the end of the border.
        Chairman Lieberman. Right.
        Mr. Flynn. That is, it is really a series of concentric
    circles that to the best of our ability, we put the most
    intensity at the origin point and then the number of
    inspections narrows down as we have to get to our own entry
    because of the volume and velocity issue that we face here.
        What is clear is that we need a general pool of data, and
    there was an effort that Customs was involved with in the
    former administration to create what was called the
    International Trade Data System that would bring all the kinds
    of things that Mr. Quartel outlined there all in one pool and
    allow the agencies to shop within that data.
        Most of what we find is things also, as Mr. Quartel talked
    about here, is this anomaly detection, the things that do not
    make sense, a high-value good going on a slow boat to China
    originating from a place, as he said, that does not make steel.
    And so what you need there is this data up front and you need
    it in a pool, and ideally you also would be housing people
    together.
        We have models for this in the drug world. We have the
    EPICs, the El Paso Intelligence Center. We have similar efforts
    in Jonestown and so forth here. But what we have learned here
    is that just to try to take that small segment of high-risk
    drugs, we really have to now think about all general cargo as
    at risk, as it always has been, and it is not just for
    narcotics, of course. Now it is human trafficking, but
    especially this concern with weapons of mass destruction. So
    there are various useful models of how we bring data and infuse
    it that is brought out of the drug world. We just need to
    expand, in part, upon that.
        But we rushed with some legislation here right after
    September 11 to put more primary inspectors. You look at
    everything, you see nothing in this business, and we all know
    this from those people with the glazed eyes who look at the X-
    ray machines as the luggage goes by. That is not the way to do
    it. You have to be smarter.
        And so the challenge here is analysts, well-trained people
    who know their segments and markets--and this issue of
    information sharing is huge. I am almost confident, for
    instance, that Rear Admiral Larrabee has not been given a
    clearance and it would probably take him about a year or two,
    perhaps, to get a security clearance. He was a former flag
    officer in the U.S. Coast Guard that has been doing this for
    years and we cannot find a way to clear him into a system to
    share intelligence that would be useful for him as a decision
    maker and a manager at work here. These stovepipes are huge and
    have to be addressed.
        Chairman Lieberman. Well said. My time is up. Do you have a
    clearance?
        Rear Admiral Larrabee. No, sir. I had a clearance, but I
    have not gotten it back yet.
        Chairman Lieberman. Yes. Senator Collins.
        Senator Collins. Thank you, Mr. Chairman.
        Commander Flynn, I understand from my staff that through
    discussions that they have had with Rear Admiral Naccara that
    you have been involved in developing a Northern New England
    Border security project. Could you tell me about that project
    and whether you think it would help solve some of the
    coordination and communication problems that we have heard
    about today?
        Mr. Flynn. Sure. This is actually spawned out of the State
    of New Hampshire, and Governor Jeanne Shaheen actually took a
    real leadership role and interest on this.
        This is obviously a real concern by most of the Northern
    States, and Senator Levin was here as well, about the hardened
    border and what that would mean. In the New England context and
    Northern New England context, this is about the Port of
    Montreal and Halifax, as well. About half the containers coming
    to Halifax and Montreal come into the United States. So getting
    a handle on the cross-border trade is central without a kind of
    hardened, sealed border approach.
        The notion here is that I was very excited to hear in terms
    of this interest in New England, and I think it is something
    that we need as a model overall. We have to do some
    experimentation, and I think the way this is done is some
    delegation by the headquarters here to regional commanders,
    such as Rear Admiral Naccara and the Regional Director of
    Customs and let them work with the governors and private
    sector, trusted partners, and with their counterparts across
    the border in the provinces and the ports in Halifax and begin
    to do this process of vetting legitimate players and finding
    ways to expedite their movements, applying some of these
    technologies.
        Ideally, we will find some companies up there who will want
    to play. There will be some resources found to test some
    technologies and you bring together INS, Coast Guard, and the
    other players, FDA and so forth, to try to get a handle on
    this.
        So what there seems to be, I know she has contacted
    Governor King in Maine and Governor Dean in Vermont and there
    is interest, I think, in Massachusetts, and I have been up in
    Ottawa last week, in fact, testified before their House of
    Commons on this issue. There is real interest on the other side
    of the border to try to come to arrangements where--this, I
    think, is so important. What we are trying to do here is not
    just find the needle in the haystack bad thing. What we are
    trying to do, as well, is to take the legitimate trade and
    travel and validate it as such we can set that haystack aside.
    That way, even if we had something as horrific as happened on
    September 11, we do not have to stop that flow. We know what it
    is. We do not have to stop those people, stop that train.
        And so part of our efforts should be not entirely driven
    towards finding that one needle, but it should be focused on
    how to take the vast majority of legitimate goods, validate as
    such, so even if a terrorist attacked, we do not have to
    disrupt that. Thank you very much.
        Senator Collins. I think it is interesting that at every
    single hearing we have had, no matter what the areas we are
    looking at, we find that agencies are not talking to one
    another or not sharing information or there is a lack of
    coordination. That is the common theme, whether we are talking
    about immigration policies or airports or our seaports. It does
    seem to be something that ought to be able to be solved.
        Ms. DeBusk, I want to ask you about a comment you made
    about having voluntary standards for port security. You
    expressed some concern that voluntary standards might not be
    enough. What particular standards do you think need to be made
    mandatory rather than leaving it up to the individual ports?
        Ms. DeBusk. Firearms would be an excellent example. I do
    not know why you would want anyone with firearms to just be
    strolling around at the port, so I do not know why you could
    not just say, no, you cannot have firearms at the port, as
    opposed to see if ports want to have--you put out a guideline
    that says it is better if you do not have firearms at the port.
    That would, to me, be a perfect example.
        Senator Collins. Mr. Quartel, I am very intrigued by the
    notion that both you and Mr. Flynn brought up of pushing the
    borders back. If we can inspect at the point of origin, it
    seems to me that really is the way we have to go, because if we
    do not inspect until the container gets to the United States,
    and we know we do not inspect most of them in any event, it is
    too late in many cases.
        Assuming we could get agreements from countries and
    companies to have a system that pushes the borders back, do we
    have the technology that would allow us, once a container is
    inspected, to electronically seal it and alarm it and have a
    monitoring system? I am just unfamiliar with the technology in
    this area. Does that exist now?
        Mr. Quartel. Some of that technology exists, and I think
    one of the later panels is going to be talking to the specific
    physical aspect of technology. If I might, I think what I would
    like to conceptualize for you, though, is a non-physical means
    of inspecting, which is really, I think, what we are suggesting
    to you here.
        In the hierarchy of things you want to do, you want to
    first screen a cargo electronically. You know the data. You can
    funnel out 80 percent of it just by knowing with some
    certainity that they are good people, they are good companies,
    they have security in place, you know they maintain it. Then
    you go to a scan. There are passive scans. There is an issue
    there of the cost, which you will probably hear about later,
    and we cannot mandate that a foreign port use it. Then you go
    to search, and then you go to actually seizing it. So it is
    screen, scan, search, stop, basically.
        There are technologies for the physical control of the
    process. They are a lot more expensive than most people can
    actually afford to introduce across a system of 40-some million
    containers worldwide.
        Senator Collins. Thank you, Mr. Chairman.
        Chairman Lieberman. Thank you, Senator Collins.
        Senator Cleland, good morning.

                  OPENING STATEMENT OF SENATOR CLELAND

        Senator Cleland. Thank you very much, Mr. Chairman, and
    thank you for having the hearing today. Thank you, panelists,
    for coming.
        I would just like to follow up on Senator Collins'
    observation. I am on the Commerce Committee as well as this
    Committee. Whether we are talking about aviation security, bus
    security, port security, rail security, homeland security, it
    does seem to us that, and to me as I connect the dots, that we
    are talking about three basic bugaboos: Coordination,
    cooperation, and communication between and with Federal
    agencies. Now, that is no rocket science there, but it is
    coordination, cooperation, and communication.
        I have been briefed on the Dark Winter exercise, the attack
    or presumed attack by smallpox on the country, and Senator Nunn
    played the role of the President with the Johns Hopkins mock
    attack on smallpox back in June. That exercise was called Dark
    Winter, and Senator Nunn, who was in this body for 24 years,
    former chairman of the Armed Services Committee, said, as
    President, as he got into the mock exercise, he found himself
    becoming more and more impatient with bureaucracy. What he was
    running across was the lack of coordination, cooperation, and
    communication.
        [The prepared statement of Senator Cleland follows:]

                     PREPARED STATEMENT OF SENATOR CLELAND

        Mr. Chairman, as a Senator from a State with several ports, I
    appreciate your holding this hearing today.
        I am also a member of the Senate Commerce Committee, which has
    oversight of our Nation's seaports. I welcome our chairman, Senator
    Hollings, here today to tell us what the Commerce Committee has done to
    help secure the Nation's ports. I supported these efforts, and voted
    for S. 1214, the Port and Maritime Security Act of 2001. Given the 2000
    Report of the Interagency Commission on Crime and Security in U.S.
    Seaports which found that security at U.S. seaports ``generally ranges
    from poor to fair, and, in a few cases, good,'' there was not time to
    waste after this country realized its vulnerabilities on September 11.
        S. 1214 contains several provisions that I believe would help
    strengthen port security. The bill calls for a vulnerability assessment
    at our ports, and the review of this assessment should involve all
    relevant authorities for each port, which usually includes local,
    State, and Federal officials. At the Nation's 50 most economically and
    strategically important ports, the vulnerability assessment would be
    updated on a regular basis. The Department of Transportation would
    develop procedures for screening passengers, cargo and crew members at
    maritime facilities, and those employed at security sensitive jobs at
    ports would have to undergo criminal background checks. Attempts would
    also be made to work with foreign ports to assess security
    vulnerabilities abroad, which is an important part of this equation.
    Also, S. 1214 authorizes loan guarantees and grants to help fund
    security improvements and upgrades. This bill provides for funding of
    research initiatives to develop technology for detection of chemical
    and biological agents, which is vitally important as we continue to
    hear of the potential that terrorists may have access to ``dirty'' bomb
    materials. Unfortunately, there have been some Senate colleagues who
    have blocked consideration of this legislation despite the efforts of
    Senator Hollings and others to bring this bill to the floor. I am
    hopeful that we will be able to address this bill soon.
        Since September 11 was not an attack on our ports, it is difficult
    to raise this issue with the public in order to have the public demand
    action. But, the facts point to the need for better port security: 95
    percent of foreign goods enters or leaves by ship, only 1-2 percent of
    cargo containers are inspected, and the U.S. has 95,000 miles of
    shoreline. In Georgia, over 12 and a half tons of cargo on over 2,500
    vessels entered our State ports during fiscal year 2001. I must be able
    to reassure my constituents and all Americans that the vast amount of
    material entering the U.S. via ship is safe. How do I do this under the
    current regime? I hope to get some answers today from our panelists.

