[Senate Hearing 107-1065]
[From the U.S. Government Publishing Office]



                                                       S. Hrg. 107-1065



                  CRIME AND SECURITY ISSUES INVOLVING 
                             U.S. SEAPORTS

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

                                HEARING

                               BEFORE THE

                         COMMITTEE ON COMMERCE,
                      SCIENCE, AND TRANSPORTATION
                          UNITED STATES SENATE

                      ONE HUNDRED SEVENTH CONGRESS

                             FIRST SESSION

                               __________

                             JULY 24, 2001

                               __________

    Printed for the use of the Committee on Commerce, Science, and 
                             Transportation



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           COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION

                      ONE HUNDRED SEVENTH CONGRESS

                             FIRST SESSION

              ERNEST F. HOLLINGS, South Carolina, Chairman
DANIEL K. INOUYE, Hawaii             JOHN McCAIN, Arizona
JOHN D. ROCKEFELLER IV, West         TED STEVENS, Alaska
    Virginia                         CONRAD BURNS, Montana
JOHN F. KERRY, Massachusetts         TRENT LOTT, Mississippi
JOHN B. BREAUX, Louisiana            KAY BAILEY HUTCHISON, Texas
BYRON L. DORGAN, North Dakota        OLYMPIA J. SNOWE, Maine
RON WYDEN, Oregon                    SAM BROWNBACK, Kansas
MAX CLELAND, Georgia                 GORDON SMITH, Oregon
BARBARA BOXER, California            PETER G. FITZGERALD, Illinois
JOHN EDWARDS, North Carolina         JOHN ENSIGN, Nevada
JEAN CARNAHAN, Missouri              GEORGE ALLEN, Virginia
BILL NELSON, Florida

               Kevin D. Kayes, Democratic Staff Director
                  Moses Boyd, Democratic Chief Counsel
                  Mark Buse, Republican Staff Director
               Jeanne Bumpus, Republican General Counsel


                            C O N T E N T S

                              ----------                              

                                                                   Page
Hearing held on July 24, 2001....................................     1
Statement of Senator Edwards.....................................    28
Statement of Senator Hollings....................................     1
    Prepared statement...........................................     2
Statement of Senator McCain......................................     5
    Prepared statement...........................................     6

                               Witnesses

Carlton, Bruce J., Acting Deputy, Maritime Administration........    16
    Prepared statement...........................................    17
Craig, James M., Vice President, American Institute of Marine 
  Underwriters...................................................    42
    Prepared statement...........................................    43
Graham, Hon. Bob, U.S. Senator from Florida......................     7
Leone, Michael, Port Director, Massachusetts Port Authority......    50
    Prepared statement...........................................    53
Loy, Admiral James M., Commandant, United States Coast Guard.....    12
    Prepared statement...........................................    14
Maher, Basil, President and Chief Operating Officer, Maher 
  Terminals, Inc.................................................    45
    Prepared statement...........................................    46
Miller, John L., Executive Vice President, International 
  Transportation 
  Service, Inc...................................................    47
    Prepared statement...........................................    49
Petersen, Kim E., Executive Director, Maritime Security Council..    32
    Prepared statement...........................................    38
Underwood, Rear Admiral James W., Director, Office of 
  Intelligence and Security, Department of Transportation........    20
    Prepared statement...........................................    22
Winwood, Charles, Acting Commissioner of Customs.................     9
    Prepared statement...........................................    11

                                Appendix

Powell, Peter H., Sr., President, National Customs Brokers and 
  Forwarders Association of America, letter dated July 23, 2001, 
  to Hon. Ernest F. 
  Hollings.......................................................    63

 
                  CRIME AND SECURITY ISSUES INVOLVING 
                             U.S. SEAPORTS

                              ----------                              


                         TUESDAY, JULY 24, 2001

                               U.S. Senate,
        Committee on Commerce, Science, and Transportation,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 9:45 a.m., in 
room 
SR-253, Russell Senate Office Building, Hon. Ernest F. 
Hollings, Chairman of the Committee, presiding.

         OPENING STATEMENT OF HON. ERNEST F. HOLLINGS, 
                U.S. SENATOR FROM SOUTH CAROLINA

    The Chairman. The hearing will come to order pending 
Senator Graham's attendance here. We can have our opening 
comments by myself and Senator McCain. I will file my statement 
in the record. If I were in the drug business down in the 
country of Colombia, I would load up 10 of those containers 
that come into the ports of America, knowing that only one of 
the 10 would be inspected. Nine would go through clear and 
free, and I would have around 450,000 tons of cocaine in on the 
market.
    I am fascinated, because I live at a port and we always 
find in concrete posts and big, 55-gallon asphalt drums, 
cocaine, small amounts secured. But my point is that we do not 
have port security. Port operations are very complex. You have 
got all kinds of entities involved.
    The captain of the port is in charge of the security, and 
this observation by not having security is no criticism of the 
Coast Guard. If I had to list one entity in my years up here 
that has done a most creditable job, it would be the United 
States Coast Guard.
    They have been limited financially. The bill I introduced, 
along with Senator Graham last week, is limited financially. 
Everyone in the Administration wants to endorse it. There are 
no real objections to it until they get to OMB and then OMB 
says ``hold up, do not say anything.'' So it is really a money 
problem. Understanding that, we have got to go about it in a 
deliberate fashion.
    The bill calls for a survey of all the ports, so they are 
wanting the Coast Guard to come in and look at their particular 
plans at 50 ports in the United States as to their security 
plans and then go with a team and start the implementation. 
This cannot be done overnight. It is a start, and particularly 
favored to have authorities from the various entities all ready 
to tell us about their concerns and their suggestions.
    I yield to Senator McCain.
    [The prepared statement of Senator Hollings follows:]

            Prepared Statement of Hon. Ernest F. Hollings, 
                    U.S. Senator from South Carolina

    Today, the Committee will examine the state of security at our 
Nation's seaports, and for those that have yet to study this issue, I 
think they may be surprised at what they hear. Despite the massive 
volume of cargo that moves through our Nation's ports, there are no 
Federal security standards, guidelines or otherwise, and the Federal 
Government does not provide the resources to obtain the technology to 
adequately screen the cargo moving through, leaving our seaports 
vulnerable to criminal activity--from smuggling to terrorism to cargo 
theft. The safety and security of our national borders is a Federal 
responsibility, and given the security that we help to provide at our 
Nation's land and air borders, we must do more for our seaports.
    On Friday, Senator Bob Graham and I introduced the Port and 
Maritime Security Act of 2001. This legislation is long overdue. It is 
needed to facilitate future technological advances and increases in 
international trade, and ensure that we have the sort of security 
control necessary to ensure that our borders are protected from drug 
smuggling, illegal aliens, trade fraud, threats of terrorism as well as 
potential threats to our ability to mobilize U.S. military force. We 
introduced similar legislation in the last Congress, but time did not 
allow us to proceed any further with the legislative process. However, 
this is just too important an issue to let go by, and I intend to work 
with Senator Graham, and others, to try and craft a policy to help 
protect our maritime borders.
    The Department of Transportation recently conducted an evaluation 
of our marine transportation needs for the 21st Century. In September 
1999, then-Transportation Secretary Slater issued a preliminary report 
of the Marine Transportation System (MTS) Task Force--An Assessment of 
the U.S. Marine Transportation System. The report reflected a highly 
collaborative effort among public sector agencies, private sector 
organizations and other stakeholders in the MTS.
    The report indicates that the United States has more than 1,000 
harbor channels and 25,000 miles of inland, intracoastal, and coastal 
waterways in the United States which serve over 300 ports, with more 
than 3,700 terminals that handle passenger and cargo movements. These 
waterways and ports link to 152,000 miles of railways, 460,000 miles of 
underground pipelines and 45,000 miles of interstate highways. 
Annually, the U.S. marine transportation system moves more than 2 
billion tons of domestic and international freight, imports 3.3 billion 
tons of domestic oil, transports 134 million passengers by ferry, 
serves 78 million Americans engaged in recreational boating, and hosts 
more than 5 million cruise ship passengers.
    The MTS provides economic value, as waterborne cargo contributes 
more than $742 billion to U.S. gross domestic product and creates 
employment for more than 13 million citizens. While these figures 
reveal the magnitude of our waterborne commerce, they don't reveal the 
spectacular growth of waterborne commerce, or the potential problems in 
coping with this growth. It is estimated that the total volume of 
domestic and international trade is expected to double over the next 20 
years. The doubling of trade also brings up the troubling issue of how 
the U.S. is going to protect our maritime borders from crime, threats 
of terrorism, or even our ability to mobilize U.S. armed forces.
    Security at our maritime borders is given substantially less 
Federal consideration than airports or land borders. In the aviation 
industry, the Federal Aviation Administration (FAA) is intimately 
involved in ensuring that security measures are developed, implemented, 
and funded. The FAA works with various Federal officials to assess 
threats directed toward commercial aviation and to target various types 
of security measures as potential threats change.
    Currently, each air carrier, whether a U.S. carrier or foreign air 
carrier, is required to submit a proposal on how it plans to meet its 
security needs. Air carriers also are responsible for screening 
passengers and baggage in compliance with FAA regulations. We made sure 
that airports, the FAA, air carriers and law enforcement worked 
together to protect the flying public.
    At land borders, there is a similar investment in security by the 
Federal Government. TEA-21 approved $140 million a year for 5 years for 
the National Corridor Planning and Development and Coordinated Border 
Infrastructure Program. These funds will help facilitate the law 
enforcement functions of the Federal Government, and are in addition to 
funds that we invest in border patrol operations.
    By way of contrast, at U.S. seaports, the Federal Government 
invests nothing in infrastructure, other than the human presence of the 
U.S. Coast Guard, U.S. Customs Service, and the Immigration and 
Naturalization Service, and whatever equipment those agencies have to 
accomplish their mandates. Physical infrastructure is provided by 
State-controlled port authorities, or by private sector marine terminal 
operators. There are no controls, or requirements in place, except for 
certain standards promulgated by the Coast Guard for the protection of 
cruise ship passenger terminals. Essentially, where seaports are 
concerned, we have abrogated the Federal responsibility of border 
control to the State and private sector.
    I think that the U.S. Coast Guard and Customs Agency are doing an 
outstanding job, but they are outgunned. There is simply too much money 
in the illegal activities they are seeking to curtail or eradicate, and 
there is too much traffic coming into, and out of the United States. 
For instance, in the latest data available, 1999, we had more than 10 
million TEUs imported into the United States. For the uninitiated, a 
TEU refers to a twenty-foot equivalent unit shipping container. By way 
of comparison, a regular truck measures 48-feet in length. So in 
translation, we imported close to 5 million truckloads of cargo. 
According to the Customs Service, seaports are able to inspect between 
1 percent and 2 percent of the containers, so in other words, a drug 
smuggler has a 98 percent chance of gaining illegal entry.
    It is amazing to think, that when you or I walk through an 
international airport we will walk through a metal detector, our bags 
will be x-rayed, Customs will interview us, and may check our bags. 
However, at a U.S. seaport you could import a 48 foot truckload of 
cargo, and have at least a 98 percent chance of not even being 
inspected. It just doesn't seem right.
    In my own State, the Port of Charleston, which is the fourth 
largest container port in the United States, just recently we got our 
first unit even capable of x-raying intermodal shipping containers, and 
we have the temporary deployment of a canine unit. By way of 
comparison, the Dallas/Fort Worth Airport is the fourth largest airport 
in the United States. It would be inconceivable that an airport of this 
magnitude have just one single canine, and one piece of screening 
equipment. This is simply not sufficient.
    The request to evaluate our system of seaport security came from 
Senator Graham, and I would like to commend him for his persistent 
efforts in addressing this issue. Senator Graham has had problems with 
security at some of the Florida seaports, and although the State has 
taken some steps to address the issue, there is a great need for 
considerable improvement. Senator Graham laudably convinced the 
President to appoint a Commission, designed much like the Aviation 
Security Commission, to review security at U.S. seaports.
    The Commission visited 12 major U.S. seaports, as well as two 
foreign ports. It compiled a record of countless hours of testimony and 
reviewed the security practices of the shipping industry. It also met 
with local law enforcement officials to discuss the issues and their 
experiences as a result of seaport related crime.
    For instance, the Commission found that the 12 U.S. seaports 
accounted for 56 percent of the number of cocaine seizures, 32 percent 
of the marijuana seizures, and 65 percent of heroin seizures in 
commercial cargo shipments and vessels at all ports of entry 
nationwide. Yet, we have done relatively little, other than send in an 
undermanned contingency of Coast Guard and Customs officials to do 
whatever they can.
    Drugs are not the only criminal problem confronting U.S. seaports. 
For example, alien smuggling has become increasingly lucrative 
enterprise. To illustrate, in August 1999, INS officials found 132 
Chinese men hiding aboard a container ship docked in Savannah, Georgia. 
The INS district director was quoted as saying, ``This was a very 
sophisticated ring, and never in my 23 years with the INS have I seen 
anything as large or sophisticated.'' According to a recent GAO report 
on INS efforts on alien smuggling (RPT-Number: B-283952), smugglers 
collectively may earn as much as several billion dollars per year 
bringing in illegal aliens.
    Another problem facing seaports is cargo theft. Cargo theft does 
not always occur at seaports, but in many instances, the theft has 
occurred because of knowledge of cargo contents. International shipping 
provides access to a lot of information and a lot of cargo to many 
different people along the course of its journey. We need to take steps 
to ensure that we do not facilitate theft. Losses as a result of cargo 
theft have been estimated as high as $12 billion annually, and it has 
been reported to have increased by as much as 20 percent recently. The 
FBI has become so concerned that it recently established a multi-
district task force, Operation Sudden Stop, to crack down on cargo 
crime.
    The other issues facing seaport security may be less evident, but 
potentially of greater threat. As a Nation in general, we have been 
relatively lucky to have been free of some of the terrorist threats 
that have plagued other nations. However, we must not become 
complacent. U.S. seaports are extremely exposed. On a daily basis many 
seaports have cargo that could cause serious illness and death to 
potentially large populations of civilians living near seaports if 
targeted by terrorism. Most of the population of the United States 
lives in proximity to our coastline.
    The sheer magnitude of most seaports, their historical proximity to 
established population bases, the open nature of the facility, and the 
massive quantities of hazardous cargoes being shipped through a port 
could be extremely threatening to the large populations that live in 
areas surrounding our seaports. The same conditions in U.S. seaports 
that could expose us to threats from terrorism, could also be used to 
disrupt our abilities to mobilize militarily. During the Persian Gulf 
War, 95 percent of our military cargo was carried by sea. Disruption of 
sea service could have resulted in a vastly different course of 
history. We need to ensure that it does not happen to any future 
military contingencies.
    As I mentioned before, our seaports are international borders, and 
consequently we should treat them as such. However, I am realistic 
about the possibilities for increasing seaport security, the realities 
of international trade, and the many functional differences inherent in 
the different seaport localities. Seaports by their very nature, are 
open and exposed to surrounding areas, and as such it will be 
impossible to control all aspects of security, however, sensitive or 
critical safety areas should be protected. I also understand that U.S. 
seaports have different security needs in form and scope. For instance, 
a seaport in Alaska, that has very little international cargo does not 
need the same degree of attention that a seaport in a major 
metropolitan center, which imports and exports thousands of 
international shipments. However, the legislation we are introducing 
today will allow for public input and will consider local issues in the 
implementation of new guidelines on port security, so as to address 
such details.
    Substantively, the Port and Maritime Security Act establishes a 
multi-pronged effort to address security needs at U.S. Seaports, and in 
some cases formalizes existing practices that have proven effective. 
The bill authorizes the Department of Transportation to establish a 
task force on port security and to work with the private sector to 
develop solutions to address the need to initiate a system of security 
to protect our maritime borders.
    The purpose of the task force is to implement the provisions of the 
act; to coordinate programs to enhance the security and safety of U.S. 
seaports; to provide long-term solutions for seaport safety issues; to 
coordinate with local port security committees established by the Coast 
Guard to implement the provisions of the bill; and to ensure that the 
public and local port security committees are kept informed about 
seaport security enhancement developments.
    The bill requires the U.S. Coast Guard to establish local port 
security committees at each U.S. seaport. The membership of these 
committees is to include representatives of the port authority, labor 
organizations, the private sector, and Federal, State, and local 
government officials. These committees will be chaired by the U.S. 
Coast Guard's Captain-of-the-Port, and will be used to establish 
quarterly meetings with local law enforcement and attempt to coordinate 
security and help facilitate law enforcement.
    The bill also requires the Coast Guard to develop a system of 
providing port vulnerability assessments for U.S. seaports. After 
completion of the assessment, the seaport would be required to submit a 
security program to the Coast Guard for review and approval. The 
assessment shall be performed with the cooperation and assistance of 
local officials, through local port security committees, and ensure the 
port is made aware of and participates in the analysis of security 
concerns. The legislation does not include provision for allowing the 
Coast Guard to conduct criminal background checks of transportation 
workers to reveal potential threats to facilitate crime or terrorism. 
It had been my intent to include such a provision, but the need to get 
it introduced in advance of a hearing scheduled on the subject of 
seaport security precluded it from being included in the bill. I intend 
to address this issue as we move the bill through the process, and feel 
that I can work with interested parties to craft something that will 
help address legitimate law enforcement concerns, while at the same 
time, protecting individual rights and defining security risks to avoid 
unnecessary and needless security review.
    The bill authorizes MarAd to provide loan guarantees to help cover 
some of the costs of port security infrastructure improvements, such as 
cameras and other monitoring equipment, fencing systems and other types 
of physical enhancements. The bill authorizes $8 million, annually for 
4 years, to cover costs, as defined by the Credit Reform Act, which 
could guarantee up to $320 million in loans for security enhancements. 
The bill also establishes a grant program to help cover some of the 
same infrastructure costs. Additionally, the bill provides funds for 
the U.S. Customs Service to purchase screening equipment and other 
types of non-intrusive detection equipment. We have to provide Customs 
with the tools they need to help prevent further crime.
    The bill requires a report to be attached on security and a 
revision of 1997 document entitled ``Port Security: A National Planning 
Guide.'' The report and revised guide are to be submitted to Congress 
and are to include a description of activities undertaken under the 
Port and Maritime Security Act of 2001, in addition to analysis of the 
effect of those activities on port security and preventing acts of 
terrorism and crime.
    The bill requires the Department of Transportation, to the extent 
feasible, to coordinate reporting of seaport related crimes and to work 
with State law enforcement officials to harmonize the reporting of data 
on cargo theft, or alternatively, the feasibility of utilizing private 
data on cargo theft. Better data will be crucial in identifying the 
extent and location of criminal threats and will facilitate law 
enforcement efforts combating crime. The bill also requires the 
Secretaries of Agriculture, Treasury, and Transportation, as well as 
the Attorney General to work together to establish shared dockside 
inspection facilities at seaports for Federal and State agencies, and 
provides $1 million, annually for 4 years, to carry out this section. 
Currently, there are some U.S. ports that do not have inspection space 
in the organic port area. It is crucial that inspections occur as close 
to the point of entry as possible.
    The bill also establishes a program to train personnel involved in 
maritime transportation and maritime security. A better prepared 
security force will help enable us to more effectively combat potential 
threats of crime and terrorism. The bill also requires the Customs 
Service to improve reporting of imports at seaports to help ensure that 
Customs will have adequate information in advance of having the entry 
of cargo, and to do so in a manner consistent with their plans for the 
Automated Commercial Environment (ACE) program.
    Finally, the bill reauthorizes an extension of tonnage duties 
through 2006, and makes the proceeds of these collections available to 
carry out the Port and Maritime Security Act. These fees currently are 
set at certain levels, and are scheduled to be reduced in 2002. The 
legislation reauthorizes and extends the current fee level for an 
additional 4 years, but dedicates its use to enhancing our efforts to 
fight crime at U.S. seaports and to facilitating improved protection of 
our borders, as well as to enhance our efforts to ward off potential 
threats of terrorism.
    I look forward to hearing the testimony from our witnesses today.

                STATEMENT OF HON. JOHN McCAIN, 
                   U.S. SENATOR FROM ARIZONA

    Senator McCain. I thank you, Chairman Hollings, for holding 
this hearing today and, in light of recent world events and 
problems here at home, I know that we can all agree that 
ensuring the security of our nation's seaports is a necessity.
    The bombing of the USS Cole and the ongoing problems with 
drug and alien smuggling, while highlighting the need for 
action, also show the complexity of this issue.
    In our efforts to increase our nation's seaport security, 
we must ensure to take into account not only the wide range of 
threats and crimes surrounding our seaports, but also the 
unique nature of our ports.
    I know today's witnesses are going to share their views on 
the Interagency Commission Report on Crime and Security in U.S. 
Seaports. As we found out last year, the commissioners 
determined that seaport crime encompasses a broad range of 
crimes. These include the importation of illicit drugs, 
contraband, prohibited or restricted merchandise, stowaways and 
alien smuggling, trade fraud and commercial smuggling, 
environmental crimes, cargo theft, and the unlawful exportation 
of controlled commodities and munitions, stolen property and 
drug proceeds.
    I once again want to thank all the members of the 
Commission for their efforts in bringing their concerns to our 
attention. I am interested in hearing from our witnesses, who I 
understand share many of the concerns raised by the Commission 
about what is needed to address security concerns. I hope they 
will offer recommendations that can be utilized in advancing a 
legislative resolution.
    I am also interested in hearing their views on S. 1214, the 
Port and Maritime Security Act, which was introduced by 
Chairman Hollings last Friday. Specifically, I hope our 
witnesses can shed some light on how they believe the 
provisions of that bill could be implemented, what they believe 
would be the cost to both the public and private sector, and 
how the flow of commerce would be affected.
    As I stated earlier, we must not ignore the need for 
increased attention to the security of our nation's seaports 
and we can ill afford to put clamps on ports that would degrade 
their ability to facilitate the movement of commerce.
    I thank you, Mr. Chairman, for taking the lead on this 
issue for many years. I note our colleague, Senator Graham is 
here, who has also been heavily involved. I look forward to 
working with you and Senator Graham as we attempt to address a 
very serious challenge that I think has been identified. The 
question is how we go about it. I congratulate you, Senator 
Hollings, on the introduction of your legislation to address 
this challenge.
    [The prepared statement of Senator McCain follows:]

                Prepared Statement of Hon. John McCain, 
                       U.S. Senator from Arizona

    I want to begin by thanking Chairman Hollings for holding this 
hearing today. In my capacity as Chairman, I held a similar hearing 
last fall. In light of recent world events and problems here at home, I 
know that we can all agree that insuring the security of our nation's 
seaports is a necessity. The bombing of the USS Cole and ongoing 
problems with drug and alien smuggling, while highlighting the need for 
action, also show the complexity of the issue.
    In our efforts to increase our nation's seaport security, we must 
ensure that we take into account not only the wide range of threats and 
crimes surrounding our seaports, but also the unique nature of our 
ports. A ``one-size-fits-all'' approach will not work. Our ports are 
complex and diverse in both geography and infrastructure. It is 
essential that we keep this in mind as we go forward with legislation 
to improve security.
    I believe that we must proceed with caution in the development of 
new programs to address problems of lax seaport security. In some 
cases, the problems we face today in our seaports are not due to a lack 
of programs to address them, but result more from a lack of attention 
both in funding and hard assets for the agencies who are currently 
responsible for seaport security.
    I know today's witnesses are going to share their views on the 
Interagency Commission's Report on Crime and Security in U.S. Seaports. 
As we found during last year's hearing, the Commissioners determined 
that seaport crime encompasses a broad range of crimes. These include: 
the importation of illicit drugs, contraband, and prohibited or 
restricted merchandise; stowaways and alien smuggling; trade fraud and 
commercial smuggling; environmental crimes; cargo theft; and the 
unlawful exportation of controlled commodities and munitions, stolen 
property, and drug proceeds.
    I want to once again thank all the members of the Commission for 
their efforts in bringing their concerns to our attention.
    I am interested in hearing from our witnesses, whom I understand 
share many of the concerns raised by the Commission, what is needed to 
address security concerns and hope they will offer recommendations that 
can be utilized in advancing a legislative resolution. I am also 
interested in hearing their views on S. 1214, the Port and Maritime 
Security Act of 2001, which was introduced by Chairman Hollings last 
Friday.
    Specifically, I hope our witnesses can shed some light on how they 
believe the provisions of that bill could be implemented, what they 
believe would be the cost to both the public and private sector, and 
how the flow of commerce would be effected. As I stated earlier, we 
must not ignore the need for increased attention to the security of our 
nation's seaports, but we can ill afford to put requirements on the 
ports that will degrade their ability to facilitate the movement of 
commerce.

