[Senate Hearing 107-1127]
[From the U.S. Government Publishing Office]



                                                       S. Hrg. 107-1127

    OREGON'S MARITIME COMMERCE: PROTECTING TRADE AND SECURING PORTS

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

                             FIELD HEARING

                               BEFORE THE

       SUBCOMMITTEE ON SURFACE TRANSPORTATION AND MERCHANT MARINE

                                 OF THE

                         COMMITTEE ON COMMERCE,
                      SCIENCE, AND TRANSPORTATION
                          UNITED STATES SENATE

                      ONE HUNDRED SEVENTH CONGRESS

                             SECOND SESSION

                               __________

                              JULY 2, 2002

                               __________

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


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       SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION

                      ONE HUNDRED SEVENTH CONGRESS

                             SECOND 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
      Jeanne Bumpus, Republican Staff Director and General Counsel
                                 ------                                

       Subcommittee on Surface Transportation and Merchant Marine

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


                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on July 2, 2002.....................................     1
Statement of Senator Smith.......................................     2
Statement of Senator Wyden.......................................     1
    Article dated June 26, 2002, entitled Coast Guard Braces for 
      Fight, from The Wall Street Journal........................    21

                               Witnesses

Browning, Douglas M., Deputy Commissioner, U.S. Customs Service..     8
    Prepared statement...........................................    10
Butler, Colonel Randall J., District Engineer, Portland District, 
  United States Army Corps of Engineers..........................    12
    Prepared statement...........................................    13
Cross, Vice Admiral Terry, USCG, Commander, Pacific Area.........     4
    Prepared statement...........................................     6
Gaul, Michael, Director of Operations, Oregon International Port 
  of Coos Bay....................................................    40
    Prepared statement...........................................    41
Holte, Bruce, President, Local 8, International Longshore and 
  Warehouse Union................................................    64
    Prepared statement...........................................    66
Hrdlicka, Robert, Marine Director, Port of Portland..............    33
    Prepared statement...........................................    34
Isbell, John, Director, Corporate Delivery Logistics, Nike, Inc..    47
    Prepared statement...........................................    48
Isbell, Monica, Vice President, Pacific Northwest International 
  Trade Association..............................................    51
    Prepared statement...........................................    52
Iverson-Summer, Patrice A., President, Columbia River Customs 
  Brokers and Freight Forwarders Association.....................    54
    Prepared statement...........................................    56
Puzey, Kim B., General Manager, Port of Umatilla.................    35
    Prepared statement...........................................    37
Townley, Captain Jim, Executive Director, Columbia River 
  Steamship Operators Association................................    60
    Prepared statement...........................................    62

 
    OREGON'S MARITIME COMMERCE: PROTECTING TRADE AND SECURING PORTS

                              ----------                              


                         TUESDAY, JULY 2, 2002

                               U.S. Senate,
Subcommittee on Surface Transportation and Merchant 
                                            Marine,
        Committee on Commerce, Science, and Transportation,
                                                      Portland, OR.
    The Committee met, pursuant to notice, at 10 a.m. in the 
Port Commission Room, First Floor, Port of Portland Building, 
Hon. Ron Wyden, presiding.

             OPENING STATEMENT OF HON. RON WYDEN, 
                    U.S. SENATOR FROM OREGON

    Senator Wyden. The Subcommittee will come to order. Thank 
you all very much for coming today. This is a hearing of the 
Subcommittee on Surface Transportation and Merchant Marine or 
the Senate Committee on Commerce, Science, and Transportation. 
It is being held at the request of Chairman Hollings and 
Chairman Breaux. I am particularly pleased to be able to be 
here with Senator Smith to address these cogent issues that are 
part of our bipartisan agenda, and this is a particularly 
timely hearing.
    Right now there is a conference committee between the House 
and Senate that is working on important issues relating to Port 
Security, and both of us serve on that conference committee and 
the input that we are gathering at today's hearing--yesterday I 
chaired a hearing in Seattle, and a number of other hearings 
have been held around the country--is particularly useful as we 
try to move ahead in the conference committee and get this 
important legislation with respect to our ports to the 
President of the United States.
    I'm just going to have a few comments to open up and then 
turn to my colleague for his views.
    It is quite clear as we look around the United States that 
our seaports are tempting targets for terrorism. If you look 
for example at geography, if you look at the openness of our 
ports, the proximity of many of our ports to metropolitan 
areas, it is very clear that these can be prime targets, prime 
areas of vulnerability that would be susceptible to terrorism. 
And there are very big stakes here for the people of Oregon.
    For example, one out of six jobs in Oregon depends on 
international trade. The trade jobs pay better than the non-
trade jobs, and it is critically important that those jobs be 
protected, while at the same time addressing these critical 
security issues. One of the things that Senator Smith and I 
will be examining in great detail is how you strike a balance 
between security on one hand, and moving goods in and out of 
the Pacific Northwest. Both of the major northwest ports, 
Portland and Seattle, are in the top 20 ports in this country, 
so the stakes are extremely high for our region.
    Among other policy issues that we are going to examine this 
morning, and one that I will be looking at in great detail is 
how the Coast Guard could be merged into the Homeland Security 
Office; because if you have the Coast Guard performing all the 
essential tasks it's performing now, and then taking on new 
duties with respect to Homeland Security, it is very hard to 
see how you reconcile those two concerns without significant 
new sums.
    Yesterday in response to my questions in Seattle, the Coast 
Guard said that it could be accomplished through synergies--and 
certainly synergies are useful things to put in place--but I 
never saw any synergies that could come up with billions of 
dollars the way it looks like you're going to have to have to 
merge these functions. So we're looking forward to talking with 
Admiral Cross and others about that issue as well.
    There are technology questions that we will be examining 
because one of our goals is to promote innovative use of 
technology. I also chair the Subcommittee on Technology for the 
Commerce Committee and if there is one thing that I want to see 
accomplished in that Homeland Security legislation, it is that 
I want to make it possible for entrepreneurs and business 
leaders when they have promising products in the security 
field, to go to one stop in the Federal Government. Right now 
we've got these people from the Northwest and elsewhere 
traipsing all over the country trying to figure out who to deal 
with in the Federal Government. That's unacceptable and we're 
going to examine that issue as well.
    Finally, a set of important issues revolve around 
international discussions that are being held on these issues. 
In particular, what we would like to see is more work done at 
the point of origin. In other words, once you have products 
that come to our shore, you're playing catch-up ball in order 
to try to examine some of those risks. What we need to do is be 
far more aggressive in terms of negotiating agreements with our 
allies and trading partners around the world in order to get at 
these concerns at the point of origin. There are a number of 
sensitive discussions going on right now with respect to that 
issue that we will discuss with our witnesses as well.
    Again, I'm very pleased to have a chance to team up with 
Senator Smith on this issue. Our witnesses and audience members 
should know that with the conference committee coming up, this 
is a chance to really get a sense of what the Pacific Northwest 
and what Oregon needs in that conference; and so let me 
recognize my colleague for any statement he would like to make.

                STATEMENT OF HON. GORDON SMITH, 
                    U.S. SENATOR FROM OREGON

    Senator Smith. Thank you, Senator Wyden.
    Ladies and gentlemen, it is a pleasure to be here with 
Senator Wyden. It is a privilege to work with him in the U.S. 
Senate for the betterment of our country and especially for the 
betterment of the State of Oregon.
    I don't know of another state in America that has two 
members on the Senate Commerce Committee and two members on the 
Senate conference committee for Maritime security legislation. 
Therefore, it is important for us to give Oregonians and 
various witnesses the chance to tell us how we can put this 
bill together in a way that will do two things:
    To increase security to protect our people against the 
threat of dirty bombs and terrorist activities within the Port 
of Portland and other places, and at the same time to do this 
without unduly compromising the efficiency of business 
operations for very important companies. There are many of them 
that rely on this economic lifeline of the ports of the State 
of Oregon. Intel, Nike, Columbia Sportswear, and many others 
come to mind, who count on us having an efficient process as 
well as a publicly safe process. So efficiency and security 
right now are intention, and our job is to find out from you 
how to get the job done to protect the people of Oregon, the 
people of America, but to also insure that the business 
vitality that they depend on for their families is not 
unnecessarily interrupted.
    So next week we will be merging Senate Bill 1214, the Port 
and Maritime Security Act, with the House Bill 3983, the 
Maritime Transportation Anti-Terrorism Act of 2002.
    I would like to indicate our intention to get enough 
information from the different ports that we can come up with 
legislation that is not a one size Federal fits all, that will 
allow different ports the chance to provide security without 
sacrificing efficiency.
    So we have here representatives today from the Port of 
Portland, the Port of Umatilla, and the Port of Coos Bay, 
because we need these different perspectives. We are very 
grateful to have the United States Coast Guard represented, the 
U.S. Customs Service, and the Army Corps of Engineers as well.
    And Captain Spitzer, I understand you have been given a 
reassignment, and also Colonel Butler, that you have as well. 
We regret that in the sense that you will not be in Oregon, but 
we're glad you are still in the service of our country, and we 
wish you well in your new assignments and look forward to 
benefiting today from your remarks.
    Let me conclude by pointing out that on November 19th, 
2001, President Bush signed into law the Aviation and 
Transportation Security Act to increase security at our 
nation's airports. And on May 14th, 2002, the President signed 
into law the Enhanced Border Security and Visa Entry Reform 
Act, which will increase security at our nation's land borders. 
And so, it is past time for us to send to the President for his 
action this important piece of legislation.
    We do appreciate you coming to this important hearing. Your 
words, your wisdom your experience will be very helpful to 
Senator Wyden and me as we go to this conference to make sure 
that we do the right thing by this port and others, and that we 
keep if safe, but also allow it to be efficient.
    Thank you, Mr. Chairman.
    Senator Wyden. Thank you very much, and we will move right 
to our hearings and right to the discussion. We are going to 
have on the first panel Vice Admiral Terry Cross, Commander, 
Pacific Area, United States Coast Guard, accompanied by Captain 
James Spitzer, Captain of the Port in Portland; Mr. Douglas 
Browning, Deputy Commissioner of U.S. Customs Service; and 
Colonel Randall J. Butler, District Engineer of the Portland 
District, the Army Corps of Engineers.
    Gentlemen, we welcome you. We have as you know asked that 
you try to keep your opening statements to about 5 minutes. I 
know there is almost a biological compulsion to just read those 
statements word for word. We are going to put them into the 
hearing record in their entirety and if you could just perhaps 
summarize some of your principal concerns, that will leave some 
extra time for questions. So, welcome.
    Let us begin with you, Admiral Cross.

STATEMENT OF VICE ADMIRAL TERRY CROSS, USCG, COMMANDER, PACIFIC 
                              AREA

    Admiral Cross. Good morning, Mr. Chairman, Senator Smith. 
As you said, I'm Vice Admiral Terry Cross, United States Coast 
Guard, Pacific Area Commander. In that role I am essentially 
responsible for just about everything Coast Guard west of the 
Rocky Mountains out to the Hawaiian Islands, including Alaska 
and beyond. On behalf of Admiral Tom Collins, Commandant of the 
Coast Guard, I want to thank you for including the Coast Guard 
in this morning's hearing and we are very pleased to be here.
    As you noted, with me this morning is Captain James 
Spitzer. He's Captain of the Port for Oregon and southwest 
Washington coasts. His area of responsibility includes not only 
the coastline but also the Willamette, Columbia, Snake Rivers, 
and includes a thousand miles of coastline and river shoreline 
in over 40 ports.
    Sir, as you've noted, I've submitted a written statement 
for the record. I ask that it be entered, and I will just make 
a quick summary of key points here to keep well within your 
time limit.
    My hope here is to put what Captain Spitzer may add later 
in his efforts here in Portland within the broader context of 
Coast Guard strategies. Coast Guard strategy for Homeland 
Security, Maritime Homeland Security, was developed shortly 
after the events of 9/11, and it consists of five key elements.
    The first of those elements is the control of high interest 
vessels, and we do that primarily two ways. One, through the 
use of sea marshals, and two, with the use of Coast Guard 
escort vessels.
    The second element is the increased protection for Coast 
Guard people, but also for critical infrastructure.
    The third element is increased presence over and above our 
waters. We do that for at least two reasons. First of all, we 
think that provides a deterrent effect, but also increased 
presence provides us an ability to respond quicker for late 
breaking information or intelligence.
    Fourth is maritime domain awareness, and what we mean by 
that, sir, is we currently--let me say it another way. Before 
9/11 we had very little information about ships, cargo and 
crews that were plying our waters or that were en route to U.S. 
ports. We have a lot more information now than we did, but we 
still don't have enough. And that involves some of the 
technology I think you were talking about earlier, Senator.
    And fifth is outreach, and that's both an international 
outreach which once again I believe the Senator was referring 
to, but also domestic outreach to enhance the relationships and 
information sharing not only between Federal agencies, but also 
between state and local agencies, and private industry.
    Now part of that involves leadership in the ports. And by 
virtue of our Captain of the Port authorities and 
responsibilities that belonged to the Coast Guard by statute 
since 1917, we have taken a leadership position, and I think 
Captain Spitzer is to be commended for the leadership he has 
shown here in the Port of Portland.
    And as key in this role, we are committed to working, once 
again, with all the agencies, state, local, Federal, and with 
private industry, and we very much understand that the two keys 
here are, one, to enhance the security, but two, to insure the 
efficient flow of commerce.
    Shifting gears just a little bit, sir, I want to emphasize 
that the Commandant of the Coast Guard supports the President's 
government reorganization proposal and he has identified three 
prerequisites for insuring that Coast Guard services to the 
American people remain at the same high standards that they are 
today.
    One is that the Coast Guard, if shifted to a Department of 
Homeland Security, remain intact, that parts of our service are 
not peeled off to other agencies. Second would be that the 
basic characteristic of our service, our maritime, military, 
multi-mission characteristic remain unchanged. And, sir, the 
third piece would be that the Coast Guard retains all of its 
missions.
    Now interestingly enough, some people believe that Port 
Security and coastal security are new missions for the Coast 
Guard. That's simply not true. We've actually been doing those 
missions that one could argue, for about 212 years, and we were 
specifically assigned Port Security responsibilities in the 
Espionage Act of 1917. And as we talked earlier, there were 
actually more Coast Guard people involved in Port Security 
operations in World War II than are in the entire Coast Guard 
today. I'm not suggesting we need that many people now but it's 
just, I wanted to make the point that it's a historical mission 
for us.
    And we think that we can do the mission, the expanded port 
and homeland security mission. What we need from the 
Administration and the Congress is clear tasking and resources 
commensurate with that tasking.
    Let me finish up, sir, by saying I think you know, we have 
been very very busy since 9/11. We very much appreciate the 
Senate support for the supplemental that was passed last fall. 
$209 million allowed us to surge operations and develop many 
new initiatives, some of which I talked about earlier. And in 
addition to Senate 1214, which is on the Hill right now, we 
also have the spring supplemental and fiscal year 03 
appropriations bills, and we would appreciate your support for 
those bills. Passage of those bills will allow us to continue 
the efforts that we have initiated post-9/11 and annualize many 
of the efforts that we have undertaken.
    I would also point out that from our perspective, this is, 
the fiscal year 03, that appropriations bill would be the first 
year of a multiyear process to get us the resources we think 
we're going to need to provide the seaports the level of 
security that the American people will demand.
    And, sir, with that, I would be happy to answer any 
questions you might have.
    [The prepared statement of Admiral Cross follows:]

   Prepared Statement of Vice Admiral Terry Cross, USCG, Commander, 
                              Pacific Area

    Good afternoon Mr. Chairman, I am Vice Admiral Terry Cross, 
Commander of the Coast Guard Pacific Area headquartered in Alameda, 
California. I am responsible for Coast Guard operations conducted from 
Alaska to Samoa, and from the Rocky Mountains to the Far East. On 
behalf of the Commandant, Admiral Thomas Collins, I thank you for the 
opportunity to speak to you today about the challenges we face in the 
Columbia River region with respect to our role in law enforcement and 
maritime homeland security.

Unique Challenges of Columbia River Region Port Security
    Three Coast Guard Group Commanders are responsible for maritime law 
enforcement and other missions in Oregon and southern Washington. With 
me today is one of those Group commanders, Portland-based Captain James 
Spitzer. He is also Captain of the Port for Oregon and southern 
Washington and is responsible for many aspects of port and waterway 
security on the Oregon coast, the coast of southwestern Washington, and 
portions of the Columbia, Willamette, and Snake Rivers. This region 
includes nearly 1,000 miles of coastal and river shoreline, some 40 
ports, and many more port facilities that provide opportunity for 
illegal entry and exploitation.
    Over 2,000 ocean-going merchant ships call on these port systems 
each year and many dozens of tugs and barges ply these waterways as far 
up as Lewiston, Idaho. Over 35 million tons of goods and a quarter of a 
million containers are handled annually. These waters attract exports 
from farmers as far away as the headwaters of the Mississippi River. 
The Columbia River System is second only to the Mississippi River 
System in its handling of bulk agricultural exports. Vancouver and 
Portland are top auto ports on the West Coast, and imported cars 
passing through their terminals are distributed throughout the nation. 
The waterways and ports of this region also serve petro-chemical and 
nuclear industry needs. Our coastal and Columbia River system waterways 
contribute substantially to the economic growth and stability of our 
nation, to the quality of life of our citizens, and to our Nation's 
security.

Power of Partnerships in Maritime Security
    Last September the Coast Guard developed a five point Maritime 
Homeland Security strategy emphasizing: Maritime Domain Awareness, High 
Interest Vessel Control, Presence and Response, Critical Infrastructure 
and Force Protection, and Domestic and International Outreach. This 
strategy acknowledged the power and importance of partnerships in 
defending against the threat of terrorism. Here are a few of the many 
steps the Coast Guard and its partners have taken:

   The Coast Guard worked with Portland area shipping agents 
        early in the development of our new national standards for 
        screening vessels. Shipping agents routinely offered 
        cooperation when the Coast Guard asserted direct control over 
        their ships.

   Waterfront facility owners and operators improved security 
        on those facilities that posed special risk.

   Large passenger vessel operators instituted heightened 
        security measures.

   The Customs Service, local terminals, and the Coast Guard 
        collaborated on operations such as container inspections.

   The river pilots and the towing industry developed emergency 
        response procedures.

   Partners in law enforcement and emergency response 
        management at all levels of government coordinated efforts and 
        information sharing to an unprecedented degree.

    A regional Internet list-server of the National Infrastructure 
Protection Center (NIPC) program known as InfraGard was created for 
industry and government personnel to share security and crime-related 
information.

   Citizens, port and facility employees lent their eyes and 
        ears as critical elements of the security network of our ports, 
        facilities, and waterways. Facilities cooperated with one 
        another on security matters.