        Senator Cleland. Now, how do we improve that? I just want
    to ask some basic questions based on the fact that I have a
    State which has two major ports, Brunswick, Georgia, and
    Savannah, Georgia. As a matter of fact, Brunswick is very close
    to the Trident nuclear submarine base at King's Bay, which
    stores nuclear weapons. That has been a real eye-opener to see
    how the lack of security at Brunswick, the Port of Brunswick,
    impacts, say, a nuclear sub base just to the South and how the
    nuclear sub base has had to take extraordinary measures just to
    protect its nuclear weapons.
        I will say first, Mr. Commander, since the President says
    we are at war and the Coast Guard is supposed to be under the
    Navy, coordinated by the Navy in wartime, are we remiss by not
    having the Coast Guard under the Navy so at least at a nuclear
    submarine base like King's Bay, you have the coordination built
    in because the Navy is in command of the Coast Guard and the
    Coast Guard could help out with the protection of nuclear
    weapons? I just throw that out to you.
        Mr. Flynn. Sure, Senator. The cooperation between the Coast
    Guard and Navy has always been ongoing. Of course, even the
    Vietnam War, the Coast Guard was actively involved in the
    Vietnam War. We did a lot of river patrols and so forth, but we
    never felt officially under the Department of Navy in that
    instance.
        Today, in fact, you have the CND offered to Admiral Loy
    naval assets to assist the Coast Guard in this new war, that
    is, helping in the patrolling, giving some Naval patrol craft
    to help the Coast Guard do its mission. You already have a
    Maritime Defense Zone Commander who is a Coast Guard Commander
    who is dual-hat and works with the Atlantic Fleet Commander.
        So I am not worried about the ability for the Coast Guard
    to work with the Navy in an integrated way. I am more worried
    and concerned about the rest of that tapestry.
        What we know about these terrorists is that they are
    blending into the real estate. They are blending into the day-
    to-day movements and trying to look as legitimate as possible,
    whether it is as a fisherman or a charter boat or whatever
    might be on the water, or that their commerce blends into
    legitimate commerce, and we are trying to get a handle on the
    people, the conveyances, and the cargo and have a sense of
    being able to fuse the details of that in advance.
        The Coast Guard will have some knowledge about the
    conveyance, in this case a ship. That actually works. Our
    intelligence people sit with the Office of Naval Intelligence
    and the Navy works closely with that, as well, in tracking
    those.
        Customs will know about the cargo and INS will know about
    the people, and obviously Consular Affairs, who give the visas,
    will know about the people. The FBI and CIA will have the
    backlist.
        The challenge here, just to illustrate quickly, though,
    is--I heard this from a Customs agent who was involved with
    designing a scenario, he said, last April that followed this
    weapon of mass destruction, the container, and it was built out
    of--the FBI had given Customs some information about a
    household goods from Asia which actually had a dirty bomb in it
    and it was going to be arriving in New York on the Fourth of
    July. This had to go up to headquarters to get scrubbed before
    they used it. It got kicked back initially. They said it was
    unrealistic because the FBI would never give the information
    about the household goods being contaminated to the Customs
    organization.
        Senator Cleland. May I just interrupt? Mr. Chairman, we
    have run across this with the CDC----
        Chairman Lieberman. That is right.
        Senator Cleland [continuing]. A couple of times--and we
    just had the Postmaster General here--we have demonstrated in
    hearings that the FBI, once it gets hold of the anthrax
    letters, whether it is Senator Daschle's letter or Senator
    Leahy, does not send it to the CDC. It sends it to Fort
    Detrick, Maryland, who does it, and Fort Detrick, Maryland,
    looks upon that as the FBI as a customer, so they are not going
    to tell anybody, and the FBI does not tell anybody. Therefore,
    the CDC winds up in the dark and ultimately gives bad advice to
    the Postmaster General about a Postal Service entity one step
    removed from Daschle's office while two people are dying at
    Brentwood.
        The point is that it is not healthy for the right hand to
    not know what the left hand is doing. Again, coordination,
    cooperation, communication. So I just want to get your take on
    whether the Coast Guard, since the President said we are at war
    and the Coast Guard in wartime is under the Navy, ought to be
    under the Navy, but that is not your concern. Your concern is
    working with the other entities, right?
        So let me move on to Ms. DeBusk. You mentioned the
    possibility of the fact that there is no central authority,
    controlling authority, in terms of port security in America.
    You mentioned the creation maybe of a Department of Homeland
    Security. As a matter of fact, that is exactly what the Hart-
    Rudman Commission recommended over a year ago, that an entity,
    an agency with budgetary authority and troops, people, infantry
    to command, be instilled in our Federal Government to
    coordinate this kind of thing.
        Instead, we have an Office of Homeland Security with 18
    people. Tom Ridge is a good guy, a fellow Vietnam veteran, but
    I doubt that 18 people are going to go up against 60 different
    agencies. So we still are left with the challenge of
    coordination, cooperation, and communication.
        Any thoughts about what this Committee ought to do in
    furthering our strong interest in strengthening an Office of
    Homeland Security or creating a Department of Homeland
    Security?
        Ms. DeBusk. Yes, and I think you have already answered the
    question and that is resources. The only way you really get
    good coordination is through resources to back it up in
    addition to jawboning and saying, let us all talk together.
        The resources would come in for basic things like computer
    systems that talk to each other. There is a lot of good will in
    the agencies. They like to cooperate. For instance, my former
    office got along excellently with the Customs Service, but we
    did not have the same database for going back and forth on the
    computer system with the information.
        And so I think in terms of getting coordination and the
    concept of pushing back the border, it only works if there are
    resources that would be committed to doing things like letting
    the agencies talk to each other over the computer system.
        Senator Cleland. Thank you very much. My time is up.
        Just to highlight, I mentioned this in the Commerce
    Committee, I will mention it here, that Georgia Tech in Atlanta
    has developed a little chip, a little glass sensor to pick up
    biological and chemical agents, which might be helpful in this
    war against terrorism and detecting early on what is in some of
    these containers.
        Thank you very much, Mr. Chairman.
        Chairman Lieberman. Thank you, Senator Cleland. That is
    very interesting. You know, you are right. Something is going
    on here, and probably my colleagues on the Committee have had
    the same experience I have, which is that a lot of complaints
    from local officials about difficulty in working with the
    Federal intelligence agencies and the FBI. I wonder if the
    Committee might not have a role to play in calling in the
    agencies, either in a public or private session, and talk about
    this problem. The examples that you just gave, Dr. Flynn, and I
    think it was Rear Admiral Larrabee gave another example earlier
    on, they are just not acceptable, because you are now--ports
    are now the front lines, so we have got to arm you with the
    information to protect us.
        Senator Bennett.