    The Chairman. Thank you. We both join in congratulating 
Senator Graham because he is the real leader here on this 
question of port security. Very interesting, he served here in 
Washington when everybody talks about a surplus and there isn't 
any. Everyone talks about the ABM Treaty and there is no 
treaty, and now everyone is now all wound up about space-based 
threats when it is port-based threats. That is the real threat 
at the present and earlier on.
    There is no one better equipped than our distinguished 
colleague here from Florida, Senator Graham. We recognize you 
at this time.

                 STATEMENT OF HON. BOB GRAHAM, 
                   U.S. SENATOR FROM FLORIDA

    Senator Graham. Thank you very much, Mr. Chairman, and 
Senator McCain. I very much appreciate your holding this 
hearing so promptly on this important legislation relative to 
the security of America's seaports. Just a little personal 
background.
    I became interested in this years ago when we were 
receiving weekly, even daily reports of crime, narcotics, human 
trafficking through seaports in Florida. I took occasion in 
October 1997 to spend a day working with Customs at Port 
Manatee, one of the ports serving the Tampa Bay area, and saw 
the extent to which not only were crimes coming into the United 
States, but crimes that had been committed inside the United 
States such as auto theft were being exported through our 
ports.
    At that time, I became very concerned that the seaports 
lacked the advanced security procedures and equipment that are 
necessary to prevent acts of theft, drug trafficking, even acts 
of terrorism.
    What impressed me was the stark contrast between the 
security levels at our seaports and the security levels at our 
nation's airports. I also learned that seaport security 
suffered from some severe communication deficiencies.
    Although seaports conduct the vast majority of our 
international trade, about 95 percent of our international 
trade flows in and out of our seaports, the activities of law 
enforcement and trade processing agencies such as the Coast 
Guard, Customs, Department of Agriculture, FBI, and State and 
local agencies are often uncoordinated, fragmented.
    Taken together, this lack of security and lack of 
interagency coordination in U.S. seaports presents an extremely 
attractive target for criminals and a variety of criminal 
activities. The severity of the problem will dramatically 
increase over the next 20 years as the total volume of imported 
and exported goods at U.S. seaports is expected to more than 
double.
    The variety of trade and commerce carried out in the 
seaports has greatly expanded. Everything from bulk cargo, 
containerized cargo, passenger cargo, tourism, intermodal 
transportation, present targets of opportunity for illicit 
activities at our seaports.
    The continued expansion of activities at the seaports has 
increased these opportunities. Now is the time for the United 
States in coordination with Federal, State, local, and users of 
the ports and others who support the port activities to come 
together in an effective effort to begin to suppress the level 
of crime being conducted at America's seaports.
    Some of the proposals which are contained in this 
legislation, most of those proposals are a direct result of a 
Commission entitled the Interagency Commission on Crime and 
Security in U.S. Seaports, which was established by President 
Clinton on April 27th, 1999. This Commission conducted onsite 
surveys of 12 U.S. ports. At each location interviews and focus 
group sessions were held with representatives of governmental 
agencies and the trade community.
    In August of last year, the Commission issued its final 
report which identified many of the common security problems 
that were discovered in U.S. seaports. The report also issued 
20 recommendations for improving security at U.S. ports.
    To highlight a few of those recommendations which are 
contained in the legislation you are considering today, the 
creation of a national level Security Subcommittee of the 
Interagency Committee on Maritime Transportation System with 
the specific goal of developing voluntary minimum security 
guidelines for seaports and a model port concept that would 
include detailed site plans and procedures that could be 
adopted by all ports in America to improve their security; the 
establishment of local port security committees with Federal, 
State, local and private sector membership; the preparation of 
an annual interagency crime threat assessment for each seaport; 
the development of a 5-year crime and security technology 
deployment plan to identify and evaluate advanced investigative 
technologies that can be deployed at seaports.
    If I could, Mr. Chairman, that is an area of particular 
interest to me because in my visits to seaports outside the 
United States, particularly Rotterdam in Holland, I was 
impressed with how further advanced they were in the 
application of technology to deal with seaport crime.
    Next, the establishment of interagency Federal inspection 
stations at seaports to facilitate cooperation among Federal 
agencies and to expedite the flow of legitimate trade and 
commerce; and finally, an analysis of future Federal personnel 
resource requirements at seaports based upon future projections 
of seaport crime, trade volume, and technology improvements.
    Mr. Chairman and Senator McCain, I believe it is important 
to note that not all these actions with regard to seaport 
security will be taken at the Federal level. Our seaports have 
had a long tradition, preceding by a century the American 
Revolution, of local control of those seaports. That is one of 
the things that distinguishes seaports from airports, airports 
being a product of the 20th Century, started with a much higher 
level of Federal involvement.
    I would bring to the Committee's attention that at the 
State level, several legislatures are now involved with this 
issue. The Florida Legislature recently passed legislation that 
calls for the development and implementation of security plans 
within the seaports of our State. I believe this is indicative 
of the kind of initiative that this Federal legislation could 
prompt elsewhere.
    Mr. Chairman, the publication of the Commission's final 
report should be viewed as only the initial chapter in our 
efforts to improve the safety and security of U.S. seaports.
    I would hope that the passage of the Port and Maritime 
Security Act of 2001 would be another chapter.
    Seaports play one of the most critical roles in expanding 
our international trade and protecting our borders from 
international incidents. Both the report of the Commission and 
this legislation recognized the important role in our seaports 
and advocate the use of appropriate resources to move our ports 
into the 21st Century.
    Mr. Chairman, I look forward to working with you, Senator 
McCain, and other Members of your Committee in the early 
consideration and adoption of this legislation.
    The Chairman. Thank you very much, Senator Graham. It may 
be well to note at this point that most of that Seaport 
Commission's recommendations went to the Collector of the 
Customs. But since the turn of the century, the Seaport 
Security Act fixes the responsibility to the captain of the 
port.
    Now, the reason that the captain of the port hadn't taken 
over more of that responsibility has been budgetary. I remember 
when we extended, back in the 1980s, the Continental limits out 
200 miles--the economic zone. We increased the size of the 
United States by one-third, gave the jurisdiction and 
responsibility to the Coast Guard, and then promptly cut their 
budget. Senator Stevens and myself, working on both the 
authorization and the Department of Defense, we've been robbing 
function 050, the Department of Defense, about $320 million 
each year to supplement the Coast Guard budget. And we are 
going to work hard to repair that situation.
    But what needs to be known is that by Congress, the 
authority and the responsibility is with that captain of the 
port. I am confident that we are on the right track with 
Admiral Loy and his team, because they will oversee it, we will 
finally get plans, and begin to implement it. We can't do this 
thing overnight. We couldn't buy the Rotterdam screener for 
every one of the 378 ports in America and we wouldn't want to.
    But there are 50 secure ports that have been designated by 
the Coast Guard that need that kind of security.
    Let me yield to Senator McCain.
    Senator McCain. Thank you, Senator.
    The Chairman. Thank you very much, Senator Graham, for your 
leadership on this thing. We will follow it on through.
    Senator Graham. Thank you very much, Mr. Chairman.
    The Chairman. We have our first panel, Charles Winwood, the 
Acting Commissioner of Customs; Admiral Loy, the United States 
Coast Guard Commandant; Bruce J. Carlton, the Acting Deputy of 
the Maritime Administration; and Admiral James W. Underwood, 
Director of the Office of Intelligence and Security, Department 
of Transportation. All of your full statements will be included 
in the record and we will ask to you summarize as best you can.
    We will start with Commissioner Winwood.

                 STATEMENT OF CHARLES WINWOOD, 
                 ACTING COMMISSIONER OF CUSTOMS

    Mr. Winwood. Thank you, Mr. Chairman, and thank you for the 
opportunity to testify on the security of our nation's 
seaports. Before I begin, let me express my appreciation to the 
Members for your support of the United States Customs Service 
and other Federal agencies involved in the effort to strengthen 
seaport security. Your assistance, of course, is vital to any 
success we will have.
    As you know, last year Customs took part in the Interagency 
Commission on Crime and Security in U.S. Seaports and that 
Commission issued its report in October of 2000. The report has 
mentioned, cited the presence of key risks in the seaport 
environment including weaknesses in physical security, 
jeopardizing our fight against drug smuggling, exposure to 
international conspiracy, trade fraud, cargo theft, illicit 
export of vehicles and other serious crimes.
    The good news is that the Commission also judged 
partnership between the Federal and private sectors at the 12 
major seaports it surveyed to be productive. It also found 
coordination among Federal law agencies and State and local to 
be strong. Customs is also an active participant in the harbor 
safety committee that has been formed at major seaports.
    Committee meetings serve as key advocacy channels through 
which our personnel can stress the priority of port security 
needs.
    Clearly, the basis for cooperation exists to improve 
conditions in our seaport environment. Our challenge now is to 
focus that cooperation and provide proper resources to make it 
effective. A boom in activity in our nation's seaports poses 
unique challenges for the United States Customs Service and the 
other agencies involved. We have to process an ever-expanding 
stream of commerce with an eye toward protecting America from 
crime. Our employees are continuing with this increasing volume 
of trade to the best of their abilities.
    But today's environment demands that we supplement their 
efforts with an effective balance of technology and risk 
management strategies. Through the principles of risk 
management, we are conducting a more rigorous analysis of trade 
data that we collect and are using that information to spot 
trends and anomalies. This strategy is essential in helping us 
to direct resources to where they are needed most.
    Our electronic targeting systems, which include automated 
targeting systems and ACS, the Automated Commercial System, are 
important tools to help us to select incoming shipments for 
examination. They have played a key role in many of our most 
significant drug seizures at our seaports. Likewise, we are 
also cognizant of the threat in the export environment.
    Customs' use of the Automated Export System--or AES--now 
covers 90 percent of the outbound filings made by maritime 
shippers. That offers us a powerful means to interpret 
compliance with U.S. export laws.
    We also look forward to the day in the near future when we 
can employ Customs' new automated system in the effort to 
strengthen seaport security. The Automated Commercial 
Environment--or ACE--represents one of the agency's most 
crucial infrastructure needs. ACE's powerful applications will 
revolutionize the way we select cargo and process the nation's 
trade.
    I want to take the opportunity to thank the Members for 
their support of ACE and ask for your continued assistance as 
we work to obtain the funds to complete the system on time.
    Customs is also relying heavily on new non-intrusive 
inspection technologies to protect America. We are using 
powerful new x-ray systems capable of examining entire trucks 
and rail cars at one time. These systems have been used very 
effectively along our Southwest border and hold great promise 
in the seaport environment as well.
    Tighter security practices at seaports will help us to 
eliminate threats that technology alone cannot. In that regard, 
Customs welcomes the Interagency Commission's recommendations 
to improve physical security and to tighten controls on 
movement of goods within ports, restrict access to sensitive 
areas and implement other practical security measures.
    Finally, I would like to stress that despite the gains 
technology and better information offer us, our personnel 
continue to be our most valuable resource. There is no 
replacement for the dedicated work of our special agents, 
inspectors, canine enforcement officers and other Customs staff 
in protecting our nation's seaports.
    Thank you again for this opportunity to testify and I look 
forward to answering questions you might have at another time.
    [The prepared statement of Mr. Winwood follows:]

                Prepared Statement of Charles Winwood, 
                     Acting Commissioner of Customs

    Chairman Hollings, Senator McCain, Members of the Committee, thank 
you for this opportunity to testify on security in our nation's 
seaports.
    Before I begin, let me express my appreciation to the Members for 
your support of U.S. Customs and other Federal agencies involved in the 
effort to strengthen seaport security. Your assistance is vital to our 
success.
    As you know, last year Customs took part in the Interagency 
Commission on Crime and Security in U.S. Seaports. That Commission 
issued a report in October of 2000. The report cited the presence of 
key risks in the seaport environment, including: weaknesses in physical 
security jeopardizing our fight against drug smuggling; exposure to 
internal conspiracies; trade fraud; cargo theft; illicit export of 
stolen vehicles; and other serious crimes.
    The good news is that the Commission also judged partnership 
between the Federal and private sectors at the 12 major seaports it 
surveyed to be productive. It also found coordination among law 
enforcement agencies at the Federal, State, and local levels to be 
strong.
    Customs is also an active participant in the Harbor Safety 
Committees that have been formed at major seaports. Committee meetings 
serve as a key advocacy channel through which our personnel can stress 
the priority of port security needs.
    Clearly, the basis for cooperation exists to improve conditions in 
our seaport environment. Our challenge now is to focus that 
cooperation, and provide the proper resources to make it effective.
    Booming activity at our nation's seaports poses unique challenges 
for the Customs Service. We have to process an ever-expanding stream of 
commerce with an eye toward protecting America from crime.
    Our employees are contending with this increasing volume of trade 
to the best of their abilities. But today's environment demands that we 
supplement their efforts through an effective balance of technology and 
risk management strategies.
    Through the principles of risk management, we are conducting a more 
rigorous analysis of the trade data we collect. We are using that 
information to spot trends and anomalies. This strategy is essential in 
helping us to direct limited resources where they're needed most.
    Our electronic targeting systems--which include ATS and ACS--are 
important tools that help us to select incoming shipments for 
examination. They have played a key role in many of our most 
significant drug seizures at seaports.
    Likewise, we are also cognizant of the threat in the export 
environment. Customs' use of the Automated Export System, or AES, now 
covers 90 percent of the outbound filings made by maritime shippers. 
That offers us a powerful means to ensure compliance with U.S. export 
laws.
    We also look forward to the day, in the near future, when we can 
deploy Customs new automated system in the effort to strengthen seaport 
security. The Automated Commercial Environment, or ACE, represents one 
of the agency's most crucial infrastructure needs.
    ACE's powerful applications will revolutionize the way we select 
cargo and process the nation's trade. I want to take this opportunity 
to thank the Members for their support of ACE and ask for your 
continued assistance as we work to obtain the funds to complete the 
system on-time.
    Customs is also relying heavily on new non-intrusive inspection 
technologies to protect America. We are using powerful new x-ray 
systems capable of examining entire trucks and railcars at a time. 
These systems have been used very effectively along our Southwest 
border and hold great promise in the seaport environment as well.
    Tighter security practices at seaports will help us to eliminate 
threats that technology alone cannot. In that regard, Customs welcomes 
the Interagency Commission's recommendation to improve physical 
security and tighten control on the movement of goods within ports, 
restrict access to sensitive areas, and implement other practical 
security measures.
    Finally, I would highlight the need for added manpower to implement 
the Commission's recommendations. The fact remains that despite the 
gains technology and better information offer us, we must have the 
personnel available to contend with our spiraling workload.
    Thank you again for this opportunity to testify. I look forward to 
answering any questions you have.

    The Chairman. Thank you.
    Admiral Loy.

        STATEMENT OF ADMIRAL JAMES M. LOY, COMMANDANT, 
                   UNITED STATES COAST GUARD

    Admiral Loy. Good morning, Mr. Chairman. First let me thank 
Senator Graham, as you and Senator McCain noticed there, for 
his leadership and direction on having the Commission happen to 
begin with, and following the recommendations and the results 
of the Commission to your Committee, and certainly for your 
leadership, Mr. Chairman, and direction for this very important 
issue.
    Many of us have been working very hard these past 3 or 4 
years seeking to place the maritime dimension, if you will, of 
our national transportation system on the same level as our 
land and air systems as you described. TEA-21 and Air 21 have 
directed attention and resources toward badly-needed 
improvements in all facets of our land and aviation systems.
    In September 1999, Secretary Slater submitted a carefully 
crafted report to the Congress on the U.S. Maritime 
Transportation System (MTS). Port security was a very key part 
of that report. The MTS report also addressed safety in the 
environment, infrastructure, investment, among many other 
things.
    The report culminated 2 years of listening by the 
Department of Transportation team joined by 24 other Federal 
agencies and countless representatives from State, local, 
industry, academic, labor and other interests around the 
country's ports and waterways.
    I continue to think it is among the most important products 
I have personally been associated with in the 3-plus years I 
have had this job. My concern is that we may have sent too much 
too fast for the Congress to consume. Last year, the Crime 
Security in U.S. Seaports Commission broke out port security as 
a more consumable challenge. The Commission's report is solid, 
and I think the Committee's recent legislation is a strong and 
supportive step in the right direction.
    Recent history shows us--and should frighten us to the 
degree that throughout the world, terrorists target 
transportation systems. All of us remember the terrorist 
bombing of Pan Am 103; the sarin gas attack on a Tokyo subway; 
and deliberate derailment of Amtrak's Sunset Limited, each an 
example of an attack on a transportation target.
    Ridership on cruise ships has increased exponentially over 
the past 10 years. Two years ago, a cruise ship of 70,000 gross 
tons was the largest in the world. Today we have an entire 
class of cruise ships exceeding 140,000 gross tons. These new 
megaships carry upwards of 5,000 passengers and crewmembers. A 
successful terrorist attack on any one of these ships could 
result in a catastrophic number of casualties and threaten the 
economic viability of that entire industry. Just last week, the 
Coast Guard and the Customs Service units in Miami, along with 
the FBI, responded to a bomb threat against a cruise ship 
capable of carrying 3,000 passengers and 1,000 crewmembers.
    The ship implemented their security plan, a plan, by the 
way, required by the Passenger Vessel Safety Act to prevent the 
threat from being realized. We successfully ensured the safety 
of the passengers, the crew and the vessel, and the port as a 
whole. Who can say what would have happened had we not 
responded as we did, or if the cruise line personnel had 
followed their well-prepared plan in a different manner.
    Examples, unfortunately, abound in anyone's imagination 
where dire consequences can result in our ports from illicit 
activity associated with drug smuggling, cargo theft, 
environmental crime and others that we've heard about already 
this morning.
    I am even concerned, as you know, sir, about the terrorist 
acts associated with nuclear, biological or chemical threats of 
mass destruction. These are not fantasies. Many of these 
illegal activities are actually going on in U.S. ports as we 
speak this morning.
    In the interest of time, I'd just like to offer sort of a 
menu of things I remain very concerned about and that I believe 
are worth our attention and I'll be happy to address any of 
these during our questions.
    First of all, our notion is, sir, and I think you have 
reinforced it, that our ports are low threat at the moment, but 
enormously high vulnerability targets. Again, 95 percent of our 
global trade goes through our ports. Protecting our ports 
requires the significant coordination that Commissioner Winwood 
has already described. Federal, State and local, industry, 
labor, all those involved must be part of the solution.
    Third, the threat information that we have has to be 
developed and it has to be shared. Knowledge in this instance 
is power and we have to translate data collection efforts to 
become usable knowledge that we, the captain of the port, and 
others can deal with constructively at the port scene.
    I have a sense of three things in a sequence that have to 
occur. First, this notion of developing what we consider to be 
the attributes of a generic model port. I do not mean a 
specific port that we pick out that we think is the best. 
Rather, a generic model port and what the attributes of that 
port ought to be. Then when we make, as the legislation will 
require, vulnerability assessments, we can gauge each port 
against this generic model to see where the shortfalls lie in 
that particular port. Then that would allow the local harbor 
safety committee or port security committee to develop an 
adequate action plan to close those shortfalls.
    So that sequence of events, understanding what the model 
port ought to be, assessing the vulnerability of all those 
ports in question and then developing action plans that follow 
is a sequence of events that I think is enormously important 
for us to understand.
    Mr. Chairman, every port is different, leading to this 
notion that harbor safety committees and/or port security 
committees are the right places for us to leave the development 
of the action plans. There may be some sense of low, medium, 
and high categories of threat that might be helpful to that 
thinking process, but the notion that it needs to be done 
locally is, I think, an imperative.
    The Seaport Commission recommendations, Mr. Chairman, are 
sound. They represent a good place to start, and we must 
recognize that the security issue is just one dimension of that 
larger report that we sent to the Congress back in September, 
1999. The others will eventually need people's attention.
    We must find a way to balance the seemingly conflicting 
notions of security on one hand, and commercial flow on the 
other. The Hart-Rudman Commission discussed that very carefully 
and very thoroughly and we have been working on a concept 
called Maritime Domain Awareness that may be the key to success 
in that issue. Again, knowledge is power if we can take data, 
convert it to knowledge and act on it in local ports.
    In closing, Mr. Chairman, I find the latest draft of the 
Maritime and Port Security Act a solid step forward. It 
discusses vulnerability assessments, a task force to make 
things happen, shared dockside facilities to expedite 
commercial flow and perhaps more importantly, this notion of 
calling for better data collection on which we can build 
analytically sound action.
    Mr. Chairman, as we consider the bigger picture, the 
national dialog on homeland security is underway.
    Commissions, think tanks and the Pentagon's QDR are all 
talking about it. This hearing goes right to the heart of that 
discussion. The Seaport Commission and the President's Task 
Force on the Coast Guard Roles and Missions both reaffirm our 
responsibility as the lead agency for port security, and when 
properly resourced, we are ready to get on with that important 
work.
    I look forward to your questions and thank you, Mr. 
Chairman.
    [The prepared statement of Admiral Loy follows:]

              Prepared Statement of Admiral James M. Loy, 
                 Commandant, United States Coast Guard

    Good morning, Mr. Chairman and distinguished Members of the 
Committee. As Commandant of the U.S. Coast Guard, I want to thank you 
for the opportunity to appear before you today to discuss the Coast 
Guard's views regarding seaport security.
    As a multi-mission, maritime, military service within the 
Department of Transportation, the Coast Guard is a leader in ensuring 
America's maritime security. As a lead agency for seaport security, we 
provide a valuable service to the American people by making the nation 
safer, cleaner, more mobile, and more secure.
    As you may know from the September 1999 Report to Congress on the 
U.S. Marine Transportation System (MTS), U.S. trade is expected to more 
than double by the year 2020. The Interagency Commission on Crime and 
Security in U.S. Seaports identifies a lack of adequate security for 
our critical MTS infrastructure, which can potentially affect our 
entire economy. We don't think often enough of our maritime ports as 
security threats. But, as indicated in the Interagency Report on Crime 
and Security in U.S. Seaports, our maritime borders are more porous and 
have lower security levels when compared to our airports and land 
borders.
    Recent history shows us that, throughout the world, terrorists 
target transportation. All of us remember the terrorist bombing of Pan 
Am Flight 103, the sarin gas attack on the Tokyo subway, and the 
deliberate derailment of Amtrak's Sunset Limited--each an example of an 
attack against a transportation target. Ridership on cruise ships has 
increased exponentially over the past 10 years. Ten years ago, a cruise 
ship of 70,000 gross tons was the largest in the world. Today, we have 
an entire class of cruise ships that exceed 140,000 gross tons. These 
new mega-ships carry upwards of 5,000 passengers and crewmembers. A 
successful terrorist attack on any one of these ships could result in a 
catastrophic number of casualties, and threaten the economic viability 
of the entire industry. Just last week, Coast Guard units in Miami, 
along with the FBI, responded to a bomb threat against a cruise ship 
capable of carrying approximately 3,000 passengers and 1,000 
crewmembers. The ship implemented their security plan--a plan required 
by the Passenger Vessel Safety Act--to prevent the threat from being 
realized. We successfully ensured the safety of the passengers, crew, 
vessel, and port as a whole. Who can say what would have happened had 
we not responded as we did, or if the cruise line personnel had not 
followed their well-prepared plan?
    The same security activities used to prevent a terrorist attack 
also aid in preventing criminal acts such as smuggling of illicit 
drugs, contraband and stowaways; trade fraud and commercial smuggling; 
environmental crimes; cargo theft; and the unlawful exportation of 
controlled commodities, munitions, stolen property, and drug proceeds. 
This same security provides for secure ports in support of military 
deployments and national defense.
    In addition to the traditional physical security threats, the 
information age brings with it new vulnerabilities. We need to protect 
our critical information systems as well as our physical 
infrastructure. As we modernize our transportation infrastructure by 
integrating technology with automation, we also make their associated 
information systems more interdependent and interconnected. These 
systems become declared targets for attacks by hackers and cyber-
terrorists. Someone intent on disruption, or destruction, of the flow 
of sensitive operational information contained in our transportation 
management systems will cause crippling damage. Consequently, we face a 
significant challenge to ensure our information systems are protected 
from those who would cause harm, and yet remain accessible to our 
customers--the traveling public, commercial transportation operators 
and government agencies alike.
    The MTS is especially vulnerable to crime and terrorism because of 
the scale, complexity, and pace of activity in our ports. The task of 
protecting our transportation system is complex and requires close 
coordination between our regulatory, intelligence, and law enforcement 
organizations. Effective deterrence, prevention and response activities 
affecting U.S. transportation assets and programs must be coordinated 
between Federal law enforcement authorities, the Coast Guard, State and 
local officials, and the transportation community. The willingness of 
intelligence and law enforcement agencies to share threat information 
with the Coast Guard greatly enhances our ability to work with the 
transportation industry to increase security awareness and, if 
necessary, implement security countermeasures.
    The reports from the Interagency Committee on the Marine 
Transportation System (ICMTS), the Marine Transportation System 
National Advisory Committee (MTSNAC), the 1999 Report to Congress on 
the U.S. Marine Transportation System (MTS), and the Interagency 
Commission on Crime and Security in U.S. Seaports contain 
recommendations for improving security that will require additional 
resources for implementation. Both the ICMTS, chaired by the Coast 
Guard, and MARAD's MTSNAC are discussing many of these security issues 
and beginning to coordinate efforts ranging from national defense and 
terrorism to theft and our economic security. Examples include 
implementing infrastructure improvements to allow for interagency 
systems integration, and pursuing the ``model port concept'' through 
which best practices by marine terminal operators are shared, and 
voluntary minimum-security guidelines are developed. These groups are 
working to balance security imperatives and the increasing need for a 
fast and efficient U.S. transportation system, a key contributor to the 
country's overall economic prosperity. To the extent there are resource 
implications, they must be weighed against other priorities in the 
context of the overall budget.
    In summary, the Coast Guard is encouraged that seaport security 
concerns are receiving national attention. It is not my intent to 
instill fear or alarm in anyone today. But the sobering reality is, 
because we live in a country that prides itself on the openness of its 
democracy, we are always at risk of a terrorist attack. Therefore, it 
is very important that we address the issues of security and crime in 
seaports now. If we do, we can assure our national security and our 
ability to keep our nation's transportation system the very best in the 
world.