   A ``Visa parole program'', which allows shore visits for 
        particular visiting ships' crewmembers, while minimizing 
        security concerns, was created through an innovative 
        partnership between the Coast Guard and the Immigration and 
        Naturalization Service.

   Our Regional Maritime Security Coalition, made up of 
        shippers, ports, and waterfront facilities, recently received 
        approval for $623,000 in federal grant funding to develop 
        methods to more efficiently track goods shipped through our 
        ports. A $30,000 grant was approved to improve security in the 
        Port of Vancouver.

    Locally, Captain Spitzer has staunchly advocated a maritime 
security strategy that includes a comprehensive security web. This web 
is not a centrally controlled series of operations. Rather, it is 
focused on multiple security nodes around activities, operations, and 
jurisdictions throughout the ports, waterways and coastal areas. A 
sustainable security web required the development of partnerships with 
other federal agencies, state and local agencies and the private 
sector. This partnering activity set the tone for leveraging the entire 
maritime community, both public and private, as part of the solution 
for security . . . and not just against terrorism, but also for any 
kind of illegal activity. Key tenets of the security strategy are:

   Each employee is sensitized to security concerns and knows 
        whom to call as concerns are observed. (facilitated by company 
        and union leaders);

   Security staffs have improved recognition and support from 
        management and employees. (facilitated by management);

   The owner/operator asserts affirmative leadership and 
        emphasis on security matters. (facilitated by COTP, state/local 
        LE, fire marshals);

   Physical and procedural security measures are commensurate 
        with risk and consequences. (facilitated by the owner/
        operator);

   Security audits are conducted. (facilitated individually & 
        jointly by CG, and local fire and police);

   Patrol and response activity is jointly coordinated by all 
        agencies with jurisdiction including CO (from shore, water, and 
        air), police/sheriff patrol, fire marshal visits, emergency 
        manager planning, and related awareness and preparedness of 
        other agencies.

   Personal relations are cultivated between key facilities/
        activities and the various law enforcement, patrolling, and 
        response management organizations. (jointly facilitated by 
        oversight and LE agencies).

    Such a network takes effort to develop and cultivate. However, the 
cumulative result is powerful. The result is a very strong local and 
regional security and response management network comprised of tens of 
thousands of eyes and ears, over-laid by the agencies of government.
    The Coast Guard's multi-mission assets, military role as an Armed 
Service, and maritime presence and authorities bridge security, safety, 
and response capabilities between federal, state, local, and private 
organizations as well as other military services. We have been the 
leader for the non-DoD maritime security needs of our nation since 1790 
. . . it was the reason we were formed 212 years ago. We possess 
extensive regulatory and law enforcement authorities governing ships, 
boats, personnel, and associated activities in our ports, waterways, 
and offshore maritime regions. We are a military service with 
724 command, communication, and response capability. We 
maintain, ``at the ready'', a network of coastal small boats, aircraft, 
and cutters, and expert personnel to prevent and respond to safety and 
security incidents; and we have geographic presence throughout the 
country, coasts, rivers, and lakes, both in large ports and small 
harbors. We are a formal member of the national foreign intelligence 
community. We partner with other government agencies (OGAs) and the 
private sector to multiply the effectiveness of our services. The Coast 
Guard is the recognized leader in the world regarding maritime safety, 
security, mobility, and environmental protection issues. These 
characteristics form the core of our organization and enable a unity of 
effort among diverse entities whether preventing or responding to 
incidents.
Conclusion
    In conclusion, the United States Coast Guard is an integral 
component of our nation's homeland security efforts and the lead agency 
for maritime homeland security. We maintain the viability and integrity 
of the marine transportation system by working with other public, 
private, domestic and international partners so that people and goods 
move safely and efficiently. The Coast Guard is committed to the 
continuing protection of our nation against terrorist threats, as well 
as maintaining our maritime law enforcement missions. Thank you for the 
opportunity to share the unique challenges that the Coast Guard in the 
Columbia River Region faces today and for your continuing support of 
the Coast Guard. I will be pleased to answer any questions you may 
have.

    Senator Wyden. Admiral, thank you. It's very helpful and we 
will have some questions in a moment.
    Mr. Browning, welcome. You're a glutton for punishment, 
twice in 24 hours, both in Seattle and Portland, and you serve 
our country well, and we welcome you. Let's get you one of 
those microphones, and please proceed.

           STATEMENT OF DOUGLAS M. BROWNING, DEPUTY 
               COMMISSIONER, U.S. CUSTOMS SERVICE

    Mr. Browning. Thank you, Senator. I actually may not be so 
much a glutton of punishment since the weather has been 
particularly lovely.
    Senator Wyden. It is not hardship duty coming to the 
Northwest.
    Mr. Browning. Senator Wyden, Senator Smith, thank you for 
the invitation to testify today.
    Since September 11th, the U.S. Customs Service's top 
priority has been responding to the terrorist threat at our 
seaports, land borders and airports. We are doing everything we 
reasonably and responsibly can to keep terrorists and their 
weapons from entering the United States. We are currently at a 
Level One alert at all border entry ports, including our 
seaports.
    Level One requires sustained, intensive anti-terrorist 
questioning and includes increased inspections of travelers and 
goods. Because there is a continued threat of another terrorist 
attack, we will remain at Level One for the foreseeable future.
    To help ensure that Customs develops a coordinated, 
integrated counter-terrorism strategy for border and seaport 
security, Commissioner Bonner established an Office of Anti-
Terrorism. To support our Customs officers operationally, we 
have also established the Office of Border Security. The 
mission of this office is to develop more sophisticated anti-
terrorism targeting techniques for passengers and cargo in each 
border environment and provide a single point of contact for 
events taking place in the field.
    In our fight against terrorism, Customs employs a ``Defense 
in Depth'' strategy, a layered approach that essentially 
expands our perimeter of security to the point of origin. If 
terrorists were to succeed in concealing a weapon of mass 
destruction among the tens of thousands of containers that 
enter U.S. ports every day, the physical and economic 
devastation would be severe. As the primary agency for border 
security, U.S. Customs should know everything there is to know 
about a container headed for this country before it leaves a 
foreign port for the U.S. We want that container pre-screened 
there and not here.
    A critical component of our ``Defense in Depth'' strategy 
is the Container Security Initiative, or CSI. The CSI engages 
the ports that send the highest volume of container traffic 
into the United States, as well as their governments in these 
locations, in a way that will facilitate the detection of 
potential problems at their earliest possible opportunity.
    The core elements of the Container Security Initiative are: 
One, establishing security criteria for identifying cargo 
containers that pose a high terrorist risk. Second, maximize 
the use of detection technology to pre-screen high-risk 
containers. Third, pre-screening at the point of export rather 
than the port of importation. And finally, developing and 
deploying smart and secure containers.
    About 90 percent of the world's trade moves in containers, 
much of it carried on ocean-going vessels. Nearly half of all 
incoming trade to the United States by value, and that is about 
46 percent, arrives by ship and most of that is in containers. 
Last fiscal year approximately 34,000 containers entered the 
North Pacific CMC, which includes the service ports of Portland 
and Anchorage.
    The effective use of technology depends largely on good 
targeting for which we require advance information. Since 
September 11th, Customs has refocused our resources and 
technology to increase the number and the type of cargo exams 
we perform. However, to some the overall number of examinations 
may still seem surprisingly low, but be aware that the cargo 
not(?) chosen randomly. It is the result of a careful screening 
process using information from a vast data base, the Automated 
Manifest System. Using these targeting systems, we are able to 
choose those shipments that appear unusual, suspect or high 
risk, and in that context we are inspecting a hundred percent 
of those containers.
    Currently the submission of advanced shipping manifests to 
Customs is voluntary. We can not rest our nation's homeland 
security on the inconsistent, often incomplete and occasionally 
inaccurate submissions of advance information. Timely, accurate 
and complete information is vital to homeland security and we 
should mandate that it be provided in advance.
    In this regard current legislation such as S. 1214 takes us 
a major step closer to where we ultimately need to be. And that 
is to have full information on incoming cargo before it even 
leaves the foreign port.
    As you can see, technology and information are essential to 
our counter-terrorism mission. Simply put, the more technology 
and information we have and the earlier in the supply chain we 
have them the better. Customs has a history of positive 
relationships with the trade community. Capitalizing on this 
experience is the Customs Trade Partnership Against Terrorism, 
or C-TPAT.
    C-TPAT builds on successful security models between Customs 
and the trade that were designed to prevent legitimate 
commercial shipments from being used to smuggle illegal drugs.
    Customs also looks forward to the completion of our 
Automated Commercial Environment or ACE, which, as you know, is 
an extremely important project for the Customs Service. ACE, 
our new and comprehensive automation system, offers major 
advances in both the collection, sorting and targeting of 
border transaction data.
    The terrorists have already exploited one key component of 
our transportation system and that is commercial aviation. It 
is not at all unthinkable that they will seek to target others, 
including maritime trade. We believe our seaports and the 
system of global trade they support are vulnerable, and we 
believe that the U.S., the U.S. Customs Service and in 
partnership with the trade community and other government 
agencies must address this threat.
    Mr. Chairman, I thank you for the opportunity to appear 
before the Subcommittee and I would be willing to take any 
questions that you might have.
    [The prepared statement of Mr. Browning follows:]

    Prepared Statement of Douglas M. Browning, Deputy Commissioner, 
                          U.S. Customs Service

    Senator Wyden, Senator Smith, thank you for your invitation to 
testify before this Subcommittee today. Since September 11th, 
Commissioner Bonner's top priority for the Customs Service has been 
responding to the terrorist threat at our seaports, land borders, and 
airports. His highest priority is doing everything we reasonably and 
responsibly can to keep terrorists and terrorist weapons from entering 
the United States.
    Through our Customs Inspectors, Canine Enforcement Officers, and 
Special Agents we are doing just that: protecting and defending our 
country against the terrorist threat at all our ports of entry, 
including our seaports.
    Since September 11th, Customs has been at a Level One alert across 
the country--at all border entry points, including our seaports. Level 
1 requires sustained, intensive anti-terrorist questioning, and 
includes increased inspections of travelers and goods at every port of 
entry. Because there is a continued threat that international 
terrorists will attack again, we remain at Level 1 alert to this day 
and will be at Level 1 for the foreseeable future.
    To help ensure that Customs develops a coordinated, integrated 
counter-terrorism strategy for border and seaport security, 
Commissioner Bonner established a new Office of Anti-Terrorism. In an 
operational context and to support our Customs officers in the field, 
we have also established the Office of Border Security. The mission of 
that office is to develop more sophisticated anti-terrorism targeting 
techniques for passengers and cargo in each border environment and 
provide a single point of contact for events taking place in our field.
    In approaching our primary priority to prevent terrorists and 
terrorist weapons from transiting our borders, Customs employs a 
``Defense in Depth'' strategy. A layered approach for targeting and 
screening that essentially expands our perimeter of security to the 
point of origin. If terrorists were to succeed in concealing a weapon 
of mass destruction, even a crude nuclear device, among the tens of 
thousands of containers that enter U.S. ports every day, the 
devastation would be horrible to contemplate. And the impact on our 
global economy would be severe. As the primary agency for cargo 
security, U.S. Customs should know everything there is to know about a 
container headed for this country before it leaves a foreign port, such 
as Rotterdam or Singapore, for an American port. Customs wants that 
container pre-screened there, not here.
    A critical component of Customs overall ``Defense in Depth'' 
strategy is the implementation of the Container Security Initiative. 
The Container Security Initiative engages the ports that send the 
highest volumes of container traffic into the United States as well as 
governments in these locations, in a way that will facilitate detection 
of potential problems at their earliest possible opportunity.
    The core elements of the Container Security Initiatives are the 
following:

   First, we must establish international security criteria for 
        identifying high-risk cargo containers that potentially pose a 
        risk of containing terrorists or terrorist weapons.

   Second, we must maximize the use of detection technology to 
        pre-screen high-risk containers. Much of this technology 
        already exists and is currently being used by the U.S. Customs 
        Service. This technology will not only be used for inspection 
        of U.S. Customs targeted cargo but also for cargo identified by 
        other federal agencies such as the U.S. Coast Guard, 
        Immigration and Naturalization Service, Food and Drug 
        Administration and the Department of Agriculture.

   Third, we must develop and broadly deploy ``smart'' boxes--
        smart and secure containers with electronic seals and sensors 
        that will indicate to Customs and to the private importers or 
        carriers if particular containers have been tampered with, 
        particularly after they have been pre-screened.

    The vast majority of world trade--about 90 percent--moves in 
containers, much of it carried on oceangoing container ships. Nearly 
half of all incoming trade to the United States by value--about 46 
percent--arrives by ship, and most of that is in containers. In Fiscal 
2001, approximately 34,000 containers entered through the North Pacific 
CMC (Service Ports of Portland and Anchorage).
    The effective use of technology depends largely on good targeting, 
for which we require advance information. Since September 11th, Customs 
has refocused resources and technology to increase the number and the 
type of cargo exams it performs. However, to some the overall number of 
examinations may still seem surprisingly low in proportion to the vast 
amount of trade we process. Yet it is important to note that the cargo 
Customs selects for intensive inspection is not chosen randomly. It is 
the result of a careful screening process, one that uses information 
culled from a vast database on shipping and trading activities known as 
the Automated Manifest System. Using targeting systems that operate 
within AMS, we are able to sort through the cargo manifests provided to 
Customs by shippers and carriers, and chose those shipments that appear 
unusual, suspect, or high-risk. It is a system that has served us well, 
but one that can and must serve us better in light of September 11th.
    Currently the submission of advanced shipping manifests to Customs 
is voluntary. We cannot rest our Nation's homeland security on the 
inconsistent submission of advance information that is often incomplete 
and sometimes inaccurate. Timely, accurate, and complete information is 
vital to homeland security and we should mandate it is provided in 
advance. Current legislation, such as S.1214 take us a major step 
closer to where we ultimately need to be, particularly for the 
Container Security Initiative--and that is to have full information on 
incoming cargo before it even leaves the foreign port. This information 
is needed for all imports and in-bond shipments.
    The Customs Service is also seeking the inclusion of a six-digit 
harmonized tariff code in the manifest for in-bond shipments. The six-
digit classification universally describes the goods to all governments 
that subscribe to the Harmonized system. Customs has had success in 
targeting in our entry system, using this level of detail. This level 
provides the specificity necessary to allow for finer targeting, which 
could translate into fewer examinations--a sort of reverse targeting to 
eliminate unnecessary and timely inspections. With less detailed 
information, however, the need to examine for potential threats 
increases, particularly as those shipments move in-bond.
    As part of our immediate response to September 11th, Customs 
promptly sought, and the Congress promptly enacted, legislation that 
made the submission of data on incoming passengers to Customs' Advance 
Passenger Information System mandatory for all airlines. That law was 
passed last November as part of the Aviation and Transportation 
Security Act. Initially, the Commissioner ordered all international 
airlines flying into the U.S. from abroad to submit advance passenger 
information to Customs, or face 100 percent inspection of people and 
goods departing their flights. This enabled Customs to better secure 
advance passenger information on all incoming international flights 
before the new law took effect.
    As you can glean from this list, technology and information are 
essential to a successful container security strategy and to our 
counter-terrorist mission in general. And to put it simply, the more 
technology and information we have, and the earlier in the supply chain 
we have them, the better.
    Customs has a long history and working relationship with the trade 
community. Another Customs developed initiative is the Customs-Trade 
Partnership Against Terrorism, or ``C-TPAT''. C-TPAT builds on past, 
successful security models between Customs and the trade that were 
designed to prevent legitimate commercial shipments from being used to 
smuggle illegal drugs.
    Customs also looks forward to the completion of the Automated 
Commercial Environment, or ACE, which as you know is an extremely 
important project for the Customs Service. ACE, our new and 
comprehensive automation system, offers major advances in both the 
collection and sorting of border transaction data.
    The terrorists have already exploited one key component of our 
transportation system: commercial aviation. It is not at all 
unthinkable that they will seek to target others, including maritime 
trade. We believe our seaports and the system of global trade they 
support are vulnerable, and we believe that the U.S. and the Customs 
Service must act now to address this threat.
    Thank you again for the opportunity to testify here today.

    Senator Wyden. Mr. Browning, thank you. You've been very 
helpful. Colonel Butler, welcome.