                  OPENING STATEMENT OF SENATOR BENNETT

        Senator Bennett. Thank you very much, Mr. Chairman, and for
    your pursuing this continued issue. In the spirit of full
    disclosure, I am going to be very shameless in pushing my bill.
        Chairman Lieberman. It would not be the first time that has
    happened around Congress. [Laughter.]
        I was not speaking of you, but it has been done in Congress
    before.
        Senator Bennett. Right. In July, the Defense Threat
    Reduction Agency, DTRA, gave me a top secret briefing on air
    vulnerability analysis of the Port of Baltimore, and, of
    course, the members of the panel might not know, but my hobby
    horse, my focus here is on critical infrastructure protection
    generally, but the computer portion of it more specifically.
        Some people say to me, well, why are you focused on
    computers because homeland defense, homeland security involves
    so much more than computers. I will give you an example that I
    use in speeches. With the ability that currently exists for
    hackers and others who want to get into computers, this is not
    a theoretical. This has happened. Someone got into the computer
    system at a dam and was in a position to control whether or not
    the floodgates would be opened or closed. Downstream from the
    dam was a military installation which would have been flooded
    and destroyed had the hacker or activist or whoever it was
    decided to open the floodgates.
        So when you think of homeland security and you want to
    protect the military installation, or fill in the blank, put in
    whatever you want, downstream, you want to protect the facility
    downstream, it was the vulnerability of the computer that made
    that possible.
        And as I sit here and listen to all of you describe your
    frustrations and your problems, I realize that we cannot
    stovepipe port security away from the issue of computer
    security. You talk about anomalies, Commander Flynn and Mr.
    Quartel, you wanted to look for an anomaly in the situation,
    suppose I was the individual loading that dirty bomb in a place
    where it would not show up, should not show up, and that would
    be an anomaly that would immediately appear on a computer
    screen somewhere. And prior to learning that, I break into the
    computer system and change the data so that the data that comes
    says this is not an anomaly. This really is woolen goods or
    cotton goods or something coming from an agricultural country,
    and yes, it has an unstable political background, but these are
    T-shirts that we do not need to worry about because I have
    changed the computers to have the information that comes to you
    say it is T-shirts.
        And when we talk about the theme that Senator Cleland
    talked about and Senator Collins talked about of not talking to
    each other and not getting the proper analysis, we come back to
    the fact that I have heard several of you say a very large
    portion of the ports are under private control, and unless we
    pass a law that requires private people to give us all of the
    information as to what is happening in terms of the threat on
    their computers, which law does not exist now, again,
    shamelessly, we need to pass my bill which says they can
    voluntarily share that information with a common analysis
    center in the government without worrying about a FOIA request
    being filed by Osama bin Laden saying, I want to know what the
    private sector is telling the government about my attempt to
    break into their computers.
        So, as I say, shamelessly, I am laying this out. Now, I
    would like your responses to that and your comments about that
    and see if I have misread some of your testimony about
    vulnerabilities here.
        Mr. Quartel. I actually have not read your bill, but I like
    what you are saying. In the specific example--by the way, I
    have also a port story. I was at the Port of Los Angeles
    Tuesday afternoon and they had a similar story to this one
    about information sharing. There are reasons for not
    information sharing, which we know, firewalling various kinds
    of data. But there are also ways to share data by tapping
    databases electronically without violating all of these other
    provisions, which I think is what you are talking about.
        No terrorist is going to tell you he has got 20 tons of
    nitrate kinds of fertilizers and a $80 GPS and a $3 blasting
    cap that he is going to load through there. There is a
    hierarchy of responses. Data by itself will not tell you
    anything.
        Customs today has a program they call BASC, for example,
    which they use in the drug process, where they work with
    trusted parties, people who have procedures in place where they
    seal and load and they know the people there, they have
    security as to who the people are, so they can actually
    certificate across the process and that helps them speed it.
        So while you use data to look for anomalies and suspect
    situations, you also do what Steve Flynn was saying, which is
    you also can channel big chunks of that out. If it is a Cisco,
    for example, they may have a procedure in place that you cannot
    load a nuclear weapon or a dirty bomb in any of their systems.
    So maybe those cargoes go through faster.
        There may be small players in the business who can also get
    through that process. In fact, most of our cargoes that come
    from Asia have a lot of small players, so we actually have to
    deal with the real world as it really is.
        If I have one message to the Committee beyond that I have
    already said, it is that what we should do is tap into the way
    business works, and one of the things as government we do not
    do very well, particularly in transportation, is ever ask the
    shipper, meaning the guy who owns the cargo, what they think.
    We go to the carriers, we go to the labor unions, we go to
    this, we go to that, but we do not go to the shipper, and these
    are the guys who have the holistic view of the process.
        We have talked about tracking. Most shippers do not care
    where a cargo is every minute. It is not useful data. What is
    useful is to know it arrived at the port or it is going to be 3
    days late at the port or it missed the train, because then they
    use it for planning.
        So if we talk about tracking, for example, it should align
    with what a customer wants to do with it. It should align with
    his commercial interests. And if we do not align the interests,
    you are going to find things like port shopping.
        Senator Hollings said, well, let us concentrate on the top
    25 ports. You should, but on September 11, the guys came
    through a minor airport, an out-of-the-way crossing at the
    border, and then fed into a major funnel and you will have
    exactly the same kind of thing in shipping unless you align
    your interests with the way the commercial sector operates and
    data is a key part of it.
        Ms. DeBusk. Let me just add something on that from one of
    the concerns of the private sector, because the security of the
    data is incredibly important for getting the cooperation of the
    private sector.
        Senator Bennett. That is right.
        Ms. DeBusk. One of the big concerns is the very mundane
    concern of theft. If you know exactly what is coming in,
    exactly where it is, you can find it exactly with this high-
    tech device. It turns out that it is great new color TVs,
    which, unfortunately, can disappear before reaching its final
    destination. So a major private sector concern in trying to do
    the public-private sector cooperation on data would have to be
    addressed through the security of the data.
        Senator Bennett. That is exactly the point of my bill. It
    says you can share this information and it will stay secure
    within the government.
        Ms. DeBusk. And also secure within the government, and then
    you have to think about a limited number of people within the
    government that would have access encrypted passwords, the
    whole thing.
        Senator Bennett. Sure.
        Mr. Flynn. And absolutely, Senator, I would support this,
    as well. You find most sophisticated ports are actually run
    virtually by computer, the gantry cranes and everything else.
    You take down the computer system, you shut down that port, as
    well. So the cyber attack could do it as much as a physical
    bomb kind of thing with huge disruption effects, so there is
    that area.
        The other is, ultimately, of course, we must be talking
    about sharing data overseas. We are dealing with
    multinationals, not just private sector domestic, but
    multinationals, and we are also, as with Canada, in an effort
    to enhance our data shopping there, if there is not comfort
    about the security of the data, that is going to make that much
    more problematic.
        I think taking that wartime analogy, though, that we are
    in, as the President said, about trying to apply it in this
    area, I think it would behoove us to think about--I get from a
    number of private sector people up in New York who have really
    been, obviously, mobilized by the tragic events of September 11
    and are waiting for the call, basically. These are the people
    who understand how to do data management, understand how to do
    data mining. We have huge companies out there who solved how to
    bring legacy systems together and make mainframes go and they
    are just sitting idle.
        I think some calling in of a red team, almost, to solve
    this information issue from private sector folks, anoint them,
    give them 9 months' charter, give them all the resources they
    need to fix this problem. Everything we are talking about in
    the government is 5- or 7-year, multi-year programs in one
    sector that we are not going to finance anyways until whenever.
    That is unacceptable. I do not think we are going to fix it
    through our traditional public sector needs. If it is a
    wartime, let us treat it as such and fix this by getting the
    smart people into this.
        Senator Bennett. That is a good summary, because in World
    War II, a lot of information from the private sector was
    considered secret, classified, shared with the government with
    the understanding that it would not be available, and in the
    war we are talking about here, with 90 percent of the critical
    infrastructure in private hands, that means an intelligence
    officer trying to see what is happening on the battlefield has
    90 percent of the battlefield blacked out to him if the private
    sector does not share the data. But as you indicate, Ms.
    DeBusk, the private sector will not share the data if they
    think it is going to be made public.
        Thank you, Mr. Chairman.
        Chairman Lieberman. Thanks, Senator Bennett. Your
    questioning may have been shameless, but it was quite
    productive, I thought, and very interesting.
        Senator Thompson.