    The Chairman. Very good.
    Mr. Carlton.

                STATEMENT OF BRUCE J. CARLTON, 
             ACTING DEPUTY, MARITIME ADMINISTRATION

    Mr. Carlton. Thank you very much, Mr. Chairman. Good 
morning. It is a pleasure to be here to talk to you about the 
issue of port and maritime security and I'd like to begin by 
joining my colleagues in thanking you and this Committee for 
your leadership on efforts to improve in this area.
    The security of our ports is vital to our economic and 
national security. A disruption of the flow of cargo through 
our ports would have a significant negative impact on our 
economy and our military readiness. Security lapses at port 
facilities can cause cargo handling delays or losses and 
jeopardize personal safety and society at large. Security 
weaknesses in and around our ports reduce competitiveness, 
threaten military readiness and degrade our quality of life.
    The movement of military cargoes through our commercial 
ports is standard practice, and the security of commercial 
ports during times of military mobilization is critical to 
national defense. Ports around the world are contending with 
security issues such as alien smuggling, cargo theft, drug 
smuggling and terrorist activities.
    Simply having the ability to move large quantities of cargo 
through a port in a short period of time is no longer enough in 
order to remain both safe and competitive.
    Government cooperation with industry to identify and 
correct security weaknesses, while at the same time maintaining 
or improving upon the efficiencies for the movement of cargo, 
is the basis upon which all port security measures should be 
approached.
    Because we are focused on the development and maintenance 
of a strong maritime industry for both economic and national 
security purposes, my agency, the Maritime Administration, is 
well positioned to help ensure that both objectives continue to 
be met while concurrently focusing on new security measures. We 
would be very happy to offer this Committee any assistance it 
may need in the area of developing this legislation on improved 
port security. Many factors contribute to the need for 
increased port and maritime security.
    As the Interagency Commission on Crime and Security in U.S. 
Seaports pointed out in its 1999 report, thefts of high 
technology cargoes alone from U.S. manufacturers and their 
customers may exceed $5 billion annually in direct and indirect 
costs. But theft costs also include lost productivity, lost 
time, lost resources spent with the police, attorneys and 
claims adjusters. Theft results in increased insurance 
premiums, greater liability exposure, lost trade, erosion of 
goodwill and damaged reputations. Billions of dollars per year 
are stolen from us at the hands of thieves in and around our 
port areas as well as on various intermodal systems going to 
and from our ports.
    In an extreme case, unchecked theft could retard the 
expansion of international trade. In the end, the annual multi-
billion cost of cargo theft is borne by you and me and all 
Americans as taxpayers and consumers. As my colleagues have 
already noted, alien smuggling and stowaways continue to be a 
major seaport security challenge. Aside from the risks of harm 
to stowaways and mariners, their discovery aboard a vessel can 
cost the ship operator hundreds of thousands of dollars in 
route diversion costs and result in the disruption of cargo 
services and expensive delays.
    Vessel operators are responsible not only for the complete 
cost of repatriating the stowaways, but are generally subject 
to fines for violating our immigration laws. The financial cost 
to steamship companies in a highly competitive global market 
would be very significant. Efforts to eliminate this practice 
will not only save money but more importantly will save lives. 
Recognizing the need for heightened seaport security is 
essential. Strict control of access to port areas, containers 
and ships is critical, yet without better international 
cooperation, immigration crimes will continue to plague our 
ports and hinder international trade.
    As Admiral Loy has already mentioned, drug smuggling is the 
most prevalent crime affecting seaport security. It also 
results in a significant negative economic impact.
    Inspections of arriving passenger and cargo ships must be 
sufficiently effective to deter smugglers, yet not so intrusive 
as to hinder the smooth flow of cargo to and from our port 
areas.
    Terrorism is yet another area of concern for seaport 
security. Our seaports are generally seen as relatively low 
threat areas for terrorist actions. Addressing port 
vulnerabilities is key to ensuring that our ports are not 
targeted for terrorist and criminal activity. It is very 
reasonable for the Federal Government to achieve coordination 
among the various agencies concerned with port and maritime 
security and to work with the ports to explore ways to minimize 
criminal activity.
    However, achieving appropriate levels of security in our 
seaports is not just a matter of heightened diligence. Port 
security infrastructure improvement is an important aspect of 
modern port security needs, both here, in the United States and 
in foreign countries. We recognize that each port is different 
and that a one size security plan does not fit all.
    Partnering with the maritime industry and the port industry 
on a voluntary basis is, we believe, the key to progress.
    Let me close by noting two areas of work at the Maritime 
Administration which I believe illustrate some useful outreach 
efforts. We chair a national port readiness network, which is a 
group focused on planning and coordinating military 
mobilization security at each of the 13 commercial ports around 
the country designated as strategic ports. We also serve as 
chair of the technical advisory group in the Organization of 
American States to develop multilateral approaches to improving 
port security throughout the Western Hemisphere.
    Again, Mr. Chairman, thank you for this opportunity to 
appear. I look forward to any questions you have.
    [The prepared statement of Mr. Carlton follows:]

                Prepared Statement of Bruce J. Carlton, 
                 Acting Deputy, Maritime Administration

    Mr. Chairman and Members of the Committee: I welcome the 
opportunity to be here today to discuss the important issue of port and 
maritime security on behalf of the Maritime Administration (MARAD). I 
would first like to thank the Committee for your continued efforts in 
this area. The security of our ports is vital to our nation's economic 
and national security. A disruption of the flow of cargo through our 
ports could have a significant negative impact on our economy and our 
military readiness.
    Ports around the world contend with security issues such as alien 
smuggling, cargo theft, drug smuggling and terrorist activities. Simply 
having the ability to move large quantities of cargo through a port in 
a short period of time is no longer enough in order to remain both safe 
and competitive. Security lapses at port facilities can cause cargo 
handling delays or losses, and jeopardize personal safety and society 
at large. Security weaknesses in and around our ports reduce 
competitiveness, threaten military readiness and degrade our quality of 
life.
    Government cooperation with industry to identify and improve 
security weaknesses, while at the same time maintaining or improving 
upon the efficiencies for the movement of cargo, is the basis upon 
which all port security measures should be approached. Because we are 
focused on the development and maintenance of a strong maritime 
industry for both economic and national security purposes, MARAD is 
uniquely positioned to help ensure that both objectives continue to be 
met while concurrently focusing on new security measures.

                 THE NEED FOR HEIGHTENED PORT SECURITY

    In April 1999, an Executive Memorandum established an Interagency 
Commission on Crime and Security in U.S. Seaports (The Commission). The 
Commission's objective was to undertake a comprehensive review of 
seaport crime, the state of seaport security and the ways in which 
Government is responding to the problem. The Commission report, 
completed in August 2000, specifically identified threats to seaports 
and makes recommendations intended to reduce the vulnerability of 
maritime commerce, national security and the infrastructure that 
supports them.
    Many factors contribute to the need for increased port and maritime 
security. As the Commission pointed out in its report, thefts of high 
technology cargoes alone, from U.S. manufacturers and their customers, 
may exceed $5 billion annually in direct and indirect costs. The cost 
of cargo theft is not limited to the manufacturer's expenses to produce 
a certain product. Among other things, theft costs include lost 
productivity, lost time and resources spent with police, attorneys, and 
claims adjusters. Theft also results in increased insurance premiums, 
greater liability exposure, lost trade, erosion of goodwill and damaged 
reputation. Billions of dollars per year are stolen from us at the 
hands of thieves in and around our port areas as well as on various 
intermodal systems going to and from the ports. Underwriters are 
increasingly unwilling to insure high value cargo. Some view the 
problem as an impediment to the expansion of international trade. In 
the end, the annual multi-billion dollar cost of cargo theft is borne 
by you and me, as taxpayers and consumers.
    Immigration crimes including alien smuggling and stowaways continue 
to be a major seaport security challenge. Stowaways, in particular, are 
a significant concern for many U.S. ports. Vessels arriving in the U.S. 
from Third World countries frequently carry stowaways hiding on the 
ship or in empty containers. Ship's crews spend precious time 
inspecting the ship and empty containers prior to departure from 
foreign ports seeking to ensure that stowaways are not aboard. These 
same crewmembers also jeopardize their safety by confronting determined 
stowaways desperate to seek a better life. The discovery of stowaways 
aboard a vessel can cost the operator hundreds of thousands of dollars 
in route diversion costs. The discovery of stowaways in port can result 
in a disruption of cargo services and expensive delays. Vessel 
operators are responsible not only for the complete costs of 
repatriating the stowaways but are generally subject to fines for 
violating immigration laws. The financial costs to steamship companies 
in a highly competitive global market can be very significant.
    Even so, the financial aspects of this issue pale in comparison to 
the toll in human life that is levied upon stowaways each year. In one 
of the most shocking incidents, 54 Chinese nationals were found dead in 
a truck last year that had crossed from Belgium to the United Kingdom. 
Efforts to eradicate this practice will not only save money but, more 
importantly, will save lives.
    The problems created by stowaways domestically also point directly 
to the shortcomings of port security abroad and security aboard 
merchant vessels generally. International seaport cooperation and 
recognition of the problem is essential to the eradication of this 
problem. Strict control of access to port areas, containers and ships 
is critical. Without international cooperation, immigration crimes will 
continue to plague our ports and hinder international trade.
    Drug smuggling is the most prevalent crime affecting seaport 
security, and results in a significant economic impact. Inspections of 
arriving passenger and cargo ships must be sufficiently effective to 
deter smugglers, yet not so intrusive as to hinder the smooth flow of 
cargo to and from port areas. In an era where ``just-in-time'' 
logistics allows companies to maintain their competitive edge, undue 
delays to prevent the importation of contraband can upset entire supply 
chains with a ripple effect of negative consequences across the globe.
    Terrorism is also a concern for seaport security. The threat of 
such activity and the vulnerability of seaports are the reasons for 
concern. While U.S. airports and land border crossings have well 
structured security measures, our ports do not enjoy the same level of 
security even though they offer unparalleled intermodal access to our 
nation's interior. Addressing port vulnerabilities is key to ensuring 
that our ports are not targeted for terrorist and criminal activities. 
Moreover, most of the serious crimes that take place in our seaports 
are in fact violations of Federal law. For this reason, it makes good 
sense for the Federal Government to achieve coordination among the 
various agencies concerned with port and maritime security and to work 
with the ports to explore ways to minimize criminal activity.

             MARAD'S ROLE IN CONTRIBUTING TO PORT SECURITY

Infrastructure
    Achieving appropriate levels of security in our seaports is not 
just a matter of heightened diligence. Port security infrastructure 
improvement is a critical aspect of modern port security needs. There 
exists a need for more secure port infrastructures both at home and 
abroad, and we support potential progress in this area.

Industry Relations
    MARAD is well situated to help carry out many of the objectives of 
the seaport Commission's report, by working with industry and the ports 
to develop and implement meaningful voluntary guidelines on port 
security. We believe that partnering with industry on a voluntary basis 
is the key to progress. We also recognize that each port is different 
and that one size security plan does not fit all. That is why 
cooperation between Government and industry is necessary to achieve our 
common goal of secure ports while promoting marine transportation.

National Security
    The movement of military cargoes through our commercial ports is 
standard practice. Because of our dual mission, MARAD works closely 
with both the maritime industry and the Department of Defense (DOD). As 
the Commission's report noted, forward deployment of U.S. troops and 
equipment overseas in this post cold war era is declining. Ongoing base 
closure and realignment initiatives have resulted in the closure of 
several military owned and operated ports. As a result, U.S. commercial 
ports have become critical centers for military mobilizations. The 
security of commercial ports during times of military mobilization is 
therefore critical to national defense.
    In developing port security standards MARAD continues to work to 
bridge the gap between military requirements and industry concerns. A 
National Port Readiness Network was established between MARAD, Coast 
Guard and various DOD Commands to ensure, in part, the readiness of 
commercial seaports in the event of a mobilization. MARAD, as the chair 
of the National Port Readiness Network (NPRN), also continues its 
effort to strengthen the NPRN in planning and coordination for military 
mobilization security at each of 13 commercial ports around the country 
designated as Strategic Ports.

Domestic Training
    The United States Merchant Marine Academy's (USMMA) Global and 
Maritime Transportation School (GMATS) has teamed with the National 
Cargo Security Council as well as other key transportation and trade 
associations to offer leading edge training for professionals in the 
transportation industry. Among other courses, USMMA's continuing 
education program offers a comprehensive cargo security training 
program. The program consists of an intensive 4-day training period 
using top industry, law enforcement, and Government instructors. 
Program highlights include instruction in the areas of asset 
protection, organized crime threats, vulnerabilities of the freight 
transportation system, industry best practices for minimizing cargo 
theft and site visits to three major cargo handling facilities 
representing air, marine and rail modes. Participants also learn how to 
develop a cargo security management plan and to deal with losses 
efficiently.
    GMATS has also developed customized security programs for 
Government agencies needing a better understanding of maritime security 
issues. The school also trains senior level merchant marine officers 
and naval reservists in pertinent maritime security issues as they 
relate to shipboard and port security. The intensive program is part of 
the 2-week national sealift training program designed to improve 
readiness in the Ready Reserve Fleet and aboard American flag vessels 
in general.
    MARAD has also been instrumental in developing a maritime and 
terrorism course for the Federal Law Enforcement Training Center. Over 
the last 5 years, MARAD has conducted training sessions for Gulf Coast 
port authorities on bomb threats to determine best practices and 
capabilities of various government agencies and bomb squads. Over 100 
port personnel have been trained in this effort.

International
    MARAD serves as Chair and Secretariat of the Technical Advisory 
Group (TAG) on Port Security of the Organization of American States 
(OAS) Inter-American Committee on Ports. The purpose of the port 
security TAG is to develop solutions and coordinate multilateral 
approaches to improving port security in the Western Hemisphere. The 
TAG seeks to: (1) develop a hemispheric approach to improving the 
security of the Inter-American maritime trade corridors; (2) develop a 
common port security strategy; (3) devise basic guidelines and minimum 
standards of security for ports of member countries of the OAS; and (4) 
organize and conduct annual courses planned under the Inter-American 
Port Security Training Program, managed by MARAD.
    MARAD has had an on-going port security program with the 
Organization of American States (OAS) since the 1980s, including port 
security outreach. Since 1995, MARAD has been conducting port security 
training courses in the Western Hemisphere. Over 300 commercial port 
authority police and security personnel from the 34 member countries of 
the OAS have been trained.
    MARAD engages in outreach to foreign countries and their port 
authorities to enhance the efficiencies of global commerce, which in 
turn benefit our own maritime industry. By its very nature, trade is an 
international business in which U.S. companies rely upon the security 
and efficiencies of foreign ports. For example, MARAD and the Port 
Authority of Argentina signed a bilateral document on June 24, 1999, 
declaring their intention to: (1) promote improved security of seaports 
and waterways, (2) exchange information in matters related to crime and 
security in seaports and waterways, and (3) develop and coordinate 
training programs for personnel responsible for seaport operations and 
security. This bilateral declaration began in multilateral sessions 
through the OAS Inter-American Committee on Ports.

Publications
    MARAD has also played a lead role in developing DOT security 
publications. These include Port Security: A National Planning Guide 
and Port Security: Security Force Management. These guides provide 
local governments and the commercial maritime industry with a common 
basis upon which to establish port security standards and the outcomes 
expected from meeting those standards. MARAD also publishes a report 
entitled the ``Maritime Security Report''. The report is an 
unclassified periodic publication prepared to inform the commercial 
maritime industry and senior Maritime Administration officials of 
international criminal activity and security issues which could pose a 
threat to U.S. commercial maritime interests and the movement of 
civilian cargoes in foreign trade. The Maritime Security Report is 
intended to increase awareness of the scope and severity of economic 
crime affecting U.S. maritime commerce in order to deter criminal 
exploitation of the maritime transportation system and improve port and 
cargo security in international trade corridors.
Conclusion
    Mr. Chairman, we recognize the urgent need for better port 
security. We heartily support the recommendations of the port security 
Commission. We look forward to the opportunity to work with other 
agencies, the industry, and this Committee to improve port security in 
order to maintain the flow of cargo that is so important to our economy 
and our military readiness. We appreciate your willingness to consider 
our views on this topic. I would be happy to answer any questions you 
or the other Committee members may have at this time.

    The Chairman. Very good.
    Admiral Underwood.

         STATEMENT OF REAR ADMIRAL JAMES W. UNDERWOOD, 
        DIRECTOR, OFFICE OF INTELLIGENCE AND SECURITY, 
                  DEPARTMENT OF TRANSPORTATION

    Admiral Underwood. Good morning, Mr. Chairman and 
distinguished Members of the Committee. I too would like to 
thank you and Senator Graham for your leadership in this effort 
to improve port and maritime security and for inviting me to 
discuss the importance of transportation security in our ports 
and its nexus toward strengthening national security.
    As the national security advisor to the Secretary of 
Transportation, my job is to focus attention on land, sea, and 
air transportation security issues that protect the safety of 
the traveling public, ensure the movement of the nation's cargo 
and preserve the transportation system's critical 
infrastructure.
    Within the department, the Office of Intelligence and 
Security attempts to identify physical and cyber-
vulnerabilities of the nation's transportation system, while 
working to protect it from asymmetric threats of criminals, 
terrorists and rogue states bent on attacking Americans here at 
home.
    The Aviation Security Act of 1990 mandated increases to 
aviation security, including the use of advanced technology, 
training and awareness to prevent terrorist acts like the 
bombing of Pan Am Flight 103. The capacity of the aviation 
industry in the United States has grown since enactment and 
thankfully, security measures on aircraft and within airport 
terminals have kept pace.
    This is not the case with maritime port security. While the 
amount of cargo shipped through the U.S. ports has 
significantly increased during the same period, security 
resources and measures have not kept pace.
    The Interagency Commission on Crime and Security in U.S. 
Seaports signaled the need for comparable and sustained effort 
focused on improving maritime transportation and set the 
groundwork by which multi-jurisdictional government and law 
enforcement bodies in an industry may fully cooperate with one 
another.
    The Office of the Secretary has taken the lead in bringing 
together various groups to examine threats to the 
transportation system infrastructure and we are learning from 
each other. Our nation's maritime transportation system has 
been designated as a critical infrastructure essential to both 
national security as well as economic security.
    As our transportation systems become increasingly complex, 
extensive and interdependent, America's need to move people and 
cargo quickly and efficiently depends on a transportation 
infrastructure that will function continuously without serious 
interruption or delays. Challenging the reliability of the 
system is an evolving set of asymmetric threats and physical 
and electronic vulnerabilities yet to be fully assessed.
    We must protect against two broad types of threats. First, 
those that target our transportation system to inflict serious 
personal injury or disruption, and second, those that use our 
transportation system as a means to engage in criminal and 
hostile acts.
    It is not necessary to live near or work in a port to be 
impacted by the threats of port crime. Ships, rail, trucks, and 
air transportation modes are linked and move cargo thousands of 
miles across the United States. A container loaded overseas may 
reach its Midwestern destination without ever being opened for 
inspection. I am concerned that border security controls and 
voluntary reporting currently in place are not enough to stop 
someone intent on causing severe harm to our seaports in the 
United States.
    Prudent and practical measures must be taken to 
fundamentally improve our nation's security within our 
unprotected ports and maritime approaches. The risk of a weapon 
of mass destruction being deployed against the United States by 
such low tech means as a shipping container delivered to a 
seaport presents a difficult challenge, but one the United 
States cannot afford to ignore.
    The Office of Intelligence and Security supports the 
Secretary's effort to coordinate transportation security 
measures through the department's operating administrations and 
other Federal, State, and local agencies. The Department of 
Transportation, through the Office of Intelligence and 
Security, has served the transportation industry as a source of 
intelligence and threat dissemination on terrorism.
    Furthering the security of our ports requires the 
involvement of the Office of the Secretary and the United 
States Coast Guard, the Maritime Administration and other law 
enforcement agencies at all levels and especially industry.
    Maritime transportation is an integral component of our 
nation's vitality and one of our greatest strengths supporting 
free markets, free trade and personal freedoms. To advance the 
safety and security of our ports and waterways requires us to 
be proactive in our approach, collaborative in our work with 
Federal, State authorities and private sector and resolute in 
our determination to diminish the threat of terrorism and crime 
within the critical maritime infrastructure. I welcome any 
questions that you have.
    [The prepared statement of Rear Admiral Underwood follows:]

   Prepared Statement of Rear Admiral James W. Underwood, Director, 
   Office of Intelligence and Security, Department of Transportation