       STATEMENT OF COLONEL RANDALL J. BUTLER, DISTRICT 
   ENGINEER, PORTLAND DISTRICT, UNITED STATES ARMY CORPS OF 
                           ENGINEERS

    Colonel Butler. Thank you, Mr. Chairman. I'm Colonel 
Randall Butler, the district engineer for Portland District, 
United States Army Corps of Engineers. We appreciate the 
opportunity to testify today on the security at our nation's 
seaports.
    As you are surely aware, the role of the engineers with 
respect to navigation is to provide safe, reliable, efficient, 
and environmentally sustainable waterborne transportation 
systems in channels, harbors, and waterways for the movement of 
commerce, people, recreation and for national security.
    Currently the Corps of Engineers maintains about 926 
coastal and inland harbors throughout the nationwide system, 
including 4,690 deep-draft and 4,619 shallow-draft and 
commercial facilities. We give budgetary priority to commercial 
activities.
    Nationwide the Corps also maintains 215 navigational locks 
along shallow-draft waterways and about 23 locks along the 
deep-draft channels to aid in the movement of commodities and 
commercial products throughout the nation's heartland. These 
navigational facilities are the lifeblood of interstate and 
international trade.
    In addition to commercial traffic, the Corps navigation 
locks also provide an invaluable service to recreational users 
without charge. Regionally, the Corps maintains eight 
navigational locks on the Columbia and Snake River system with 
benefits to 36 ports in Oregon, Washington and Idaho and in the 
export and import of commodities and products.
    While the Corps has no authority and appropriations for 
Port Security, we do have a keen interest and a vital stake in 
its effectiveness. The nation's waterways, along with the civil 
works infrastructure--the locks and dams we operate--are the 
nation's assets, and as such we have a responsibility to 
maintain security throughout that system.
    The events of 9/11 brought a sobering realization that our 
infrastructure could be at risk. In the months following, the 
Corps of Engineers initiated an aggressive assessment of all 
its dams and critical facilities and developed plans to 
increase the physical security of the navigation system.
    The need for a security assessment was first discussed in 
1997 in the Presidential Decision Directive 63. Nine Federal 
and non-Federal agencies responsible for security of the 
nation's infrastructure developed a process to systematically 
analyze current security risks at our nation's dams and propose 
security measures to protect all critical missions of these key 
Federal dams.
    We have completed our initial assessment of 47 dams in the 
Northwest Division and for over 300 critical Corps structures 
across the nation, and we've developed protection and 
mitigation measures that are included in the individual project 
reports. Using the funding provided by Congress, we are 
implementing increased security measures.
    The locks and dams in the Columbia River Basin are among 
the highest priority dams within the division. Lockages are 
performed 24 hours a day, 7 days a week at Corps navigational 
locks. Priority is given to commercial vessels, with 
recreational lockages scheduled five times a day.
    In the wake of 9/11, we have increased our vigilance at our 
facilities. Operators at each lock maintain a list of the names 
of vessels that frequent the lock, mainly commercial vessels, 
tugs, commercial passenger boats and several navy vessels. The 
powerhouse and lock operators are familiar with most commercial 
vessels and their crews, and should anything sound or look 
suspicious, the operator may refuse lockage.
    The Corps is not only the nation's leader in water resource 
management, but the nation's premier public engineering agency. 
Partnering with similarly committed public and private entities 
can only strengthen the national resolve and sharpen our 
preparedness.
    We are learning from the tragic events in New York and 
Washington, DC and now have a better understanding of who the 
likely players would be should a similar incident occur at one 
of our facilities. We've reached out to new and old partners, 
the U.S. Coast Guard and the navigation industry, and are 
developing new response and communication plans that we 
hopefully will never have to use.
    The Corps of Engineers does not intend to allow the risk of 
terrorism to cripple our effectiveness as the nation's leader 
in water resource management. We will continue to execute our 
navigation mission to the best of our ability.
    Mr. Chairman, that concludes my statement. I will submit my 
full statement for the record and I'm open to your questions at 
this time.
    [The prepared statement of Colonel Butler follows:]

  Prepared Statement of Colonel Randall J. Butler, District Engineer, 
        Portland District, United States Army Corps of Engineers

    Mr. Chairman and Members of the Subcommittee, I am Colonel Randall 
Butler, the District Engineer for the Portland District, U.S. Army 
Corps of Engineers. Thank you for the opportunity to testify on 
security at our nation's seaports.
    As you are surely aware, the role of the U.S. Army Corps of 
Engineers, with respect to navigation, is to provide safe, reliable, 
efficient, and environmentally sustainable waterborne transportation 
systems (channels, harbors, and waterways) for the movement of 
commerce, people, recreation and for national security. The Corps 
accomplishes its navigation mission through a combination of capital 
improvements and the operation and maintenance of existing navigation 
projects and structures. Our role in developing the Nation's water 
highways dates back to the early days of this Nation's history, 
beginning in the Ohio and Mississippi basins in 1824, and expanding 
with the new frontier.
    Currently, the Corps of Engineers maintains 926 coastal and inland 
harbors nationwide, including 4,690 deep-draft and 4,619 shallow-draft 
commercial facilities. It gives budgetary priority to facilities 
supporting commercial activities. On an average annual basis, Corps of 
Engineers operations and maintenance at these projects removes nearly 
300 million cubic yards of sediment from Federally-maintained 
navigation channels.
    Nationwide, the Corps also maintains 215 navigation locks along 
nearly 11,000 miles of inland and intracoastal shallow-draft waterways 
and 23 locks along 14,000 miles of deep draft channels to aid the 
movement of commodities and commercial products throughout the nation's 
heartland. These navigation features are the lifeblood of interstate 
and international trade, generating nearly $700 billion in foreign 
commerce. In 2000, almost 3 billion tons of goods and services moved 
through Federally-maintained facilities and waterways.
    In addition to commercial traffic, Corps navigation locks also 
provide an invaluable service to recreational users without charge. The 
Hiram M. Chittenden Locks in Seattle, for example, passed nearly 50,000 
recreational crafts through its lock chambers last year.
    Regionally, the Corps maintains eight navigation locks on the 
Columbia and Snake Rivers system, which benefits some 36 ports in 
Oregon, Washington and Idaho in the export and import of commodities 
and products. A number of these ports rank in the top 100 in the 
nation: the Port of Portland--the nation's 22nd busiest navigation hub; 
the Port of Vancouver, Washington--the 68th busiest; and the Port of 
Longview, Washington--the 88th busiest.
    While the Corps has no authority or appropriations for port 
security, we do have a keen interest and vital stake in its 
effectiveness. The nation's waterways, along with the civil works 
infrastructure--the locks and dams we operate, are national assets, and 
as such, we have a responsibility to support security measures to 
safeguard them.
    The events of 9/11 brought a sobering realization that our 
infrastructure could be at risk. In the months following, the Corps of 
Engineers initiated an aggressive assessment of all its dams and 
critical structures and developed plans to increase the physical 
security of the navigation system.
    The need for a security assessment was first discussed in 1997 as 
part of Presidential Decision Directive 63. Nine Federal and non-
Federal agencies, responsible for security of our Nation's 
infrastructure, developed a process to systematically analyze current 
security risks at our nation's dams and propose security measures to 
protect all critical missions of key Federal dams.
    We have completed our initial assessments of all 47 dams within the 
Northwestern Division and for over 300 critical Corps structures across 
the nation, and developed protection and mitigation measures that are 
included in individual project reports. Using the funds appropriated by 
Congress, we are implementing increased security measures.
    The locks and dams in the Columbia River Basin are among the 
highest priority dams within the Division. Our end goal is to protect 
the dams while at the same time allowing the continued movement of 
commerce and people and maintaining the environmental and recreational 
qualities along the river system and through the navigation locks.
    Lockages are performed 24 hours a day, seven days a week at Corps 
navigation locks. The majority of these lockages are of commercial tows 
or private recreational vessels, with other vessels being owned by 
universities or federal, state, or local governments. Priority is given 
to commercial vessels, with recreational lockages scheduled three times 
each day.
    In the wake of 9/11, we have increased our vigilance at our 
facilities. Operators at each lock maintain a list of the names of 
vessels that frequent the lock, mainly commercial vessels, tugs, 
commercial passenger boats and a several Navy vessels. Powerhouse and 
lock operators are familiar with most commercial vessels and their 
crews, and should anything sound or look suspicious, the lock operator 
may refuse lockage.
    The Corps is not only the nation's leader in water resource 
management, but the nation's premier public engineering agency. Using 
our expertise and authorities, we are taking additional measures to 
safeguard the nation's investment in waterway infrastructure and to 
protect the safety of the citizens in our region. Partnering with 
similarly committed public and private entities can only strengthen the 
national resolve and sharpen joint preparedness.
    We are learning from the tragic events in New York and Washington 
DC and now have a better understanding who the likely players would be 
should a similar incident occur at one of our facilities. We have 
reached out to new and to long-time partners (the U.S. Coast Guard and 
navigation industry), and are developing new response and communication 
plans that we hopefully will never need to use.
    The Corps of Engineers does not intend to allow the risk of 
terrorism to cripple our effectiveness as the nation's leader in water 
resource management. We will continue to execute our navigation mission 
to the best of our ability. Mr. Chairman, this concludes my statement. 
I would be happy to answer any questions you or the other Subcommittee 
Members may have.

    Senator Wyden. It will be put into the record in its 
entirety. And what we'll do--I have a number of questions and I 
know Senator Smith does--we'll just go back and forth. Let me 
start with one for the panel. I think that it is very clear 
that since September 11, there is a real challenge in terms of 
taking on these new functions to address terrorism, while at 
the same time keeping the traditional activities of your 
agency.
    And the General Accounting Office is looking at this area 
in particular, and they found, for example, on the east coast 
that there was a dramatic drop in the Coast Guard's fishing 
boat boardings. They found that since September 11, for 
example, on the east cost of the United States there were only 
38 of these boardings compared to 300 in the first quarter of 
last year.
    So it's clear that with each of your agencies you have 
taken on new missions with respect to combating terrorism, and 
what I would like you to do is tell us, each of you, for your 
agencies, what additional actions you've taken to combat 
terrorism since September 11, and what functions are you forced 
to do less of because of your new duties?
    Let's begin with the Coast Guard.
    Admiral Cross. Yes, sir. Maybe to put the numbers that you 
addressed into a little bit of context. Prior to the events of 
9/11, the Coast Guard resources engaged in specifically Port 
Security operations was something less than 5 percent. In the 
couple weeks immediately following September 11th, that number 
surged up to something between 50 and 60 percent as we reacted 
and responded to, as we normally do, to emergencies. And that 
would account for the significant drop off in first quarter 
fishing boardings.
    Since that time we have realigned our resources and we now 
are investing somewhere between 20 and 25 percent of our 
resources in Port Security operations and have gone back as 
much as we think we can to other more traditional--that's not 
fair. To other Coast Guard missions.
    And as I mentioned in my statement, port and coastal 
security is not a new mission for the Coast Guard, but 
certainly with the increased threat it calls for a greater 
percentage of our resources.
    And the other question that you asked is what are we doing 
less of? Sir, we're doing primarily less in the way of our law 
enforcement missions. Less narcotics, less fisheries law 
enforcement, somewhat less in the migrant interdiction role, 
and then those resources to some extent have been deployed and 
shifted, if you will, to port and coastal security operations.
    I think you also asked what additional things are we doing? 
What kind of things are we doing? Shortly after the events of 
9/11, we implemented a sea marshal program. I can go into that 
in as much depth as you'd like, but in short those are Coast 
Guard people who are willing to go onto high interest vessels 
and ensure that those vessels can't be taken over as the 
aircraft were on 9/11.
    Tomorrow we're going to commission a maritime security 
team, one of four such teams that we're going to commission 
this year. This one will be commissioned in Seattle. And these 
are deployment teams that come--two separate teams within the 
overall team come with six boats, and they're going to be 
specially trained--these are law enforcement personnel--trained 
along the lines of our Port Security that we already have that 
are primarily focused on overseas Port Security. So there is a 
different venue here in terms of law enforcement work versus a 
wartime scenario.
    For example, one of those Port Security teams currently is 
deployed in the Middle East and another in Guantanamo Bay. So 
the training for those teams differs somewhat. And I will also 
mention we have just increased our presence on the water. We're 
much more over and above the water, so that you're much more 
likely to see a Coast Guard boat, a patrol boat or a helicopter 
flying over than you have before.
    And most importantly, we've very much increased our 
outreach efforts. In our efforts to build a team within each 
port, a security committee, for example, to try to bring all 
the resources of the port together to enhance the security of 
the port. Those are the kinds of things that we've done.
    Maybe one other issue because you touched on international 
efforts, we have been very busy working with the International 
Maritime Organization in helping the United Nations in London. 
And one example of one of the things that we've been able to 
accomplish there is there's a lot of information in the system 
that was--this is a system that will allow us to track ships 
very much like the current aviation system in the world allows 
us to track aircraft.
    That system was initially scheduled to go on-line and be 
required in 2008. Working within the IMO, we now have agreement 
to go forward with that system in December of 2004. And the 
reason we couldn't really go faster than that is we don't 
believe the manufacturers could actually provide us the 
equipment any faster than that. We have not yet totally set up 
a shore-side architecture to gain those signals and plot them 
so we can actually track where the vessels go, and there is 
some bandwidth issues that need to be addressed. But that's an 
example of the kinds of efforts that we're making in the 
international scene.
    Senator Wyden. Mr. Browning, what else have you taken on 
since September 11th, and what areas have you been forced to do 
less of?
    Mr. Browning. Thank you, Mr. Chairman. Actually, Mr. 
Chairman, this gives me an opportunity to sort of outline what 
I think have historically been the four core missions of the 
U.S. Customs Service. We have for quite some period of time 
been a law enforcement agency. That certainly is one of our 
four mission requirements.
    Certainly post-9/11 border security has come to the 
forefront as one of the issues, but it has always, and I will 
join Admiral Cross in that, it has always been one of our 
functions to be involved in border security. You will recall 
that the time of the Y2K that indeed it was a customs officer 
in Washington state that apprehended a potential terrorist who 
had intentions of causing an explosion at the Los Angeles 
International Airport. So we have always been in that business.
    What we have been doing post-9/11, however, is to refocus 
our efforts in that area so that we can provide the security 
that the American people are entitled to and are asking us to 
provide.
    Along with those two parts of our mission, we also 
recognize that we are an important part of the international 
global trade arena. We have a clear trade compliance function 
and we have a trade facilitation function. And we have been 
working those functions along with our partners in the trade 
for quite some period of time.
    And indeed one of the things that I would join Admiral 
Cross in this regard, one of the things that is critically 
important to the Customs Service and Commissioner Bonner is at 
the time the decision was made that we would become part of the 
Department of Homeland Security, the decision was made to take 
all of our functions over and the organization over in tact. We 
think that is critically important, because the things that we 
do on our law enforcement side help us to provide the trade 
compliance facilitation that is so critically necessary to our 
economy.
    So in that sense I think we've been doing this for quite 
some period of time. As to what we have done differently since 
9/11, what new initiatives, I mentioned in my oral statement 
both the C-TPAT and CSI. As you are aware with respect to CSI, 
we've had some considerable successes in that area. Most 
recently Singapore has indicated a willingness to allow us to 
deploy our inspectors to that or to do pre-screening on 
containers for the U.S. The ports of Rotterdam, Antwerp and 
LeHavre have also agreed and we will be deploying resources 
there shortly. And we have for quite some period of time been 
engaged in CSI with our Canadian colleagues taking a look at 
over the half a million containers that come into the U.S. 
inbound from Canada to the U.S. And again, we have been 
experiencing some successes.
    In addition to these two programs, however, very quickly, 
Operation Shield America, in which we have gone out and spoken 
to over 3,000 domestic manufacturers of items that would be of 
interest to terrorists to alert them to what to look for, and 
if in fact they have customers who are trying to acquire some 
of these commodities to let us know so that we might be able to 
do some necessary followup, and at least two followup 
investigations have come out of those outreach efforts and 
those contacts.
    Operation Green Quest, which is the targeted money 
laundering activity going after the terrorists' financing has 
resulted in the seizure or freezing of over $49 million worth 
of suspect terrorist assets and numerous indictments.
    The Office of Border Security, which we also outlined in my 
presentation was started up for the sole purpose of helping us 
to further refine our rules-based data system, so that when we 
take information and we start targeting containers, we have a 
very sophisticated, very in-depth tool that allows us to make 
decisions on what is and is not high risk.
    Finally, on the international front we have been working 
with our international organization, the World Customs 
Organization, that has adopted a resolution and will be 
undertaking an action plan in which we will play a critical 
role to develop, with other nations, a whole process of supply 
chain security, from vendor to consignee.
    And then very finally, I want to thank the Congress and the 
Senate for the support we have received with respect to 
nonintrusive technology. We have accelerated our deployment of 
nonintrusive technology to our seaports. This allows us to do 
better examinations, quicker examinations of suspect and high 
risk containers. It allows our people to help continue to 
facilitate legitimate trade while still allowing us the ability 
and flexibility to take a look at those things that would be of 
interest to us from both an enforcement or anti-terrorist 
standpoint. And in that context those are just a few of the 
things we're undertaking.
    One final point. We have worked diligently to partner with 
other law enforcement agencies, other government agencies 
involved in this, the container working group which has the 
Customs Service, the Coast Guard, several other concerned 
agencies have been working in concert to try to identify 
approaches so that we can better assist each other in trying to 
tackle this very difficult problem.
    Senator Wyden. Mr. Browning, you list many things that 
you're doing in addition to what you used to do. What are you 
doing less of? Mr. Cross told me he was doing less in the law 
enforcement area, which of course concerns me because we have a 
serious drug problem. Tell me, if you will, what are you doing 
less of since September 11th?
    Mr. Browning. Senator, I can't say we're doing less of 
anything. What I can say is we're doing it differently than the 
way we may have done it pre-9/11. C-TPAT was a recognition and 
one of the things we did with C-TPAT was to provide a whole 
series of benefits to the trade that made it worth their while 
to shore up their own security. We're not in a position as a 
law enforcement agency to step back from some of the 
significant law enforcement activities we have, such as 
counter-narcotics, anti-terrorism, forced child labor, IPR 
violations.
    What I think we have been trying to do is to manage the 
resources so that we could do it differently and try to enlist 
the assistance of other partners to help us do that. I will 
give you one very interesting statistic. As a result of what we 
have been able to do in the counter-terrorism area, our 
narcotics seizures for this year are up 17 percent over what 
they were at this same time last year. And again, I think it's 
simply a reflection of the fact that we have been trying to get 
processes in place that will allow us to do our job better.
    I can't say that we've put any one of our missions aside. 
Maybe some of the commercial trade activities or something that 
we've had to step away from to redeploy resources, but 
generally what we're trying to do, sir, is just try to do it 
better and do it different.
    Senator Wyden. Mr. Butler, same question. What are you 
doing more of? What has been an area in which you've been 
forced to take a lower priority?
    Colonel Butler. Yes, sir. Let me address that from two 
different perspectives. One from a national perspective. On the 
national side, as I said in my opening statement, we've done a 
lot more in the security assessment program. We used what we 
call RAM-D assessment. And RAM-D stands for Risk Assessment 
Methodology for dams. Given that, we've done that very 
intensively.
    Also nationally, we have done a heightened outreach for 
security information. We have now leveraged with our DoD 
organizations and also collectively with other law enforcement 
agencies looking for potential threats to the national 
infrastructure.
    Internally on a national level, we've leveraged our 
capabilities as a premier engineer organization to help the 
nation. In particular we have a protective design center in 
Omaha that has been leveraged to help other agencies in looking 
at their abilities to shore up security. We have done a 
tremendous amount of work in the R&D community. We also have 
outreached to the engineer community as a whole in partnering 
with different engineer organizations to come up with better 
standards throughout the industry. That's on the national 
level, so we've done a lot more of that.
    Regionally, I as a district engineer have had to divert 
some of my ranger personnel from doing what is their normal 
activities to doing much more law enforcement type or 
patrolling type activities. I have additionally added some 
temporary security folks to augment at my facilities, so I have 
a higher level of comfort that I have eyes watching around the 
projects as a whole. Additionally, we have just had a 
heightened awareness throughout all the work force.
    Now, specifically on the ``less''. The ``less'' that's 
happened is that the range of personnel that we have typically 
are not there as security personnel. We hire them to interact 
with the public to provide safe recreational opportunities, and 
to provide interpretation at our facilities throughout the 
nation. We have done less of that. That's exactly what has 
happened. We've had less interface with the public than what 
they would like. We've had less activities at the projects, 
because we've had to restrict certain areas of our projects 
from the public.
    In particular at Bonneville Dam, the lock area has a 
viewing platform that is no longer accessible to the public, so 
we're allowing less visitation to certain parts of projects 
where people would like to go.
    Additionally, early on we had to divert dollars from our 
maintenance account in order to supplement our efforts to 
provide additional security personnel. So we diverted dollars 
early on in order to make that happen, and what that has done 
in essence is pull back on our maintenance and repair 
activities here toward the end of the year. As dollars become 
available throughout the command, we continue now to apply 
those back to maintenance and repair. Basically, that was an 
early decision to take those dollars to shore up on the 
security side. So that's what we did less.
    Senator Wyden. One other question for this round and then 
I'm going to let Senator Smith have his first round. Let's go 
into the budget issues, Admiral Cross. And again, the people of 
Oregon and I--I have community meetings around the state, as 
Senator Smith does as well--are very concerned because we've 
got a number of traditional operations the Coast Guard performs 
which are extremely important to the people of this state. 
We're talking about Search and Rescue, fishery protection, and 
responding to environmental disasters such as the New Carissa 
in our state.
    Tell me how the Coast Guard is going to take on all of 
these new missions with the primary mission of combating 
terrorism and still perform these essential functions that are 
so important to coastal communities and the people of our 
state.
    Admiral Cross. I'll maybe start with a simple answer and 
then a more complex answer. The simple answer is that the Coast 
Guard, especially since 1950, has had a broad spectrum of 
missions. We're responsible for missions from bridge 
administration to national defense.
    And to say that moving the Coast Guard to the Department of 
Homeland Security will somehow make Port Security a primary 
mission over the other missions, I think belies our past a 
little bit. Admiral Loy, he was once asked why the Coast Guard 
should remain in the Department of Transportation. And he 
explained that about--using rough numbers--about a third of our 
missions are national defense related, about a third are law 
enforcement related, and about a third are transportation 
related. So we're not really a good fit in justice or in the 
defense department, so we might as well stay in the 
transportation department. And that's what he was advocating at 
the time.
    However, now I think if you take a look at those missions, 
one-third national defense-type related missions, one-third law 
enforcement related missions, and terrorism concerns, there are 
very clearly law enforcement and national defense issues. We 
now have an opportunity to move the Coast Guard forward into a 
department where we would have about a two-thirds fit.
    But I don't think it's fair to presume that that would 
somehow mean that we will ignore the other missions. For 
example, we always talk about Search and Rescue being our 
primary mission before 9/11, and what we did after 9/11 is 
essentially move Maritime Homeland Security and Port Security 
up on par with Search and Rescue.
    That doesn't mean that we didn't do Fishery Law Enforcement 
here or off the Bering Sea. It didn't mean that we didn't pay 
great attention, for example, to aids to navigation, which I 
know is greatly important for the transport of goods from the 
Port of Portland a hundred miles to the Pacific Ocean. So we've 
always been an agency that had to have a broad spectrum. It's 
had a broad spectrum of missions and we've been able to attend 
to those missions.
    So I don't necessarily see a big change here. And like I 
said and said before, Port Security has been a mission for the 
Coast Guard for many years. It's not a new mission for us. This 
is simply a mission that because of the increased threat has 
increased in our priority.
    Senator Wyden. Admiral, I guess with all due respect I 
would have to disagree. I mean it's very clear. It's stipulated 
in the president's proposal that the new primary mission is to 
combat terrorism. It's outlined very clearly. And it just seems 
to me that the math doesn't add up in terms of keeping the 
functions.
    I was very troubled by The Wall Street Journal's recent 
report that of the extra money that's being requested by the 
Coast Guard, more than 90 percent of it is for functions other 
than security. In fact The Wall Street Journal reported that 
about two-thirds of the extra money goes for retirement 
programs alone.
    So you are a good man and it is not right to put you just 
solely on the grill here for decisions being made in 
Washington, DC But it is clear that the primary mission of the 
new Coast Guard in Homeland Security is to combat terrorism, 
and certainly people on the Oregon coast didn't see that as the 
primary mission of the Coast Guard over the past several 
decades. And we're anxious to work with you all to make the 
math add up. But I will tell you that it sure doesn't look like 
it does.
    Admiral Cross. One maybe or two additional points that 
might help us with the math just a little bit.
    Senator Wyden. Sure.
    Admiral Cross. First of all, I make the point that we're 
going to be engaged in coastal security regardless of whether 
we stay in the Department of Transportation or whether we go 
into the Department of Homeland Security. I didn't mean to 
imply that we're going to be able to enhance our Homeland 
Security efforts without impacting other missions without 
having a bigger Coast Guard.
    In fact our fiscal year 2003 budget that's on the Hill 
along with the supplementals will grow the Coast Guard by about 
2200 people. And that's significant for an organization of 
about 35,000 people now. So there are going to be increased 
costs and those costs will be for increased security.
    Senator Wyden. Well, again The Wall Street Journal reports 
otherwise. They make it clear that more than 90 percent of the 
extra money that's being requested is for functions other than 
security. And without objection I'm going to put that Wall 
Street Journal article into the record at this point.
    [Information follows:]