                 OPENING STATEMENT OF SENATOR THOMPSON

        Senator Thompson. Thank you, Mr. Chairman. Sorry for being
    late. I was a witness this morning, an uncustomary role though
    it may be, at a U.S.-China Commission hearing. I wanted to get
    over here as quickly as I could.
        Chairman Lieberman. We are glad you are here.
        Senator Thompson. It occurs to me in listening to this that
    one of the things that is happening here is going to cause us
    to really look at the issue of federalism in a different way.
    One of the things this Committee deals with, of course, the
    relationship between the various levels of government.
        I listened to you and once again we see various Federal
    agencies are involved to one extent or another, but so is
    State, so is local. And, law enforcement is on one side, while
    prevention is on the other. The real question, I think, that we
    are grappling with is who ought to be doing what? What should
    we be doing and who should be doing it? If you think about it,
    that is really the main question of the government and it is
    not an easy one.
        I think that what we are seeing now after September 11 is
    that we are going to be doing some reassessing and we are
    probably going to be bringing the Federal Government into some
    areas, at least on the prevention side, that maybe they have
    not been before. We need your help on that.
        Hopefully, we will learn to stop doing some things at the
    Federal level that we should not be doing and let those
    responsibilities go to the State and local governments. We
    should consider a realignment, a reprioritization, as it were,
    to look at federalism anew and start concentrating and spending
    more of our resources on the things that the Federal Government
    can do and must do best. We should look for standardization. I
    think in areas of national security, we have to really look at
    that.
        The other thing that is kind of related that concerns me is
    what is the economic impact of all of this going to be and what
    are we going to be willing to tolerate. We can devise all these
    systems, but as we have seen at the bridge in Detroit, a little
    bit of slowdown, a little bit of disruption and things start
    backing up. What is that going to do, what is our toleration
    level going to be, and to what extent are we going to have to
    start looking at things differently?
        We have been called upon to sacrifice in this country, but
    so far, about the only sacrifice we have been called upon to do
    is shop at the mall, and buy more. What if we have to get used
    to doing more, not just at our airports, but here?
        My testimony today before the China Commission had to do
    with the extent to which we should be allowing foreign
    companies that are engaged in proliferation activities, that
    our government determines that are engaged in proliferation
    activities, to raise billions of dollars in our capital
    markets, no questions asked, without disclosing to the
    investors that they are engaged in proliferation activities.
        It seems like a no-brainer to me, but that is what is
    happening, billions and billions of dollars by companies,
    including Chinese companies that our country knows are engaged
    in proliferation activities, making the world more dangerous,
    which we say we need a national missile defense system to
    protect us against. But they can come and raise billions of
    dollars and hand it over to the military, as far as we know.
        As I am speaking, half of Wall Street is downstairs
    explaining why I am wrong because the measures I recommended
    will not do any good, because they will have an economic
    impact, it is going to cost us business. How much are we going
    to be willing to do? Has anybody made an assessment of the
    economic impact of the preventive measures that are being put
    on the table?
        Rear Admiral Larrabee. In the Port of New York and New
    Jersey, we have estimated that it will cost us about $150
    million in the next couple of years to implement just some of
    the things that the Hollings bill has suggested. As we begin to
    talk about other ways to prevent terrorism, I think that the
    cost goes up.
        You are absolutely right. My job every day is to find a way
    to balance a system that works very well because of its speed
    and its economy with the need to slow it down and be more
    deliberate in terms of making sure that we know what comes
    across the border, and that is a very, very difficult
    challenge, because the system that we operate today is what
    drives the engine of our economy, and the minute that that
    system slows down and we cannot bring oil in on the basis that
    we bring it in now, the system comes to a grinding halt.
        Mr. Quartel. If I can add to that, too----
        Senator Thompson. Liquid nitro gas, which is very much a
    concern.
        Mr. Quartel. Maybe I can take it from the micro to the
    macro. Every trip I now take on an airplane, and I used to
    travel a lot, adds 4 hours. That is half a day. So I travel 80
    percent less. So I am certainly not helping the aviation
    system, nor, frankly, are a lot of the rules, the way they are
    being implemented across the system.
        In logistics, the cost of transporting and moving goods and
    logistics and storing and maintaining them as inventories in
    the United States 20 years ago was 25 percent of GDP. Today, it
    is 15 percent. We have saved $1 trillion annually in terms of
    the kinds of things we have built into the system by moving
    cargo swiftly, reducing inventories, reducing the cost----
        Senator Thompson. Just in time?
        Mr. Quartel. Just in time. Although even ``just in time''
    is only in a small percentage of the economy, these things
    affect everybody, from the biggest to the smallest.
        Senator Thompson. Some people are saying we are going from
    ``just in time'' to ``just in case'' now.
        Mr. Quartel. Well, there is some issue there, but let me
    give you a number there. If you only increase inventories by 5
    percent, you add $75 billion in costs to the American economy.
    That is 75,000 jobs you have just lost.
        Mr. Flynn. I might add here, though, I think the key,
    again, about this prescription, if we are willing to take this
    in a comprehensive networked approach, Rear Admiral Naccara,
    the First District Commander up in Boston, has a very creative
    and ultimately successful model for how to deal with the
    liquified natural gas. What he is doing is he is sending
    inspectors to Trinidad where it is loaded. They are inspecting
    the facility, which actually is a pretty good, secure facility,
    to board the vessel when it leaves the harbor, inspect it
    before it goes to make sure there are no bad people on it, sail
    the harbor and get off at the pilot buoy. If it was hijacked in
    between, there would obviously be some communication of that.
        The advantage is when it gets to Boston, we are actually
    able to speed it in. I mean, you are going to still do some
    controls, but you do not want it harboring out there for a few
    days having a big advertisement, LNG is waiting here as a
    target. You actually want to get it in relatively quickly. So
    they will be met with an escort, but it will be moving very
    quickly. The company loves it because it now has expedited
    treatment in. We are more secure.
        The same modeling applies, I think, even as we think about
    cargo. If we are talking about building this in as a standard
    up front, the market will adapt, I think, to it.
        I would propose that, for instance, that perhaps Governor
    Ridge--well, the President would issue a homeland security
    Presidential directive to the Secretary of Transportation to
    meet with his counterparts in the six or seven major megaports
    to essentially say, we are not going to allow mystery boxes
    anymore into our ports because they are a critical
    infrastructure and here are the standards. And as soon as that
    is harmonized, the cost issue starts to get adjusted, just as
    it has with oil tankers.
        When we had this real problem many years ago, there were a
    lot of unsafe tankers, people were saying we could not impose
    standards. The oil would not come in anymore. Well, we have
    rationalized and adjusted.
        The real cost, though, for me, the one that most keeps me
    awake almost every night, knowing what I know about the system,
    is the cost of turning the spigot off. Ninety-five percent of
    general cargo coming into the United States comes in a
    container. This makes the anthrax in the mail service pale by
    comparison. We went to E-mail and faxes and UPS and FedEx. When
    you compromise this system and you turn off the switch, there
    is no alternative. Cargo stops coming in. That is the cost
    matrix I think we need to balance against, the dollars that we
    are talking about here and putting in a smart approach.
        Senator Thompson. Ms. DeBusk.
        Ms. DeBusk. Yes. One of the important things that is in the
    Hollings legislation, and that was recommended by the Seaports
    Commission, has to do with threat assessment. Because it is
    simply not possible to do everything that we can or should do
    at every single one of the 361 ports. So an important way to
    weed out spending priorities would be to conduct threat
    assessments and figure out where the greatest vulnerabilities
    are and tackle those first.
        Rear Admiral Larrabee. And then with better information,
    you can adjust your reaction with the idea that you cannot do
    everything, and----
        Senator Thompson. It seems to me like a threat assessment,
    certainly, everything has got to be prioritized and all that,
    but it looks to me like once we do that, it has got to be the
    most closely held information in all of our government.
        Ms. DeBusk. I agree.
        Senator Thompson. If the bad guys have that information,
    then it is all for naught.
        Ms. DeBusk. I agree completely, and even some of the
    information that was put out by the Seaports Commission is no
    longer available.
        Mr. Flynn. On the reverse, I just might say, Senator, is
    the schemes that we talked about, the criminals are there. They
    know--we are not talking about a hypothetical--about containers
    being used. They have been used for the last 15 years to
    smuggle narcotics into this country, as a matter of routine,
    almost. So bad guys know the vulnerabilities of this system.
        Mr. Quartel. And I would suggest to that, every one of us
    can tell you how to get it in, and if we can, someone else can,
    as well.
        Senator Thompson. Knowing what we are watching and what we
    are not watching is what I am talking about.
        Mr. Flynn. Oh, yes, sir.
        Senator Thompson. Thank you, Mr. Chairman.
        Chairman Lieberman. Thanks, Senator Thompson.
        Thanks to the four of you. We have got to move on to the
    next panel, and we really did not go into some of the very big
    ideas that you gave us for reform, such as pushing the border
    back and how that would work, how we station our personnel
    there or do we, and does that require international treaties
    and agreements. And then, although we will get into both of
    these matters in the next panel, too, I hope, the use of
    technologies that are available now to create new ways to track
    containers without slowing them up so that there is no adverse
    economic effect.
        Perhaps either with the Committee or our staffs, we could
    ask you to give us some more time to better develop those
    ideas, because it may be that this Committee can take a
    leadership role, hopefully after Senator Hollings' bill is
    passed, which I hope will happen soon, to implement some of
    those ideas.
        But in the meantime, I thank you very much. It has been
    excellent testimony.
        Chairman Lieberman. We will call our third panel, Argent
    Acosta, Customs Inspector, Port of New Orleans, and President
    of the NTEU Chapter 168; Deputy Chief Charles Cook of the
    Memphis Police Department; W. Gordon Fink, President of
    Emerging Technology Markets; and Michael Laden, President of
    Target Customs Brokers, Inc.
        Thank you all for being here. Chief Cook, we are going to
    call on you first. You come from a great city.
        Mr. Cook. Thank you, sir.
        Chairman Lieberman. You even have some great Senators
    representing your State here in Washington.