    Good morning, Mr. Chairman and distinguished Members of the 
Committee. Thank you for inviting me to appear before you today to 
discuss the importance of transportation security in our ports and its 
nexus toward strengthening national security.
    As National Security Advisor to the Secretary of Transportation, my 
job is to focus attention on land, sea and air transportation security 
issues that protect the safety of the traveling public, ensure the 
movement of the nation's cargo, and preserve the transportation 
system's critical infrastructure. Using a nautical analogy, the Office 
of Intelligence and Security (OIS) serves as the Secretary's lookout, 
scanning the horizon for the first signs of danger, and then 
recommending alternatives for safe passage in advance of reaching 
extremis. Within the Department, OIS attempts to identify physical and 
cyber vulnerabilities of the nation's transportation system, while 
working to protect it from the asymmetric threats of criminals, 
terrorists and rogue states bent on attacking Americans here at home.
    The Aviation Security Improvement Act of 1990 created the Office of 
Intelligence and Security to protect the traveling public from 
terrorist incidents such as the December 1988 bombing of Pan AM 103 
over Lockerbie, Scotland. In the years following the enactment of this 
legislation, increased and publicized security measures, employed 
technologies, training and awareness have bolstered the public's 
confidence to fly. And as the capacity of the aviation industry in the 
United States grew during this period, security measures on aircraft 
and within airport terminals thankfully kept pace.
    This is not the case with maritime port security. The release of 
the Report of the Interagency Commission on Crime and Security in U.S. 
Seaports signaled the need for a comparable and sustained effort 
focused on improving maritime transportation security--especially our 
strategic and economically vital ports. As you are aware, this report 
prescribes numerous recommendations directed at preventing both crime 
and terrorism. Whether it is crime, involving cargo theft and trade 
fraud, or terrorism occurring either within the port or via weapons of 
mass destruction transshipped to anywhere in the United States, the 
Report's recommendations provide a firm foundation to improve maritime 
security and safety. And perhaps most importantly, the Report sets the 
groundwork by which multi-jurisdictional and authoritative government 
and law enforcement bodies and industry may fully cooperate with one 
another.
    The Office of the Secretary has taken the lead in bringing together 
various groups to examine threats to the transportation system 
infrastructure. We are learning from each other. FAA's experience in 
improving security at airports offers valuable lessons for seaport 
security. For example, they have already developed a system for 
checking the criminal history of employees with access to sensitive 
areas. This is one of the recommended measures in the report of the 
Interagency Commission on Crime and Security in U.S. Seaports for which 
the aviation security model may be applicable.
    Our nation's maritime transportation system has been designated as 
a critical infrastructure, essential to both national security as well 
as economic security. As our transportation systems become increasingly 
more complex, extensive, and interdependent, America's need to move 
people and cargo quickly and efficiently depends on a transportation 
infrastructure that will function continuously, without serious 
interruption or delays. Challenging the reliability of this system is 
an evolving set of asymmetric threats and physical and electronic 
vulnerabilities yet to be fully assessed.
    We must protect against two broad types of threats: (1) those that 
target our transportation system to inflict serious personal injury or 
serious disruption, and (2) those that use our transportation system as 
a means to engage in or perpetrate criminal and hostile acts.
    It is not necessary to live near or work in a port to be impacted 
by the threats of port crime. Ships, rail, trucks and air 
transportation modes are linked and move cargo thousands of miles 
across the United States. A container loaded overseas may reach its 
Midwestern destination without ever being opened for inspection. In 
light of the recent outbreak of Hoof and Mouth Disease in the United 
Kingdom and Europe, national border security was increased to thwart 
the introduction of this disease. However, I am concerned that border 
security controls and voluntary reporting would not be enough to stop 
someone intent on causing severe harm, by way of our seaports, to the 
United States.
    Several recent studies and threat assessments have underscored the 
persistent nature of the threats that require U.S. attention as they 
relate to port security:
     The December 2000 International Crime Threat Assessment 
indicates that the threat to the U.S. from international crime 
continues to grow as criminals and terrorists exploit the globalization 
of trade and finance and rapid changes in technology. It further states 
that drug trafficking, illegal migration, and environmental crimes as 
well as international terrorism using both sophisticated and crude 
weapons will persist.
     The CIA's Global Trends 2015 Report identifies the 
propensity for present and potential adversaries to avoid U.S. military 
strengths and exploit perceived national weaknesses. Furthermore, this 
report notes that such asymmetric opportunism will ``become the 
dominant characteristic of most threats to the U.S. homeland.'' A 
balanced national security strategy requires an effective and 
comprehensive action plan that addresses such traditional ``low 
technology'' threats.
    Prudent and practical measures must be taken to fundamentally 
improve our nation's security within our unprotected ports and maritime 
approaches. Our attention could not be more appropriate given the 
concern expressed by President Bush in his 1999 speech at the Citadel, 
in which he noted: ``weapons can be delivered, not just by ballistic 
missiles, but by everything from airplanes to cruise missiles, from 
shipping containers to suitcases.'' The risk of a weapon of mass 
destruction being deployed against the United States by such low-tech 
means as a shipping container delivered to a seaport presents a 
difficult challenge, but one the United States cannot afford to ignore.
    The Office of Intelligence and Security supports the Secretary's 
effort to coordinate transportation security measures throughout the 
Department's operating administrations and other Federal, State and 
local agencies. The Department of Transportation, through the Office of 
Intelligence and Security has served the transportation industry as a 
source for intelligence and threat dissemination on terrorism. 
Furthering the security of our ports requires the involvement of the 
Office of the Secretary, the U.S. Coast Guard and the Maritime 
Administration, and other government law enforcement agencies at all 
levels, and especially industry.
    Maritime transportation is an integral component of our nation's 
economic vitality, and one of our greatest strengths supporting free 
markets, free trade and personal freedoms. To advance the safety and 
security of our ports and waterways requires us to be proactive in our 
approach, collaborative in our work with Federal, State, local 
authorities and the private sector, and resolute in our determination 
to diminish the threat of terrorism and crime within the critical 
maritime infrastructure.

    The Chairman. I am pleased this morning to have Senator 
Edwards with us.
    Admiral Underwood, we talk in terms of drugs. We talk in 
terms even of immigration. I noted last year I think it was, 
some of these containers actually had Chinese refugees--or 
whatever you want to call them--actually, when they opened the 
container, several were dead. They just piled into these 
containers.
    So going right to your observation about reaching a Midwest 
destination, not immigration, not drugs, but hoof and mouth 
disease. They could be loaded on at some foreign destination 
and get all the way into the Midwest and spread the disease 
itself and we would be running around checking every airport 
and everything else of that kind and stepping up security. But, 
it might well get to Omaha, Nebraska and be unloaded with 
nobody looking around or anything else of that kind, couldn't 
it?
    Admiral Underwood. It is a very good concern that we have 
and share. One example that I'm aware of was during the recent 
hoof and mouth outbreak of a rock band that was in Britain at 
the time and had its next concert in New Orleans and the 
shipping container that had its stage loaded on it was shipped 
through Charleston, South Carolina and fortunately, inspectors 
on the dock in Charleston stopped that container and found mud 
that was in on the stage inside the container.
    The Chairman. Talking about Charleston, South Carolina, 
Admiral Loy, you described what happened down in Miami and an 
alert with respect to a passenger vessel and you had a plan on 
course and it was completed and engaged in. Do you have one for 
Charleston? I suppose if you had a similar kind of alert?
    Admiral Loy. Yes, sir, we certainly do. There are several 
things important in play there. First of all, the Passenger 
Vessel Safety Act. Had the cruise ship been in Charleston or 
Savannah or any other port, we would have been able to exercise 
it because of two things. First of all, the local captain of 
the port has his own contingency plans to deal with a variety 
of different possibilities.
    Second, in this case, the cruise liner itself and the ICCL, 
the International Cruise Line Association, imposes the 
requirement for them to be able to deal with those kind of 
events when they occur.
    Now, are they even remotely foolproof? No, sir, they are 
certainly not. But in the instance of the Miami case, we were 
able--first of all, because we had the bomb threat, had the 
culprit simply planted the bomb and never made the threat, 
whether or not the activation process would have been adequate 
is a very different story.
    The Chairman. That is for the vessel, but not the port 
itself. For example, the captain of the port there in 
Charleston, how often does he check, not just with the Coast 
Guard and his own troops, seamen you can call it, but rather 
Customs, the DEA, the actual local authorities and everything 
else? Has he enunciated a plan of security for the Port of 
Charleston and everybody knows about it and everybody is ready 
to go to war if something occurs and so forth?
    Admiral Loy. No, sir. I don't believe those are in place 
and the reality there is that we would hope that in the wake of 
vulnerability assessments taken on our ports we could depend on 
the captain of the port's led harbor safety committees and port 
security committees to produce precisely those action plans, to 
tabletop exercise them and to, in fact, field exercise them in 
some kind of frequency over the course of the future.
    The Chairman. This is rather new, but at the Coast Guard 
Academy, are these graduates all inculcated in port security?
    Do they know, I mean, other than just going on the vessel 
and everything else, which is the usual 95 percent or 99 
percent of the work out at sea, and so forth like that, would 
they know about port security?
    Admiral Loy. Not at the level that you would want them to 
know to be a good operator in your port, sir. Those are, if you 
will, on-the-job training kinds of opportunities that one gets 
specialized in either through our marine safety track as a 
marine safety professional or in our shore operations track, 
where they would populate the stations and groups to be 
supportive when necessary to the local captain of the port.
    So not focused training at the academy, no.
    The Chairman. How about the Port and Maritime Security Bill 
updating the 1936 Act that we introduced last week? Do you have 
any criticisms, misgivings about it or suggestions that we can 
do to improve on it?
    Admiral Loy. Sir, as I indicated in my sort of menu that I 
wanted to leave with my verbal statement, I am convinced that 
the Act is a terrific step in the right direction.
    I was trying to paint the picture of 2 years ago when we 
sent the Marine Transportation System Report from the 
Department to the Congress, it talked about safety, security, 
environmental issues, infrastructure, investment issues and 
many, many other things. I am convinced that tactically we did 
not have our act together very well then, and we sent up 
something that was sort of unconsumable by the Congress.
    The Commission that Senator Graham and others influenced, 
in reality last year broke the security piece out from that 
bigger picture and said ``let's focus on this first and get 
about the business of improving security.'' I think both the 
results of the Commission and the recommendations now found in 
the law that you found in the bill that you have offered, take 
us exactly in the directions that we should be going, sir.
    The Chairman. Very good.
    Mr. Carlton, what about the Maritime Administration. Do you 
have any suggestions?
    Mr. Carlton. Mr. Chairman, I would join Admiral Loy in just 
commenting very briefly that we believe that you and the 
Committee have done us all a great service by turning on the 
bright light on this issue. That has been missing.
    We devoted a tremendous amount of resources in our Federal 
budget and through our other activities in aviation in 
particular. The shortcomings that the Commission and other 
studies have highlighted, bring this into sharper focus and 
what I believe the draft bill does is it is going to stimulate 
this discussion, stimulate this debate and we look forward to 
working with you and your staff to move this on.
    The bill is a massive undertaking. I note that in passing 
the bill has grown in size substantially. It is broad, 
comprehensive and it has a very extensive reach. In all truth, 
I have not digested all of its content, but I am looking 
forward to a full and thorough look through it.
    We will be back to talk to your staff about the details, 
but it is absolutely, as Admiral Loy has just said, it is 
absolutely a major step in the right direction to bring 
appropriate national level, Congressional level attention to 
this issue.
    The Chairman. That is exactly what we need is that media, 
friends in the media, to bring attention to the American 
public, the Congress in particular, that we have got to do 
something about maritime. I know at the beginning of Desert 
Storm, we were recruiting retired 85-year-old ship captains, 
broken down vessels. For a while, they thought we were invading 
Seville, Spain, with all of them limping in there rather than 
getting all the way to the Gulf. I have been, for 34 years now, 
meeting, meeting, meeting, and ``this is an emergency and we've 
got to do something,'' but nothing ever happened.
    Mr. Winwood, with respect to the budget, your budget has 
been cut back, too, because I will never forget in the debate 
on NAFTA, my colleague on the House side gave up his vote in 
favor of NAFTA when he was promised 500 extra Customs agents.
    You folks have testified it was $5 billion in textiles, in 
violation of Customs, just trans-shipped through Customs that 
you weren't able to check. So we got supposedly 500 extra 
agents and they never were hired.
    I went back to you folks in Customs and you said ``well, 
what do you want me to do, stop textiles or stop drugs?'' I 
said ``Well, obviously, stop drugs.'' Are you still short 
agents over there?
    Mr. Winwood. I'll tell you, Senator, thanks to a lot of 
good support of the Congress in general, and the Senate 
specifically, if you look at the year 2001, we had an influx of 
a tremendous amount of personnel. I am pleased to say that all 
the salary moneys we received in the budget year of 2001, we 
have hired every position. We have added several hundred people 
to the rolls this year and I think we are doing a much better 
job in bringing balance, not only to commercial fraud and trade 
responsibilities, but also heavy emphasis on our narcotics 
responsibilities to include the influx of technology.
    I would like to make one more mention, if I may. We're 
continuing to get great support in the Congress and, I must 
say, Senator Edwards, I appreciate very much the letter that 
you sent to our Subcommittee on Postal, Treasury on ACE 
funding. In the automated commercial environment which will 
take us to the next generation of the proper type of automation 
necessary to take what Admiral Loy has been referring to, is 
you take a stream of data, you turn that into knowledge and you 
turn that into tactical information. The influx of money and 
the building of this new modern ACE infrastructure will go a 
long way to totally supporting the future of the government's 
effort in this area and the Customs Service specifically.
    The Chairman. You stated in the prepared statement: ``We 
are using powerful new x-ray systems capable of examining 
entire trucks and rail cars at a time.'' I take it this is down 
at the Southwest border?
    Now, we had a transportation hearing just last week. We 
found out that 27 checkpoints coming up from Mexico, only two 
of them are really manned for trucks. Is that the two of them 
where you have got this x-ray equipment?
    Mr. Winwood. Well, we have the x-ray equipment in several 
locations along the Southern border. If I may just digress for 
a second.
    The Chairman. I want this kind of equipment at Charleston. 
We do not care about Wilmington.
    Mr. Winwood. We are trying to get it there.
    Senator Edwards. You don't care.
    Mr. Winwood. We had what we call an NII, or Non-Intrusive 
technology 5-year plan that we put together in 1997. Thanks 
again to the Senate and Congress, we received $134 million 2 
years ago to have this plan put into place.
    This plan allows us to buy, either through research and 
development or through existing equipment, buy what we call 
high-tech equipment, x-ray, Vax machines, gamma machines that 
we started on our southern tier.
    The good news is we are putting it in our seaports and we 
are putting in our high threat seaports first. For instance, we 
already have 15 pieces of this high technology in 13 seaport 
locations.
    The Chairman. Is that the equivalent they have at Rotterdam 
where they can scan or screen an entire container?
    Mr. Winwood. Yes, sir. As a matter of fact, we have 22 more 
pieces coming online to be placed in the other seaports between 
now and fiscal year 2003, and based on some additional money 
you are trying to get us, we have plans to put another 22 
pieces of equipment to put into 20 locations at our seaport 
locations. So the good news is we got a good start. The 
additional news is we have a long way to go.
    But we are using high-tech equipment. We have a plan to 
increase the use of high-tech equipment at our seaports and we 
are demonstrating the value of that high-tech equipment at our 
seaports right now.
    We did start at our Southern tier because of the massive 
influx of trucks and the fast movement, but we are using those 
systems at our seaports for container examinations that have 
been quite successful. We have tremendous success with this 
technology for narcotics interceptions.
    The Chairman. Obviously in the 20s, the plan, is Charleston 
included in that 20?
    Mr. Winwood. I will have to go back and check our sheet and 
then let you know. I don't know for sure, but we are definitely 
putting it in high threat areas.
    The Chairman. Well, we have got $68 million in our bill, 
too. We are watching that transportation bill because we 
include extra moneys in it. It is really getting ahead of the 
authorization, which is fine business with me.
    Senator Edwards.

                STATEMENT OF HON. JOHN EDWARDS, 
                U.S. SENATOR FROM NORTH CAROLINA

    Senator Edwards. Thank you, Mr. Chairman.
    Mr. Chairman, thank you very much for your work in this 
area and I hope we will be able to work with you on this 
seaport security legislation that I know you are leading the 
way on. I also want to thank my other Chairman, Senator Graham 
for his leadership as the Chairman of the Intelligence 
Committee and also thank the witnesses for all the work you do, 
how important it is to our national security, how important it 
is to controlling criminal activity at our seaports. And we 
have a seaport in Wilmington, North Carolina that we are very 
proud of and we thank you very much for the work that you do.
    I want to focus if I can this morning specifically on the 
issue of terrorism and potential terrorism at the seaports. I 
have become convinced during the time I have been on the 
Intelligence Committee that the most serious national security 
risk that we face over the course of the next decade is 
terrorism. In response to that, I had been working on a set of 
comprehensive ideas and proposals to address the terrorism 
issue, and how it affects our national security here in this 
country.
    But today, I want to focus specifically on terrorism at 
seaports. Now, some of the things, some of the ideas and 
proposals I have are things that you all have talked about or 
made reference to.
    Mr. Woodward just made reference to the ACE during his 
testimony. But let me just mention these ideas, if I can, to 
you. I have got basically five proposals.
    First is that we need to improve our ability to detect 
chemical, biological, nuclear weapons, weapons of mass 
destruction. I know that you are aware of the fact that there 
are very promising new technologies available out there and my 
belief is that we need to invest in these new technologies and 
begin to use them as soon as we possibly can, as soon as it 
becomes practical. We also need to make better use of these so-
called ``smart containers'' that places these GPS tracking 
devices on cargo.
    Second is to streamline the movement of legitimate commerce 
through our ports so we can focus more on high-risk cargo and 
carriers. That sounds kind of counterintuitive to some people, 
but I think if we can move more quickly, the cargo that we know 
is low risk, deal with the shippers that we know are reliable 
and good citizens, then I think it allows us to focus more of 
our resources and attention on those that we need to be most 
concerned about.
    Third is to just strengthen and modernize the Coast Guard 
and to improve its ability to interdict potential threats to 
our seaports before they get to our shores.
    Fourth, to improve the coordination between law enforcement 
and trade agencies and at the Federal, State, and local level. 
Like so many of our efforts to fight terrorism, lack of 
effective communication can sometimes be an enormous obstacle 
and I think we need to integrate this effort, make sure that 
these folks are working together and that they are 
communicating, and communicating efficiently.
    Finally, to help our allies and our trading partners 
improve security at their seaports. Obviously, that is a 
critical component of trying to avoid terrorism and protect our 
national security. I know some of these you all have made 
reference to during the course of your testimony, but I would 
like for you, if you would, to comment on these ideas and 
proposals.
    Mr. Winwood, we will just start with you.
    Mr. Winwood. Well, first of all, Senator, I think this is a 
great list and I agree wholeheartedly with these actions. I'm 
sure the Admiral will be glad to hear me say I support the 
increased support to the Coast Guard.
    But I would like to make a couple of comments on something 
that we've already started and I'll start at the bottom of the 
list. You talk about help our allies. I won't speak to Europe 
and some of the other places, but I will give you one example 
of where cooperation with a foreign government and our 
counterparts can be very productive. If somebody would have the 
opportunity to take a look at the advancement in security 
issues that have been handled in Cartagena, Colombia, which is 
a major threat to the United States as far as the movement of 
illicit narcotics, etcetera, coming into this country.
    Cartagena, based on a combination of working, or a program 
we've started in the Customs Service called BASC, the Business 
Anti-Smuggling Coalition, which is a partnership between the 
business community and the government to look at ways to help 
educate those people to take care of themselves to improve 
security to avoid them being victims of crime. Between that and 
the security measures that Cartagena has put in for additional 
security controlling access and egress, special background 
checks of their employees who work on the seaport, control of 
who works there, they have done a tremendous job in securing 
that particular port which makes our life easier for that type 
of activity coming into the United States.
    Coordination with the trade and the Federal, State and 
locals. I think there's some good news there and I think it 
could be even better. So I wholeheartedly support that. The 
more we can talk together, the more we can share information, 
the more we can work on a common goal, the more effective we 
will be.
    If I may say something about the legitimate cargo, which is 
one of the areas that we consider ourselves to be an expert in, 
we have some great programs going in that area. For instance, 
we have, through our risk management strategy that we have 
established in the Customs Service, we have come up with a 
methodology to divide our world into three parts: that which is 
low risk through 3 or 4 years worth of continued analysis; 
cooperation with the business community and examinations to 
prove our case; to high risk, those which we need to be more 
focused on or we do not know much about.
    We now have a series of 160 major importers that bring 
goods into the United States that we have classified as low 
risk, which means we can divert our attention away from those 
types of companies and their commodities and their containers 
and focus on the unknown and high risk.
    Now, that doesn't sound like a lot, 160, but what that 
represents is 20 percent of the volume and value of goods 
coming into the United States. It means that next year we can 
avoid approximately 25,000 exams that we won't have to do 
because we have already identified these particular companies 
and we are going to expand on that strategy, very detailed, 
very comprehensive approach. I think it is the only way.
    It is not how many you examine, it is what you examine. You 
have to examine the right--it is not the percentage, it is are 
you examining the right ones and that is what we are trying to 
focus on.
    And of course, I can't say more about technology. I mean, 
it is critical that we have the technology and as we get 
available to us the types that help us discern chemical and 
biological, we will most definitely try it.
    If I may add one thing, I misspoke, Senator. If you have 
the opportunity, we do have a mobile Vax truck in the port of 
Charleston, South Carolina, and it is one of our high-tech 
pieces of equipment. I'm sorry I didn't mention earlier, but 
I'd welcome you to take a look at it sometime at your 
convenience.
    The Chairman. It has got to be mobile because it has to go 
from Columbus Street to the North terminal and back again.
    Mr. Winwood. That's why we made it mobile.
    Senator Edwards. Admiral Loy, would you mind responding?
    Admiral Loy. Yes, sir, I would certainly agree with Chuck 
that the list you have offered us here as a set of challenges 
is right on target. There are a couple of thoughts with respect 
to several of those things that we are working on very hard.
    This notion of being able to differentiate between the low 
threat and high threat, whether it is a shipper, whether it is 
an owner, whether it is a ship, whether it is a person on that 
ship, a master or a member of the crew, whether it is cargo 
destinations or cargo, where it began. We have entered into a 
memorandum of agreement with the National Security Council, 
with INS, with the State Department, with DOD, with the 
Department of the Navy. The notion here is this idea of 
maritime domain awareness, that knowledge, in fact, is power 
and we have got to get a better handle on where data becomes 
actionable for us to actually separate the suspicious from the 
non-suspicious.
    Chuck's discussion of their efforts in that regard are, I 
think, right on target. We are attempting to do the same thing 
simply coming from the premise that we are dealing with either 
vessels, people or cargo one way or the other. And if we can 
get an integrated set of data that we can fuse together such 
that the national databank on people fused with the national 
databank on vessels fused with the national databank on cargo, 
would allow any of us in the business to access that fused 
package and make a better set of decisions as to which 
container to inspect. Or in our instance, as we execute our 
port State control evolutions day after day after day in every 
port in the United States, which ones of those vessels are we 
going to stop and scrub to their keel before we allow them 
continued entry into our ports.
    So the waterside side of that as well as shoreside of that 
has to be a hand-in-glove kind of operation. The Customs 
Service has been very aware what we are doing with this 
maritime domain awareness notion. We are centering the effort 
at the Coast Guard Intelligence Center here in Suitland, 
Maryland. I think it is about at the level, sir, where perhaps 
even a visit so as to gain an appreciation of what we are 
trying to do there would be of value to you.
    Second, I would go back to this notion of a model port.
    I want to make sure that folks like you will hear from in 
the second panel are not turned away from the notion because 
what it is, is a generic set of attributes that we would like 
to see reach whatever the minimum thresholds are with respect 
to not only security, but safety, environmental protection and 
lots of other dimensions of any given port's work.
    If we can have that set of standards determined by a group 
of people that will be gathered together to form them and then 
when we on our teams go and assess the vulnerability of any one 
of those ports we have an index against which to measure the 
assessment.
    We can determine gaps and we can encourage them, the harbor 
safety committees and port security committees in those local 
ports to build the action plan that will close the gap to get 
us to the acceptable level of security and safety that we want 
in our ports.
    Risk management, a phrase that the Customs Service uses an 
awful lot these days because of the volume of challenge we 
have, is a rather simple notion. It is about probability times 
consequences; the probability of an event occurring times the 
consequences if it occurs. That is what a risk management 
evolution and thought pattern is all about. We want to be able 
to identify those risk management solutions that offer us the 
very best opportunity to have the most impact with the 
resources that we can devote to the issue.
    So I think this streamlining notion that you have is right 
on target, sir. Certainly, the technological end with our 
partners in the FBI and DOD who are doing an awful lot of good 
work with respect to the sensors dealing with weapons of mass 
destruction is right on target, and we have to be joined hand-
in-glove with them to do that as well.
    Improved coordination was the most straightforward and 
simple recommendation that emerged from our Maritime 
Transportation System Report to the Congress that we submitted 
in September 1999. It is no less important today as it was then 
and the opportunity for to us do better is very, very real.
    Last comment, on international seaports. I too, have 
visited the Hong Kongs and the Singapores and Rotterdams of the 
world and watched both the technological innovations there, a 
sea-land port in Rotterdam which is totally robotic. You pull 
that ship up to the pier, you don't see a person anywhere, but 
a computer-controlled set of access to deal with which 
container is going to go where. The process end of it is one 
thing. The security dimension can be built right into that same 
system if we are careful of what we do.
    The Hart-Rudman Commission in its first report said, sir, 
two things. One, we have two phenomena going on in this world 
that are very real: globalization of the economy and this 
notion of homeland security and a widening threat to the 
security of the nation, of the United States. They appear to be 
conflicting things that if we wanted to deal only with 
facilitating commerce, we would open the security valves at our 
ports and let the commerce flow. But if we are concerned about 
homeland security, we have to tighten those valves down to 
restrict access to the ports. We think this domain awareness 
notion is the umbrella that can allow both of those things to 
go on as constructively as we can.
    Senator Edwards. Thank you, Mr. Chairman.
    The Chairman. That is exactly what we are concerned about, 
Admiral Loy. I guess the port officials, the local folks, 
there's a culture that we let the cargo go. Do not worry about 
it, it moves if it comes through our particular port. And that 
culture has got to be indoctrinated to deal with security.
    Admiral Loy. Absolutely.
    The Chairman. There is no question that is really badly 
needed and how to get them to move and cooperate is the tough 
part. That is why we are going in a gradual fashion. There is 
also the question of labor. If you want a job out here with the 
captain of police, you have got to get a polygraph.
    I find that on the Intelligence Committee. Maybe you can 
get the staff checked. When I was on it, they had all kinds of 
leaks. So I figured it was the staff and we learned in the 
world that you never ask a man to do anything that you are not 
going to do yourself first. So I went over there to get me a 
lie detector test, and the first question, I started my answer: 
``In my humble opinion''; and the needle just went right 
straight across over there. So I don't know how to comment, 
whether he got the same kind of test or not. But that is what 
we have to do.
    Now, we want to get something done, and we did not want 
just a roadblock. And our good labor friends that really run 
these ports, and just nothing happened. We have to work out 
some way to check those in particularly secure positions and we 
will look for a recommendation from each of you on that 
particular score because that was left out of the bill.
    We have got a very important second panel here. The 
Committee is indebted to each of you and the record will stay 
open for questions by the Members. Thank you very much, and we 
will ask panel two to come forward as quickly as possible.
    Mr. Michael Leone, the Port Director of the Port of 
Massachusetts; Basil Maher, the President and Chief Operating 
Officer, Maher Terminals; John L. Miller, the Executive Vice 
President of International Transportation Service; James M. 
Craig, the Vice President of the American Institute of Marine 
Underwriters; and Kim E. Petersen, the Executive Director of 
the Maritime Security Council.
    Mr. Petersen, thank you very much. I understand Mr. 
Petersen has got to catch a plane, so we will start over here 
on my right.
    Mr. Peterson, we welcome you and we are glad to hear from 
you at this time. The full statements will be included in the 
record and we will ask you to summarize as best you can.