                      Coast Guard Braces for Fight
           The Wall Street Journal, Wednesday, June 26, 2002

                            By Leila Abboud

War on Terror Thrusts Service Onto Front Line, Into Controversy
    The Coast Guard has long seen itself as the Rodney Dangerfield of 
the armed services, known best for tending buoys and towing broken-down 
boats. But lately it is getting plenty of Congressional attention as 
President Bush proposes to put the agency on the front lines against 
terrorism.
    Securing the nation's borders was only a small part of the Coast 
Guard's focus before Sept. 11. Now the agency faces nothing less than a 
drastic reorientation, should it become part of Mr. Bush's proposed 
Homeland Security Department. And that, the Coast Guard says, would 
require more boats and more money--despite the president's insistence 
that the new Cabinet department can take form without adding to the 
deficit.
    At the same time, some powerful members of Congress from coastal 
states don't want to see moves that shortchange the Coast Guard's 
traditional missions, such as search-and-rescue operations and 
fisheries protection.
    Warns Alaska's GOP Rep. Don Young, a well-known legislative 
pugilist: Congress will alter those Coast Guard missions ``over my dead 
body.''
    These are the kinds of hurdles ahead as Mr. Bush and Congress try 
to create the new bureaucracy from all or parts of 22 existing 
agencies, also including the Customs Service and the Immigration and 
Naturalization Service, that have substantial jobs unrelated to 
fighting terrorism. Given budget constraints, agencies may have few 
choices but to neglect old missions for new.
    How this may affect the Coast Guard has some powerful groups and 
lawmakers mobilized for their own battle. Besides Rep. Young, who is 
chairman of the House Transportation Committee, with jurisdiction over 
the agency, others include his fellow Alaskan, Sen. Ted Stevens, top 
Republican on the Senate Appropriations committee, and House 
Appropriations Chairman Bill Young, a Florida Republican.
    Nothing illustrates the tensions better than a current debate over 
``Deepwater,'' the largest acquisition program in the Coast Guard's 
history. Yesterday, a joint venture of Lockheed Martin Corp. and 
Northrop Grumman Corp., as expected, won the contract. The Coast Guard 
is expected to spend as much as $17 billion over the next three decades 
to buy new ships, planes and helicopters.
    Conceived well before Sept. 11, Deepwater was supposed to replace 
92 large, aging vessels and 209 aircraft that work far from shore on 
missions such as interdicting illegal drugs or migrants. But now some 
other influential members of Congress question why the Coast Guard is 
spending three-quarters of its annual capital budget on Deepwater when 
most homeland-security programs--for patrols, boarding vessels, and 
guarding infrastructure--operate close to shore and require smaller 
boats.
    Leading the fight against Deepwater is Sen. Richard Shelby of 
Alabama, senior Republican on the Senate Appropriations subcommittee 
for transportation. ``The responsible thing for Congress to do is to 
withhold further funding for this program until it has been 
restructured to meet the changing mission profile,'' he says.
    The Coast Guard's Petty Officer First Class Ken Walberg, who 
oversees its patrols of New York's vast and busy harbor, says the 
smaller, 30-year-old patrol boats were the ``workhorses'' there after 
Sept. 11. But Coast Guard officials say Deepwater equipment will also 
be used for homeland-security tasks; if terrorists get as close as the 
port, they argue, that could already be too late.
    Alaska's Rep. Young, concerned that missions critical for Alaska 
will be downgraded, defends Deepwater. And he isn't pleased that the 
Coast Guard's move to a new department could take it out of his 
jurisdiction. Rep. Young met with President Bush and his staff to 
discuss the restructuring soon after the plan was announced. ``Until I 
have the assurance that the core missions won't be affected, I am not 
supporting this,'' Rep. Young says.
    He offered an alternative: Write the law so each mission would be 
given a fixed percentage of the total budget. That could protect 
functions that Mr. Young supports, regardless of the preferences of 
some future secretary of the new department--who, as Rep. Young put it, 
might not ``know squat.''
    Even if it wanted to, the White House can't ignore Mr. Young, whose 
committee also oversees the Customs Service, the Federal Emergency 
Management Agency and the post-Sept. 11 Transportation Security 
Administration--all of which would be part of Homeland Security.
    For Rep. Young and Sen. Stevens, this is more than a turf war. In 
Alaskan waters, Coast Guard missions are literally about life-and-death 
issues: By its count, the Coast Guard saved 246 lives in Alaska last 
year. Coast Guard Lt. Jim Zawrotny flies search-and-rescue missions in 
small aircraft from Kodiak Island, the largest island in the Aleutian 
chain that reaches far into the Pacific Ocean. In remote wilderness and 
harsh winter conditions, it can take an eight- hour flight just to get 
to a mariner in distress. Last year, 52 of those lives were saved by 
Coast Guardsmen from Kodiak.
    Congress has already begun debating how the Coast Guard should 
handle changed priorities. At a recent hearing of the House Government 
Reform Committee, Coast Guard Commandant Thomas Collins was asked how 
the Coast Guard would choose between rescuing a sinking sailboat or 
guarding a river said to be a possible target for terrorist attack.
    ``Search and rescue takes priority,'' Adm. Collins replied.

    Senator Wyden. Senator Smith.
    Senator Smith. Thank you, Senator Wyden. Colonel Butler, in 
his state of the union address, President Bush revealed to the 
American people that there were specific threats about plans 
against hydroelectric dams. And no place in America has more of 
them than the Pacific Northwest. There were specific plans made 
against the Grand Coulee dam.
    Without revealing what you've done, can you assure the 
people of Oregon and the northwest, the United States, that 
these facilities are more secure now than they were on 
September 12th.
    Colonel Butler. Yes, sir, I can tell you that the Corps of 
Engineer facilities that I control, and that General Fastabend, 
under his control here in the northwest controls, are more 
secure than prior to 9/11. But I will carry that out. Can we do 
better? Yes, clearly. There are more things that can be done. 
That's what our assessments tell us--clearly there are certain 
things. We can leverage the technologies that my sister 
agencies and I have talked about to our advantage.
    In the past we have been complacent on the topic of 
security and really put more recreation and some of the other 
purposes higher. But with the new emphasis, the new look, at 
this point we feel we have secure and safe facilities. As any 
facility of the size of a dam, it is vulnerable. It is very 
vulnerable to certain aspects. With that, we need to take new 
steps in order to shore up those vulnerabilities.
    Senator Smith. Are you finding in these new budgets for 
developing that you're going to have the resources to do these 
extra things?
    Colonel Butler. Senator, we're going to need supplemental 
funding. In the current budgets, none of the improvements I've 
talked about were actually budgeted for. Supplemental funding 
would be required to the operation and maintenance account in 
order to make these kinds of improvements a reality.
    Senator Smith. Thank you. Mr. Browning, what does the 
industry generally get from participating in the C-TPAT program 
and is it working?
    Mr. Browning. Senator Smith, in fact we started that 
program with roughly seven charter members. At this point we 
have numbers that are reaching almost 200 and more are coming 
in now.
    Senator Smith. What motivates them to participate?
    Mr. Browning. There are specific benefits and I'll just 
give you one of them. We have a number of programs where we 
audit the operations of the imports coming in. An audit can be 
a very time consuming and expensive proposition over an 
extended period of time. One of the things that we have said to 
our compliant traders is that if you join the C-TPAT program 
and you go through the process of developing the necessary 
internal security control in your operation, and they meet the 
conditions that we've set forth, we will put you into sort of a 
gold card group.
    And that gold card group, one of the benefits of which is a 
new program called ISA, importers self-assessment. Which means 
we will allow you to keep your books, to keep the information 
and make that information available. We will periodically go in 
and take a look, but you won't be subject to the very time 
consuming costly internal audits that we have been conducting 
in the past. That is an extremely big seller for the trade.
    I need to make one other point about the C-TPAT. We 
initiated that program, but we initiated that program not 
unilaterally. We initiated it in partnership with our traders. 
We talked to them about what was important. We talked with them 
about how to get there. We have a book of what we refer to as 
security standards--it's about an inch and a half thick--which 
was developed by our industry partners in three different 
areas, in the sea, air and land environment, about what types 
of best practices or measures could be implemented by the trade 
to shore up the security of their transactions and the 
movements of their commodities.
    So throughout this process we've tried to be sensitive to 
our traders about this. If this program works well, C-TPAT, and 
CSI works well, what we ought to really have in a sense is a 
green lane for those people that we have a high level of 
confidence are taking the necessary measures to secure their 
supply chain which allows us to better focus our resources on 
those areas that are at high risk for us.
    Senator Smith. And when you develop this information, the 
track record, developing a green lane would certainly be a real 
motivation for companies to participate. I assume you hear from 
them the biggest concern is, What are you going to do to the 
efficiency of the flow of commerce? And are you going to be 
making a proposal to Congress for budgetary allocations to 
develop this green lane process?
    Mr. Browning. Actually, Senator, one of the things that's 
been most helpful is the support Congress has given us on our 
ACE automation system. We have for a very long period of time 
been a transaction-based organization. What ACE is going to 
allow us to do is to move away from that transaction-based 
approach entry by entry by entry, to one where we start to deal 
with our importers as accounts. And as accounts we will have 
more information about them. As accounts we will know their 
business better. As accounts we will have a higher sense of 
reliability that the information they're providing us is 
information on which we can rely in terms of how we treat them. 
And as accounts what there will also be is some of the 
processes that we have to apply, like the imposition of fines 
and penalties when violations occur, will be addressed 
differently because we'll have a relationship with these 
accounts that allows us to take a look at them in a more 
holistic fashion.
    So I think, and I cannot emphasize enough how important the 
support of the Congress has been for the ACE deployment. Two 
things have happened with ACE, our new automated system. We are 
on a track that we have been making submissions for additional 
funding so that we can put that into a deployment phase of 4 
years instead of 5 years. The information that we'll be able to 
gather from ACE will allow us to do a better job on the 
facilitation side. We will give the traders things like 
periodic payments, remote filing, a host of things that they 
have been saying since 1994 that would really be critical to 
them in terms of the operation of their business.
    But by the same token it will give us an information 
platform that from a security standpoint will allow us to do 
our job better and to share information with our partners that 
should allow them to do their job better. So we are trying to 
move on, Senator.
    Senator Smith. We want to give you every encouragement on 
this front because we've got to provide the security. We don't 
want to retard the commerce. And I suppose if I hear any one 
threat of concern from industry is that they need more return, 
if you will, for the efforts that they're making in the 
program. And it would be very helpful to us to have a proposal 
from Customs as soon as possible, because I think when people 
know from the human standpoint, when you go to an airport, 
catching a plane isn't like catching a cab any more. And we 
understand that and we put up with that. But eventually we need 
to get to an efficiency without compromising the security, and 
these companies are going to need that proposal.
    Admiral Cross, is there a set standard for the AIS system, 
the automated information system, and what is the cost of the 
share side components of the system?
    Admiral Cross. Sir, I don't have that information 
available. I can provide it for the record if that would be 
helpful.
    Senator Smith. If you could do that that would be 
appreciated.
    [Information referred to follows:]

    Standards for equipment required for Safety at Sea Convention 
(SOLAS)-class vessels are complete. Class B standards (equipment 
required for non-SOLOS-class vessels) are under development.
    Standards for the AIS shore infrastructure are under development by 
the International Association of Marine Aids to Navigation and 
Lighthouse Authorities (IALA). IALA plans to have these standards 
completed by September 2002.
    We estimate that to install a ``receive only'' AIS system on 
National Distress Response System towers will cost approximately $28.3 
million over a 3-year period. Annual operating costs will be 
approximately $3.24 million. At this time we do not anticipate a 
requirement for AIS transmit capability, but we are continuing to 
research this capability.