     TESTIMONY OF DEPUTY CHIEF CHARLES C. COOK,\1\ MEMPHIS POLICE
                               DEPARTMENT

        Mr. Cook. Thank you very much, Mr. Lieberman. I would like
    to say good morning to the Members of the U.S. Senate,
    witnesses, and others present. I want to give special thanks to
    Senator Fred Thompson and, in particular, his staff, Hannah
    Sistare, Jason Roehl, and Morgan Munchik, for inviting me to
    speak here today on behalf of the people of Memphis.
    ---------------------------------------------------------------------------
        \1\ The prepared statement of Mr. Cook appears in the Appendix on
    page 120.
    ---------------------------------------------------------------------------
        I am here today to talk about the City of Memphis, how we
    have responded to the events of September 11, and the needs of
    Memphis in the area of homeland security. I am sure our
    situation is much like those of other cities our size.
        Prior to September 11, the Memphis Police Department, the
    local FBI, the Memphis and Shelby County Emergency Management
    Agency, the Memphis and Shelby County Fire Departments, the
    City of Bartlett, the City of Germantown Police and Fire
    Departments began training with incident command tabletop
    exercises. Our focus was on natural disasters, the threat of
    terrorist attacks, school shootings, and plane crashes.
        This multi-agency training developed a team concept in
    responding to large-scale, long-duration events. Our
    departments began seeking further training for various
    contingencies. In all the exercises, role players simulated
    their responses, and as a result of the critiques and follow-
    ups, they determined that additional training, equipment, and
    manpower resources were needed.
        Because of extreme delays on the Memphis to Arkansas
    bridges across the Mississippi River at I-55 and I-40 caused by
    relatively simple accidents, a multi-agency bridge mitigation
    team was formed in the year 2000. Members of this group came
    from the police departments of Memphis and West Memphis,
    Arkansas; the sheriff departments from Shelby County,
    Tennessee, and Crittenden County, Arkansas; the Tennessee
    Highway Patrol and the Arkansas State Police; the Railroad
    Police; the Tennessee and Mississippi Departments of
    Transportation. Various casualties, including marine accidents,
    terrorist attacks, and any subject threatening bridge security
    became topics of discussion. Decisions regarding multi-agency
    jurisdiction and removing hazards from the roadway were made
    and the agencies took joint responsibility for patrolling the
    bridges and they continue to do so.
        Most police, fire, and emergency management agencies during
    the first few hours of September 11 reacted by encircling the
    government buildings in the downtown area. We deployed our
    resources to include other targets of opportunity, including
    bridges, water supplies, power utilities, and similar
    government-related services. We received numerous phone calls
    from businesses, manufacturers and trucking firms, refineries
    and other facilities. Each caller was interested in information
    on what to expect in the way of local terrorist attacks.
        Their questions were addressed through the media in a press
    conference with public officials, including the Memphis Mayor,
    the Shelby County Mayor, the Police Director, the Shelby County
    Sheriff's Chief Deputy, the Fire Director, and other emergency
    services personnel. These officials made an evaluation of the
    immediate threat to the city based on information from the FBI
    and national and local television news. This resulted in an
    agreement that our response could be reduced at that time.
    Jointly, in an organized setting, this team of city officials
    released information to the public. It was timely, informative,
    and reassuring.
        We have continued to maintain high levels of alertness,
    giving special attention to large sporting events, concerts,
    and the Beale Street entertainment district. We have
    experienced a blow to our budget as a result of September 11
    and our anthrax responses. Sustained actions resulting from
    hoaxes, threats, and actual attacks are devastating to local
    budgets, as you know, draining dollars by eating overtime.
    There is little that can be held in the hand following
    unbudgeted responses.
        Since the events and continuous warning of future threats,
    many cities are looking at budget shortfalls. We have still
    maintained high levels of awareness and are establishing
    communications between our precincts, manufacturers, and
    redistribution.
        Following the New York attack, we have experienced the
    uncertainty and fear of bio-terror. There have been several
    warnings of additional attacks. As we further assess our
    ability to deal with attacks of this type, it is necessary to
    evaluate what is needed in order to defend ourselves against
    attack, to respond to and reduce the damage and loss of life,
    and to fully recover.
        In reviewing the needs of the city, I must mention the Port
    of Memphis, an integral part of the Memphis economy. Memphis is
    known as America's distribution center. I think this notoriety
    comes from its association with Federal Express, the United
    Parcel Service, and other air carriers. However, the marine
    port facilities of the Memphis metropolitan area is one of only
    three cities served by five class one railroad carriers serving
    48 contiguous States, two barge fleeting services, and a
    multitude of barge and truck transport services. International
    shipments come through the Port of New Orleans and are filtered
    to the other States through Memphis, the world's largest cargo
    airport hub.
        The Port of Memphis is the fourth busiest inland port in
    the country. The port facility has immediate access to
    Interstate 40 and Interstate 55 and is located less than 15
    minutes from the Memphis International Airport. The Port of
    Memphis also provides a unique industrial area for the
    convergence of transportation services located near the Memphis
    downtown district.
        This transportation hub has been of interest to organized
    crime due to the large quantity of manufactured goods. The
    Memphis Police, the Shelby County Sheriff's Office, the local
    FBI, the U.S. Customs Service, and the National Insurance Crime
    Bureau was organized through a memorandum of understanding,
    updated yearly, into the Tennessee, Arkansas, Mississippi Auto
    Cargo Theft Task Force. This is a multi-agency investigative
    law enforcement unit targeting organized vehicle theft,
    including heavy equipment and farm and construction machinery,
    and associated criminal activity and thefts from interstate
    cargo shipments. They are involved in activities in and around
    both marine ports and the airport.
        These are the reasons Memphis is considered to be a
    potential terrorist threat.
        The following are suggested measures which should be
    considered in the interest of preventing terrorist attacks,
    attacks which would severely interrupt interstate commerce for
    years if successful, seriously crippling the Nation.
        Use a multi-agency approach to the investigation of
    suspected terrorists and develop the availability of an
    electronic clearing house for all information gathered
    nationally and internationally on suspected terrorists.
        Assign fully-armed U.S. Coast Guard personnel to 24-hour
    operations, providing visible patrols on the Mississippi River,
    Wolf River, McKellar Lake, Tennessee Chute, and the new Frank
    Pidgeon Industrial Park.
        Support a national or international truck driver licensing
    program for drivers entering and exiting the U.S. from Canada
    and Mexico and for crossing major infrastructures, bridges, and
    tunnels. Also, support technology capable of identifying
    drivers and driver history by fingerprint, photos, and newer
    iris scan technology for officers to use in the field.
        Support smart card technology for trucks and loads, capable
    of immediately identifying driver, cargo, origination point,
    destinations, and route plans. This would also do well for
    marine vessels.
        Organize a U.S. Coast Guard inspection boarding team to
    meet and board vessels above and below the Mississippi River
    bridges to identify operators and crew and to monitor
    approaches to sensitive infrastructure, such as bridges,
    industrial complexes, and production facilities with river
    access.
        Assign U.S. Army or Army Reserve troops to provide 24-hour
    security and surveillance to the more critical targets, where
    attacks would cause severe repercussions for America.
        Provide security gates and barricades limiting access to
    Presidents Island, refineries, and chemical plants from
    vehicles without proper identification and authorization.
        Establish privately-owned police agencies, like the
    Railroad Police and Federal Express Security Police, for the
    protection of businesses which produce or manage critical
    materials.
        Also, establish a Homeland Security Block Grant to meet
    such needs as police and fire overtime, training, communication
    and rescue equipment, and for security measures to protect
    airports, waterways, utilities, public transit, and other
    public infrastructures.
        Thank you once again for inviting me here to testify today.
    I will be happy to work with the Committee in the future in any
    way and I will be glad to answer any questions you may have.
        Chairman Lieberman. Thanks, Chief Cook. That was excellent
    testimony and I appreciate the specificity of the
    recommendations. We are going to hold a hearing in the
    Committee, I believe at the end of next week, particularly
    having local officials come in from around the country to talk
    about some ideas, and the idea of federalism Senator Thompson
    talked about earlier. But your proposals here really set the
    table for that and I appreciate it.
        Mr. Cook. Thank you, sir.
        Chairman Lieberman. Mr. Acosta, thanks for being here. You
    bring firsthand experience as a longtime Customs inspector and
    we appreciate your willingness to be here and look forward to
    your testimony.

     TESTIMONY OF ARGENT ACOSTA,\1\ SENIOR CUSTOMS INSPECTOR, PORT
    OF NEW ORLEANS AND PRESIDENT, NATIONAL TREASURY EMPLOYEES UNION
                           (NTEU) CHAPTER 168