       STATEMENT OF KIM E. PETERSEN, EXECUTIVE DIRECTOR, 
                   MARITIME SECURITY COUNCIL

    Mr. Petersen. Thank you, Mr. Chairman and Members of the 
Committee. As the Executive Director of the Maritime Security 
Council, I am pleased to have this opportunity to address the 
Committee today to relate the views and concerns of our 
membership on the proposed Port and Maritime Security Act of 
2001. With your indulgence, I would like to provide you with a 
thumbnail sketch of the Maritime Security Council.
    The MSC was created in 1988 to address the many security 
concerns of the U.S. and international and maritime community. 
The MSC is a member-driven organization that works closely with 
United States Government agencies concerned with maritime 
security and counterterrorism.
    Our mission is to advance the security interests of the 
international merchant marine community against terrorist and 
criminal threats. The MSC represents maritime interests before 
government bodies, works in partnership with industry and 
government, disseminates timely information to its members, 
encourages the development of industry-specific technologies 
and convenes conferences and meetings for the membership. The 
MSC has established partnerships with a number of these 
agencies to prevent illegal drug trafficking, stowaways, theft, 
piracy, terrorism and hijackings.
    Our membership consists of 65 percent of the world's 
commercial ocean carrier fleet, including cruise lines, 
numerous maritime services companies and port authorities. We 
work with many agencies, including the UN's International 
Maritime Organization, U.S. Customs, U.S. Coast Guard, INS, 
State Department, U.S. Navy, Drug Enforcement Agency, the U.S. 
intelligence agencies, the Federal Law Enforcement Training 
Center, as well as government bodies in the United Kingdom and 
Canada.
    With regard to the Port and Maritime Security Act of 2001, 
the MSC finds laudable the steps taken by the Committee and 
Senators Hollings and Graham and their efforts to establish 
minimum and effective security standards for U.S. and foreign 
ports. This last decade has seen shipowners invest significant 
amounts in security infrastructure in operations improvements. 
But the sad fact is that port authorities have failed to keep 
pace. Rarely has this been due to oversight by port directors; 
rather, it is the unfortunate by-product of shortsighted budget 
cuts, departmental downsizings and the lack of Federal 
leadership in financial assistance.
    The past year has demonstrated it is incumbent upon many 
ports to review, analyze and implement improvements in 
physical, personnel and information security, particularly now 
as the range of threats has expanded. Unlike 10 years ago, the 
U.S. now faces an amalgam of threats that have heretofore been 
more likely the subject of ``Rambo'' movies than reality. 
Weapons of mass destruction, chemical and biological agents, 
nuclear devices, sophisticated human smuggling schemes, high-
tech approaches to narcotics smuggling are all at the top of 
the list.
    Many shipowners have made huge strides to protect their 
vessels, employing state-of-the-art access control devices, 
electronic narcotics and explosives detectors, and even devices 
that detect stowaways by way of CO2 concentrations 
in their intermodal containers.
    Equal resolve has not been shown by many ports who have 
been relying upon shipowners to do the heavy lifting. Clearly, 
the efforts of the Interagency Commission on Crime and Security 
in the United States Seaports demonstrated that it is incumbent 
upon ports to match this effort in the protection of their 
perimeters and facilities. Additionally, the MSC believes there 
has been a systemic failure to adequately address security 
awareness within the maritime community.
    Security has become an integral part of the operational 
fabric within the aviation industry, as an example, with strong 
messages of security awareness broadcast both publicly and 
internally--and with the consequent effect of heightened 
deterrence and employee participation. A similar approach must 
be taken by the maritime industry, and as an industry we look 
to the government to support such an effort with funding, 
research and long-term commitment.
    While the MSC applauds the efforts of the President's 
Seaport Commission, it also recognizes the intrinsic weakness 
of its mandate: providing a critical review of United States 
ports as they relate to maritime security. The MSC would like 
to underscore that, no less important, and arguably more so 
than U.S. ports, are the relative standards of security found 
in foreign ports that are a direct sources of merchant shipping 
bound for U.S. ports. Whether it is WMDs, stowaways, or drugs, 
the fundamental fact is that each of these threats will likely 
have as their source some port outside the United States. So 
long as the emphasis is on interdiction rather than prevention 
at the source, the U.S. will remain vulnerable. We applaud this 
legislation for addressing this issue.
    In 1999, the MSC launched an initiative that recommends a 
partnership between key Federal agencies and the MSC to first 
quantify the scope of the problem associated with the lack of 
internationally recognized minimum standards of security for 
all international ports, (that is, ports with merchant traffic 
that have points of origin or destination outside their own 
national boundaries), and second, to develop and recommend 
tiered standards pegged to the cargo/passenger throughput, GNP, 
et cetera, that would codify such standards much like what was 
previously done with international airports.
    We hope that this initiative, and the Maritime Security 
Council's unique ability to assist in such efforts, will not be 
lost in the scramble to accomplish the goals of this 
legislation.
    While we applaud the intent of the legislation, we 
nevertheless have reservations about the key elements of its 
provisions. For example, we concur that intelligence and 
information sharing among law enforcement agencies needs to be 
improved and coordinated at many seaports. Most seaports have 
little or no idea of the threats they face from crime, 
terrorism, stowaways, and other illegal activities, due to lack 
of coordination and cooperation between law enforcement and 
intelligence agencies and the sea carriers themselves.
    It is vital for the Members of this Committee to understand 
that the lion's share of intelligence relating to maritime 
crime comes from the industry itself. Just like the seaports, 
the sea carriers, which include cargo ships, cruise ships and 
other merchant vessels, are victims in these illegal 
activities, and as such, they work tirelessly to identify 
threats, minimize vulnerabilities and reduce their risk.
    If you ask the Office of Naval Intelligence or the Central 
Intelligence Agency or the Coast Guard where the bulk of their 
intelligence comes from, they will certainly tell you it is the 
industry and the shippers themselves.
    Many are not aware of the fact that there exists today an 
ad hoc working group that is composed of key Federal agencies, 
including the Defense and intelligence groups and industry 
representatives from the Maritime Security Council and the 
ICCL. The MSC and ICCL members have U.S. security clearances 
and the technical means to communicate classified information 
in order that they and the government agencies represented in 
the working group can share information and, if necessary, 
discuss raw intelligence findings so as to jointly propose 
reasonable actions to take so as to protect innocent lives and 
property. The reason that this unique and effective partnership 
exists is that the government agencies involved in maritime 
security recognize that much of the expertise and the 
intelligence from the field resides in the sea carrier 
community and not in the government. Any effort to improve the 
standard of communication between law enforcement and other 
government agencies and seaports must also include provisions 
for industry participation. Absent such provisions, the efforts 
to strengthen U.S. seaport security is doomed to failure.
    The same participation by industry is also essential for 
the establishment of Port Security Task Force and the local 
port security committees recommended in this legislation. 
Umbrella non-profit organizations representing sea carriers 
must be included to ensure that their resources and concerns 
are not overlooked. Indeed, we can only assume it to be an 
oversight that membership in the proposed seaport committees is 
limited to the port authorities, Federal, State and local 
government and their law enforcement agencies, labor 
organizations and transportation workers, and those private 
sector representatives whose inclusion is deemed beneficial by 
the Coast Guard Captain of the Port. I do not believe it was 
the intention of the Committee to have seaport security issues 
reviewed by stevedore's unions, but not by the sea carriers as 
well.
    Seaport security and vulnerability assessments are vital 
for conducting risk assessments of U.S. and foreign ports. The 
U.S. Coast Guard has done an admirable job in performing such 
assessments of foreign ports of what can only be described as 
ridiculously low funding.
    Funding for these assessments is anemic. Despite hundreds 
of thousands of U.S. citizens visiting ports around the world, 
the risks of which are little known to the government. In some 
years, less than five assessments are performed--in some cases 
the assessments are canceled altogether due to the ports being 
deemed too hazardous for military personnel to visit. Yet these 
same ports are visited by American tourists on a regular basis, 
not knowing the potential risks.
    The Committee should know that the maritime industry itself 
is committed to improving the safety of foreign ports, 
particularly those visited by cruise ships. As the former 
Director of Security for both Princess and Renaissance Cruises, 
I performed security audits in over 160 ports in 106 countries. 
If a port had problems, the industry would assist the port 
authority in identifying weaknesses and those low-cost or no-
cost measures that could reduce their exposure to risk. Mind 
you, none of this is mandated by legislation or done with U.S. 
assistance. It is just good business to protect the lives and 
property of our passengers and cargo. But there needs to be 
Federal help to do this correctly.
    The Act also recommends the use of the FBI's Integrated 
Automated Fingerprint Identification System for port authority 
background checks. The MSC recognizes the sensitivity of this 
issue, particularly given the volatility of any form of 
background checks with various unions and waterfront 
organizations. While the majority of dock workers are honest 
and absent a criminal background or criminal ties, it is 
nevertheless recognized by government agencies, port 
authorities and sea carriers that the majority of crimes 
committed within the ports are by those employees that have 
access within their confines. Access controls, coupled with 
background checks of all those port employees that have access 
to restricted areas, which by definition includes docks and 
ships, would have a significant effect in reducing the over $1 
billion lost in cargo theft annually, as well as minimizing 
overall criminal risks within these ports. There also needs to 
be effective visitor controls, using state-of-the-art 
technologies such as Fast Pass and A-Pass.
    The Act recommends an International Seaport Security 
Initiative designed to encourage the development and adoption 
of seaport security standards under international agreements in 
other countries. This, and the follow-on Port Accreditation 
Program, were first proposed in an international conference on 
maritime security hosted by the Maritime Security Council in 
1998.
    In 2000, I met with the UN's International Maritime 
Organization in London and discussed this issue. The IMO 
expressed interest in working with the MSC and United States 
Government in the creation of a tiered set of standards of port 
security that could be used to increase the security in Third 
World countries to acceptable levels. It is important to 
recognize that by itself, the United States would be hard put 
to see such far-reaching an effort succeed without the 
assistance of the international sea carrier community.
    The MSC's constituents are both familiar with the ports of 
concern and work with these port authorities on a regular 
basis. For reasons previously articulated, and due to its 
extant efforts in this pursuit, we believe that the MSC must be 
an integral partner in the Act's International Seaport Security 
Initiative.
    The Act proposes the creation of a Maritime Security 
Institute to develop standards and procedures for training and 
certification of maritime security professionals. The MSC is 
flattered that such an initiative is being proposed, as the MSC 
created the Maritime Security Institute in 2000 for the same 
purposes as detailed in the Act. It was also the intention of 
the MSC to combine efforts with the U.S. Treasury's Federal Law 
Enforcement Training Center, which is already recognized for 
its outstanding course work in seaport security and 
counterterrorism. The MSC stands ready to work with the U.S. 
Merchant Marine Academy and the International Association of 
Airport and Seaport Police to further develop the Maritime 
Security Institute.
    However, the MSC recommends that the Maritime Security 
Institute be based in Charleston, South Carolina, not at the 
U.S. Merchant Marine Academy, as is recommended in the 
legislation. The Federal Law Enforcement Training Center 
already has established in Charleston a training facility that 
sees nearly 30,000 students per year. While the U.S. Merchant 
Marine Academy is undoubtedly one of the finest merchant marine 
training centers in the world, the Maritime Security Institute 
will focus more on law enforcement than it will merchant marine 
training. Given the quality of maritime security, law 
enforcement, and criminal investigation training that already 
takes place at the Charleston facility, plus the added benefits 
of its proximity to a major U.S. port, a mild climate that 
lends itself to year-round outdoor training, and greater 
accessibility to the majority of sea carriers which tend to be 
located in the southern United States, Charleston is a better 
choice and the MSC recommends a change.
    The Act recommends that loans and grants be made available 
for port security infrastructure improvements, which the 
Maritime Security Council applauds. Under eligible projects, 
the MSC would recommend including conferences and seminars 
which aim is to educate and improve maritime security in the 
U.S. and overseas. The role of education should be seen as a 
predicate to hardware improvements at our seaports and such 
inclusion under this section of the Act would help to ensure 
that.
    Finally, Mr. Chairman, the Act recommends that the revision 
of the Department of Transportation's Port Security Planning 
Guide be made available over the Internet. The MSC believes 
that the dissemination of information, including guides of this 
sort, that provide detailed security planning guidance 
regarding the nation's seaports, is best done through official 
sources. Placing such information on the Internet could place 
sensitive security guidelines in the hands of terrorists or 
criminals that could derive benefit from their contents. It is 
not likely that those ports and other end-users who have a 
legitimate need for security planning information, would not 
have access to it through the U.S. Coast Guard, U.S. Department 
of Transportation, MARAD or other official sources. The Port 
Security Planning Guides should be treated as ``For Official 
Use Only'' documents and promulgated as such.
    I'd like to thank the Committee and its Members for this 
opportunity to address this important legislative effort. The 
proposed Port and Maritime Security Act of 2001, with the 
modifications we have put forward to you today, as well as the 
details and budgetary changes spelled out in my prepared 
remarks which I asked to be included in the record, stands to 
be one of the most important steps taken by any government to 
protect its ports and sea carriers from an amalgam of unchecked 
risks.
    We at the MSC stand prepared, as we always have, to assist 
this Committee and its staff in this important undertaking. The 
Maritime Security Council will be dedicating a significant 
portion of its annual conference here in Washington to the 
issues raised in this hearing. I invite each of you to attend 
on the 18th and 19th of September to help us find new ways to 
improve maritime security.
    Mr. Chairman, I look forward to answering any questions you 
may have.
    [The prepared statement of Mr. Petersen follows:]

      Prepared Statement of Kim E. Petersen, Executive Director, 
                       Maritime Security Council

    Thank you Mr. Chairman and Members of the Committee. As the 
Executive Director of the Maritime Security Council, I am pleased to 
have this opportunity to address the Committee today to relate the 
views and concerns of our membership on the proposed Port and Maritime 
Security Act of 2001.

                               BACKGROUND

    The Maritime Security Council was created in 1988 to address the 
many security concerns of the U.S. and international maritime 
community. The MSC is a member-driven organization that works closely 
with United States government agencies concerned with maritime security 
and counterterrorism.
    Our mission is to advance the security interests of the 
international merchant marine community against criminal and terrorist 
threats. The MSC represents maritime interests before government 
bodies; works in partnership with industry and government; disseminates 
timely information to its members; encourages the development of 
industry-specific technologies; and, convenes conferences and meetings 
for the membership. The MSC has established partnerships with a number 
of these agencies to prevent illegal drug trafficking, stowaways, 
theft, piracy, terrorism, and hijacking.
    The MSC's international membership includes over 65 percent of the 
world's commercial ocean carrier fleet (by tonnage), cruise lines, 
numerous maritime service companies, port authorities, P&I clubs, 
shipping groups, ships' agents, maritime law firms, and technical and 
engineering firms serving the maritime industry. The MSC works with 
many agencies, including the U.N.'s International Maritime 
Organization, the U.S. Customs Service, U.S. Coast Guard, U.S. 
Immigration and Naturalization Service, U.S. Department of State, U.S. 
Navy, U.S. Maritime Administration (MARAD), U.S. Drug Enforcement 
Agency, U.S. intelligence agencies, Federal Law Enforcement Training 
Center, U.K. Department of the Environment, Transportation and the 
Regions, and the U.K. Ministry of Defense.
    In addition to being the principle clearinghouse for the exchange 
of information between its carrier members, the MSC also acts as a 
liaison with regulators and governments offering vital intelligence on 
crimes at sea. As a consequence of this role, the MSC assisted in the 
development of the U.S. Sea Carrier Initiative and Super Carrier 
Programs and participates in international activities with the U.S. 
Drug Control Program, World Customs Organization, and the Baltic and 
International Maritime Council. The MSC also maintains an extensive 
library of information and training aids on maritime security.
    The Committee should know that the Maritime Security Council is the 
proud recipient of the Vice President's National Performance Review or 
``Hammer Award'' and has been a consultant to The White House, National 
Security Council, U.S. Customs, U.S. Department of Transportation, U.S. 
Coast Guard, and many other government entities. In 2000, the Maritime 
Security Council was asked to become maritime security advisors to both 
the U.S. State Department, through its Overseas Security Advisory 
Council, and Interpol, the international police agency.
    The Maritime Security Council was the first maritime organization 
to work with the President's Interagency Commission on Crime and 
Security in United States Seaports. In fact, MSC executives provided a 
confidential state-of-the-industry briefing to key staff of the 
Commission at the White House prior to its actual authorization by the 
President in the Fall of 1999.