    Senator Wyden. OK. Let's go on to some other areas. And I 
appreciate that you all have taken the time because obviously 
these are important issues. Let me followup on a point Senator 
Smith made with respect to the locks and the dams, and 
particularly the Corps' role in this important area. And 
actually it was something where I had a colloquy with Senator 
Hollings, who managed the Port Security Bill, to try to address 
some of the issues that Senator Smith was talking about.
    The Corps has the responsibility for maintaining the 
navigation system. That is essentially the key type of Corps 
function. But protecting that system against terrorism has not 
been one of the Army Corps' primary missions in the past. And 
my question to you, Colonel Butler, is where are you all going 
to get the expertise again to take on these new duties or do 
you think that this is something that should be given to 
somebody else in the whole debate about setting up the new 
Department of Homeland Security?
    Colonel Butler. Senator, at my level--I'm not able to 
answer at the national level.
    Senator Wyden. Just talk about Oregon. Senator Smith raised 
an important issue. The locks, the dams, these are very 
important. That's not been a primary function of all of you. 
Where are you going to get the expertise, to get the training, 
to take on this new function now?
    Colonel Butler. Sir, in doing that we have internal 
resources, like I mentioned, on the engineer side. That of a 
protection design center and capable engineers able to come up 
with the technologies to give us early detection systems, 
deterrents and such. We have also partnered very heavily in 
working with the Coast Guard, with the FBI, with local law 
enforcement agencies, and tapping their expertise, because, 
like I said, law enforcement is not a Corps mission. Therefore, 
when it gets to the law enforcement functions we are looking 
for our sister agencies to provide us that.
    So we don't anticipate to train up to have folks do it, but 
what we're looking to have, as you mentioned, is synergy of the 
efforts of all agencies so that we respond to our common goal. 
One of the things that we have done in the past, since 9/11 
also, is that we've had increased table top exercises or 
simulation exercises, where we bring all agencies together. 
We've had those and played certain scenarios to answer, ``How 
would we react? Can we now function as diverse communities with 
different responsibilities and authorities in order to handle 
this kind of situation?''
    Every one of those exercises provided great learning 
opportunities, and has reassured folks that we work in tandem 
and we can handle any threat that has been proposed to us.
    Senator Wyden. I want to go back and take a look in the 
budget for where this concept of synergy has come in. It's very 
clear we're going to have a whole lot of it. Mr. Browning, a 
couple questions for you. One key one on the technology side. 
And my sense is that clearly screening technology needs to be 
included and enhanced--the Customs screening technology--to 
develop and search small aviation luggage. But X-rays of marine 
containers that can contain 10 or 15 large shipments carrying 
up to 60,000 pounds is obviously a very different drill 
altogether.
    Now you all have a pretty small budget for R&D, and it's a 
pretty small budget to take a look at innovative technologies. 
What is Customs doing to develop technology to identify threats 
scientifically as opposed to the old approach of visual 
identification of huge cargo volumes?
    Mr. Browning. Thank you, Senator. We, as you indicated, do 
in fact have--I mean our budget for R&D is not a huge budget, 
but we have a very, very talented staff, and more importantly 
what we have is some very good partnerships with other 
organizations in technology development.
    In 1991, and I think I may have mentioned this to you 
yesterday, we had one piece of non-intrusive technology on-line 
in our organizations, which was an X-ray van. That was in 1991. 
Today we have over 86 pieces of non-intrusive technology and 
they go the full range from personal radiation detector devices 
to vapor trapping devices for determining whether there's 
narcotics, explosives in a container, to the ability to do full 
scans of containers.
    Our vehicle and cargo inspection systems, VACIS, have been 
totally resigned. They are now relocatable. They are mobile. 
They are specifically geared to the sea environment, 
specifically geared to the land environment. So we are doing an 
awful lot in that regard to develop a whole range of different 
technologies that will help us do our job better.
    Working with organizations like Pacific Northwest 
Laboratories, we have given some of our requirements to them 
and they have developed some of these technologies for us. In 
fact the personal radiation detector was developed by them 
based on specifications that we gave to them. And this is 
widely used. Indeed by January we'll have over 8500 pieces of 
this equipment out in the field.
    Our goal is to have some system of non-intrusive inspection 
at every port of entry in the U.S. In fact the Port of Portland 
is on-line to receive two portable detectors which can do all 
kinds of testing, including for nuclear. So we are on-line.
    I have to say one thing that's happened and this has been a 
plus up from the standpoint of the emergency supplemental. With 
our appropriated funds for 2002 in the emergency supplemental, 
we received $102 million in non-intrusive. The 2003 budget has 
46.6 million additional in non-intrusive and our 2004 request 
will have somewhere in the neighborhood of 59 million 
additional dollars for non-intrusive.
    Clearly that technology piece is essential for us to do our 
job given the volume of merchandise that moves to the U.S. and 
the fact we want to try to do our level best to facilitate the 
movement of the trade. So we are continuing right now to work 
with partners in a host of other areas to develop the 
technologies we need, and we're getting good response both from 
our R&D people as well as the other individuals in other 
agencies that are involved in technology development.
    Senator Wyden. A couple of others for you, Mr. Browning. 
Obviously it's critically important to get agreements with 
other countries to coordinate security at the point of origin. 
What do you do if they won't go along? What's going to be the 
strategy of Customs to try to up the ante and make sure that we 
can have this police presence that's so important for our 
security?
    Mr. Browning. I've been actually surprised and delighted by 
the response we've gotten thus far from some of the ports that 
we've approached as part of our CSI program. I think, as you 
are aware, the whole notion of waiving sovereignty is a 
difficult one, and when you allow Customs inspectors on your 
soil to do in a sense targeting and making those kinds of 
decisions, it can be very difficult negotiations. We have had 
success, and I think I indicated to you some of the ports we've 
had success with: Rotterdam, Antwerp, LeHavre, Singapore. We're 
in discussions with Hong Kong. We're in discussions with the 
People's Republic of China. We're in discussion with Taiwan. 
And of course we've had ongoing activity with Canada.
    A good bit of that has been Commissioner Bonner himself has 
personally engaged to pushing this forward. That has been a 
real benefit for us to move this forward, because when you get 
the head of the agency himself sitting down at the table across 
from his partner, decisions can get made. And it's very 
difficult for people to backslide those decisions when you have 
the two heads of organizations working together.
    So we have had good success. We've had very few people that 
haven't at least been willing to talk to us. And in some 
respects the successes we've had thus far will motivate other 
ports, because I think in terms of CSI, what we have said is if 
you have this in place, the treatment that those containers 
coming out of there will receive will be better treatment than 
from other locations where we don't have that level of 
confidence in the security system that's in place. That will be 
a huge motivator simply from a standpoint of commercial 
competitiveness to get some of these other ports moving down 
the aisle.
    If they don't, then what we look to do, Senator, is we look 
to go back to our state department and enlist the state 
department in going to those governments and saying it's in 
your interests, it's in our interests, it's in the global 
trading environment's interests for us to have these 
arrangements. Now, the good news is we haven't had to do that 
thus far, although I will say that the state department has 
been extremely supportive. They've been on the ground putting 
out the word. They've been on the ground perfecting this 
understanding of what the program intends to do, and they've 
been on the ground helping us to interface with our 
counterparts to make some of these things happen.
    Senator Wyden. I think that's a constructive strategy. I 
think it's essential that you all be prepared to up the ante if 
you don't get the cooperation that is clearly critical to your 
thinking. I have one other question.
    Mr. Browning. I just want to make another quick point. 
Commissioner Bonner at the outset of this process made it 
absolutely clear, as we did with the airline industry, that if 
they didn't sign on we would subject them to inspections, and 
people that don't sign on will be subjected to inspections. 
They need to know that. We have no intentions wavering on our 
authority to inspect everything that comes into the U.S. to 
ensure that it's safe to enter this country. And we have said 
that to a number of our partners.
    Senator Wyden. Mr. Browning, how serious a problem is this 
matter of unsealed containers coming in?
    Mr. Browning. It's a huge problem because it is--and when 
we say unsealed, are you saying unsealed meaning no seal or 
empty containers?
    Senator Wyden. Either one. What we heard yesterday in 
Seattle, and I assume I'm going to get the same answer when I 
ask the question now, is that it is one of those issues that my 
kids would say ``hello.'' I mean it just is so obvious. You've 
got unsealed containers, or I guess empty could be a 
possibility as well, where there is essentially no inspection 
system whatsoever. With the people of Oregon saying to Senator 
Smith and I, they want to have assurance that there is an 
inspection process in place, and they want it done in a way 
that's also going to allow for the free flow of goods. And when 
you have what we heard yesterday in Seattle, you know, unsealed 
containers, I mean those just strike me as magnets for 
terrorists. And I'd really like to hear what you all think of 
the problem and in fact what can be done about it?
    Mr. Browning. Senator, I think actually my 11-year old 
would say, Dad, duh. It is clearly a problem. And I think 
you're right that it is clearly a problem. I also might add to 
that the in-bond movements, because those become a bit of a 
problem also. We recognize that empty containers, and there are 
an awful lot of empty containers moving around, when you look 
at our inspection rates, the examination rates of containers, 
what's actually very interesting is to see the inspection 
rate's considerably higher for empties specifically because 
empties pose such a problem.
    To be candid about it, we're going to need to work through 
that because we're trying to just right now deal with the 
things given the volume of what's coming in now, trying to 
shore up that piece. We are continuing to look at that issue 
and continuing to look for approaches that indeed what I 
suspect and what I hope will happen as we go through this 
process working with committees such as yours, perhaps we can 
come up with some solutions that will give us what we need to 
place requirements on these containers also.
    But it is a problem. It is one we're going to have to 
continue to try to address. We know that and we're trying to 
work out some solutions within our organization, and hopefully 
we'll be seeking some additional support from Congress to make 
that happen.
    Senator Wyden. I appreciate the candor of that answer and 
we want to work with you on it. One of the suggestions I had is 
that I would really like to encourage you to work with the 
unions and various labor organizations. The longshore and 
warehouse union brought it up yesterday and made it clear that 
they want to work with all of you and business folks in a kind 
of partnership that's very much been a part of our tradition to 
try to get everybody to the table: the workers, government and 
business. I just think this is a critical problem. You've 
acknowledged it by describing it as huge. And we're anxious to 
work with you on that. Senator Smith.
    Senator Smith. Just a couple more questions, Mr. Browning. 
I assume Singapore, Rotterdam and other places, they're willing 
to work with us there as opposed to waiting until it gets here 
because they want to keep the flow of business going with the 
United States. I would hope beyond that there's a common human 
desire to prevent the terrorism that has beset the whole world. 
Is that the spirit you think this is being done in?
    Mr. Browning. Senator, I think there certainly are some 
concerns in that regard, but I would be less than forefront if 
I didn't say that a good bit of this is motivated by the 
commercial interests of these ports.
    Senator Smith. Well, what happens if you find a dirty bomb 
in Singapore, for example? Just hypothetically? What's the 
process there?
    Mr. Browning. We would do the targeting in Singapore. If we 
found something there, we would say to the Singapore 
authorities, This container is high risk based on our having 
put the data up against our data base. You need to take some 
action, and then it would be incumbent upon them to take 
action.
    If they refuse to take action, then this would be a problem 
for us. We might make a decision that we're not going to let 
that vessel or that container come in, and we would communicate 
that to the shipper, and the shipper would be on alert that if 
in fact you try to move that vessel in here, it will not make 
entry in the U.S.
    We are hopeful that that will not happen. Most of the 
agreements that we have right now indicate that they have 
agreed to take action at that port.
    Senator Smith. Mr. Browning, does the Customs have any 
formal process for allowing industry to provide input into the 
development of the Customs program? Is it just informally done 
or is it a formal process?
    Mr. Browning. No, sir. There are several organizations, but 
we actually have a statutory mandated advisory group called the 
COAG, the Commercial Operations Advisory Group. It is through 
the Treasury Department, but it is the body that provides 
advisory assistance to Customs on the development of our 
activities. And in fact they were actively involved in 
developing the guidelines in our supply chain security program. 
We meet with them on an annual basis four times a year. In 
addition to that there are several trade representative groups. 
AAEI, the American Association of Exporters and Importers, the 
Joint Industry Group, a group called BACUM, and several other 
groups that we have direct interface with. The American Steal 
Association. There are a whole list of bodies on a regular 
ongoing basis for which we have primary points of contract that 
are responsible at the assistant commissioner level that are 
responsible for interfacing with these individuals and 
providing feedback.
    And then one final group is our trades port network, which 
has been involved with us on the development of ACE and our 
overall modernization strategy. That is about 200 plus people 
who we periodically report to, importers, exporters, service 
providers, the whole array of our stakeholders.
    Senator Smith. And in this process you describe of 
interfacing with industry, was this process utilized in the 
develop of the C-TPAT program?
    Mr. Browning. Yes, sir, absolutely. I've been with this 
organization 26 years, Senator, and I have to say that there 
was a point in time when our relationship with trade was very 
adversarial, us against them. I think that the phrase was 
coined that we had sort of a ``gotcha'' mentality. What we 
recognized is given the limited resources that we have, that in 
order for us to be effective as both a law enforcement agency 
and a trade compliance/trade facilitation agency, we had to 
change that mind set. So what we have been doing is we have 
been partnering up very extensively with the trades, and we 
have been lock step in a lot of projects simply because we need 
their support if we're going to be able to do our jobs better.
    Senator Smith. Thank you. Colonel Butler, I'm still worried 
about these hydroelectric dams, and I'd like to get Captain 
Spitzer in on this next question. You mentioned a table top 
exercise. In your efforts to protect the dams from terrorist 
attack, do you have a way to involve Captain Spitzer or other 
branches of the military?
    Colonel Butler. Yes, sir. I'll let Captain Spitzer talk to 
the Coast Guard's role. Usually the dam structure is an 
obstacle in the river. If it's the target of the intended 
terrorism, then we will be looking for outside support. Clearly 
we do not have those kinds of capabilities. We lean to those 
law enforcement agencies, to the Coast Guard, heavily to react 
with us. So given that, when we look at these on these table 
top exercises, one of the intents is to understand everybody's 
capabilities so that we understand, as certain events unfold, 
who should we call out to.
    We're a very stationary object in the river and therefore 
we need help and we need help from all areas of the government. 
If it were to escalate to the point that we need other DoD 
assets, yes, that's within my foray to escalate on up, along 
with Captain Spitzer, at that point.
    Senator Smith. And if there's a problem everybody knows 
what it is and you push a button, make a call, whatever, and 
you trigger their involvement?
    Colonel Butler. Yes, sir. I wouldn't say there is a 
formalized process, but these table tops opened the discussion 
lines. Let me go back to 9/11. When I rolled into work early 
morning on 9/11, the first thing on my mind was what about my 
dam facilities? I picked up the line, called the air national 
guard here in Oregon and said, What kind of top cover can I get 
from you? They hadn't thought about it. They put it in their 
decision cycle. In the same sense, Captain Spitzer and I were 
also on the line talking about navigation security. What was he 
doing as captain of the port and how did I fit into his plans; 
because I'm a fixed facility, how does he see insuring the 
navigational security?
    Senator Smith. And was there any way to include the river 
pilots in this discussion? We stopped all the airplanes from 
flying, but what did we do with the pilots on the river?
    Colonel Butler. Sir, I'll defer to the Coast Guard to 
answer to that.
    Captain Spitzer. Senator, getting back to the dams. Right 
after 9/11, representatives from my planning staff were in 
touch with the planners at the Corps of Engineers and we were 
looking at things like the structural integrity, the strength 
of the dams, the vulnerability to a similar attack to the World 
Trade Towers, and a lot of our review and analysis has been 
done.
    Some of the exercises have been even more than table tops. 
They involve the maritime industry. We did one with Tidewater 
Barge Lines and using their resources at Bonneville Dam, and it 
was just a tremendous amount of coordination done there. What 
we have done even more importantly, a lot of our leveraging and 
coordination has been done not just focused on civil resources, 
but consequence management in general.
    For example, we did a mass casualty exercise on the 
Columbia River at the Portland airport simulating the crash of 
an airliner. This is an exercise that was just done about a 
month ago, although we originally intended to do the exercise 
on September 12th. For obvious reasons it was delayed. But 
there was tremendous planning done toward exercises that 
ultimately involved about 500 people, and with primary benefits 
being the coordination of the agencies working together before 
the exercise to interact together.
    And when we have to come together, it could be at a dam or 
it could be anywhere in the system, it could be downtown 
Portland, but the important thing to emphasize is that there 
are lots of planning efforts similar to this going on in all 
sorts of different communities. And the Coast Guard is going to 
many of those efforts.
    Senator Smith. Thank you.
    Senator Wyden. Gentlemen, did you all participate in the 
summit that was held in Oregon, or your agencies, on technology 
and cybersecurity when Mr. Clark came?
    Colonel Butler. Sir, I'm not aware that my organization 
did.
    Admiral Cross. Sir, neither Captain Spitzer nor I are aware 
that the Coast Guard participated or not. We can get back to 
you.
    Senator Wyden. Well, let me wrap up on this technology 
point, because it really highlights a very significant concern 
on my part. This was a hearing of the merchant marine 
subcommittee, but I chair the Technology Subcommittee for the 
Commerce Committee. And Oregon is now becoming a center for 
cybersecurity. In fact if you read Oregon Business Magazine 
this month, there is a significant discussion of many jobs 
coming in this field which can help our national security. It's 
very good for this sector as well. And I'm troubled that the 
Federal Government really is botching this job with respect to 
technology in many respects.
    First, after 9/11 thousands of ideas came in to the Federal 
Government unsolicited from business people and entrepreneurs, 
and there was no system for reviewing any of these. Basically 
I've heard from scores of businesses and entrepreneurs who 
said, not only is there no test bed to evaluate what we're 
doing, we can't get an answer from anybody.
    And I think that we have got to have you all in your 
agencies at the table in every one of these significant 
discussions with respect to technology, if we're going to get a 
jump on the terrorists. They're not technological simpletons; 
they're looking at what's going on out there in the commercial 
world, and they're getting on top of the state-of-the-art and 
they're using it against us. And I don't want to put you on the 
spot with respect to the meeting with Richard Clark.
    This is an area where the administration is doing some very 
good work. They work very closely with me. We're going to have 
a technology package that will go to the president by the fall. 
Senator Smith has been very supportive of this as well. It's 
gotten through the Commerce Committee. But I think we've got 
really two problems. First, we don't have a one-stop process in 
order to make sure that entrepreneurs, many of them who live in 
our state and right in this area, can get their ideas 
evaluated. And second, we don't seem to be reaching out in a 
proactive way in going to them to get their ideas.
    And, Mr. Browning, you're nodding and I'm just going to 
take note of that, and I think you all are aware of that. But 
we have got to have you all much more proactive with respect to 
technology in getting these ideas. Even the CSI initiative, 
which we've been talking about is so important; we're going to 
try to get as far as we can with those foreign governments. But 
it may be that somebody in Beaverton or somebody here in our 
area of technology may be able to come up with a way to get 
exactly that accomplished through products in this country that 
helps put people to work in an area of the country that's very 
high in unemployment.
    So we are going to be following up with each of your 
agencies, and I would just ask ultimately that when you see 
significant meetings with respect to technology and 
cybersecurity, we want you to be proactive. I'll get you all a 
copy of the Oregon Business Magazine or you can get a copy 
yourself. The organization doing very good work in this area is 
called RAINS, and they're going to be one of the cybersecurity 
leaders in the country; and it's something that would be good 
for our state's employment and also good for our national 
security. I just wanted to close with that final comment. 
Senator Smith, anything you wanted to add?
    Senator Smith. No.
    Senator Wyden. OK. Thank you all. We thank you for your 
professionalism. I know that I asked some questions that 
involved some decisions being made in Washington, DC that are 
not exclusively within your province to decide; but do know 
that feelings run very strong in our part of the world on these 
issues. Your agencies are part of our community and part of our 
family, part of the Oregon family. You do important work and we 
want to make sure that we're taking every step to deal with 
terrorism. We know that the seaports are vulnerable. We've got 
to figure out a way to perform these other functions and 
address it in a balanced way along the way. Anything further? 
If not we'll excuse you and we thank you for your 
professionalism.
    Our next panel Is Robert Hrdlicka, Marine Director of the 
Port of Portland; Mr. Kim Puzey, Executive Director of the Port 
of Umatilla; Allan Rumbauch, General Manager, Oregon 
International Port of Coos Bay.
    All right, gentlemen, we thank you and you all have been 
very patient. I must have mangled the pronunciation of your 
name. Is it Hrdlicka?
    Mr. Hrdlicka. It's Hrdlicka.
    Senator Wyden. Hrdlicka, OK.
    Mr. Hrdlicka. But I'm used to it, Senator.
    Senator Wyden. We'll put your statements into the record in 
their entirety, and if you would please just speak for 5 
minutes or so about the concerns that are important to you, 
that'll be great and we'll have some time for some questions. 
Mr. Gaul is it?
    Mr. Gaul. Yes, sir.
    Senator Wyden. And you're going to be speaking for?
    Mr. Gaul. I'm speaking for Mr. Rumbaugh.
    Senator Wyden. OK. Welcome, everybody.