        Mr. Acosta. Thank you. Chairman Lieberman, Members of the
    Committee, thank you for inviting me here today to talk about
    port security. My name is Argent Acosta and I am a Senior
    Customs Inspector at the Port of New Orleans. I am also the
    President of Chapter 168 of the National Treasury Employees
    Union. My chapter actually encompasses five States, Louisiana,
    Mississippi, Tennessee, Arkansas, and Alabama. There are 19
    ports in that region of Customs and the majority of those are
    seaports.
    ---------------------------------------------------------------------------
        \1\ The prepared statement of Mr. Acosta appears in the Appendix on
    page 127.
    ---------------------------------------------------------------------------
        I have been a Customs inspector for 30 years, the Chapter
    President for 26 years. My job is to ensure that illegal
    contraband, from knock-off designer jeans to cocaine to bombs,
    does not enter the country, and that legal goods that enter the
    country are assessed the correct duties.
        At seaports like the Port of New Orleans, the mainstay of
    the job is boarding incoming vessels, primarily cargo ships, to
    inspect for illegal goods. It can be a very dangerous and not
    very glamorous job, but there is a great deal of commitment by
    the front-line inspectors to do the best job possible,
    especially since the events of September 11.
        I would like to share with the Committee a recent example
    of that commitment. Inspector Thomas Murray, a 31-year veteran
    of the Customs Service, died tragically during an inspection of
    the hold of a vessel at the Port of Gramercy, Louisiana, on
    October 30 of this year. He was killed by toxic fumes, as was a
    member of the vessel's crew and the ship's captain, who
    followed him into the hold. A second Customs inspector was
    overcome by the fumes, but is recovering.
        Inspector Murray was aware that the vessel he was searching
    previously brought illegal drugs into the United States, so he
    was determined to be as thorough as possible. He did not know
    what dangers he would encounter when he went below the deck,
    but he went anyway. Tragically, his commitment to doing his
    job, despite potential danger, cost him his life. His fellow
    inspectors, especially those of us from Louisiana, will mourn
    his loss for a long time to come, but we will also remember his
    bravery and commitment every time we are faced with boarding a
    suspect vessel or searching a hold that we believe to be
    dangerous.
        Mr. Chairman, you asked in your letter of invitation that I
    address several questions regarding port security in my
    testimony. The first was, what is the current adequacy of port
    security? I am afraid that I must answer that question by
    saying I believe port security is currently not adequate and
    poses serious potential threats to those not only in the
    immediate area of the port, but to those who may come in
    contact with uninspected material that arrives through our
    ports and moves throughout the country in other modes of
    transportation.
        The Customs Service is currently only capable of inspecting
    about 2 percent of the 600,000 cargo containers that enter our
    seaports every day. From my own experience in New Orleans,
    despite the huge increases in trade since I started with
    Customs in 1970, the number of Customs inspectors at the Port
    of New Orleans has dropped from approximately 103 in 1970 to 29
    this year. In addition, since September 11, Customs inspectors
    from around the country have been temporarily reassigned,
    primarily to Northern Border ports to cover the gaping holes in
    security there.
        Since I had previously volunteered for emergency response
    team duty, not realizing, of course, that September 11 was on
    the horizon, I was among the first to do a temporary tour of
    duty in Michigan, at Port Huron, one of the busiest truck
    crossings in the country. On September 14, I was given 4 hours
    to go home, pack, board a Customs flight at the Gulf Port
    Airport and go to Michigan, at which time I found out I would
    be in Port Huron.
        There was an incredible amount of pressure on inspectors at
    Port Huron since many ``just in time'' auto parts headed from
    Canada to the big three auto makers go through the port. I know
    my biggest personal concern was not to be the one who let a
    terrorist into the country, and some supervisors seemed to
    support that view, the view that extreme caution was necessary.
    However, others seemed to be sending the signal that we needed
    to move things through more quickly because of the need for the
    auto parts, so it is a very difficult balance and I can
    appreciate the problem that they are faced with.
        I will begin another temporary assignment at Port Huron in
    January. These temporary assignments, while currently necessary
    due to the extreme shortage of personnel, leave home ports,
    like my Port of New Orleans, able to inspect even fewer vessels
    than usual. Also, the more an inspector knows about a
    particular characteristic of his port, what the main goods that
    go through the port are, what are the main carriers, the
    destinations, etc., the more effective he or she can be.
    Obviously, 30-day temporary assignments at different ports does
    not lend itself to building this kind of experience.
        The use of the National Guard at some ports may be
    temporarily necessary due to the unprecedented threats we are
    facing, but in many cases, due to their lack of training and
    experience in the area of cargo and vessel inspection, the
    National Guard provides the appearance of security rather than
    any real increase in security. In any case, having military
    personnel perform these duties is obviously not a long-term
    solution.
        In addition to the severe limitations on the ability to do
    actual inspections, the technology that is supposed to help us
    do our jobs by providing us with advance information on
    oncoming vessels is outmoded, subject to brownouts, and often
    incompatible with the technology of those we need to
    communicate with. In addition, the advance information about
    what cargo may be aboard a vessel often is not sent early
    enough to do any good, and even more often is not accurate.
    Customs has determined through its own system that the accuracy
    rate of vessel cargo information is only 56 percent accurate,
    and let me give you a real current story to point out this
    aspect.
        In April of this year, a vessel arrived from the Port of
    Savannah. It was a foreign flag vessel with containers on board
    for discharge throughout the United States. Our enforcement
    team targeted the vessel for boarding. We targeted the vessel
    to look at the cargo that was available. It had empty
    containers and full containers. By doing that, we set certain
    containers aside that we wanted to pull off and take a look at
    and we wanted to verify all the rest of the containers,
    including the fact that the empty containers were empty, and
    you will see why we do this.
        We looked at the vessel and encountered one of the empty
    containers and upon opening it found out that it had cargo in
    it. We sealed the container and sent it to our cargo
    examination station. It sat for a day or two. When the two
    inspectors who worked the station went to open it up, their
    radiation detectors went off. They went off big time. One of
    the inspectors was our actual HAZMAT coordinator and trainer,
    so she backed everybody off, moved everybody away. We called in
    the experts. The container was very hot. It had drill testing,
    well testing equipment on it, but it was a serious threat to
    everybody around it. Fortunately, after testing and after a
    period of time, it appears as though the inspectors did not
    suffer any long-lasting effects. We hope they did not.
        But were it not for us targeting the vessel and looking at
    the containers, this empty container would have moved
    throughout the country to wherever it was going to go, and
    whoever else who might have walked up to it who did not have
    equipment to note that there was something wrong with it might
    easily have been harmed or killed.
        There are also problems with regard to the physical
    security of the port. Access to cargo and cruise vessels in
    many ports is not limited to those with prior approval to be in
    the area. Virtually anyone can gain access to the areas where
    vessels unload passengers and cargo. While there are secure
    areas in the Port of New Orleans, access to those areas is
    overseen by contract security personnel, who, like airport
    baggage screeners, receive low wages and little training.
        In fact, in the immediate aftermath of September 11, while
    Customs was and still is on its highest state of alert, I noted
    as I passed a secure area, the checkpoint going into the port
    area of the port, that there was no one in the security
    checkpoint. I sat for a few minutes thinking that maybe
    somebody had stepped into the bathroom, and it was the case.
    They had stepped away from the access. So access to the secure
    area was totally insecure.
        The second question you asked me to address is what
    problems confront the Customs Service and other Federal
    agencies charged with securing our ports. I believe that the
    biggest problem is a lack of personnel. As I mentioned earlier,
    trade has grown exponentially. The number of airports,
    seaports, and border crossings have increased and have seen
    huge increases in passenger traffic. Funding and personnel
    levels have not kept up. I believe that funding is also an
    issue with regard to the use of low-wage contract personnel to
    provide security services to the port.
        Another problem facing Customs in securing our ports is
    that I believe the balance between rigorous enforcement and
    facilitation of the trade can tip too much towards trade
    facilitation. In the aftermath of the September 11 attacks,
    there has been a renewed focus on our enforcement role and it
    has revealed great vulnerabilities. Yet we need to move trade
    and people throughout ports quickly, but we also need to make
    sure that we are doing it in a way that protects our security.
    In order to do both, we need more personnel.
        Other problems mentioned earlier include lack of adequate
    technology and timely and accurate manifest information. It
    also includes the sharing of information.
        The final issue you asked me to address was whether I had
    any recommendations to address the problems discussed above.
    The most important recommendation I would make is that Customs
    needs to be provided with adequate funding. In February 2000,
    the Customs Service commissioned a study, referred to as the
    Resource Allocation Model, that set optimum staffing levels for
    Customs at ports throughout the country. That report, which I
    would like to submit for the record, showed a need for 14,000
    additional Customs positions. That was before September 11. I
    would hope that Congress would act to provide those additional
    positions.
        I believe that there is also a need to look at recruitment
    and retention issues for Customs inspectors. The compensation
    and benefits are less generous than many State and local law
    enforcement officers and there is a serious concern that
    experienced Customs inspectors will leave to go to other
    professions, including the air marshals, due to the more
    generous compensation package, particularly in the area of
    retirement. Customs inspectors should receive the 20-year
    retirement benefit available to other Federal law enforcement
    officers if Customs is to remain competitive.
        Customs also needs upgraded technology. Congress has
    provided initial funding for the Automated Commercial
    Environment, or ACE, system, which will make remote inspection
    of cargo more accurate. I must point out, however, that this
    kind of technology can never take the place of physical
    inspection.
        There is also a need to address the physical security
    issues at our ports by setting up secure areas for incoming
    cargo and personnel and by ensuring that port security
    personnel are well trained.
        I would add just one more thing. Customs recently has
    entered into a program which has taken away the option of
    boarding vessels midstream for Customs. This really has serious
    consequences, because, in effect, it leaves Customs inspectors
    such as myself and my counterparts blind as to what is in a
    vessel sitting in the river.
        Many vessels arrive in the Port of New Orleans. They go to
    anchor. They actually load or discharge their cargo all while
    at anchor, so we will never have an opportunity to board the
    vessel to fully look at the manifest, and we use--in the case
    of the radioactive container, there are many needs that we have
    to look at. We have to match all of these up just to try to
    come up with a picture that is reasonably accurate, and this is
    about accuracy.
        I have heard other panel members discuss the fact that
    Customs' area of expertise is the cargo. I believe that is
    true. I believe it is supposed to be. But I want to impress
    upon you that, by our own study, 56 percent accurate is not a
    very good rate.
        So we have to use whatever means that are available to us.
    That includes the vessel, the chief officer of the vessel, the
    information that the steamship line provides us, stevedore
    information. We get it from anyplace that we can, and then what
    we have to do is basically put all that information together
    and extrapolate what we think is the best possible picture of
    what is on the vessel.
        Thank you. I would be happy to answer any questions.
        Chairman Lieberman. Thanks very much to you, Mr. Acosta. We
    have got a lot of work to do.
        Mr. Acosta. Yes, sir.
        Chairman Lieberman. Mr. Laden, you bring a unique
    perspective and a very important one here as President of
    Target Customs Brokers, and that is the private sector, the
    customers. Thank you for being here.

      TESTIMONY OF MICHAEL D. LADEN,\1\ PRESIDENT, TARGET CUSTOMS
                             BROKERS, INC.

        Mr. Laden. Thank you, Mr. Chairman. Mr. Chairman, Members
    of the Committee, good morning. My name is Michael Laden and I
    am the President of Target Customs Brokers, Inc., a wholly
    owned subsidiary of Target Corporation. I am also the current
    Chairman of the American Association of Exporters and
    Importers, and I am an appointee to the Treasury Advisory
    Committee on the Commercial Operations of the U.S. Customs
    Service, otherwise known as COAC. I would like to thank you for
    allowing me the opportunity to express my views under
    consideration today.
    ---------------------------------------------------------------------------
        \1\ The prepared statement of Mr. Laden appears in the Appendix on
    page 133.
    ---------------------------------------------------------------------------
        Without trying to become too prophetic or philosophical in
    my comments, the atrocities committed against us all on
    September 11 have forever distorted the way in which we as a
    people will live. It is reshaping and transforming the way we
    think about everything, security first, everything else second.
    ``Just in time'' for some companies has morphed into ``just in
    case,'' adjusting lead times and building safety stocks to
    offset potential security delays.
        Our industry, perhaps more than any other in America, will
    be deeply impacted just by the very nature of the business
    itself. As you have heard, the fabric of our industry is an
    intricate weave of very complex components and stakeholders. A
    single import shipment and the documents accompanying it pass
    through many hands and many different checkpoints as it travels
    to our country. Every one of those handoffs creates new
    vulnerabilities.
        Now, before I continue with my comments, please allow me to
    make one very important distinction. I am not holding myself
    out as a security expert. I do rely on others, including the
    U.S. Customs Service, for advice and assistance. What I can
    offer this Committee today, however, is more than 25 years of
    practical operations experience in international logistics and
    on Customs matters.
        Target's bottom line is this: We want no more nor any less
    than exactly what we have ordered when it comes to an
    international consignment. Simply put, we want no contraband of
    any kind--drugs, laundered money, weapons of mass destruction,
    bio- or chemical-hazards contaminating our shipments, and we
    certainly do not want to fathom the possibility of fouling our
    domestic supply chain. You do not need a very vivid imagination
    to know that the consequences of that would be catastrophic.
        In part, some of the answers to our security concerns lie
    in newer developing technologies, but we must also rely on good
    old-fashioned common sense and American ingenuity. All
    stakeholders in the supply chain must closely examine their
    processes end to end.
        I am pleased to report to you and the Committee Members
    today that the trade community and the U.S. Customs Service,
    under the direction of the Treasury Department, are working
    cooperatively together to improve many of the security features
    already in place. At the U.S. Customs Trade Symposium held last
    week in Washington, Customs Commissioner Bonner called upon the
    trade community to advance the partnership currently embracing
    Customs and the trade to a new plateau. Speaking on behalf of
    Target, COAC, and AAEI, we stand prepared to work side-by-side
    with Customs and other areas of the Federal Government in
    establishing practical, effective, and cost-efficient methods
    to ensure the safekeeping of our supply chain.
        In my written statement submitted to the Committee, I
    discussed the industry partnership programs currently in place
    at U.S. Customs and some of the programs that Target employs to
    assure compliance and security. For example, Target's approved
    for purchase and vendor compliance programs are well positioned
    to complement our active participation in the Business Anti-
    Smuggling Coalition, otherwise known as BASC. BASC is a
    voluntary industry-led, Customs-supported program that was
    established in 1995. It was a natural evolution of the Carrier
    Initiative Programs launched by Customs in the late 1980's and
    early 1990's.
        As Customs' air and sea interdiction efforts successfully
    closed off the smuggling corridors, the drug cartels
    increasingly looked for new and more innovative methods of
    moving their illicit products to market. As a result, they
    began targeting ordinary, law-abiding, legitimate commercial
    cargo and the BASC program was the end result of the trade
    community coming together and telling the world that we do not
    want contraband in our shipments.
        All of these programs are vigorously enforced and engaged
    at Target and we will be coordinating our deterrence and
    detection efforts throughout the company. As we speak, these
    programs are being strengthened and retrofitted to discourage
    supply chain incursions.
        And so now that we may begin a lively and active dialogue
    on these vital matters, I relinquish the rest of my time to the
    Committee for questions. Mr. Chairman, thank you for allowing
    me to appear before you today.
        Chairman Lieberman. Thanks very much, Mr. Laden, a very
    interesting piece of the picture. That is what one of the
    witnesses on the first panel said. Sometimes when folks go, and
    unfortunately, he mentioned another store chain in Wal-Mart,
    but when they go into Target, they just think about the
    inventory coming out of the back room, but obviously a lot of
    it comes from all around the world and it puts you--I am
    fascinated that this company, Target Customs Brokers, exists,
    but I obviously understand why. So thanks for your testimony.
        Mr. Laden. Sure.
        Chairman Lieberman. Gordon Fink is President of Emerging
    Technology Markets and is well positioned to testify about the
    range of technologies that can be used either by the government
    or the private sector to improve security at our ports. Thanks
    so much for being here.