                 PORT AND MARITIME SECURITY ACT OF 2001

    The MSC finds laudable the steps taken by the Committee and 
Senators Hollings and Graham in their efforts to establish minimum and 
effective security standards for U.S. and foreign ports. The last 
decade has seen shipowners invest significant amounts in security 
infrastructure and operations improvements, but the sad fact is that 
port authorities have failed to keep pace. Rarely has this been due to 
oversight by port directors; rather, it is the unfortunate byproduct of 
shortsighted budget cuts, departmental downsizings, and lack of Federal 
leadership and financial assistance.
    The past year has demonstrated that it is incumbent upon many ports 
to review, analyze, and implement improvements in physical, personnel, 
and information security, particularly now as the range of threats has 
expanded. Unlike 10 years ago, the U.S. now faces an amalgam of threats 
that have heretofore been more the subject of Rambo movies than 
reality: weapons of mass destruction (WMD); chemical and biological 
agents; sophisticated human smuggling schemes; and, hi-tech approaches 
to narcotics smuggling are at the top of the list. Many shipowners have 
made huge strides to protect their vessels, employing state-of-the-art 
access control devices, electronic narcotics and explosives detectors, 
and even devices that detect stowaways by way of CO2 
concentration. Equal resolve has not been shown by many ports, who have 
relied upon shipowners to do the heavy lifting; clearly, the efforts of 
the Interagency Commission on Crime and Security in United States 
Seaports demonstrated that it is incumbent upon ports to match this 
effort in the protection of their perimeters and facilities.
    Additionally, the MSC believes there has been a systemic failure to 
adequately address security awareness within the maritime community. 
Security has become an integral part of the operational fabric within 
the aviation industry, as an example, with strong messages of security 
awareness broadcast both publicly and internally--and with the 
consequent effect of heightened deterrence and employee participation. 
A similar approach must be taken by the maritime industry, and as an 
industry we look to the government to support such an effort with 
funding, research, and long term commitment.
    The MSC feels that an impediment to holistic improvements in the 
area of maritime security can be traced to a confusing array of would-
be agency ownership of this issue. It is a daunting task, to say the 
least, for a maritime director of security to weigh which agency to 
report an incident to or request guidance from, when the sheer numbers 
of these agencies exceed that which can be counted on two hands and a 
few toes thrown in for good measure. If not outright consolidation of 
responsibility, the industry would benefit from greater articulation of 
agency responsibility on issues involving security.
    While the MSC applauded the efforts of the President's Seaport 
Commission, it also recognized the intrinsic weakness of its mandate: 
providing a critical review of U.S. ports as they relate to maritime 
security. The MSC would like to underscore that no less important, and 
arguably more so than U.S. ports, is the relative standards of security 
found in foreign ports that are direct sources of merchant shipping 
bound for U.S. ports. Whether it is WMDs, stowaways, or drugs, the 
fundamental fact is that each of these threats will likely have as a 
source some port outside the United States. So long as the emphasis is 
on interdiction rather than prevention at the source, the U.S. will 
forever remain vulnerable. We applaud this legislation for addressing 
this issue.
    In 1999, the MSC launched an initiative that recommends a 
partnership between key Federal agencies and the MSC to first quantify 
the scope of the problem associated with the lack of internationally 
recognized minimum standards of security for all international ports 
(i.e., ports with merchant traffic that have points of origin or 
destination outside their own national boundaries); and second, to 
develop and recommend tiered standards pegged to cargo/passenger 
throughput, GNP, etc. that would codify such standards much like what 
has previously been done with international airports. We hope that this 
initiative, and the Maritime Security Council's unique ability to 
assist in such efforts, will not be lost in the scramble to accomplish 
the goals of this legislation.
    While we applaud the intent of this legislation, we nevertheless 
have reservations about key elements of its provisions. For example, we 
concur that intelligence and information sharing among law enforcement 
agencies need to be improved and coordinated at many seaports. Most 
seaports have little or no idea of the threats they face from crime, 
terrorism, stowaways, and other illegal activities due to a lack of 
coordination and cooperation between law enforcement and intelligence 
agencies and the sea carriers themselves.
    It is vital for the Members of this Committee to understand that 
the lion's share of intelligence relating to maritime crime comes from 
the industry itself. Just like the seaports, the sea carriers (which 
includes cargo ships, cruise ships, and other merchant vessels) are 
victims in these illegal activities, and as such they work tirelessly 
to identify threats, minimize vulnerabilities, and reduce their risk. 
If you ask the Office of Naval Intelligence or the Central Intelligence 
Agency or MARAD or the Coast Guard where the bulk of their intelligence 
comes from, they will certainly tell you it is the industry and the 
shippers themselves.
    Many are not aware of the fact that there exists today an ad hoc 
working group that is composed of key Federal agencies, including the 
defense and intelligence groups, and industry representatives from the 
Maritime Security Council and the International Council of Cruise 
Lines. The MSC and the ICCL members have U.S. security clearances and 
the technical means to communicate classified information in order that 
they, and the government agencies represented in the working group, can 
share information and, if necessary, discuss raw intelligence findings 
so as to jointly propose reasonable actions to take so as to protect 
innocent lives and property. The reason this unique and effective 
partnership exists is that the government agencies involved in maritime 
security recognizes that much of the expertise and the intelligence 
from the field resides in the sea carrier community, and not in the 
government. Any effort to improve the standard of communication between 
law enforcement and other government agencies, and seaports, must also 
include provisions for industry participation. Absent such provisions, 
the efforts to strengthen U.S. seaport security is doomed to failure.
    The same participation by industry is also essential for the 
establishment of a Port Security Task Force and the local Port Security 
Committees recommended in this legislation. Umbrella non-profit 
organizations representing sea carriers, such as the Maritime Security 
Council, must be included to ensure that their resources, and concerns, 
are not overlooked. Indeed, we can only assume it to be an oversight 
that membership in the proposed Seaport Security Committees is limited 
to the port authority; Federal, state, and local government and their 
law enforcement agencies; labor organizations and transportation 
workers; local management organizations; and those private sector 
representatives whose inclusion is deemed beneficial by the USCG 
Captain of the Port. Can it really be the intention of the Committee to 
have seaport security issues reviewed by stevedores' unions but not by 
the sea carriers themselves?
    Seaport security and vulnerability assessments are vital for 
conducting risk assessments of U.S. and foreign ports. The U.S. Coast 
Guard has done an admirable job in performing such assessments of 
foreign ports with what can only be described as ridiculously low 
funding. Despite hundreds of thousands of U.S. citizens visiting ports 
around the world, the risks of which are little known to the 
government, funding for these assessments is anemic. In some years less 
than five such assessments are performed--in some cases the assessments 
are canceled altogether due to the ports being deemed ``too hazardous'' 
for military personnel to visit. Yet American tourists will visit such 
ports regularly not knowing the potential risks.
    The Committee should know that the industry itself is committed to 
improving the safety of foreign ports, particularly those visited by 
cruise ships. As the former Director of Security for both Princess and 
Renaissance Cruises, I performed security audits in over 160 ports in 
106 countries. If a port had problems, the industry would assist the 
port authority in identifying weaknesses and those low-cost or no cost 
measures that could reduce their exposure to risk. Mind you, none of 
this is mandated by legislation or done with U.S. assistance. It's just 
good business to protect the lives and property of our passengers and 
cargo. But there needs to be Federal help if we are to do it right.
    The Act recommends the creation of Maritime Transportation Security 
Programs for the purpose of prescribing regulations to protect the 
public from threats originating from vessels in a U.S. seaport against 
an act of crime or terrorism. The Maritime Security Council again urges 
the Committee to include organizations such as the MSC in these 
programs to ensure that all relevant voices are heard. Without the MSC, 
a significant percentage of maritime security expertise, experience, 
and information will be unavailable to those most in need of it.
    The Act also recommends the use of the FBI's Integrated Automated 
Fingerprint Identification System for port authority background checks. 
The MSC recognizes the sensitivity of this issue, particularly given 
the volatility of any form of background checks with the various 
stevedoring and other waterfront labor unions. While the majority of 
dock workers are honest and absent a criminal background or criminal 
ties, it is nevertheless recognized by both government agencies, port 
authorities, and sea carriers, that the majority of crimes committed 
within the ports are by those employees that have access within their 
confines. Access controls coupled with background checks of all those 
port employees that have access to restricted areas, which by 
definition includes docks and ships, would have a significant affect in 
reducing the over $1 billion lost in cargo theft, as well as minimizing 
overall criminal risk.
    The Act proposes Security Program Guidance for the development of 
voluntary security recommendations that will serve as a benchmark for 
the review of security plans. The Maritime Security Council and its 
members have experience in depth in the development of security 
policies and procedures. In areas covering general security, access to 
sensitive areas, vehicular access, firearms restrictions, and private 
security guards, the sea carriers themselves have experience extending 
beyond U.S. borders, thereby giving a global perspective.
    The Act recommends an International Seaport Security initiative 
designed to encourage the development and adoption of seaport security 
standards under international agreements in other countries. This, and 
the follow-on Port Accreditation Program, were first proposed in an 
international conference on maritime security hosted by the Maritime 
Security Council in 1998. In 2000, I met with the U.N.'s International 
Maritime Organization in London and discussed this issue. The IMO 
expressed interest in working with the MSC and the U.S. Government in 
the creation of tiered standards of port security that could be used to 
increase security in Third World countries to acceptable levels. It is 
important to recognize that by itself, the United States would be hard 
put to see such far reaching an effort succeed without the assistance 
of the international sea carrier community. The MSC's constituency is 
both familiar with the ports of concern, and works with these port 
authorities on a regular basis. For reasons previously articulated, and 
due to its extant efforts in this pursuit, we believe the MSC must be 
an integral partner in the Act's International Seaport Security 
initiative.
    Furthermore, the MSC believes that, given the gravity of the 
problem associated with foreign port security standards, and the 
magnitude of this effort, the proposed budget of $500,000 per year for 
3 years is entirely inadequate. An amount of $1,000,000 per year would 
be a minimum amount necessary to accomplish this goal of the Act.
    The Act proposes the creation of a Maritime Security Institute to 
develop standards and procedures for training and certification of 
maritime security professionals. The Maritime Security Council is 
flattered that such an initiative is being proposed, as the MSC began 
the creation of a Maritime Security Institute in 2000 for the same 
purposes as detailed in the Act. It was also the intention of the MSC 
to combine efforts with the U.S. Treasury's Federal Law Enforcement 
Training Center, which is already recognized for its outstanding course 
work in seaport security and counterterrorism. The MSC stands ready to 
work with FLETC, as well as the U.S. Merchant Marine Academy and the 
International Association of Airport and Seaport Police to further 
develop the Maritime Security Institute.
    However, the funding recommended is woefully inadequate given the 
demand for such training and certification. I believe the Committee has 
underestimated the number of persons involved in seaport and sea 
carrier security, and a budget of $2,500,000 for the first 2 years and 
$1,000,000 for the following 2 years, is simply unrealistic and setting 
the program up for failure. The MSC and its members strongly believe 
that a budget of $3,750,000 for the first year, $2,500,000 for the next 
3 years, and $1,750,000 each following year would be the minimum 
necessary to accomplish the goal of establishing a U.S.-based 
Institute, coupled with an ability to send Mobile Training Teams to 
foreign governments and ports in concert with the Port Accreditation 
Program.
    The MSC further recommends strongly that the Maritime Security 
Institute be based in Charleston, South Carolina and not at the U.S. 
Merchant Marine Academy. The Federal Law Enforcement Training Center 
already has established in Charleston a training facility that sees 
nearly 30,000 students per year. While the USMMA is undoubtedly one of 
the finest merchant marine training centers in the world, the Maritime 
Security Institute will focus more on law enforcement than it will 
merchant marine training. Given the quality of maritime security, law 
enforcement, and criminal investigation training that already takes 
place at the Charleston facility, plus the added benefits of proximity 
to a major U.S. port, a mild climate that lends itself to year round 
outdoor training, and greater accessibility to the majority of sea 
carriers which happen to be located in the southern United States, this 
location is a superior choice and the MSC encourages a change.
    The Act recommends that loans and grants be made available for port 
security infrastructure improvements, which the Maritime Security 
Council applauds. Under eligible projects, the MSC would recommend 
including conferences and seminars which aim is to educate and improve 
maritime security in the U.S. and overseas. The role of education 
should be seen as a predicate to hardware improvements at our seaports 
and such inclusion under this section of the Act would help to ensure 
that.
    Finally, the Act recommends that the revision of the Department of 
Transportation's Port Security Planning Guide be made available on the 
Internet. The MSC believes that the dissemination of information, 
including guides of this sort, that provides detailed security planning 
guidance regarding the nation's seaports, is best done through official 
sources. Placing such information on the Internet could place sensitive 
security guidelines in the hands of terrorists or criminals who could 
derive benefit from their contents. It is not likely that those ports 
and other end-users who have a legitimate need for security planning 
information would not have access to it through the U.S. Coast Guard, 
Department of Transportation, MARAD, or other official sources. The 
Port Security Planning Guides should be treated as ``For Official Use 
Only'' documents and promulgated as such.
    The Maritime Security Council thanks the Committee and its Members 
for this opportunity to address this important legislative effort. The 
proposed Port and Maritime Security Act of 2001, with the modifications 
we have put forward to you today, stands to be one of the most 
important steps taken by any government to protect its ports and sea 
carriers from an amalgam of unchecked risks. We at the MSC stand 
prepared, as we always have, to assist this Committee and its staff on 
its important efforts. The Maritime Security Council will be dedicating 
a significant portion of its Annual Conference to the issues raised in 
this hearing. I invite each of you to attend on the 18th and 19th of 
September here in Washington as we work to find new ways to improve 
maritime security.
    I will make a copy of my remarks available to your staff and will 
remain to answer any of your questions.
    Thank you.

    The Chairman. Thank you very much, Mr. Petersen. You 
favored the Committee by your appearance and we understand if 
you have got to catch a flight and be excused.
    Mr. Craig.

         STATEMENT OF JAMES M. CRAIG, VICE PRESIDENT, 
           AMERICAN INSTITUTE OF MARINE UNDERWRITERS

    Mr. Craig. Thank you, Mr. Chairman. My name is James M. 
Craig and I am Vice President of the American Institute of 
Marine Underwriters. AIMU is the national association of U.S.-
based insurance and reinsurance companies which insure vessels 
of all types, the cargoes they transport and the liabilities 
they face. Our membership also includes brokers, claims 
adjusters, surveyors and attorneys. I am here to testify that 
cargo crime is a huge national problem which the private sector 
is trying very hard to make a dent in. Cargo insurers strongly 
support enactment of the Port and Maritime Security Act. We 
believe that our efforts to combat the problem of cargo theft 
can be greatly assisted by applying more and better coordinated 
Federal resources as the proposed legislation would do. The 
views expressed in my statement are also shared by the Inland 
Marine Underwriters Association. IMUA members insure cargoes 
transported domestically, while AIMU members cover cargoes 
moving by sea or transported internationally by any mode. Both 
AIMU and IMUA are members of the National Cargo Security 
Council, which has labored for many years on this issue.
    Cargo theft represents a costly drain on our economy, 
beginning with the impact on the victimized companies and 
spreading to their employees who may become unemployed when 
bankruptcy results, or, even worse, can be killed in a violent 
robbery. Then there is the cost to the consumer. An independent 
study conducted by one of our member companies estimated that 
theft of high-tech cargo adds $150 to the cost of an average 
computer. All of this is just part of an even bigger picture. 
We are told by the FBI that stolen computer components are 
often accepted in place of cash in drug deals. The same 
criminals involved in cargo theft have been linked to money 
laundering, counterfeiting, illegal gambling, illegal 
immigration, smuggling, all kinds of business frauds, narcotics 
and weapons violations. Resources applied to preventing cargo 
crime will have a ripple effect in helping to combat terrorism 
and other national security concerns and vice versa.
    Several key features of the legislation are important to 
the insurance companies and their customers, which include all 
of corporate America. These provisions would improve the 
collection of data to document the problem of cargo theft, 
increase criminal penalties for cargo thieves, and provide 
training in maritime security to law enforcement professionals. 
We discussed these same matters with the Interagency Commission 
on Crime and Security in U.S. Seaports which addressed them in 
their final report. Your legislation incorporates most of what 
we recommended to the Commission, and our list of key 
provisions also comprises most of the priorities on the agenda 
of the National Cargo Security Council. We appreciate the work 
of all who have brought us to this point and thank you for the 
opportunity to testify today.
    [The prepared statement of Mr. Craig follows:]

         Prepared Statement of James M. Craig, Vice President, 
               American Institute of Marine Underwriters

     My name is James M. Craig and I am Vice President of the American 
Institute of Marine Underwriters. AIMU is the national association of 
U.S.-based insurance and reinsurance companies which insure vessels of 
all types, the cargoes they transport and the liabilities they face. 
Our membership also includes brokers, claims adjustors, surveyors and 
attorneys. I'm here to testify that cargo crime is a huge national 
problem which the private sector is trying very hard to make a dent in. 
Cargo insurers strongly support enactment of the Port and Maritime 
Security Act. We believe that our efforts to combat the problem of 
cargo theft can be greatly assisted by applying more and better 
coordinated Federal resources, as the proposed legislation would do. 
The views expressed in my statement are also shared by the Inland 
Marine Underwriters Association. IMUA members insure cargoes 
transported domestically, while AIMU members cover cargoes moving by 
sea or transported internationally by any mode. Both AIMU and IMUA are 
members of the National Cargo Security Council, which has labored for 
many years on this issue.
    Cargo theft represents a costly drain on our economy, beginning 
with the impact on the victimized companies and spreading to their 
employees who may become unemployed when bankruptcy results, or, even 
worse, can be killed in a violent robbery. Then there is the cost to 
the consumer. An independent study conducted by one of our member 
companies estimated that theft of high-tech cargo adds $150 to the cost 
of an average computer. And all of this is just part of an even bigger 
picture. We are told by the FBI that stolen computer components are 
often accepted in place of cash in drug deals. The same criminals 
involved in cargo theft have been linked to money laundering, 
counterfeiting, illegal gambling, illegal immigration, smuggling, all 
kinds of business frauds, narcotics and weapons violations. Resources 
applied to preventing cargo crime will have a ripple effect in helping 
to combat terrorism and other national security concerns--and vice 
versa.
    Several key features of the legislation are important to the 
insurance companies their customers, which include virtually all of 
corporate America. These provisions would improve the collection of 
data to document the problem of cargo theft, increase criminal 
penalties for cargo thieves, and provide training in maritime security 
to law enforcement professionals. We discussed these same matters with 
the Interagency Commission on Crime and Security in U.S. Seaports, 
which addressed them in their final report. Your legislation 
incorporates most of what we recommended to the Commission, and our 
list of key provisions also comprises most of the priorities on the 
agenda of the National Cargo Security Council. We appreciate the work 
of all who have brought us to this point and thank you for the 
opportunity to testify today.

                            DATA COLLECTION

    Several independent studies discussed in the Seaport Commission's 
report--including one by the John A. Volpe National Transportation 
Systems Center and another by the RAND organization--place the losses 
due to cargo theft near $10 billion annually. However, we need to 
improve the collection of data so that law enforcement efforts can be 
better focused. Statistics currently available are seriously deficient 
for a variety of reasons. Your legislation would mandate an evaluation 
of existing governmental data bases in an effort to ensure the 
collection of data on cargo theft occurring in the ports or anywhere 
else in the intermodal chain of transportation. We understand that the 
current unified Federal crime reporting system suffers from a lack of 
resources on the State and local levels. The bill requires an outreach 
program to help channel resources to State and local law enforcement 
agencies to improve their information systems and harmonize them with 
the Federal system. In addition, we strongly recommend that a 
requirement be added for officials to report cargo theft as a separate 
crime so this data may be easily retrieved.

                           CRIMINAL PENALTIES

    We have observed that cargo criminals are not being adequately 
deterred by the existing penalties. In fact, indications are that those 
who once specialized in other types of crime are turning to cargo theft 
because the rewards are lucrative and the threat of prosecution is 
minimal. We strongly support the provision in your bill which directs 
the U.S. Sentencing Commission to amend the Federal sentencing 
guidelines to provide a sentencing enhancement of not less than two 
levels for a violation of the Federal cargo theft law.

                           SECURITY TRAINING

    The legislation addresses an important need by building on the good 
work already being done at the United States Merchant Marine Academy's 
Global Maritime and Transportation School (GMATS) at Kings Point, New 
York. A new Maritime Security Institute to be established at this 
Federal facility will expand the current offerings and enable the 
training and certification of maritime security professionals in both 
the law enforcement and private sectors. With a better understanding of 
the intricacies of the shipping business, law enforcement officials 
will be better equipped to do their jobs.

                                TEAMWORK

    The problems addressed by the legislation are multidimensional, and 
they are best approached through interagency cooperation and the 
sharing of information and resources. We are pleased that the Port 
Security Task Force proposed in the bill will have a subcommittee 
comprised of Federal, State and local government law enforcement 
agencies. This ``Law Enforcement Subcommittee'' will have the ability 
to collaborate with public and private entities. We would like to call 
your attention to a group of interagency task forces which have already 
been established in various regions of the country to combat cargo 
theft. They were organized as a result of a speech made in 1994 by the 
Attorney General, but they have never had a sufficiently high profile 
to make an appearance in the Federal budget and thus suffer from a lack 
of resources. Ideally, each of the task forces should be funded and 
include representatives of the U.S. Attorneys, the FBI, Customs 
Service, DEA, INS, the Coast Guard, and State and local prosecutors and 
law enforcement officials. Due to budget constraints, agencies are 
sometimes unable to participate in the task forces. We would appreciate 
the opportunity to work with Committee staff to ensure that the most 
critical cargo theft task forces are able to benefit from your 
legislation.

              PRIVATE SECTOR'S WORK TO PREVENT CARGO CRIME

    Those involved in cargo transportation know they have a 
responsibility to do as much as they can to address security issues. 
AIMU recently surveyed its members to determine what advances are being 
made by the private sector in cargo loss prevention. We would like to 
share with the Committee the following findings:
     Increased use of video and digital cameras and videotape.
     Trailer satellite GPS/tracking systems including 
temperature monitoring and door monitoring.
     Electronic seals and locks on trailers and containers.
     Tamper indicating tape for use on cartons and pallets, 
pallet brands and seals.
     Trailer/chassis anti-theft devices that disarm the 
ignition or lock the brakes.
     Use of security escorts on high valued loads within the 
United States and some overseas areas.
     Increased documentation of proven packaging methods, 
including the elimination of brand markings and labels from the outside 
packages.
     Increased use of packing, loading and discharge surveys.
     Closer vetting of all modes of transportation involved in 
high-valued loads.
     Greater use of independent security experts and surveyors.

    The Chairman. Very good. Thank you a lot.
    Mr. Miller.
    Mr. Miller. Mr. Maher is going to speak first.

    STATEMENT OF BASIL MAHER, PRESIDENT AND CHIEF OPERATING 
                 OFFICER, MAHER TERMINALS, INC.

    Mr. Maher. Good morning, Mr. Chairman and Members of the 
Committee. I am Basil Maher, President and Chief Operating 
Officer of Maher Terminals, Inc., Jersey City, New Jersey. 
Maher Terminals is the largest container terminal operator in 
the port of New York and New Jersey, handling about 900,000 
containers annually. We have operated in this port in excess of 
50 years, and I have been personally involved in every aspect 
of terminal operations for 28 years.
    I am here today on behalf of the National Association of 
Waterfront Employers, or NAWE, and the United States Maritime 
Alliance, or USMX. The former is the national trade association 
representing the U.S. terminal and stevedoring industry; the 
latter is management's collective bargaining representative 
that consists of ocean carriers, marine terminal operators and 
port associations to negotiate with the ILA on the East and 
Gulf coasts. I sit on the board of NAWE and on its special 
committee on port security.
    Mr. John Miller, another NAWE board member who also sits on 
our special committee on port security joins me today. John 
will elaborate on the general points contained in my remarks.
    NAWE and USMX appreciate the opportunity you have extended 
to us to testify on this all-important issue. Given the fact 
that we only recently received a copy of your bill, we ask for 
additional time beyond this hearing to get input from a large 
cross-section of the industry. I ask that both NAWE and USMX be 
permitted to submit more detailed comments for the record. 
Hopefully this can be done within the next 4 weeks or so.
    By way of background, NAWE and USMX members have always 
cooperated with the Federal law enforcement agencies having 
jurisdiction over marine terminals. Normally, this is done on a 
local basis, and occasionally on a national basis. We will, of 
course, continue to do so when this legislation becomes public 
law.
    Unquestionably, marine terminals are subject to the 
maritime jurisdiction of the United States, and NAWE and USMX 
members readily understand that the security of our borders is 
a fundamental responsibility of the Federal Government. When 
the Interagency Commission on Crime and Terrorism in the U.S. 
Seaports conducted its fact-finding mission last year, the 
commissioners observed many terminal operations. Clearly, the 
Federal law enforcement agencies comprising the Commission 
became quite concerned with security, and recommended 
legislative changes designed to make marine terminals acquire 
the look and security practices of airport terminals.
    When the Interagency Commission's recommendations were 
first made public last fall, the NAWE board also became 
uncomfortable. Our discomfort was due less to the nature of 
recommendations, but rather centered on the broad and 
unconstrained delegation of new enforcement powers sought by 
the law enforcement agencies.
    After a thorough review, the NAWE board believes security 
procedures established by this bill must be successfully 
implemented without creating port terminal congestion and new, 
expensive mandates on private businesses. The following 
specific principles should guide any port security legislation 
and the security plans to be created by the provisions of this 
bill.
    These principles are: legislation must not shift Federal 
law enforcement obligations to private terminal operators; 
legislation must not duplicate any present State or local 
statutory legal practices or laws which substantially address 
similar security requirements; legislation must be flexible to 
the maximum extent possible, i.e., security measures must be 
taken on a port-by-port basis after considering as much local 
input as possible. No two ports are the same; therefore, their 
unique operational characteristics and existing security 
programs must be considered when implementing this legislation; 
legislation must not assess fees or tax terminal operators for 
costs properly borne by the Federal Government.
    Your legislation, Mr. Chairman, appears to have generally 
adopted these principles. It is the implementation that 
concerns us.
    Should this legislation be implemented without the guidance 
of these principles, it could seriously impact container 
terminal operations and the $400 billion in goods that are 
annually imported or exported through these terminals.
    Therefore, the private terminal industry asks that the 
legislation--in the clearest possible terms--contain guidance 
to the implementing authorities consistent with these 
principles. The legislation should also clearly emphasize the 
importance of local input and discussion well in advance of the 
implementation of the bill's requirements.
    That said, Mr. Chairman, the marine terminal industry 
pledges to work with this Committee and its staff, as well as 
the Federal law enforcement agencies, to implement the 
provisions of this legislation in a timely manner with a 
minimum of disruption to terminal operations and the commerce 
it supports.
    Mr. Miller will now address in more detail some of the 
specific concerns shared by marine terminal operators. We will 
then be happy to answer any questions from the Committee.
    [The prepared statement of Mr. Maher follows:]

   Prepared Statement of Basil Maher, President and Chief Operating 
                     Officer, Maher Terminals, Inc.