STATEMENT OF ROBERT HRDLICKA, MARINE DIRECTOR, PORT OF PORTLAND

    Mr. Hrdlicka. Good morning, Senator Wyden and Senator 
Smith. First of all, I'd like to commend you for holding this 
hearing here today in the Port of Portland. The Port of 
Portland is pleased to be able to host this event here today. I 
also appreciate the opportunity to present the port's views on 
this very important issue.
    By way of background, the Port of Portland owns five marine 
terminals. Together with the other deep-draft ports in the 
lower Columbia, we do as a port range handle a significant 
amount of cargo. Last year about 2,000 ocean-going vessels 
called on the Columbia River and carried about $14 billion 
worth of cargo. I'd like to take just a moment if I could to 
outline some of the unique characteristics of the maritime 
trade on the Columbia River. They're not all that common among 
U.S. Ports and we feel they must be taken into account as we 
develop a framework for national maritime security. First of 
all, as you know the Port of Portland is a river port about a 
hundred miles from the ocean. Private and public terminals that 
comprise the deep water system are spread over a large area 
between downtown Portland on the Willamette River on down 
throughout the lower Columbia. Second, about 80 percent of the 
cargo that's handled through our port range is export cargo, 
primarily being exported to the Pacific Rim.
    Third, most of our export cargo consists of bulk grains and 
minerals. In fact the port system on the lower Columbia River 
is the largest wheat handling port range in the United States. 
And if you take into account other grains, such as barley, feed 
corn, and that sort of thing, it is the second largest grain 
handler for grains in the world. Portland is also the largest 
automobile handler port on the west coast and the third largest 
in the nation, and we also, as you know, serve a niche market 
in the handling of import and export containers.
    Fourth, to bear in mind that Portland is only one component 
in a sophisticated system of ports along the Columbia and 
Willamette, and upriver 465 miles to the port of Lewiston, 
Idaho. And finally, due to the port's traditional placement as 
the last port of call in a typical ocean vessel sailing 
schedule, a significant share of the import cargo that comes 
into the Portland area arrives as an in-bond shipment from 
another port, typically Puget Sound or somewhere in California. 
In other words, a container would come off in Seattle and move 
by truck or by rail into the Portland area and then finally be 
inspected and declared at Customs in Portland before being 
turned over to the importer.
    Given those unique characteristics, I would like you to 
consider the following recommendations as we look at maritime 
security legislation.
    First of all, this is not a one-size-fits-all proposition. 
The final security law should provide reasonable flexibility 
and discretion to the Transportation Security Administration, 
and the Coast Guard, to implement the machinery of that law. 
Second, the Federal Government should fully fund the security 
requirements that it imposes on the port. Most ports simply do 
not have the financial wherewithal to fund the potential 
requirements of any new Federal legislation.
    Third, Federal legislation must recognize that marine 
facilities in a port area are often owned by various public and 
private entities. In our case in the lower Columbia River, the 
facilities owned by the Port of Portland are really only a very 
small part of the 40 facilities that comprise the system on the 
lower Columbia and the Willamette. On the in-bond movements of 
imports that I mentioned earlier, in the case of Portland as 
well as other inland ports, the in-bond process sustains a 
local customs and broker forwarding community that's essential 
to the movement of goods in international trade. I urge you to 
develop a compromise Port Security bill that would require the 
same type of advanced information for in-bond movements as for 
direct imports.
    With that, Mr. Chairman, I will conclude my remarks, but 
I'll be more than happy to answer questions that you may have. 
Thank you.
    [The prepared statement of Mr. Hrdlicka follows:]

    Prepared Statement of Robert Hrdlicka, Marine Director, Port of 
                                Portland

    My name is Bob Hrdlicka, and I am the Marine Director at the Port 
of Portland. I would like to commend you for holding this hearing on 
marine security today, and I appreciate the opportunity to present the 
Port's views on this important issue. The Port's Executive Director, 
Bill Wyatt, very much wanted to be here for this hearing, but he 
regrets that he has to be out-of-town today for a longstanding 
commitment.
    The Port of Portland owns and operates several aviation facilities, 
marine terminals, and business parks. In addition to Portland 
International Airport, the Port owns five marine terminals on the 
Willamette and Columbia Rivers. Together with other deep-draft ports on 
the Lower Columbia River, the Port of Portland's facilities handle a 
significant amount of cargo. Last year, about 2,000 ocean-going ships 
called on the Columbia River, and they carried about $14 billion in 
cargo.
    I'd like to briefly outline some of the characteristics of our 
marine business. They are not all that common among U.S. ports, but 
they must be taken into account in developing a national framework for 
marine security.
    First, as you know, the Port of Portland is a river port about 100 
miles inland from the ocean. Our maritime access to the world depends 
upon a 600-foot wide federal navigation channel that must be dredged 
every year to maintain its authorized depth of 40 feet. Public and 
private marine terminals in Portland are spread out over a large area 
between downtown on the Willamette and Terminal 6 on the Columbia 
River.
    Second, about 80 percent of the cargo moving through the Port of 
Portland is exported, primarily to Asia.
    Third, most of our exported cargo consists of bulk grains and 
minerals. In fact, the Port exports more wheat than any other U.S. port 
and is the second largest grain exporting center in the world. Portland 
is also the largest automobile handling port on the West Coast and 
third largest in the nation. We serve a niche market for container 
exports originating in Oregon, southwest Washington, and Idaho.
    Fourth, the Port of Portland is only one component of a 
sophisticated system of Columbia, Willamette, and Snake River marine 
terminals and navigation locks. Barges carry both bulk and container 
cargo from as far upriver as the Port of Lewiston--465 miles from the 
ocean--to the Port of Portland and other downriver deep-draft ports.
    Finally, due to Portland's traditional placement of ``last port of 
call'' in the West Coast sailing schedules of container carriers, a 
significant share of the import containers arriving in the Portland 
area move ``in-bond'' by rail or truck from Puget Sound ports. As an 
example of the ``in-bond'' process, a container is transported by ship 
from Asia and unloaded at the Port of Seattle without declaring formal 
entry to the Customs Service. The container is then carried by rail or 
truck to a freight facility or distribution center in the Portland 
area, where it is declared to Customs and handed over to the importer.
    Given our unique characteristics, I would like you to consider the 
following recommendations when considering port security legislation:

   ``One size does not fit all.''--The final port security law 
        should provide reasonable flexibility and discretion to the 
        Transportation Security Administration and the Coast Guard to 
        implement security arrangements adapted to each port's 
        particular requirements.

   The Federal Government should fully fund the security 
        requirements that it imposes on ports. Many ports simply do not 
        have the resources to comply with potential provisions of a new 
        federal law. Uniform federal funding is the surest way to 
        secure maritime ports.

   Federal legislation must recognize that marine facilities in 
        a port area are often owned and managed by various public and 
        private entities. In our case, the Port of Portland's are but a 
        small part of more than 40 marine cargo deep-draft facilities 
        in the Willamette and Lower Columbia. It is not enough to 
        simply improve security at publicly owned terminals while 
        neglecting the vast amount of private port infrastructure. 
        Federal legislation should view the entire public and private 
        terminal infrastructure as one system.

    On the in-bond movement of imports that I mentioned earlier, I urge 
you to recognize the value of the in-bond process to importers located 
around inland ports such as Portland, Dallas, and Memphis. Delaying 
formal entry of a container until it reaches its final destination 
enables local importers and brokers to resolve questions and problems 
with local Customs personnel, rather than Customs personnel at the 
initial port of unloading. In the case of Portland, the in-bond process 
also sustains a local Customs and broker/forwarder community that is 
essential to our direct call service. Finally, without the in-bond 
movement of cargo, congestion problems at initial ports of unloading, 
such as those in Puget Sound and southern California, would only grow 
worse.
    The Senate-passed port security bill would require importers to 
provide in advance much more detailed information on in-bond cargo than 
on regular imports. The Port and its trade partners in this region are 
concerned that these additional data requirements could be extensive 
enough to convince importers to just declare all their cargo at initial 
ports of unloading. If that were to occur, the in-bond process and all 
its benefits would be lost.
    I urge you to develop a compromise port security bill that would 
require the same advance information for in-bond imports as for other 
imports. The Customs Service could then use that information to assure 
the security of all import containers, whether they are formally 
declared for entry at their initial port of unloading or moved inland 
through the in-bond process.
    Thank you again for the opportunity to testify on these important 
issues and for conducting this hearing at the Port of Portland.

    Senator Wyden. You're welcome. It's good to see you and 
thanks for all the work that you've done. Mr. Puzey.

          STATEMENT OF KIM B. PUZEY, GENERAL MANAGER, 
                        PORT OF UMATILLA

    Mr. Puzey. I appreciate the opportunity to be here and 
testify before the Committee and appreciate the work that you 
and Senator Smith do for the state of Oregon. My name is Kim 
Puzey. I'm general manager of the Port of Umatilla. The Port of 
Umatilla is a river port. We have no seagoing vessels that call 
at our port. We are located on the Columbia River mile 292, 
upstream from here considerably.
    We have at our facilities a grain elevator with a belt 
conveyor for exporting of the wheat that Bob spoke about. We 
have a fuel and liquid fertilizer terminal mostly incoming. We 
serve the Hinkel switching yard in our port district with 
diesel fuel that we receive at that terminal. And then we have 
a container-on-barge facility primarily exporting value-added 
agricultural products.
    Because of the population around the Port of Umatilla, the 
location, product mix, and so forth, in my opinion the port is 
not a target and therefore not very vulnerable to acts of 
terrorism. However, we do receive empty containers that are 
coming in. We do a process which is called pre-tripping: Open 
them, clean them, inspect them, test the equipment and bring 
the temperature down, especially for the perishable products 
that we export from there. So we are inside the containers at 
our port facility.
    The Port of Umatilla, although it may not be very high on 
the food chain for a target, it is part of that system that's 
been spoken of today, the Columbia-Snake River System, that is 
vulnerable because of the Federal projects there. The dams are 
without question the most vulnerable part of that system to 
attacks of terrorism, but I would suggest to you that the locks 
are the most vulnerable. So we support any kind of land, water, 
air protection for the locks themselves.
    The destruction or disruption of one of those locks not 
only could significantly impact navigation, but also 
irrigation, hydropower, and flood control. I'm glad that Grand 
Coulee has been brought up. That's obviously the big target, 
but any of them could seriously compromise the economy of the 
region.
    The second issue that I'd like to speak to is not in our 
region, but it has to do with what I think is the most 
vulnerable port in the United States, and that is Port Arthur, 
Texas. I have included in my testimony as Attachment A, a New 
York Times article that speaks to this that came out in March. 
Port Arthur has more than 200 pipelines, more than a dozen 
refineries, large refineries, some of the largest in the 
nation, and the vessels that are coming in and out of that port 
are floating bombs.
    I don't know how we would be able to prevent those who 
would do harm at that port from doing so. An incident with a 
freighter carrying inflammables that come in and out of Port 
Arthur would be environmentally catastrophic, would impact the 
national economy because we're talking about oil, and could 
disrupt the shipping in that area. So I would like you to put 
on your radar screen Port Arthur, Texas. I know that Senator 
Hutchins is on the Committee as well.
    The third, and to me it is the most horrifying and the most 
significant threat to our country, has to do with biological 
terrorism. I have recently read seven books on biological 
warfare. I've attached a list and a brief synopsis of each of 
those as Attachment B. I live downriver from 11 percent of the 
chemical weapons in the United States, and I have six children 
and I sleep every night knowing that they're safe and well 
cared for. And that chemical repository is pale by comparison 
to the amount of smallpox that could be in that ballpoint pen.
    As you know, in recent decades there has been research and 
development done in germ warfare programs across this planet, 
especially in the former Soviet Union, where they have dealt 
with anthrax, tuleremia, ebola, salmonella, glanders, smallpox 
and so forth. And at the end of the cold war we had those 
weapons programs come to an end and had literally thousands of 
microbiologists in the former Soviet Union out of work, 
unemployed. Clearly they have given information to the North 
Koreans, to the Iranians, Iraqis.
    I think one of the most important things with respect to 
Port Security is to search and destroy. So I would advocate 
that we fund the intelligence community to help us with respect 
to that to get to the root of these things rather than to the 
branches. We need to be able to find those who would do harm on 
their own soil before they begin to come into our ports. We are 
far too vulnerable. All of the things that we've spoken about 
notwithstanding, given those who are intent to do evil, I'm 
absolutely convinced as I'm convinced we're sitting here 
talking to one another, that anthrax will be used in this 
country again.
    You saw it disrupt the U.S. mail. It's clear to me that it 
would be very easy to taint our currency, to do so in a major 
retail outlet, to do so in fast food restaurants and so forth, 
and spread terror throughout the country. Minimal loss of life, 
but any loss of life is significant, and we could stall the 
economy with the slightest of effort. I think anthrax would be 
the agent of choice because compared to smallpox and some of 
the others, it is easier to handle, easier to control. The 
contagion component of it is not as wildly destructive.
    And in conclusion I guess I would say we need to be 
vigilant about the river system, especially the locks. We need 
to get Port Arthur, Texas, and other ports like it on our radar 
screen, and I still think we're standing in the headlights on 
the biological issue.
    [The prepared statement of Mr. Puzey follows:]

 Prepared Statement of Kim B. Puzey, General Manager, Port of Umatilla

    Thank you for this opportunity to testify before the Committee on 
port security and marine transportation.
    My name is Kim B. Puzey. I am General Manger of the Port of 
Umatilla Oregon. The Port of Umatilla is a river port. We are served by 
barges, not seagoing vessels. Our marine operations consist of grain 
elevators and belt loaders, petroleum and liquid fertilizer terminals, 
and a container-on-barge dock. These facilities are located at Columbia 
River mile 292.
    First, because of the location, product mix, surrounding 
population, and proximity to strategic facilities of national 
importance, the docks at the Port of Umatilla are quite secure because 
the threat to destruction or disruption is very low. We are quite 
frankly, pretty low on the food chain.
    However, the Port of Umatilla is a component of the larger Columbia 
Snake River navigation system. This system, created by the construction 
of the federal dams and locks to provide flood control, hydropower, 
navigation, and irrigation reservoirs is of great collective importance 
to national security and the economy.
    The navigation channels themselves are quite secure. The locks are 
the most vulnerable component in the entire system. If one were to 
damage or destroy a set of locks the entire system is either 
compromised, disrupted, or possible destroyed. Focus on securing the 
locks on each dam from threats by land, air, or water should be a 
national priority.
    We support the Columbia River Steamship Operators Association in 
their objectives to help secure the entire river system.
    Second, because scarce resources must be allocated to the greatest 
need I would like to take this opportunity to draw your attention to 
what is in my opinion the most vulnerable port in the United States. I 
speak of Port Arthur, Texas.
    Port Arthur has more than a dozen oil refineries and related 
facilities that process volatile, noxious chemicals. There are more 
than 200 pipelines in the port area. Most vessels that call are 
floating bombs. A mutiny or an intentional misuse of a petrochemical 
vessel bound for Port Arthur would be very difficult to stop without 
doing what those who would do harm intended in the first place.
    An incident at Port Arthur could easily disrupt shipping, degrade 
the environment, and substantially undermine the national economy. Port 
Arthur deserves a closer look. I have included an article from the New 
York Times of March 5, 2002 on this issue as (Attachment A) to my 
testimony for your review.
    Third, I have recently read seven books on the weaponization of 
biological agents. A list of the books, authors, and a brief synopsis 
of each appears below as (Attachment B). Whether for defensive or 
offensive purposes, the history of biological warfare is not only very 
interesting, but extremely frightening. As dreadful as conventional, 
chemical, or even nuclear weapons systems are, they are pale by 
comparison to biological agents.
    I believe that viruses and certain types of bacteria are our 
greatest threat to national security. The agents are not only 
invisible, but dynamic. Some bacteria and many viruses are more than 
dangerous, they are dangerous and contagious. Some agents can be 
carried on the wind, others require a host such as an insect as tiny as 
a flea. With some agents, each victim becomes a carrier of more dread. 
Everything from anthrax to smallpox has been cultivated for evil 
purposes in recent decades.
    The likelihood of another incident using anthrax is nearly certain. 
It is invisible, deadly, and disruptive, but not as wildly dangerous as 
smallpox and other viruses that cause hemorrhagic fevers and wide 
spread death. I believe that anthrax will be used repeatedly against 
the people of the United States. The targets will go beyond the mail 
system to tainting currency in major retail outlets and fast food 
businesses. We are extremely vulnerable because we are a free society.
    My recommendations are that we be vigilant within our own borders, 
but that more importantly, we may need to increase appropriations to 
the Intelligence community. It is imperative that we detect and destroy 
foreign operatives before they can harm us on our soil.
    The dissolution of the former Soviet Union unleashed a cadre of 
unemployed and underemployed microbiologists who have quite certainly 
sold harmful information to nations such as North Korea, Iran, and 
Iraq. Bolstering the economy of former Soviet Union provides an 
important disincentive to those who would otherwise do us harm out of 
their own personal desperation.
    In conclusion, protect the locks of the Columbia Snake River 
system; take a closer look at Port Arthur and similar facilities; 
increase appropriations to the Intelligence community; seek and destroy 
germ factories controlled by our enemies on foreign soil; and continue 
to improve relations with the former Soviet Union.
    Thank you again for this opportunity to testify before the 
Committee. We live in trying times. Great wisdom is needed. May God 
bless each of you and may God bless America.
Attachment A
A Nation Challenged: Border Security; Tinderbox of a Texas Port Points 
        to a Threat by Sea
By Joel Brinkley
    PORT ARTHUR, TEXAS--March 2--Few seaports in the nation seem as 
vulnerable as this one.
    It is home to more than a dozen oil refineries and related plants, 
each with its own pier, that process noxious, volatile chemicals. In 
addition, more than 200 pipelines carrying fuel and other hazardous 
chemicals snake under Port Arthur in every direction.
    All of it makes this place a tinderbox.
    Immediately after Sept. 11, local governments, federal agencies and 
industries strengthened security on the ground and at sea. Marc 
Blanton, the assistant chief of police, began noticing clusters of 
residents standing at the fences, staring at the huge refineries that 
define this small port town, whose motto used to be, ``We oil the 
world.''
    ``I think they were assessing the threat for themselves,'' Chief 
Blanton said.
    Now, almost six months later, security is certainly more intense 
than it was in August. But a kind of complacency seems to have set in, 
even as senior officials in Washington begin to talk more urgently 
about the terrorist threat from the sea.
    Many of the off-duty Port Arthur police officers who were hired to 
patrol the refineries in the fall have been sent back to the station. 
The two additional Coast Guard boats sent here to patrol the harbor 
have left.
    Federal officials call port security the largest and most glaring 
weakness in the nation's security network. A presidential advisory 
commission concluded in August 2000 that ``the state of security in 
U.S. seaports generally ranges from poor to fair, and in a few cases 
good.''
    In an interview on Thursday, Senator Bob Graham, the Florida 
Democrat who is chairman of the Intelligence Committee, called ports 
``a clear area of serious vulnerability.'' Senior Coast Guard officials 
in Washington now talk urgently about the potential for terrorists to 
use ships as weapons.
    ``Ships can be used to transport terrorists or weapons of mass 
destruction,'' Rear Adm. Terry Cross of the Coast Guard said in 
February. ``They can be used as weapons, and they are going to try to 
blend in and look like regular traffic. We think it is important to 
publicly recognize how vulnerable seaports are.''
    When the refineries asked to hire the off-duty police officers last 
fall, ``we didn't have enough people for all the requests,'' Chief 
Blanton said. Now, the refineries ``have slowly backed off,'' he said. 
Many of the off-duty officers have been replaced by private unarmed 
security guards.
    Before the morning of Sept. 11 had ended, Capt. Eric A. Nicolaus, 
head of the Port Arthur Coast Guard Station, requested more personnel 
and more boats to protect the refineries and the public ports, even 
though port security had been a low priority for the Coast Guard before 
then.
    ``We got two extra patrol boats,'' raising the total to five, 
Captain Nicolaus said, ``and we brought in about 100 reservists.''
    With the extra resources, the Coast Guard began searching many 
ships before they docked, looking for unusual cargo or crewmen.
    Now, Captain Nicolaus said his Coast Guard crews remain at a high 
level of alert, but the two extra patrol boats have been sent back to 
their regular ports. The number of ships searched has declined, but he 
noted that local port pilots board each inbound ship to guide it in and 
would most likely notice anything amiss.
    In the fall, representatives of local, state and federal law 
enforcement agencies in the area began meeting every week to discuss 
security issues. Recently the meetings were cut back to every two 
weeks.
    Three major oil refineries lie within the city's jurisdiction, and 
more than a dozen others line the Sabine-Neches shipping channel that 
flows from Beaumont, slightly less than 20 miles upstream. Some of 
these refineries are among the nation's largest.
    Crude oil and other volatile liquids flow into the plants by ship, 
five tankers a day, on average, and by pipeline from Mexico and other 
points south.
    Refined products--gasoline, diesel fuel, butane, ethylene, benzene, 
propane, kerosene, jet fuel and other noxious liquids--pour out, tens 
of thousands of gallons a day, by truck and by train but mostly by 
pipeline.
    ``We had 216 of them at last count,'' Leslie E. McMahon, Port 
Arthur's director of public works, said of the pipelines.
    While all here acknowledge that a port with fixtures as explosive 
as this one has could be a target, many now seem little concerned.
    ``It's almost back to normal here,'' said Ronnie Hicks, technical 
supervisor for the Port of Port Arthur.
    But in Washington, Senator Graham has taken on port security as a 
major concern, saying, ``Any smart terrorist would have to think of 
this,'' since ports offer ``the lowest risk of detection and the 
highest chance of success.''
    Security officials in speeches and interviews describe three 
possible ways terrorists might use ships.
    One, terrorists could sink a ship in a narrow shipping lane, like 
the Sabine-Neches channel, closing it for days or weeks.
    ``It would be hard to get a ship like that up, no doubt,'' said 
John J. Durkay, general counsel for the refineries' Plant Managers' 
Association.
    In Washington, Admiral Cross, speaking at a Defense Week seminar, 
said, ``We think shutting down one or two major ports would do more 
damage to our economy than Sept. 11.''
    Two, terrorists might blow up a ship in an important port.
    Or three, terrorists could hide an explosive weapon in one of the 
600,000 cargo containers that arrive at American ports each day; fewer 
than 3 percent are opened and inspected.
    Robert C. Bonner, commissioner of the United States Customs 
Service, often talks about this concern, which he calls ``a nuke in a 
box.''
    ``One of the most lethal terrorist scenarios is the use of 
oceangoing container traffic as a means to smuggle terrorists and 
weapons of mass destruction into the United States,'' Mr. Bonner said. 
``And it is by no means far-fetched.''
    Shortly after Sept. 11, the Coast Guard issued a new rule: cargo 
ships approaching the United States would have to relay detailed crew 
lists to the Coast Guard 96 hours before reaching this country. Before, 
they had to report 24 hours in advance.
    The agency set up the National Vessel Movement Center, in 
Martinsburg, W. Va., whose mission is to check those names against 
national criminal and terrorist databases.
    After a few weeks, a federal official said, many shippers began 
moving seamen with Middle Eastern names onto ships not bound for the 
United States.
    In Port Arthur, the refineries quickly put up fences, installed 
lighting and barriers and hired the off-duty officers to patrol their 
grounds around the clock.
    The physical security measures remain in place. The way Mr. Durkay 
sees it: ``After Sept. 11, a lot of the things this community had been 
preparing for were tested and found to be sound.'' (Copyright 2002 The 
New York Times Company)
Attachment B
    Germs; Biological Weapons and America's Secret War, Judith Miller, 
Stephen Engleberg, and William Broad. (This is an investigative book on 
the history of biological weapons in America including the attack on 
The Dalles, Oregon).
    The Cobra Event, Richard Preston. (This is a novel of a fictional 
terrorist attack on a major city in the United States).
    The Hot Zone, Richard Preston. (This book reports on an Ebola 
outbreak in Reston, Virginia with research primates).
    Living Terrors; What America Needs to Know to Survive the Coming 
Bioterrorist Catastrophe, Michael T. Osterholm, Ph.D., M.P.H., and John 
Swartz. (Written by a public health official, this book tells of the 
government agency jurisdictional challenges that would arise in the 
event the United States were targeted with weaponized biological 
agents).
    Virus Hunter; Thirty Years of Battling Hot Viruses Around the 
World, C. J. Peters and Mark Olshaker. (This is an autobiographical 
account of an official with the Center for Disease Control and his 
experiences across the world).
    Guns, Germs, and Steel; The Fates of Human Societies, Jared 
Diamond. (This book touches briefly on the role of disease in the 
formation and outcome of societies).
    Biohazard; The Chilling True Story of the Largest Covert Biological 
Weapons Program in the World-Told from Inside by the man who Ran It, 
Ken Alibek with Stephen Handleman. (This is an autobiographical account 
of a defector from the former Soviet Union who headed their biological 
weapons programs).