    TESTIMONY OF W. GORDON FINK,\1\ PRESIDENT, EMERGING TECHNOLOGY
                                MARKETS

        Mr. Fink. Thank you very much, Mr. Lieberman. I appreciate
    the opportunity to summarize my statement, which I ask be
    included in the record.
    ---------------------------------------------------------------------------
        \1\ The prepared statement of Mr. Fink appears in the Appendix on
    page 138.
    ---------------------------------------------------------------------------
        Chairman Lieberman. We will do it, without objection.
        Mr. Fink. Other Members of the Committee, and I applaud
    your holistic approach to looking at government programs. I am
    going to give you some personal examples from my career in the
    government where I can cite technology that can help out.
        Technology is being used, and I will mention and highlight
    just a few areas. One, to improve the asset utilization of the
    industry, the truck tractors, the trailers, and the use of the
    chassis. I am going to give you some examples of that; to meet
    the demands of the shippers and the constant need to know where
    their shipment is so that they know when they can advertise--
    when they can start moving product into their stores.
        But significantly, just recently announced by the FBI is
    the increase in cargo theft. This was announced by the FBI at
    an American Trucking Association meeting a couple months ago.
    It is the fastest growing crime in the United States, and they
    mentioned it is at $12 billion a year. A lot of that cargo
    theft crime goes unreported. One of the reasons is that the
    penalties are lax, there is a high priority or a high payment
    for some of the cargo value. Pentium chips are more than worth
    their weight in equivalent cocaine and they are not marked so
    it is easy to resell them. And low risk as far as the law
    enforcement--the risk of being caught and the penalties are not
    very good.
        This also raises the thrust of stealing one of the trucks
    or one of the cargo containers even after it has arrived in the
    United States and use it as a delivery mechanism, as a weapon
    of terror. I have some ideas I will share with you about the
    technology that can address that.
        The technology is used extensively by the truck tractors
    now. The long-haul trucking firms, such as Schneider, J.B.
    Hunt, etc., know where their tractors are, the status of the
    engine, the behavior of their drivers. They can remotely shut
    it down. But more recently, they have chosen to put in the same
    technology in their trailers, because that asset can be
    decoupled from the tractor. They need to know its status, its
    location, when the doors are open, when the doors are closed,
    and it is part of asset management as well as knowing where
    their cargo is.
        The chassis--some on the Committee may not know what I mean
    by chassis, is a frame with pins on the end of it that the
    container sits down on and it is the device that moves a lot of
    these containers out of the ports, either to railheads or to
    their destination. There are about 750,000 of those chassis in
    use right now.
        While Senator Collins has left--one of the things that I
    would like to address is the fact that electronic seals for
    containers is now being tested. There is a pilot program in the
    Northwest part of the United States where cargo entering
    Seattle has an electronic seal affixed to it. It is for Customs
    in-bond shipments that go across the border at Blaine and into
    Canada. The technology is starting to emerge and most of the
    technology is now available. I am happy to see that it is
    available from several different vendors so that you can start
    to get some competition and help make the business case in the
    decision to adopt the technology.
        I have chosen to spend a lot of my time working with the
    Maritime Administration in a program they call the Cargo
    Handling Cooperative Program, which is described in my
    statement. It is a program to look for technology and make it
    available to the members of the industry--the carriers, the
    shippers, so that they can help understand what the technology
    is, make sure that they know what its maturity is, and then
    also help them make the business case for it.
        Some of the technology that is very relevant is non-
    intrusive inspection, the so-called gamma ray inspection, which
    was started at the land border crossings between Mexico and the
    United States by U.S. Customs Service to inspect the trucks and
    some containers--mostly trucks and vehicles with a high degree
    of success. It does fit very well--with reference to some of
    the comments by previous panel members--to be deployed overseas
    at the point of embarkation.
        So in addition to getting a manifest of that particular
    container, you can get the electronic image of it. It can be
    rescanned when it comes into the United States. The scanners
    scan so when it is in motion, not at 60 miles an hour, but
    roughly up to 10 miles an hour, and it is also used on railroad
    trains the same way. They can rescan it to see if there has
    been any change. The scanning device can see if there is
    anything that is inconsistent with the manifest. These
    technologies are mature and ready for application.
        I would just like to conclude by making a couple of
    comments. My bio mentions that I helped set up, and run the El
    Paso Intelligence Center for DEA. The reason it was in El Paso
    was to put outside of the Washington area so that we could get
    Customs, Coast Guard, and INS agents, along with DEA agents, to
    work in harmony against the drug interdiction problem. It did
    work and it was very highly successful, including sharing that
    information with State and local authorities.
        There is a model that works in trying to get the different
    organizations to work and provide strategic intelligence--what
    may be coming in in what form, as well as tactical
    intelligence. Approximately 50 percent of the phone calls that
    were made by people in the field got some form of intelligence
    back. There was a high hit rate in the databases.
        I appeared before many committees of the Congress that did
    not want me to merge those databases together as is now being
    done in the counterterrorism area. When I was with the CIA, I
    helped set up the Counterterrorism Center with technology
    support. But at the time, there was a fear of merging those
    databases. So we had the individual agents go into their
    databases, pull out what they had, and made an assessment. So
    we had kind of a round robin assessment and provided the
    information back in the field.
        I also did have the pleasure, of working for Bob Ehinger,
    who headed the International Trade Data System activity under
    the Department of Treasury. One of the significant outcomes of
    that activity is to combine all of the information requirements
    of the 100-plus Federal agencies that were mentioned before
    into one common database so that those people that import goods
    into the United States only have one form to fill out. It makes
    the scanning, the review of that data, it was mentioned
    earlier, much easier to do.
        So I have come here as a technologist talking about the
    maturity of technology, but I must also say that the response
    has got to be balanced by some of the other techniques, such as
    looking at the documentation--where that container has been,
    where the vessel has been, the crew on the vessel--as a part of
    the whole operation.
        That concludes my summary.
        Chairman Lieberman. Thanks, Mr. Fink. That is very
    interesting.
        Maybe I will take off from your testimony and ask the other
    witnesses the extent to which we are seeing some of the
    technologies that Mr. Fink describes embraced or utilized by
    the private and the public sectors, the idea of--mostly in the
    trucking business, but the idea that you can not only follow
    where the truck is, but almost what the truck driver is doing
    and then what is being opened and closed and when, and also
    this very interesting X-ray technology, which I gather lets you
    look inside a container----
        Mr. Fink. Yes, sir.
        Chairman Lieberman [continuing]. To see what is there
    without having to open it. What is the rate of acceptance of
    these? Maybe I will just go down, to the extent that you know,
    starting with you, Mr. Laden, in the private sector?
        Mr. Laden. The rate of acceptance is good. Some of the
    technology, though, is cost prohibitive still, as Mr. Fink
    suggested. There is an increase in availability of this kind of
    technology, but today, on seaborne--most of Target's business
    is marine.
        Chairman Lieberman. Right.
        Mr. Laden. On Target's business, we are not using
    transponders or GPS technology yet. We are using reusable
    seals. But we have found there is other technology or design
    flaws. The drug and contraband smugglers will just literally
    take the doors of the container off, defeating any seal that
    you have on, and replace the doors. We need as an industry to
    look at better design and what can be done.
        Chairman Lieberman. Mr. Acosta, are you seeing much of this
    new high-tech stuff coming into your work as a Customs
    inspector?
        Mr. Acosta. Yes. We utilize a gamma ray machine. Our
    problem is, I think we have the second prototype of the gamma
    ray machine, so we did real good in getting in there early to
    get a machine, but----
        Chairman Lieberman. Yes.
        Mr. Acosta [continuing]. So we have some down time with it.
    They are looking at it right now and hopefully we can upgrade
    that. We could probably use more than one, and because we have
    so many ports that are involved in our area, we take it on the
    road on occasion. So we have an opportunity to travel, for
    example, to the Gulf ports in Mississippi.
        Chairman Lieberman. And the containers go through it
    relatively quickly?
        Mr. Acosta. Yes. It is funny because it is hard to--
    people's paradigms. So you have a truck driver and you explain
    that you can drive through this at about five miles an hour. It
    is OK. And they will drive up to a certain point and they will
    stop, because their idea is, well, if they are taking a picture
    of the container, it is going to be blurry. It is difficult to
    change that paradigm, but yes, you can.
        Chairman Lieberman. Of course, that is a great advance,
    because then you do not have to open it up. And the
    reliability, you have found, is pretty good?
        Mr. Acosta. It is reasonably good. Our picture is very
    small for what we have, so it is a little more difficult. What
    is good for us, for example, as in the story that I told you
    before, we can set this up and we can run empty containers
    through so we do not have to pop a seal and open the door,
    because it will tell us for sure that a container is empty. It
    will tell us if there is something in the container.
        Mr. Fink. I might mention, Mr. Chairman, the Port of Miami
    has found a lot of stolen vehicles leaving their port in what
    were thought to be empty containers, through X-raying empties
    that are departing the United States.
        Chairman Lieberman. Yes. That is important.
        Mr. Acosta. We do the same thing. We have an inbound and an