    Good morning, Mr. Chairman, and Members of the Committee. I am 
Basil Maher, President and Chief Operating Officer of Maher Terminals, 
Inc, Jersey City, N.J. Maher Terminals is the largest container 
terminal operator in the port of NY/NJ, handling about 900,000 
containers annually. We have operated in this port in excess of 50 
years, and I have been personally involved in every aspect of terminal 
operations for 28 years.
    I am here today on behalf of the National Association of Waterfront 
Employers, or NAWE, and the U.S. Maritime Alliance, or USMX. The former 
is the national trade association representing the U.S. terminal and 
stevedoring industry: the latter is management's collective bargaining 
representative with the ILA on the East and Gulf coasts. I sit on the 
board of NAWE and on its Special Committee on Port Security.
    I am joined today by Mr. John Miller, another NAWE board member who 
also sits on our Special Committee on Port Security. John will 
elaborate on the general points contained in my remarks.
    NAWE AND USMX appreciate the opportunity you have extended to us to 
testify on this all-important issue. Given the fact that we only 
recently received a copy of the latest draft of your bill, we ask for 
additional time beyond this hearing to get input from a large cross 
section of the industry. I ask that both NAWE and USMX be permitted to 
submit more detailed comments for the record. Hopefully this can be 
done in the next 4 weeks or so.
    By way of background, historically, NAWE members have always 
cooperated with the Federal law enforcement agencies having 
jurisdiction over marine terminals. Normally this is done on a local 
basis, and occasionally on a national basis. We will, of course, 
continue to do so when this legislation becomes public law.
    Unquestionably marine terminals are subject to the maritime 
jurisdiction of the U.S., and NAWE members readily understand that the 
security of our borders is a fundamental responsibility of the Federal 
Government. When the interagency commission on crime and terrorism in 
U.S. seaports conducted its fact-finding last year, the commissioners 
observed many terminal operations. Clearly the Federal law enforcement 
agencies comprising the commission became quite concerned with 
security, and recommended legislative changes designed to make marine 
terminals acquire the look and security practices of airport terminals.
    When the interagency commission's recommendations were first made 
public last fall, the NAWE board became uncomfortable. Our discomfort 
was due less to the nature of the recommendations, but rather centered 
on the broad and unconstrained delegation of new enforcement powers 
sought by the law enforcement agencies.
    After a thorough review, the NAWE board believes security 
procedures established by this bill must be successfully implemented 
without creating port terminal congestion and new, expensive mandates 
on private businesses. The following specific principles should guide 
any port security legislation and the security plans to be created by 
provisions of this bill.
    These principles are:
     Legislation must not shift Federal law enforcement 
obligations to private terminal operators.
     Legislation must not duplicate any present State or local 
statutory legal practices or laws which substantially address similar 
security requirements.
     Legislation must be flexible to the maximum extent 
possible. I.e., security measures must be taken on a port-by-port basis 
after considering as much local input as possible. No two ports are the 
same; therefore their unique operational characteristics and existing 
security programs must be considered when implementing this 
legislation.
     Legislation must not assess fees or tax terminal operators 
for costs properly borne by the Federal Government.
    Your legislation, Mr. Chairman appears to have generally adopted 
these principles. It is the implementation that concerns us.
    Should this legislation be implemented without the guidance of 
these principles, it could seriously impact container terminal 
operations, and the $400 billion in goods that are annually imported or 
exported through these terminals.
    Therefore, the private terminal industry asks that the 
legislation--in the clearest possible terms--contain guidance to the 
implementing authorities consistent with these principles. The 
legislation should also clearly emphasize the importance of local input 
and discussion well in advance of the implementation of the bill's 
requirements.
    That said, Mr. Chairman, the marine terminal industry pledges to 
work with this committee and its staff, as well as the Federal law 
enforcement agencies, to implement the provisions of this legislation 
in a timely manner with a minimum of disruption to terminal operations 
and the commerce it supports.
    Mr. Miller will now address in more detail some of the specific 
concerns shared by marine terminal operators. We will then be happy to 
answer any questions from the committee.

    The Chairman. Mr. Miller.

          STATEMENT OF JOHN L. MILLER, EXECUTIVE VICE 
     PRESIDENT, INTERNATIONAL TRANSPORTATION SERVICE, INC.

    Mr. Miller. Good morning, Mr. Chairman. I am John Miller, 
Executive Vice President of International Transportation 
Service of Long Beach, California. ITS, as we are called, is a 
wholly-owned subsidiary of K Line, a Japanese flag carrier, and 
operates three container terminals on the West Coast. Like Mr. 
Maher, I have spent over 30 years in this industry, and 
hopefully believe I can impart some of that experience to the 
Members of the Committee.
    As Mr. Maher noted, I am also a NAWE board member and a 
member of NAWE's special committee formed to review and comment 
on port security legislation. Mr. Maher has addressed NAWE's 
general concerns; I will address some of NAWE's specific 
concerns with any port security legislation.
    As an initial matter, I would like to state that the West 
Coast terminal operators also recognize the concerns of the 
Federal law enforcement agencies. We recognize that preventing 
marine-related terrorism is a fundamental responsibility of the 
Federal Government and that this legislation is really a 
defense of the borders issue. We, too, will also do our best to 
carry out any statutory directives required by this legislation 
in conjunction with the port authorities and other affected 
parties on a port-by-port basis.
    Mr. Chairman, let me briefly state what this legislation 
cannot be allowed to become.
    This bill must not become a vehicle for regulations 
converting private sector industry employees into a federalized 
police force with--or without--authority to carry firearms. 
Terminals employ gatekeepers, commonly known as watchmen or 
guards. Watchmen are expected to do many things, but law 
enforcement is not one of those things. Nor should the Federal 
law enforcement agencies expect industry watchmen to become 
surrogate policemen. If a beefed-up police presence is 
necessary at any given port complex, that needs to be entirely 
a function of the Federal Government or the port authority.
    This bill must not become authority for any agency to issue 
regulations requiring procedures that impede the flow of 
intermodal movements. For example, to the extent that 
credentialing of truck drivers or other service personnel is 
deemed necessary, the credentials process must not be done in a 
manner that slows down terminal productivity. In order to 
minimize the risk of converting a credentialing requirement 
into an operational impediment, the government agencies making 
these determinations--whether Federal, State or local--must 
recognize that every affected private sector party must be 
consulted in a timely manner, and that sufficient lead time 
must be provided to ensure the smooth flow of terminal 
operations. Provision also must be made for drivers who will 
only occasionally visit a terminal.
    Mr. Chairman, a nightmare is having thousands of containers 
backed up at a marine terminal due to a poorly implemented 
credentialing process. This concern, I might add, is equally 
valid for any new regulatory requirements issued by the Customs 
Service based on the technology to be developed by this 
legislation. Another nightmare is having ships miss their 
departure time because some new Customs inspector is insisting 
on x-raying every import container as it comes under the hook 
of the container crane. While I think there is little 
likelihood of this ever occurring, the agency--and its new 
inspection technology--need keep pace with industry technology 
and operating procedures.
    This bill cannot arbitrarily require marine terminal 
employers to drop experienced members of our workforce for 
long-past or non-serious violations of the criminal laws. This 
Committee, as well as the Federal law enforcement agencies 
which are granted regulatory authority, needs to give careful 
thought to the specifics of any requirement to conduct criminal 
background checks of terminal personnel, whether management or 
labor. Nobody wants to employ workers at risk of committing a 
terrorist act or cargo-related crime, but neither do we wish to 
weed out solid workers because of past youthful indiscretions. 
I presume the representatives of our workforce share this 
concern.
    I note, Mr. Chairman, that there is language in your latest 
draft which addresses these concerns. I suggest that many 
others in the industry need to look at these proposed standards 
to see if they need further work. If this section is not 
carefully thought out, we risk creating a real injustice to our 
workforce.
    Finally, Mr. Chairman, I would like to point out that any 
final Coast Guard/MARAD regulations issued under the authority 
of this legislation must be uniform as applied to the 50 ports 
affected by this bill. This is the tricky part, because Federal 
regulation of the ports must be consistent as required by the 
customary uniformity requirement of Federal maritime law. This 
must be done while granting the industry, as your legislation 
now does, considerable leeway to implement the provisions of 
the legislation on a port-by-port basis. It is important, I 
believe, for the Committee not to underestimate the 
difficulties that will be encountered in many of these ports as 
the provisions of this bill become effective. None of this will 
be easy. It is going to take considerable goodwill and a lot of 
hard work by every party to accomplish the goals of this 
legislation.
    With that, Mr. Chairman, I will conclude my remarks and I 
will be pleased to answer any questions.
    [The prepared statement of Mr. Miller follows:]

    Prepared Statement of John L. Miller, Executive Vice President, 
               International Transportation Service, Inc.

    Good morning, Mr. Chairman. I am John Miller, Executive Vice 
President of International Transportation Service, Inc., Long Beach, 
California. ``ITS'' is a wholly owned subsidiary of K Line, a Japanese 
Flag Carrier, and operates three container terminals on the West Coast. 
Like Mr. Maher, I have spent over 30 years in this industry, and 
hopefully believe I can impart some of that experience to the members 
of the committee.
    As Mr. Maher noted, I am also a NAWE board member and a member of 
NAWE's special committee formed to review and comment on port security 
legislation. Mr. Maher has addressed NAWE's general concerns; I will 
address some of NAWE's specific concerns with any port security 
legislation.
    As an initial matter, I would like to state that West Coast 
terminal operators also recognize the concerns of the Federal law 
enforcement agencies. We recognize that preventing marine related 
terrorism is a fundamental responsibility of the Federal Government and 
that this legislation is really a defense of the borders issue. We, 
too, will also do our best to carry out any statutory directives 
required by this legislation in conjunction with the port authorities 
and other affected parties on a port-by-port basis.
    Mr. Chairman, let me briefly state what this legislation cannot be 
allowed to become:
     This bill must not become a vehicle for regulations 
converting private sector industry employees into a Federalized police 
force with--or without--authority to carry firearms. Terminals employ 
gate-keepers, commonly known as watchmen. Watchmen are expected to do 
many things, but law enforcement is not one of those things. Nor should 
the Federal law enforcement agencies expect industry watchmen to become 
surrogate policemen. If a beefed up police presence is necessary at any 
given port complex, this needs to be entirely a function of the Federal 
Government or the port authority.
     This bill must not become authority for any agency to 
issue regulations requiring procedures that impede the flow of 
intermodal movements. For example, to the extent that credentialing of 
truck drivers or other service personnel is deemed necessary, the 
credentialing process must not be done in a manner that slows down 
terminal productivity. In order to minimize the risk of converting a 
credentialing requirement into an operational impediment, the 
government agencies making these determinations--whether Federal, State 
or local--must recognize that every affected private sector party must 
be consulted in a timely manner, and that sufficient lead time must be 
provided to ensure the smooth flow of terminal operations. Provision 
also must be made for drivers who only occasionally visit a terminal.
    Mr. Chairman, a nightmare is having thousands of containers backed 
up at a marine terminal due to a poorly implemented credentialing 
process. This concern, I might add, is equally valid for any new 
regulatory requirements issued by the customs service based on the 
technology to be developed by this legislation. Another nightmare is 
having ships miss their departure time because some new customs 
inspector is insisting on x-raying every import container as it comes 
under the hook of a container crane. While I think there is little 
likelihood of this ever occurring, the agency--and its new inspection 
technology--need keep pace with industry technology and operating 
procedures.
     This bill cannot arbitrarily require marine terminal 
employers to drop experienced members of our workforce for long past or 
non-serious violations of the criminal laws. This committee--as well as 
the Federal law enforcement agencies which are granted regulatory 
authority--needs to give careful thought to the specifics of any 
requirement to conduct criminal background checks of terminal 
personnel, whether management or labor. Nobody wants to employ workers 
at risk of committing a terrorist act or cargo related crime, but 
neither do we wish to weed out solid workers because of past youthful 
indiscretions. I presume the representatives of our workforce share 
this concern.
    I note, Mr. Chairman that there is language in your latest draft 
which addresses these concerns. I suggest that many others in the 
industry need to look at these proposed standards to see if they need 
further work. If this section is not carefully thought out we risk 
creating a real injustice to our workforce.
     And Finally, Mr. Chairman, I would like to point out that 
any final Coast Guard/MARAD regulations issued under the authority of 
this legislation must be uniform as applied to the 50 ports affected by 
this bill. This is the tricky part, because Federal regulation of the 
ports must be consistent as required by the customary uniformity 
requirement of Federal maritime law. This must be done while granting 
the industry, as your legislation now does, considerable leeway to 
implement the provisions of the legislation on a port-by-port basis. It 
is important, I believe, for the Committee not to underestimate the 
difficulties that will be encountered in many of these ports when the 
time comes to implement the provisions of this bill. None of this will 
be easy. It is going to take considerable goodwill and a lot of hard 
work by every party to accomplish the goals of this legislation.
    With that, Mr. Chairman, I will conclude my remarks, and I will 
pleased to answer any questions.

    The Chairman. Very good.
    Mr. Leone.

          STATEMENT OF MICHAEL LEONE, PORT DIRECTOR, 
                  MASSACHUSETTS PORT AUTHORITY

    Mr. Leone. Good morning, Mr. Chairman and Members of the 
Committee. I am Mike Leone. I am the Port Director of the 
Massachusetts Port Authority and Chairman of the American 
Association of Port Authorities Task Force on Seaport Security. 
I am here today representing the U.S. delegation of AAPA.
    AAPA port members are public entities that have invested 
billions of dollars of public and private funds to expedite the 
transportation of people and cargo. Ports have invested 
significant resources in improving security at seaports and 
continue to make improvements.
    Security at seaports involves multiple State, local, and 
Federal Government jurisdictions as well as the private sector. 
Addressing seaport security requires a strong commitment of 
Federal resources, a partnership between all parties involved 
and the flexibility to develop local security programs that 
consider the unique needs of each port.
    The Association recognizes the need for the port industry 
to continue to make improvements in seaport security. However, 
AAPA does not believe the adoption of a new Federal program is 
the best approach. We agree that the Federal Government should 
play a larger role in maintaining security at these 
international borders by increasing resources, both monetary 
and manpower, for current law enforcement programs rather than 
establishing a new program. The report on the Interagency 
Commission on Crime and Security in U.S. Seaports concludes 
that the primary criminal activity at seaports is in violation 
of Federal laws for which Federal agencies are primarily 
responsible.
    We have concerns that the bill as crafted places more 
responsibility on ports for solving seaport crime problems by 
instituting security guidelines and offering limited loan 
guarantees and grants for making infrastructure improvements. 
Issues such as terrorism, drug smuggling, illegal aliens, trade 
fraud and export crimes require significant Federal resources.
    Confronting these challenges requires a national commitment 
and resources by all levels of government. More specifically, 
it means that Federal and non-Federal jurisdictions must share 
information and expertise, dedicated resources and work 
together to deter criminal activity.
    Overall, the bill is an improvement from last year and we 
would like to thank the Committee staff for making the 
legislation more accommodating. It is narrow in focus, provides 
some more partnership opportunities as recommended in the 
Commission report, allows more flexibility to recognize the 
unique nature of ports and provides more funds to make security 
improvements.
    We do, however, maintain some concerns with the legislation 
that I will highlight in my oral comments. In general, AAPA is 
concerned with the bill's requirements with regard to the 
development of security programs and security guidance and with 
the redundancy of creating a new Federal program on crime and 
terrorism.
    We are pleased to see that the Committee adopted many of 
the AAPA's recommended changes, especially deletion of minimum 
standards. The bill, however, still outlines specific 
requirements for port security programs will give a priority to 
these areas rather than true risks identified in the 
vulnerability assessment.
    It is our view that attempts to address seaport security at 
an individual port must be justified by security assessment so 
that improvements are made based on a proven need. The bill 
requires that the Coast Guard and the Maritime Administration 
develop a set of best practices that include a list of specific 
requirements to be used as a benchmark for the review of local 
security programs. Although port authorities are not required 
to comply with this list of security requirements, the bill 
does require them to be included in all seaport security 
programs, whether or not they are necessary.
    The result will be programs that do not take into account 
the uniqueness of each port, or the findings from a 
vulnerability assessment. In addition, we recommend that local 
committees be charged with developing these security programs 
because port authority jurisdiction varies by port and does not 
include all privately owned areas.
    Further, making improvements to security such as the ones 
listed in the bill can be very costly. Though the bill provides 
more funding than last year's version, AAPA is concerned that 
it is not enough to pay for the improvements that would be 
adopted in the guidance.
    According to the Interagency Commission report, it could 
cost one port as much as $45 million to address the security 
issues outlined in the report. If new legislation policies 
require or warrant security improvements, the Federal 
Government must provide the resources necessary to address this 
issue.
    To this end, AAPA is strongly opposed to unfunded mandates. 
The AAPA is also concerned about the redundancy of creating a 
new Federal program dealing with crime and terrorism. Security 
at seaports involves multiple State, local and Federal 
Government jurisdictions as well as the private sector. AAPA 
does not believe that the enactment of a new Federal program is 
the most effective means to increasing security.
    We believe increased coordination and information sharing 
among these various agencies in the private sector combined 
with additional resources for current seaport law enforcement 
programs is the appropriate method to address these important 
issues.
    For example, the Coast Guard has already instructed the 
captains of the port to develop local committees to facilitate 
information-sharing on crime and security issues. We support 
this initiative and believe that the information sharing that 
comes through these committees will result in stronger security 
programs that address actual problems.
    Also, there are several agencies that coordinate terrorism 
prevention programs. In fact, recently there was a Federal 
directive through the Department of Justice that each State 
conduct a risk assessment to determine areas most vulnerable to 
a terrorism attack. Some seaports were identified as at-risk 
and are developing plans and exercises to prepare in the event 
of such an incident.
    This is one of the many simultaneous, in many cases, 
redundant efforts by various Federal, State and local agencies 
to address terrorism. There must be better coordination to cut 
costs and ensure a better end result.
    Finally, the bill should go farther in coordinating the 
efforts of the various agencies and groups involved in seaport 
security and should guarantee that the task force play a 
greater role in this capacity. Although we are pleased that the 
newest draft legislation requires the task force to partner in 
the development of voluntary security guidelines and the 
development of regulations, the bill should be clarified to 
require the task force to be consulted in the development of 
standards and procedures for conducting seaport security, 
vulnerability threat assessments.
    Coordinating these efforts with all the groups involved in 
seaport security will ensure better results that take into 
account the needs of the stakeholders and agencies charged with 
implementing these programs. Since these vulnerability 
guidelines will be used as the basis for all assessments, the 
task force involvement in the process is critical.
    With regard to security officer training and international 
cooperation, AAPA commends the legislation for its 
recommendations. Security officer training is important and 
AAPA encourages the development of an appropriate program for 
this purpose. We do, however, recommend that AAPA be listed in 
the bill as one of the groups to be consulted so we will have 
the opportunity to provide input in the development of the 
security officer training program.
    AAPA is a leader in port security issues in the United 
States and the entire Western Hemisphere when it comes to 
international cooperation, enhanced crime and security 
information exchange provides an opportunity to reduce the flow 
of drugs and other illegal shipments. The bill appropriately 
gives the Maritime Administration new authority in this area 
and should consider requiring the State Department and other 
agencies to play a greater role in sharing information 
internationally.
    In conclusion, AAPA believes that new Federal seaport 
security legislation is not necessary. There are more 
appropriate solutions to addressing this issue that do not 
include the establishment of a new program that duplicates many 
current efforts and could result in considerable cost to the 
agency. The Association remains committed to working closely 
with the Coast Guard and other agencies already charged with 
overseeing the security of our nation's international borders.
    Through greater coordination at all levels and the 
necessary resources, we can build on the programs already in 
existence and enhance seaport security.
    This concludes my remarks. I appreciate the opportunity to 
share the views of AAPA's U.S. members on this important issue.
    [The prepared statement of Mr. Leone follows:]

          Prepared Statement of Michael Leone, Port Director, 
                      Massachusetts Port Authority

    Good morning. I am Mike Leone, Port Director of the Massachusetts 
Port Authority, representing the American Association of Port 
Authorities (AAPA) as Chairman of its Ad Hoc Task Force on Seaport 
Security. Founded in 1912, AAPA is an association of more than 150 
public port authorities in the United States, Canada, Latin America and 
the Caribbean. In addition, the Association represents more than 250 
sustaining and associate members, firms and individuals with an 
interest in the seaports of the Western Hemisphere. My testimony today 
reflects the views of AAPA's United States delegation.
    AAPA port members are public entities, divisions or agents of State 
and local government mandated by law to serve public purposes. Public 
Port Authorities are charged with developing port facilities, 
facilitating waterborne commerce, and promoting economic development. 
Ports are key to this nation's ability to trade internationally, 
providing American consumers and businesses with the choices they 
demand for worldwide products and markets. Ports provide this 
connection to the world by handling 95 percent of all U.S. overseas 
trade by weight, and 75 percent by value. Ports also support the 
mobilization and deployment of U.S. Armed Forces.
    Today, we are here to discuss legislation aimed at enhancing the 
security of U.S. seaports that are also international borders. U.S. 
port authorities do not condone illegal acts of any kind taking place 
in public ports. Ports believe that the protection of port cargo, 
passengers and facilities from pilferage, theft, terrorism and other 
criminal activity is critical to ports, their customers, as well as to 
the nation as a whole. In fact, AAPA has a long-standing port security 
committee focusing on these issues.
    Ports have invested significant resources in improving security at 
seaports to prevent seaport crime from occurring, and continue to make 
improvements. Some ports spend millions of dollars on their own port 
police, as well as patrol vehicles, training, computer systems, etc. 
Also, many of our port members have and continue to invest in security 
infrastructure such as fencing, lighting and barriers. Some of these 
improvements have been based on State requirements, which address 
specific problems in individual States. In addition to providing this 
infrastructure, our members work with local and Federal authorities to 
eliminate criminal activities and will continue to seek new avenues to 
stop crime at seaports.
    Security at seaports involves multiple State, local and Federal 
Government jurisdictions as well as the private sector. The Federal 
Government should play a large role in maintaining security at these 
international borders. Addressing seaport security requires a strong 
commitment of Federal resources, a partnership among all parties 
involved and the flexibility to develop local security programs that 
consider the unique needs of each port. Ports are diverse, with a 
variety of security needs and concerns. There is no universal approach 
to security that would appropriately address the wide range of 
individual port requirements. Additionally, ports already devote 
significant resources to their security programs; therefore, any 
attempt to further address this issue should build on or strengthen the 
programs that are already in existence on the local level and should be 
supported with adequate Federal resources.
    While the Association recognizes the need for the port industry to 
continue to make improvements in seaport security, AAPA does not 
believe the enactment of a new Federal program is the most effective 
means to increasing security. We believe increased coordination and 
information sharing among local/Federal agencies as well as the private 
sector, combined with additional resources for current seaport law 
enforcement programs, is the appropriate method to address these 
important issues. For example, the Coast Guard has already instructed 
the Captains-of-the-Port to develop local committees to facilitate 
information sharing on crime and security issues. We support this 
initiative and believe information sharing through these committees 
will result in stronger security programs that address actual problems.
    While AAPA does not believe a new Federal program is needed, the 
remainder of our testimony will address specific comments regarding the 
``Port and Maritime Security Act of 2001.'' Overall, the bill is an 
improvement from legislation introduced last year (S. 2965). It is 
narrower in focus (covering only 50 ports), provides for more 
partnership opportunities with the non-Federal sector, allows more 
flexibility to address the unique nature of ports, and provides more 
resources to the Federal Government and the private sector to address 
crime. AAPA is pleased to see the changes in the bill, especially the 
deletion of minimum standards for security plans and security 
guidelines. AAPA remains strongly opposed to minimum standards and 
believes that any guidance on security provided in the bill must be 
flexible to reflect the actual security needs of a port.
    The bill also provides more funding than last year's version; 
however, AAPA is concerned that it is not enough to pay for the 
improvements mentioned in the bill. According to the Interagency 
Commission report it would cost ports as much as $45 million to address 
the security issues listed in the model port concept. If new 
legislation or policies require or warrant security improvements, the 
Federal Government must provide the resources necessary to address this 
issue. (AAPA is strongly opposed to unfunded Federal mandates).
    Below are more detailed comments on specific sections of the bill.