    Senator Wyden. Thank you. Mr. Gaul.

   STATEMENT OF MICHAEL GAUL, DIRECTOR OF OPERATIONS, OREGON 
                 INTERNATIONAL PORT OF COOS BAY

    Mr. Gaul. Please bear with me. I'm a simple sailor by 
trade. My name is Mike Gaul. I'm director of operations for the 
Oregon International Port of Coos Bay. I want to thank you for 
holding this maritime security hearing in Portland today and 
for allowing us the opportunity to appear before you.
    Last year 65 deep-draft vessels and 135 loaded barges 
called on Coos Bay. The primary commodity was wood chips 
(nearly two million tons) exported to Japan. Ten years ago, 
prior to the loss of a number of wood mills, we experienced on 
average of 250 deep-draft vessels calling a year, carrying 
nearly five million tons of commerce.
    Although our agency as port authority takes responsibility 
for working with a variety of entities to ensure the safe and 
efficient operation of maritime commerce, we are a non-
operating port authority. All deep-draft terminals in the Port 
of Coos Bay are privately owned. These terminals are located 
along a 15-mile, 37-foot federally maintained deep-draft 
navigation channel with immediate access to the Pacific Ocean.
    We greatly appreciate the interest and assistance of the 
Federal Government in reviewing and enhancing maritime 
security. At the same time, we urge the Committee to be aware 
of the difficulties facing ports in accomplishing the Federal 
mandates that are eventually enacted. We ask that you consider 
the following:
    The Federal Government should fully fund the security 
requirements that are imposed on ports. As our agency has 
learned in managing the North Bend Municipal Airport (the only 
full commercial service airport on the Oregon coast) many ports 
do not have the financial resources necessary to comply with 
Federal mandates. Federal funding is imperative to the success 
of any maritime security law, and we believe this applies both 
to publicly owned and privately owned terminals.
    We believe the Federal Government should keep the efficient 
continuation of trading commerce as a top priority even while 
imposing security requirements. And it's important that these 
regulations go to the problem, perceived problem, and also to 
remember that all ports are different. A blanket approach to 
all ports of everything fits one will not work.
    We are also concerned about possible adverse changes to the 
mission of United States Coast Guard as currently proposed. The 
historic mission of the Coast Guard in the Pacific Northwest is 
Search and Rescue. The waters off Washington and Oregon are 
some of the most treacherous in the world. The Search and 
Rescue presence is vital to safety of commercial and 
recreational boaters and to the economic health of the local 
communities where the Search and Rescue stations exist. Any 
additional responsibilities assigned to the Coast Guard under a 
new maritime law should include significant and appropriate 
increases in personnel and other resources for these Coast 
Guard units.
    As a former master chief in the Coast Guard and manager of 
the Charleston Life Boat Station in years past, I believe I 
speak with some experience in these matters.
    With that I'd like to thank you for the opportunity to 
testify and I'll be happy to answer any questions you have.
    [The prepared statement of Mr. Gaul follows.]

  Prepared Statement of Michael Gaul, Director of Operations, Oregon 
                     International Port of Coos Bay

    My name is Mike Gaul and I am the Director of Operations for the 
Oregon International Port of Coos Bay. Thank you for holding this 
maritime security hearing in Portland today and for giving us the 
opportunity to testify before you. My General Manager, Allan Rumbaugh, 
sends his regrets at being unable to testify before you today because 
of a prior commitment.
    Last year, 65 deep-draft vessels and 135 loaded barges called on 
Coos Bay. The primary commodity was wood chips (nearly 2 million tons) 
exported to Japan. Ten years ago, prior to the loss of a number of wood 
products mills, more than 250 deep-draft vessels called Coos Bay 
carrying nearly 5 million tons of commerce. Although our agency as port 
authority takes responsibility for working with a variety of entities 
to ensure the safe and efficient operation of maritime commerce, we are 
a non-operating port authority. All deep-draft terminals in the port 
district are privately owned, including three active wood chip 
terminals, one general cargo terminal, one log handling terminal and 
two major inactive terminals owned by international companies. These 
terminals are all located along a 15-mile 37-foot federally maintained 
deep-draft navigation channel that offers immediate access to the 
Pacific Ocean.
    We greatly appreciate the interest and assistance of the federal 
government in reviewing and enhancing maritime security. At the same 
time, we urge the Committee to be aware of the difficulties facing 
ports in accomplishing the federal mandates that are eventually 
enacted.
    We ask that you consider the following:

        1. The federal government should fully fund the security 
        requirements that are imposed on ports. As our agency has 
        learned in managing the North Bend Municipal Airport (the only 
        full commercial service airport on the Oregon coast) many ports 
        do not have the financial resources necessary to comply with 
        federal mandates. Federal funding is imperative to the success 
        of any maritime security law, and we believe this applies both 
        to publicly owned and privately owned marine terminals.

        2. The federal government should keep the efficient 
        continuation of trade and commerce as a top priority even while 
        imposing security requirements or restrictions on that trade. 
        It is important to gear the regulation to the perceived problem 
        rather than simply applying a blanket approach or to treat all 
        ports in all situations as the same. Many ports around the 
        nation have quite different circumstances and physical 
        characteristics, and therefore require flexibility when 
        implementing a maritime security program.

        3. We are concerned about possible adverse changes to the 
        mission of the United States Coast Guard as it is currently 
        proposed. The historic mission of the Coast Guard in the 
        Pacific Northwest is search and rescue. The waters off 
        Washington and Oregon are some of the most treacherous in the 
        world. This search and rescue presence is vital to the safety 
        of commercial and recreational boaters and to the economic 
        health of the local communities where search and rescue 
        stations exist. Any additional responsibilities that are 
        assigned to the Coast Guard under a new maritime security law 
        should include significant and appropriate increases in 
        personnel and other resources for these Coast Guard units. As a 
        former Master Chief in the Coast Guard and manager of the 
        Charleston Life Boat Station in years past, I believe I speak 
        with some experience in these matters.

    Thank you again for the opportunity to testify before you today, 
and for offering us the convenience of a hearing in the state of 
Oregon.

    Senator Wyden. Gentlemen, thank you very much. Senator 
Smith is going to begin questioning and then I'll go right 
after him.
    Senator Smith. Mr. Hrdlicka, I wonder if you could tell us 
if you've noticed a difference in the operation of the Port of 
Portland since 9/11?
    Mr. Hrdlicka. Senator, certainly there have been some 
differences. Immediately following 9/11 it was very clear that 
we had entered a new era in terms of vessel security, 
notification requirements by the Coast Guard, Customs and INS 
and that sort of thing. I will say, though, that some new 
procedures were implemented around our terminals.
    Primarily around our terminals initially there were some 
noticeable differences which now have pretty much worked 
themselves into the norm. It's pretty well under control now.
    Senator Smith. Do you feel like the port facilities 
themselves, such as fencing and security, that no one can just 
breach them?
    Mr. Hrdlicka. Following 9/11 we met with the Coast Guard 
and did an immediate assessment of our facilities. We shored up 
and tightened our perimeters around our primary facilities to 
address that. Also put up some barricades in place. We do not 
allow vehicles out in the face of the dock and have implemented 
procedures to enforce those sorts of things.
    Certainly there's always more you can do. From the land 
side particularly there are some things that we can do. 
Unfortunately we did apply for some grants recently and we were 
not successful in getting some additional funding to do some 
additional tightening of that perimeter. The real weak spot 
however, as I'm sure you can appreciate, is from the water 
side. And that does require continuing attention from the Coast 
Guard and other law enforcement agencies.
    Senator Smith. Do you have a pretty good relationship with 
the Coast Guard?
    Mr. Hrdlicka. Yes, we have an excellent relationship with 
the Coast Guard and work very closely with them on a continuing 
basis.
    Senator Smith. Umatilla and Coos Bay, what changes have you 
seen in your ports in terms of security since 9/11?
    Mr. Puzey. We haven't had any significant changes. We were 
fenced. We had 24-hour security. We're so small, we're not one 
of those where if you've got a white hard hat you're out of 
place. Everybody knows each other. I feel like given a target 
matrix with respect to population and whether or not anybody 
would target us, we're just fine.
    Senator Smith. Mr. Gaul.
    Mr. Gaul. I'd say as far as Coos Bay goes, all of our docks 
are privately owned. What the port has done, of course, and the 
Coast Guard has conducted dock assessments of all our 
facilities. The port hosted meetings with the local law 
enforcement agencies, the Coast Guard, emergency management 
people, the FBI, to just kind of get everybody to sit down 
around the table and talk and start putting some kind of game 
plan together.
    We also had dialog with private dock owners and with the 
longshoremen. I believe the longshoremen are some of the first 
guys on those docks that they know what goes on on those docks 
and if something is different they will immediately recognize 
it.
    Also, working with our pilots association and just the 
general maritime community and our own staff that, both at the 
airport and at the maritime site, just making everybody more 
vigilant and aware of what's going on around them. We also 
applied for grants for a communication system that all the 
local agencies should all talk on one channel if need be, but 
we were not successful in that grant.
    Senator Smith. Kim, you mentioned Port Arthur, Texas. What 
is there about that port that makes it in your view more 
vulnerable than, say, Long Beach or Seattle or Portland?
    Mr. Puzey. The product mix, I think, primarily. More than a 
dozen refineries; I believe some of largest in the world; 
chemical plants; 216, I believe, pipelines coming in and out of 
there. Every word that ends in i-n-e and e-n-e, toluylene, 
diesel fuel, gasoline, fuel oil.
    Senator Smith. Do you have reason to believe they're not 
responding to the realities of post-9/11? Do we need to let our 
colleague, Senator Hutchison know, or I suspect the former 
Governor of Texas, President Bush, knows about this?
    Mr. Puzey. I'm sure of that. The vulnerability in my 
opinion is the vessels that call there are filled with 
flammables. Let's suppose that someone wants to do harm. 
Stopping them would do the harm that they intended to do. You 
put a vessel down in the shipping channel, you create an 
environmental catastrophe. If it's their clear intention to do 
something, how we prevent that, it's the same as someone who 
wants to use the police force to take their life. We have in 
that port such dangerous cargo, and I suppose that it is true 
for others who receive similar products, you have such 
dangerous cargo, if it's coming in and the intent is to do harm 
and evil, that the only way to prevent it is to do what they 
would like us to do which is to destroy that vessel.
    Senator Smith. Let's hope that the processes are being put 
in place to interdict it before it gets there.
    Mr. Puzey. That's why I suggest that we search and find 
those cells of people who would do harm to this country and we 
make the appropriate appropriations in the intelligence 
community to be able to do so.
    Senator Smith. Thank you.
    Senator Wyden. Gentleman, we've been talking about how 
diverse the ports are in Oregon. We've got river ports, small 
ports, medium ports, large ports, bulk cargo, container cargo. 
The list just goes on and on. And it's our view that it's 
absolutely critical that in this legislation that we're working 
on now, the conference report on Port Security, that Congress 
provides the flexibility in order to make sure that Oregon's 
wide variety of ports and their individual security needs are 
addressed. Is there anything beyond the general provisions and 
flexibility here that's important to you? And pretend you're 
writing the flexibility provision of the conference report, 
what would you want to be included there? Kim.
    Mr. Puzey. Senator, I have three things. One is that we 
protect the system, specifically the locks. In that context we 
support the efforts of the Steamship Operators Association in 
trying to secure the whole system from Lewiston, Idaho to the 
Pacific Ocean. And I don't know what all of that would entail, 
but that would secure the channels. If we do that then we can 
have relative comfort about the products that are at least 
moving on the river system.
    Second, I appreciate your interest in technology. I was in 
Quincy, Washington recently and saw a rail car, a Trinity Car I 
believe is how it's referred to. It has a global positioning 
system. It has some other surveillance equipment on it that has 
to do with monitoring temperature, opening and closure of the 
doors. It has movement sensors so that if someone were there 
that was not authorized to be there, a tape could be made of 
them and their activities.
    I think that the kind of security that we could have around 
technology of that type is available. And on higher end 
products we could afford to have that kind of security on the 
containers. Second, I'll come back to it because I forget the 
third point--I know what it was. I'm not an expert in this 
clearly, but it seems to me that we ought to be able to test 
the inside of the container if you just simply had two ports, 
one where pressurized air came in, another where a testing 
instrument is able to do parts per billion analysis of whatever 
was in there, whether that had to do with something that was 
biological, radioactive or whatever.
    So I believe that the instrumentation technology is 
available. And if there were some support from the government 
on the security side so that it didn't have to be borne by the 
customers, that we would be able to know what is inside the 
empty containers and filled containers. If you did the risk 
matrix that the immigration official here spoke about earlier, 
where you could simply target this with instrumentation, I 
think that that would be a useful thing as well.
    Senator Wyden. Gentleman, other points with respect to 
flexibility that you really would like to see? You're writing 
the flexibility provision. You're on the conference committee 
and you're writing them and you want to make sure that the 
ports aren't something that one size fits all.
    Mr. Hrdlicka. Senator, thank you. I think one thing that is 
critical, first of all, we certainly agree with the necessity 
to have flexibility written into the legislation that 
recognizes the diversity of the port systems within the United 
States. But I think a key part of that flexibility needs to 
allow the local captain of the port for the Coast Guard or some 
other authority to have the final word in approving any final 
recommendations for security within a special port range. I 
think that assignment of clear responsibility is critical to 
the success of that.
    Senator Wyden. Mr. Gaul, anything you want to add?
    Mr. Gaul. I would agree with that last comment from the 
Port of Portland. I guess the only thing that I would add, you 
know, given a perfect world if funds were available, the Port 
of Coos Bay and the Coos Bay area have just a load of displaced 
lumber workers and commercial fishermen that I think would love 
to retrain as security watch guys down in that area and help 
the economy. They're used to working on the water, used to 
working around the docks. I think technology is very important, 
but so if the fact of having eyes and people on the street just 
watching.
    Senator Wyden. Well said. For the Port of Portland one of 
the big issues in the conference has been to figure out how to 
get all this extra money that's going to be needed for the 
country's 300 ports of entry, and we're talking about an 
estimated $600 million per year being needed.
    Now, the Northwest ports have opposed new user fees, any 
kind of, you know, funding arrangement to pay for Port 
Security, and yet we're going to have a witness on the next 
panel, Jim Townley, representing the carriers, who's going to 
essentially propose the approach taken in the Oil Pollution 
Act. And that's the approach where government and industry 
works together in partnership to reduce various kinds of 
terrorist threats. And that he in effect thinks that if you 
have something that really did show some cooperation with 
respect to businesses and our ports, that there would be an 
openness to then generate some financial contributions for Port 
Security funding if there was a more cooperative approach in 
the maritime-business community. What's your sense? Is what Mr. 
Townley is talking about out of the question? Off the board? 
Have any reaction to that?
    Mr. Hrdlicka. Thank you, Senator. First of all, I think the 
approach that Captain Townley is going to be discussing is 
certainly interesting and I think could be a very effective 
approach to dealing with this whole subject. We've seen a 
history of that with the Maritime Fire and Safety Association 
here in the Columbia River following some of the guidelines 
from OPA 1990, and we would certainly be supportive and look 
forward to working with them on that. I think that the notion 
does have a lot of merit.
    Senator Wyden. We want to look at it with you. This is a 
tough time to be talking about anything relating to user fees 
or anything like that. So I go in, you know, with a 
considerable concern about what the ramifications of that would 
be, but if the maritime community working with the ports wanted 
to look at it, we will certainly pick up on their suggestions 
and evaluate them at that point.
    The Coos Bay folks of course dealt with the New Carissa and 
the Coast Guard played a critical role in responding there. And 
of course situations like the New Carissa require immediate 
response. Are you concerned about how the whole homeland 
security effort is going to affect you all in terms of being 
able to deal with those kinds of situations, Mr. Gaul?
    Mr. Gaul. I guess I would say I'm concerned about the 
homeland security and how it's going to affect our operations 
overall, but it's my belief that hopefully it will never 
happen. This was a once-in-a-lifetime and if we get another New 
Carissa on the beach, I feel confident that we'll get the 
appropriate response from both the state and Federal agencies 
and local agencies. We will address the issues as they come up 
and overcome them.
    Senator Wyden. In the Senate Coast Guard bill which we're 
working on as well, I proposed having the Coast Guard work with 
local ports to create security committees to develop local 
home-grown approaches for maritime safety concerns. You all 
have worked with the Coast Guard on this kind of approach. Do 
you think this is the kind of cooperative effort that could 
enhance Port Security and be a better way than having these 
sort of run from Washington, DC approaches?
    Mr. Gaul. I do, Senator. I think you need to start right at 
the grass roots to really look at this. And that type of 
partnership has worked well in Coos Bay and I believe 
throughout the areas.
    Senator Wyden. Well, I will just tell you that the New 
Carissa in my view just highlights this whole question of what 
you have in a new homeland security agency. It's very hard to 
see right now how you're going to be able to respond to those 
kinds of efforts as well as take on all the primary missions 
involving terrorism with these resources. And I say that 
synergy notwithstanding. There are going to be some 
opportunities to do things differently, to use technology. But 
for communities like Coos Bay, having the Coast Guard there to 
perform those functions is priority business, and we're going 
to do everything we can to make sure it's maintained. So we 
thank all of you. Senator Smith, any other questions?
    Senator Smith. No. Thank you, gentlemen.
    Senator Wyden. We'll let you go. The next panel is John 
Isbell, Director, Corporate Delivery Logistics, Nike; Monica 
Isbell testifying on behalf of the Pacific Northwest 
International Trade Association; Patrice Iverson-Summer, 
President, Columbia River Customs Brokers; and Captain James 
Townley, Executive Director, Columbia River Steamship 
Operators; and Bruce Holte, President, Local 8, International 
Longshore and Warehouse Union.
    All right. Welcome. Let's go first to Mr. Isbell. We are 
going to make your prepared statements part of the record. I 
can just tell all of you are anxious to have lunch. The blood 
sugar level is down. Mr. Isbell, you go ahead.