    outbound team, and, of course, they are looking for armaments,
    they are looking for stolen vehicles, they are looking for
    currency. So we can use that gamma ray technology both on
    inbound cargo and outbound cargo.
        One thing I would say about containers, though, is we talk
    about containers and containers can simply be thought of as a
    box. It is no more or no less than a box that you can put
    things in, just like any other box. But we are talking a lot
    about what you might find that is put into the box, maybe
    something in the cargo that is put into the box or something
    that is thrown in along with the cargo. But along those lines,
    we have to remember that the box itself accounts for about half
    of the seizures that we make. So within the walls, in the
    floor, in the roofing, in the tubing that the container is
    constructed in, many times, that is where we find contraband
    hidden, and a lot can be done--there is a lot that can be
    hidden in the box itself without talking about the space where
    you store cargo.
        Chairman Lieberman. Thanks. Chief Cook, have you seen any
    of this high-tech stuff coming into use in the Port of Memphis?
        Mr. Cook. Our Auto Theft Cargo Task Force has and is more
    and more familiar with this type of equipment every day. But
    usually when we come into contact with these boxes, they are
    already empty. We have found contraband in quite a number of
    them while doing other investigations, but yes, we are becoming
    more familiar with it every day.
        Chairman Lieberman. Thanks to all of you very much. I am
    going to call on Senator Thompson because I notice we have a
    vote that has just started, so I want to give my two colleagues
    time to ask some questions.
        Senator Thompson. Thank you, Mr. Chairman.
        I want to follow up on the technology question. I guess
    most people would wonder, if we have developed this technology
    to this advanced stage, why are we not inspecting more? What
    are the limits of technology? I mean, just for the layperson to
    understand, can scanning technology with a high degree of
    accuracy make a determination with regard to potential weapons
    of mass destruction or other things of that nature, and to what
    extent is it a technological limitation and to what extent is
    it a cost limitation?
        Mr. Fink. I think it is----
        Senator Thompson. Why are we not scanning more stuff and
    why do we not feel more secure if we have this capability?
        Mr. Fink. One of the things is the initial cost. These
    systems range up to $1 million apiece, and as you get more of
    them in operation, that cost will go down. Then there is the
    person who is looking at the image. We can do a lot to make
    that process move into pattern recognition into the computer to
    assist an operator.
        But there still are all deterrents, and while the payoff is
    high, it is not going to be 100 percent, and one of the things
    that we saw, of course, in the drug business and we now see in
    the theft business are organized criminal elements involvement.
    So they are very much aware and drilling out parts of the
    container and inserting some of their cargo in it, but you can
    still see some of those.
        I am encouraged because the technology is proven, and I
    think with quantity purchases it will be deployed. As you move
    inspection overseas, it raises another issue. Now you are
    asking the port of embarkation of that container to perform the
    imaging. But it is a global problem. Terrorism is a global
    problem. Maybe that will be part of what will help induce some
    of them to do it.
        One other thing I would just add. I do not know if Rear
    Admiral Larrabee is here, but in some of the U.S. ports, they
    have volunteered to put some of this scanning equipment in just
    to keep the flow of containers going. When Customs decides to
    pull something, it disrupts that flow. So they have said to me,
    I would invest in the gamma-ray equipment in a joint project
    with Customs in order to keep the cargo flowing. Some of the
    terminals do not have a lot of land to store the cargo on when
    Customs decides they want to conduct inspection, they disrupt
    the flow. So there are a number of business factors.
        Senator Thompson. Mr. Acosta, what would be your response
    to my question on why we are not inspecting more than 2 percent
    in some categories?
        Mr. Acosta. Somewhat the same. The systems are very costly,
    and so Customs has X amount of systems. We, of course, would--
    ideally, if I could set it up in New Orleans, I would like to
    see a system up-river and one down-river--there are two
    separate areas that are sort of divided areas--and then another
    system that we could lend to some of the smaller ports, but we
    have one system.
        The second thing is that it requires personnel to run the
    system. So when you set up a gamma ray machine, you have to
    establish the perimeter. There is an element in there that can
    be hazardous to individuals, so we have to be able to make sure
    that we have the truck run through and to set up the flow of
    trucks. We have to have people inside working the machine,
    setting the machine up. We also have to have people available
    who, if necessary, will open and look in the containers
    immediately. Some containers we will target for further
    examination. Others, we are so interested in the image that we
    are seeing, we need to get into it right away.
        So that is upwards of 10 people, and I do not know if you
    remember, but when I told you that the personnel put in New
    Orleans today is 29 inspectors, that is a third of your
    workforce. It is very difficult. It is cost for the equipment
    and it is personnel. If you could give us more equipment and
    the personnel to operate it, we would do all of those things.
        Senator Thompson. Why did you stop instream, or were you
    told to stop instream?
        Mr. Acosta. They said it was a safety issue. I think that
    is bogus. I really think it is bogus.
        The second thing, and I did not mention it because I was
    conscious of the fact that I had a small period of time to
    deliver the statement, the second thing is that we have been
    questioned recently on the number of enforcement boardings that
    we have determined. I guess that is a budget issue and that is
    a problem because we do target vessels and we are conscious
    of--and I worked on the task force that gave us a boarding
    policy 2 years ago and we are not living up to that boarding
    policy. As a matter of fact, it just changed.
        So it bothers me that if we are true to what the policy
    said and we are doing vessel targeting based on all the
    information we had, and understand that sometimes it is
    difficult to get that information, that now, we have somebody
    that comes back and questions, well, you have too many
    enforcement boardings, and I do not understand that.
        Senator Thompson. Thank you for that. That is important.
        I do want to thank Chief Cook for being here. He is
    responsible for the investigation of all the crimes at the
    international port in Memphis. You have one of the better
    interagency coordination groups, I think, going. You pointed
    out the unique circumstances there that you have to deal with.
    It is not only the fourth largest inland port in the country,
    but the second largest inland port on the shallow draft portion
    of the Mississippi River and serves as a transportation hub and
    warehouse and distribution center, and perhaps no other port in
    the country shares the same characteristics as Memphis.
        I am wondering about a law or an approach by the Federal
    Government that is a one-size-fits-all. It seems to me that
    Memphis has some unique characteristics--inland port, heavier
    concentration of activity, and so forth. Do you see your
    situation as maybe needing some kind of different attention,
    than some other places?
        Mr. Cook. I think it is not recognized as the port that it
    is. Memphis has never, until the last few years, really
    recognized its own potential as a distribution center, but it
    is growing leaps and bounds by day. In fact, I mentioned the
    Frank Pidgeon Industrial Park, which is a new industrial park
    that is being developed on the Southwest corner, just South of
    what is now called President's Island, and it is going to be at
    least half as large as the industrial complex on President's
    Island.
        So much of the industry that I said is in Memphis, and
    those that come into Memphis, a large portion comes into
    Memphis, but it is distributed within 600 miles of Memphis. And
    because of the bridges, we estimated that about $2 billion
    worth of commerce crosses those bridges each day. We do not
    think that it gets enough attention as far as the types of
    visibility patrols.
        Now, we are doing things as far as our agencies that I
    mentioned, Tennessee and Arkansas agencies who both join in
    taking care of riding on the bridges and removing vehicles and
    so forth on the bridges. But as far as the actual, what I think
    should be 24-hour marine surveillance of the bridges from
    below, and also attention to the barges that are so large and
    so potentially dangerous as far as striking the bridges and
    just completely removing them from the river itself.
        I think that is a major concern, because one barge can
    actually take out both bridges, and especially from a vessel
    that is coming down-river. If that were to happen, it would
    really destroy commerce in the surrounding area. In fact, I
    believe it would actually kill it for at least 2 or 3 years it
    would take to rebuild the bridges.
        Senator Thompson. I think you are right. A lot of people do
    not understand the amount of traffic and the amount of activity
    going on there and that makes it a port that deserves much more
    attention. We appreciate what you are doing there.
        Mr. Cook. Thank you very much, sir.
        Senator Thompson. We also appreciate you taking a real
    leadership role in terms of the Southeast in your interagency
    work.
        Thank you, Mr. Chairman.
        Chairman Lieberman. Thank you, Senator Thompson.
        I thank the members of this panel as well as those on the
    first panel. I think the Committee has learned a lot as a
    result of the testimony today. I would like to think about, at
    the next hearing on this subject, calling the heads of the
    Federal Government agencies involved and ask some of the same
    questions of them that you have raised here.
        There is never enough time at these hearings, but there are
    a lot of questions unanswered, so I am going to leave the
    hearing record open for 2 weeks, and if it is all right--and
    even if it is not all right--we are going to submit some
    questions to you in writing to follow up and look forward to
    your answers.
        In the meantime, I thank you very much for your time and
    the great contribution you have made. I hope we can serve as
    advocates for what all of you want, which is a system that is
    both economically productive and efficient but is also secure,
    most important of all.
        The hearing is adjourned.
        [Whereupon, at 11:58 a.m., the Committee was adjourned.]

                                A P P E N D I X

                                  ----------

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