                 PORT SECURITY TASK FORCE AND OVERSIGHT

    Section 3 of the legislation calls for the establishment of a Port 
Security Task Force to implement the Act and coordinate programs to 
enhance security and safety at U.S. ports. Last year, AAPA recommended 
that this Task Force be expanded to include the private sector, as 
recommended by the Interagency Commission on Crime and Security at 
Seaports. AAPA also recommended that the Task Force be consulted in the 
development of port security guidance and regulations. We are pleased 
to see that the new bill incorporates these changes.
    The bill also should be clarified to indicate that the Task Force 
should be consulted by the Coast Guard in the development of standards 
and procedures for vulnerability threat assessments. These standards 
will serve as the basis for how all 50 vulnerability assessments will 
be performed. In the development of these standards, Section 5 (a) does 
provide that appropriate public and private sector organizations be 
consulted, which AAPA strongly endorses. We also, however, recommended 
that the Port Security Task Force specifically be included in the 
outside groups to consult with. This would require changes under 
Section 3, which describes the jurisdiction of the Task Force, and 
Section 5 (a), which discusses the vulnerability assessment. This 
change will ensure a partnership approach and is in line with the 
jurisdiction of the Task Force as outlined in the bill.
    AAPA recommends that any discussions or decisions on seaport 
security made at the national level must be based on the 
recommendations of the Task Force that includes representation from the 
port industry. The Task Force could make recommendations; however, 
ultimately AAPA believes that tailored security plans should be 
coordinated at the local level in conjunction with the U.S. Coast 
Guard.

                   LOCAL SEAPORT SECURITY COMMITTEES

    AAPA views information sharing at the local level as a key 
component in making improvements to seaport security. Information 
sharing on the actual crime and threats at a particular port will 
encourage better targeting of security efforts to address local issues. 
The local security committees, called for in the bill, are an excellent 
way to accomplish this goal of information sharing. The bill should be 
amended under Section 6 to give local security committees the authority 
to develop a security program for the port, rather than the port 
authority or marine terminal. Port authorities do not have jurisdiction 
over the entire port area, especially private areas of the port.
    Ports already work closely with the local Coast Guard Captain-of-
the Port (COTP) on a number of safety and security issues, and AAPA is 
pleased that the legislation states that these committees may use or 
augment existing harbor safety committees or seaport readiness 
committees. Under the Oil Pollution Act (OPA 90) many ports have set up 
an area committee to develop plans to handle catastrophic release into 
navigable waters. AAPA recommends that these committees also could be 
used to address security issues. These committees are headed by the 
COTP, include all elements of the local port industry and have resulted 
in the development of contingency plans, pre-deployment of equipment 
and conducting drills to test the validity of the plans. The bill also 
should ensure that these committees do not duplicate on-going anti-
terrorism programs, but complement them through coordination of 
efforts.
    Section 4 of the bill calls for ``an annual exercise to be 
conducted to verify the effectiveness of each port's security plan.'' 
The bill does not specify whether the exercise must be a ``full scale'' 
or a ``table-top exercise'' and therefore the requirement may be 
redundant to what is already taking place at the port. Ports conduct 
numerous exercises each year that include security elements, especially 
at strategic ports. It may be more appropriate to conduct a full-scale 
security exercise once every 3-5 years at the COTP's discretion to 
cover this need.

              SECURITY PROGRAM GUIDANCE/SECURITY PROGRAMS

    The bill requires that the Coast Guard and the Maritime 
Administration develop a set of guidance/best practices to be used as a 
benchmark for the review of the local security programs developed by 
local port authorities. AAPA is pleased to see that the bill now 
requires the Coast Guard to take into account the different nature and 
characteristics of U.S. seaports in developing this voluntary security 
guidance.
    While AAPA believes these plans can be of value as a planning 
exercise, the bill as written still raises some challenges.
    First, the legislation calls on the plans to be evaluated based on 
guidance in particular areas. For example, Section 7 notes that the 
guidance, and therefore the program, must include physical, procedural 
and personnel security; a credentials process for access to sensitive 
areas; restrictions on vehicular access; restrictions on firearms, and 
certification of private security officers. While we are pleased to see 
that these areas are no longer considered mandatory or minimum 
standards, AAPA still has concerns about the impact of these 
requirements. These areas will become priorities, rather than the true 
risks identified in a vulnerability assessment. It is our view that 
attempts to address seaport security at an individual port must be 
justified by a security assessment so that improvements are made based 
on a proven need, rather than on a list of areas outlined in a bill.
    AAPA is also concerned about how the Coast Guard will develop this 
guidance. If it is based on the ``model port'' included in the 
Commission report, the cost of these improvements is very high. The 
report notes that the total estimated cost for maximum-level 
implementation is $44 million per port. While the bill does provide 
some financial assistance, it is not nearly enough to cover the ``model 
port'' recommendations. Ports should be given the opportunity to 
explain why they are not following the guidance. For example, if the 
guidance says all port facilities should be fenced and have security 
lights, the port could, in its security plan, be allowed to state why 
fencing is not needed.
    AAPA believes that plans should be tied to the findings of 
vulnerability assessments. The bill does not require plans to be based 
on the findings of the assessment but only states that a port have a 
security program in place within 1 year of an assessment being 
completed. AAPA believes that once a vulnerability assessment is 
conducted, the local security committee should identify the security 
issues at the port and develop recommendations based on a broad set of 
``best practices.'' These recommendations should then serve as the 
basis for port security plans. AAPA recommends that a ``best 
practices'' approach for the issues listed under minimum standards is 
better than requiring all plans to be judged against minimum standards.
    The bill also calls for port authorities to develop the port 
security programs. We recommend that the local committees be charged 
with this duty, because port authority jurisdiction varies by port and 
does not include private areas. Since port authorities would 
participate on the local committee, they would continue to be involved. 
In addition, the bill should be amended to clarify that private areas 
of the port must be included in any port plan.

                       VULNERABILITY ASSESSMENTS

    AAPA agrees that individual vulnerability assessments are important 
in determining a port's true risk; however, several improvements should 
be made to the bill. First, the development of standards and procedures 
for conducting seaport security vulnerability threat assessments should 
include advice from the Task Force. The Task Force must be consulted to 
ensure that these assessments are done in a manner that is helpful to 
port authorities and the private sector that are tasked with making 
improvements.
    AAPA also recommends that the local committees be more involved in 
conducting individual port vulnerability assessments to ensure they are 
locally relevant. We recommend that the vulnerability assessments be 
conducted by the local Coast Guard in conjunction with the port 
authority and/or the local committee. It may be appropriate to use a 
consultant for these assessments because the Coast Guard's assessments 
may be too costly, may not be done in a timely manner, and may provide 
too little detail. There must also be cooperation from appropriate 
agencies to provide financial support and the threat information 
necessary to determine risk. Congress should also consider whether the 
assessments should be limited to cargo crime, since Federal agencies 
already conduct threat assessments on terrorism and weapons of mass 
destruction. Once the assessment is completed, it should be used as the 
basis for developing seaport security programs at each port. This 
connection is missing from the bill. Finally, these reports must be 
held in strict confidence with the local port authority and law 
enforcement agencies. A report to Congress may disclose security 
sensitive information and could create a competitive disadvantage.

                          INFORMATION SHARING

    Another important aspect of partnering at the local level is the 
ability to share information. According to the Interagency Commission 
report, most ports/terminal operators are not aware of the crimes that 
are taking place. In many cases, information is not communicated to the 
ports/terminal operators by the Federal or local law enforcement 
agencies that have jurisdiction over these criminal areas. Agencies 
such as the Federal Bureau of Investigation and the U.S. Customs 
Service often provide little information to ports. Enhancing 
communication between these agencies and the seaport industry, 
including labor unions involved in day-to-day operations at the port, 
would allow local seaport security committees to better focus their 
efforts within the port area. Though a port has little control over 
internal conspiracies or drug interdiction, the local port committee 
can work closely with the Federal agencies that have jurisdiction over 
this criminal activity to address these issues.

                   SEAPORT SECURITY OFFICER TRAINING

    AAPA commends the legislation for addressing the issue of seaport 
security officer training and encourages the development of appropriate 
programs for this purpose. Such programs could provide the kind of 
training specific to handling security on the waterfront. Upon 
completion, the security officer could receive certification that he/
she has been officially trained as a seaport security officer. Existing 
training programs could serve as models. We recommend, however, that 
the bill be amended to include AAPA as one of the groups to be 
consulted with in establishing the program. Since port authorities are 
charged under the bill with security duties, and we have expertise 
throughout the Western Hemisphere on port security issues, we believe 
we can provide vital counsel in the development of this training 
program.

           SUPPORT FOR CUSTOMS AND INTERNATIONAL COOPERATION

    The issue of controlling imports and exports is something over 
which port authorities have little direct control. In order for the 
U.S. Customs Service to more closely monitor cargo flowing in and out 
of the country, and conduct more inspections without slowing the 
movement of commerce, they must have additional resources, both in 
terms of personnel and equipment. Modernizing Customs resources, such 
as upgrading the Automated Commercial System, would greatly improve the 
Customs Service's ability to more closely monitor what is coming into 
and out of the country while ensuring the continuous flow of commerce. 
AAPA also is pleased to see that the new bill provides resources for 
Customs to purchase more non-intrusive screening and detection 
equipment.
    With trade rapidly increasing, inspections must not interfere with 
a port's ability to move cargo; therefore, AAPA has some concerns with 
section 15 (2) of the bill. This section requires the same level of 
data for an in-bond entry as for a consumption entry to obtain a 
``release.'' More importantly, if all entries have to be made at the 
first seaport of entry, the congestion and time it takes to move 
freight would increase considerably. An undesired consequence could be 
diversion of transshipped cargo to Canada and the Caribbean, resulting 
in a loss of U.S. jobs. We urge the Committee to ensure that this 
section is crafted in a way that addresses both security issues and 
protects transshipping.
    The United States has little control over what is being placed on a 
vessel in another country. However, AAPA believes that enhanced crime 
and security information exchange internationally provides an 
opportunity to reduce the flow of drugs and other illegal shipments. 
The bill appropriately gives the Maritime Administration new authority 
in this area. In addition, the State Department and other international 
organizations should play a greater role and take the lead in sharing 
information internationally to reduce the types of illegal shipments 
that are coming into the United States. Finally, AAPA is committed to 
coordinating with its member ports throughout the Western Hemisphere on 
seaport crime and security issues.

                               CONCLUSION

    Overall, AAPA believes that legislation is not necessary to address 
seaport security; however, the Association is committed to working 
closely with the Coast Guard and the other appropriate Federal agencies 
to strengthen our nation's international borders. The Federal 
Government, however, must invest significant resources to ensure proper 
funding of essential programs and provide adequate personnel for 
addressing these serious issues. Through greater coordination at the 
local level and the necessary resources, AAPA believes we can build on 
the programs already in existence and enhance seaport security.

    The Chairman. Mr. Leone, we appreciate your statement and 
your appearance. It is quite obvious that you folks, you said, 
do not favor a program or any legislation. On the contrary, you 
say you are the principal entity, the port authorities are the 
principal entities for security and, in fact, you all have had 
long-standing port security commissions and committees and 
everything else, and yet the reality is we don't have any 
security.
    It ought to be somewhat of an embarrassment to port 
authority officials to say nothing is needed, certainly no 
legislation, when everybody else recognizes that is exactly 
what we have got to do. We have got to bring them together.
    There is no arbitrariness of one way to get it done, but we 
are listening to everybody and we are beginning to coordinate.
    This legislation is really a first step because it can be 
far more categorical in enforcement of its requirements. We are 
not trying to get it that way. We are trying to work with the 
port authorities because they have disregarded security, 
obviously.
    I can go example after example. We have had hearings on 
this thing last year. Things come in and go to another terminal 
point and the truck is never seen again.
    When you get 9 of 10 containers coming in unchecked, you do 
not have security, and so to say that you got good going, you 
got committees and what you ought to do is emphasize more 
coordination and everything else like that is just dancing 
around a fire.
    We have got to do something about it and we have got to get 
the port authorities to get off the idea that they are there 
just to make money and move cargo and not have any 
responsibility whatsoever for security.
    You admit that you do have responsibility for security. You 
say you have got long-standing committees on security. You 
cannot go in two different directions in the same way at the 
same time. Any comments you would like to make, we would 
appreciate it.
    Mr. Leone. Mr. Chairman, I think the port authorities have 
made significant investments in security. I can go back to the 
Port of Boston, the Massachusetts Port Authority.
    The Chairman. Do you think it is working?
    Mr. Leone. I believe that--go back to Admiral Loy's 
testimony this morning. The Federal program that was dealing 
with passenger vessel security worked in the particular case 
they had in Florida because there is a program in place for 
passenger terminal and passenger vessel security issues that 
was implemented, and in that particular case deterred--
investigated and handled the bomb threat. In the Port of 
Boston, we have invested a significant amount of money in 
training of our watchmen. We have incorporated our watchmen 
into the port authority jurisdiction, have made them special 
State police officers, have trained them at the State Police 
Academy, and also have our own State Police barracks that is 
assigned to the seaport.
    We have made investments in fencing. We have made 
investments in lighting. We have made significant investments. 
I know this is true in other ports in the United States as 
well. So there has been a significant amount of investment. We 
cooperate regularly with the captain of the port on harbor 
safety committees, work with them on security issues as well, 
and we participate in every one of these and share information 
with Federal, local and State law enforcement jurisdictions and 
continue to make investments in all the different programs and 
coordinate with all the different programs that are in place.
    So it is not that we are not inactive. We are very, very 
active on this, making significant amount of investments and 
using investments of many of the private terminal operators, 
such as Maher Terminal and others, in using seaports of the 
United States to increase the amount of investment that has 
been made in these areas.
    So it isn't that we put a blind eye. We think security is 
very, very important. We just think there are a significant 
amount of programs that are already in place, and the funding 
of those agencies, I believe, to a greater extent will enhance 
seaport security and deter seaport crime.
    The Chairman. Well, we had a Commission study 17 agencies 
and departments of the Federal Government and they found that 
security ranges from fair to poor. I mean, that is their 
finding and no one really disputes it. You keep talking about 
investment and training and time and everything else, but it 
would be, to me, somewhat of an embarrassment to talk about 
that investment, training, time, and everything else like that, 
and have the result that we've got 9 out of 10 of those 
containers coming in unchecked, unlooked at, gone.
    Mr. Leone. If I recall, the Commission report did not know 
where the actual theft occurred and it occurred anywhere 
along--or if it was hijacked, didn't have enough information to 
examine where cargo theft occurred in that particular case, and 
in those particular circumstances, had a very difficult time 
assessing exactly where some of these crimes were taking place. 
So in some of these circumstances, certainly the additional 
funding for Customs and the Coast Guard will help in these 
particular areas, but the port authorities and certainly local 
law enforcement jurisdictions have made investments as well, 
Mr. Chairman.
    The Chairman. We know about investments. I can't seem to 
make the point. I understand about the investment. We 
appreciate it. We have got investments made at my own hometown, 
but we do not have security and everybody has found that.
    Those containers come in and they are not checked and 
nobody wants to really assume the responsibility and right to 
the point, the captain of the port has not really been steeped 
in this kind of responsibility.
    He has been out at sea and we have not given him the money, 
so you cannot fault him. Nobody is trying to find fault. We are 
trying to find a solution, and to say that no legislation is 
necessary and just let us all keep on talking to each other is 
not going to get us anywhere.
    We have a dangerous situation with respect to the ports, 
much more like I stated in the initial comment about space-
based dangers. It is port-based dangers. We do not have any 
semblance of port security as we do with airport security. I 
can go through both of them, but I'm checked at the airport. 
But you just come right in and tie up and walk away at the 
port. That is about the situation. All people--the port 
people--have put security last.
    That is my observation from living, working. I used to be a 
lawyer for the port authority and I can tell you the last 
emphasis they had was on security. They had other things, 
solicitation and moving cargo. And you talk, Mr. Maher, but 
have got coming now, we know those containers are owned by 
somebody through Hong Kong, through London, back through 
somewhere else and so the port driver, he has to come 2 hours 
ahead of time to get a safe container. Because if he gets 
stopped, he gets charged on the highway for a defective 
container and he gets fined and his livelihood, poor fellow's 
working around the clock and everything else, while some rich 
guy up in some tower in some city somewhere in the world owns 
that container. You would have to be a detective to find out 
who owns it.
    But it has got to be safe and we do not want--the port 
authority doesn't want to fix that responsibility. They want to 
put it on the poor driver who has no wherewithal to do it. So 
the only way he solves his problem is to come there 2 hours 
early and roam all around and everything else like that to 
finally get what he knows is a safe one, and then he takes it 
out and thank goodness, he doesn't get stopped. But if you get 
there late, if you do not find quite a safe one, your job, your 
livelihood is gone.
    Those are the kind of things that are going on at these 
ports. It is not that we make an investment, we got lights, we 
got police, we got training. It is not working. I can tell you 
that.
    But, be that as it may, Mr. Craig, you had some more 
testimony, I think, you wanted to elaborate on four points.
    Mr. Craig. May I? Thank you.
    Data collection: Several independent studies discussed in 
the Seaport Commission's report including one by the John A. 
Volpe National Transportation System Center and another by the 
Rand organization placed the losses due to cargo theft near $10 
billion annually. However, we need to improve the collection of 
data so that law enforcement efforts can be better focused.
    Statistics currently available are seriously deficient for 
a variety of reasons. Your legislation would mandate an 
evaluation of existing governmental databases in an effort to 
ensure the collection of data on cargo theft occurring in the 
ports or anywhere else in the intermodal chain of 
transportation.
    We understand that the current unified Federal crime 
reporting system suffers from a lack of resources on the State 
and local levels. The bill requires an outreach program to help 
channel resources to State and local law enforcement agencies 
to improve their information systems and harmonize them with 
the Federal system.
    In addition, we strongly recommend that a requirement be 
added for officials to report cargo theft as a separate crime 
so this data may be easily retrieved.
    Criminal penalties: We have observed that cargo criminals 
are not being adequately deterred by the existing penalties. In 
fact, indications are that those who once specialized in other 
types of crime are turning to cargo theft because the rewards 
are lucrative and the threat of prosecution is minimal.
    We strongly support the provision in your bill which 
directs the U.S. Sentencing Commission to amend the Federal 
sentencing guidelines to provide a sentencing enhancement of 
not less than two levels for violation of the Federal cargo 
theft law.
    Security training: The legislation addresses an important 
need by building on the good work already being done at the 
United States Merchant Marine Academy's Global Maritime and 
Transportation School, (GMATS), at Kings Point, New York. A new 
maritime security institute to be established at this Federal 
facility will expand the current offerings and enable the 
training and certification of maritime security professionals 
in both the law enforcement and private sectors.
    With a better understanding of the intricacies of the 
shipping business, law enforcement officials will be better 
equipped to do their jobs.
    Teamwork: The problems addressed by the legislation are 
multidimensional, and they are best approached through 
interagency cooperation and the sharing of information and 
resources. We are pleased that the port security task force 
proposed in the bill will have a subcommittee comprised of 
Federal, State, and local government law enforcement agencies. 
This ``law enforcement subcommittee'' will have the ability to 
collaborate with public and private entities.
    We would like to call your attention to a group of 
interagency task forces which have already been established in 
various regions of the country to combat cargo theft. They were 
organized as a result of a speech made in 1994 by the Attorney 
General, but they have never had a sufficiently high profile to 
make an appearance in the Federal budget and thus suffer from a 
lack of resources.
    Ideally, each of the task forces should be funded and 
include representatives of the U.S. Attorneys, the FBI, Customs 
Service, DEA, INS, the Coast Guard, and State and local 
prosecutors and law enforcement officials.
    Due to budget constraints, agencies are sometimes unable to 
participate in task forces. We would appreciate the opportunity 
to work with Committee staff to ensure that the most critical 
cargo theft task forces are able to benefit from your 
legislation. The rest of my comments can be entered into the 
record.
    The Chairman. Very good.
    The Committee appreciates the appearance of each of you 
here this morning, and the record will stay open for any 
further comments that any of you have and any questions by the 
other Senators. Thank you very much.
    The hearing will be in recess subject to the call of the 
chair.
    [Whereupon, at 11:30 a.m., the hearing was adjourned.]


                            A P P E N D I X

    National Customs Brokers and Forwarders Association of 
                                                    America
                                                      July 23, 2001
Hon. Ernest F. Hollings,
Chairman,
Senate Committee on Commerce, Science, and Transportation

    Dear Senator Hollings:
    The following represents the views of the National Customs Brokers 
and Forwarders Association of America (NCBFAA) with respect to S. 1214. 
Please incorporate these comments into the record of your hearing 
tomorrow, July 24.
    As a general matter, NCBFAA supports legislation to improve 
security at the nation's ports. Customs brokers and ocean 
transportation intermediaries (``OTIs'') have a stake in protecting 
cargo and in ensuring that the public has confidence in our ports' 
reputation. Our commercial viability depends on a dynamic domestic port 
system.
    NCBFAA's litmus tests for support of the bill are threefold: Will 
cargo proceed to its ultimate destination in the most expeditious 
manner possible, moving just as quickly after this bill is enacted as 
before? Will cargo be encumbered with more cost and unnecessary 
regulation because of this legislation? Will the bill effectively 
provide security at the ports? In light of the foregoing, we believe 
that the bill makes many sensible additions to assessing and 
redesigning port security. There are several areas of the bill, 
however, where we suggest improvement.
    First, however, let us tell you that we are gratified that you have 
responded favorably to our suggestion that freight forwarders be added 
to those serving on the port security task force. They will contribute 
considerable value added to the proceedings of that group, especially 
by bringing unique commercial considerations to their attention.
    On the other hand, we continue to be concerned about a requirement 
in Section 16 that the Customs Service require information about in-
bond entries at the same level of detail as is provided on a 
consumption entry. This information is not now required, particularly 
at this level of detail, for one important reason: Customs does not 
need it. Merchandise entering the U.S. under bond is in transit 
merchandise, destined for another port, or for export. Furthermore, 
much of the information required is not available from the carrier and 
instead would necessitate the provision of professional services. This 
would greatly encumber in-bond transactions, adding cost and delay. 
This in turn defeats the very purpose behind sending goods under bond. 
It imposes a layer of regulation where none now exists. In fact, we do 
not believe that it would be overstated to say that this would threaten 
the entire in-bond movement system, with dire consequences to ``just-
in-time'' supply chain management. Because of this requirement and in 
order not to duplicate costs, importers would prepare entry data at the 
port of arrival. We think this would detrimentally affect ports such as 
Charleston, New Orleans and Portland.
    We acknowledge changes made in the final draft, but believe that 
they are inadequate to resolve the basic problem: encumbering ``in-
bond'' transactions. Furthermore we do not believe it is helpful to 
communicate to Customs that this should be done through regulation, 
even in the context of making it compatible with Automated Commercial 
Environment (ACE) requirements.
    There are also sections within the bill that we believe will 
inevitably add to port congestion. For example, in the findings section 
(Section 2, paragraph 12), the bill refers to ``securing entry 
points.'' This concerns us in that ``controlling movements'' of trucks 
is broad enough to result in measures that produce a major slowdown in 
the movement of goods. We would make a similar observation about 
Section 7(c)(3), providing guidance on vehicular access. Again, this is 
overly broad, might include public access roads, and could result in 
substantial delays to the movement of goods.
    We are prepared to work with the Committee to address our concerns, 
as we have in the past. At present however, we view these as 
fundamental flaws in the legislation.
            Sincerely,
                                       Peter H. Powell, Sr.
                                                         President.
  

                                  
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