    STATEMENT OF JOHN ISBELL, DIRECTOR, CORPORATE DELIVERY 
                     LOGISTICS, NIKE, INC.

    Mr. Isbell. Senators Wyden and Smith, on behalf of Nike I 
thank you for the opportunity to testify at this hearing and 
for your leadership on this critically important issue. Nike 
believes U.S. business economic and the nation's security goals 
are not mutually exclusive. Realizing these mutual goals will 
require coordination between Congress, the administration and 
the trades, so that legislative and regulatory initiatives can 
achieve their intended result without adding undue cost or 
complexity to the supply chain.
    In terms of Port Security legislation currently being 
considered by Congress, Nike would measure success in terms of 
implementing a process that sends relevant shipping information 
to U.S. Customs as the containers move toward the United States 
and in maintaining an effective in-bond program.
    As the legislation moves through conference, we are 
focusing on the following issues: Manifest information. We 
believe the information currently provided by cargo owners like 
Nike to Customs is sufficient to protect our borders from 
shipments that would contain weapons of mass destruction. To 
our ocean carriers and U.S. Customs Nike is a known importer 
with a proven track record of providing accurate and complete 
information. Nike enjoys a low risk importer status with U.S. 
Customs.
    In addition, Nike was an early signer of U.S. Customs C-
TPAT program and believes this effort will strengthen an 
already well-managed process. This known importer concept is 
perhaps the best form of security. Rather than reinvent the 
wheel, Nike would ask the conferees to consider applying 
current manifest information to all importers and making the C-
TPAT program mandatory.
    Nike has concerns about additional information requests 
beyond what is currently provided today. All Nike products are 
clearly identified at the style and color level on the 
manifest. Additional information like digitized product 
descriptions are perceived as adding little value to the cost 
involved by all parties to provide national security relevance.
    Nike is concerned that additional information will expose 
our containers to greater risk of theft. It seems reasonable 
that if more information is required for national security 
purposes, that legislation be enacted to protect the privacy 
and property rights with respect to the cargo involved and do 
not make public any information beyond what is currently 
provided for census and/or commercial statistics.
    Nike is concerned about manifest information being required 
24 hours in advance of container loading. If this comes to 
pass, then Nike would have to shift our Thursday or Friday 
origin production to the following week's ocean carrier 
sailing. This would mean adding 1 week of inventory to our 
supply chain process. The cost of that to Nike could be 
significant in terms of increased inventory levels with the 
associated risk and cost.
    Nike does hope U.S. Customs will continue to receive all 
manifest information. We encourage Congress to increase funding 
on U.S. Customs ACE systems in order to expedite its 
development time line. Nike also asks the conferees to leave 
the current U.S. Customs in-bond program unchanged.
    Nike relies heavily on moving containers in-bond to our 
interior destinations. Today Nike moves approximately 170 20-
foot equivalent containers weekly from the west coast to 
interior custom ports for cargo clearance. This represents 
about 25 percent of Nike's weekly container volume. An 
effective in-bond program eliminates congestion at west coast 
ports, promotes better distribution of U.S. Customs' resources, 
and is a key program for Oregon importers who file consumption 
entries for containers in Portland that have been discharged in 
Seattle/Tacoma.
    In summary, U.S. Customs seems to have confidence in their 
selectivity process to find suspicious containers using current 
data that is transmitted by carriers during the voyage via U.S. 
Customs Automated Manifest Systems, AMS. The process can be 
improved further if all importers fully disclose container 
content and identify the ultimate cargo owner on the bill of 
lading. This is what Congress should mandate for all shipments, 
including those managed by non-vessel operators, commonly 
referred to as NVOCCs.
    If we raise all importers to this higher standard, we 
believe this will negate the need to have 24-hour pre-
notification at the port of origin. Of course we also protect 
our contents of our containers by working with our 
consolidators and ocean carriers to maintain the integrity of 
the container seal. Much more can and needs to be done if this 
area.
    Senator Wyden, certainly we see the need for more 
intelligent seals. Technology that allows seal numbers to be 
electronically read and matched to the seal number provided on 
the manifest as the container moves through the various stages 
of its voyage to final destination.
    Moreover, regulations for in-bond shipments should not be 
more extensive than those for other shipments. Given the above, 
Nike believes legislation can be enacted to achieve our mutual 
goals of developing a more secure maritime infrastructure while 
maintaining an efficient system for the movement of products.
    Again on behalf of Nike I thank you for your consideration 
of our views as well as your exceptional leadership you and 
your staff continue to have on this critically important issue 
to Oregon and the nation. Thank you.
    [The prepared statement of Mr. Isbell follows:]

    Prepared Statement of John Isbell, Director, Corporate Delivery 
                         Logistics, Nike, Inc.

    Senators Wyden and Smith, on behalf of Nike, I would first like to 
thank you for agreeing to have Nike testify at this hearing on U.S. 
port security and would like to thank you for your leadership on this 
critically important issue. My name is John Isbell, and I am Nike's 
Director of Corporate Delivery Logistics.
    Nike, Inc. is the world's leading supplier of athletic footwear, 
apparel, and equipment. Today, Nike is the only Oregon Fortune 100 
Company and currently employs 22,000 employees worldwide including 
nearly 6,000 Oregonians. Oregon is the home of Nike's World 
Headquarters and one of our 2 major footwear distribution facilities. 
Nike also ships containers to its other distribution facilities in 
Memphis, Tennessee as well as to over 30 customer distribution centers 
across the United States. Nike utilizes U.S. Customs' in-bond program 
to manage container distribution to these interior locations.
    Currently Nike brings 35,000 TEU's (20-foot equivalent containers) 
into the United States from over 50 countries around the world. Today, 
Nike files consumption entries in Los Angeles, Seattle, Portland, 
Memphis, Chicago, Kansas City, and Atlanta. Getting the right product 
to the right customer in the right way requires an efficient and 
effective inbound delivery supply chain.
    Nike actively manages its inbound delivery process through selected 
logistics service providers who handle origin consolidation, ocean 
shipping, airfreight forwarding, and destination de-consolidation. 
Nike's overseas liaison offices oversee the contract manufacturing 
process and the interface between our factories and consolidators. This 
entire process is well coordinated through the use of standard 
operating procedures.
    Recent information technology investments will allow Nike to 
operate in a more just-in-time environment. Our end goals are to reduce 
inventory and time to market. Of course, Nike is the first to recognize 
that these goals are secondary to our national security efforts to 
enact and implement needed legislation and programs to protect our 
country and its people from terrorist organizations who may use ocean 
containers to conceal weapons of mass destruction. But we believe that 
our country's national security needs and commercial interests are not 
mutually exclusive and there are ways to craft an appropriate balance. 
Realizing these mutual goals will require coordination between 
Congress, the Administration, and the trade so legislative and 
regulatory initiatives can achieve their intended result without adding 
undue cost or complexity to the supply chain. We believe President 
Bush's recent proposal to create a new office of Homeland Security is a 
major step in coordinating the proper focus around these initiatives.
    In terms of the Port Security legislation currently being 
considered by Congress, Nike would measure success in terms of 
implementing a process that sends relevant shipping information to U.S. 
Customs as the containers move toward the United States and in 
maintaining an effective in-bond program.
    As the legislation moves through conference, we are focusing on the 
following issues:

Manifest Information
    Today, U.S. Customs' Commissioner Bonner believes his agency's 
selectively guidelines--that identify 2 percent of containers for 
inspection--is sufficient. We likewise believe the information 
currently provided by cargo owners like Nike to Customs is sufficient 
to protect our borders from shipments that could contain weapons of 
mass destruction. This information includes the following:

   Name of shipper
   Name of consignee (Nike or Nike affiliate)
   Container number
   Carrier booking number (Bill of Lading not known until after 
        vessel sails)
   Commodity description and weight
   Place of cargo receipt
   Port of loading
   Port of discharge
   Final destination as known at export

    Currently, this information is passed to the ocean carriers who in 
turn submit it by electronic transmission to the U.S. Customs' 
Automated Manifest System after the vessel has departed from the port 
of export. To our ocean carriers and U.S. Customs, Nike is a `known' 
importer with a proven track record in providing accurate and complete 
information. Nike enjoys a Low Risk Importer status with U.S. Customs. 
Ocean carriers know their customers. In addition, Nike was an early 
signer of U.S. Customs' C-TPAT (Customs Trade Partnerships Against 
Terrorism) program and believes this effort will strengthen an already 
well-managed process. This ``known importer'' concept is perhaps the 
best form of security and Customs should continue to promote and create 
incentives for companies to fully participate in these types of 
programs.
    Requirements for container information and shipper/consignee 
details are clearly needed to support any effective program to enhance 
our country's security. In making decisions that will ultimately 
require several new compliance measures, Nike would like the conferees 
to consider the following issues related to what information is going 
to be required, when it will be sent, who is going to send it, what 
Government organizations will receive it, and will that information be 
made public.

Timing of Requested Shipping Information
    Should the information be required 24 hours in advance of container 
loading, as envisioned in the House bill, Nike would have to shift our 
Thursday and Friday production to the following week's ocean carrier 
sailing. This would mean adding over one week of inventory to our 
supply chain process. The cost impact to Nike would be significant in 
terms of increased inventory, higher margin costs from closeouts, 
additional airfreight, and additional interest costs.

Requested Information
    Nike has concerns about additional information requests, beyond 
what are listed after the first paragraph in this section. All Nike 
products are clearly identified at the style, color level on the 
manifest. Additional information like digitized product descriptions 
are perceived as adding little value to the cost involved by all 
parties to provide and transmit this information and have questionable 
national security relevance.
    We are also concerned that additional information will expose our 
containers to greater risk of theft. Today, manifest information is not 
confidential and is sold to the media and published. It seems 
reasonable that if more information is required for national security 
purposes, that legislation be enacted to protect the privacy and 
property rights with respect to the cargo involved and to not make 
public any information beyond what is currently provided for census 
and/or commerce statistics.

Who Receives the Information
    Nike believes U.S. Customs should continue to receive all manifest 
information. U.S. Customs can then share that information with any 
relevant Governmental agency who needs it for national security 
purposes. Again, we believe there should be limited public access to 
this information. We encourage Congress to increase funding of U.S. 
Customs' ACE system in order to expedite its development timeline.

Who Sends the Information
    Ocean carriers are in the best position to transmit manifest 
information.

In-Bond Provision
    Nike currently moves approximately 170 TEU's weekly from the West 
Coast to interior U.S. Customs' ports for cargo clearance (file 
consumption entry). This represents about 25 percent of Nike's weekly 
container volume. The in-bond provision provides an efficient and 
effective process to rapidly move containers from the port to the rail 
and on to its final inland destination. An effective in-bond program 
eliminates congestion at West Coast ports, promotes better distribution 
of U.S. Customs resources, and is a key program for Oregon importers 
who file consumption entries for containers in Portland that have 
discharged in Seattle/Tacoma. Users of the in-bond program request that 
carrier manifest document and processing requirements for in-bond 
shipments shall not be more extensive than those placed on other import 
shipments.

Summary
    U.S. Customs seems to have confidence in their selectivity process 
to find rogue containers. The system can be enhanced if all shippers/
importers and their cargos are properly identified and that shippers/
importers work cooperatively with U.S. Customs in designated security 
programs. It's not obvious to Nike that additional information is 
needed from all shippers/importers. Instead legislation should focus on 
those shippers/importers who presently provide less information than 
cargo owners who deal directly with ocean carriers and/or airfreight 
forwarders.
    The `known' relationship between shippers/importers and their 
carriers may be the biggest security shield we can construct. The 
challenge may be with shippers/importers who use non-vessel operators, 
commonly referred to as NVOCC's. It is far more likely that through 
this transport arrangement, where no relationship exists between the 
ocean carrier and the ultimate cargo owner, that suspect cargo could 
pass, unimpeded, through the nation's transport network. Even so, with 
properly identified cargo and the current cargo manifest information 
transmitted to U.S. Customs' Automated Manifest System, that System 
should be capable of identifying suspect containers for inspection.
    With this view, Nike believes legislation can be enacted to achieve 
our mutual goals of developing a more secure maritime infrastructure 
while maintaining an efficient system for the movement of goods.
    Again, on behalf of Nike I thank you for your consideration of our 
views as well as the exceptional leadership you and your staff continue 
to have on this critically important issue to Oregon and the nation.

    Senator Wyden. Thank you very much. Very helpful. Let's 
keep this in the Isbell family.
    Really, I'm going to make your statement part of the 
record, so if I can ask you again not to read them and just 
highlight some of your key points it would be great and we'll 
have some extra time for questions.

 STATEMENT OF MONICA ISBELL, VICE PRESIDENT, PACIFIC NORTHWEST 
                INTERNATIONAL TRADE ASSOCIATION

    Ms. Isbell. I'm speaking to you in my capacity as the vice 
president of the Pacific Northwest International Trade 
Association, which is commonly known as PNITA. I think you are 
very well aware of what PNITA is so I won't go into that.
    We are very appreciative of the time and consideration that 
you've given to us over the last 6 months or so in listening to 
our thoughts on this very important issue. PNITA members have 
been very closely monitoring this development of Port Security 
legislation. I believe that you know that we're all very 
committed to making sure that our supply chains are more 
secure. We've done an awful lot of things so far in that 
regard.
    We recognize that the cost of complying with new security 
provisions will be significant, but that the negative 
repercussions of us not doing that could be even greater if 
there was a terrorist act. We ask Congress to carefully 
evaluate the pending legislation that aims to protect our 
country, but also keep in mind that reasonable legislation 
should be enacted that has practical rules that don't have a 
deleterious effect on our national economy.
    There are many things that importers can do to secure their 
supply chains. Many PNITA members are already doing things in 
this regard. One of the things that I can mention is that some 
members are including security procedure checklists to their 
factory audits that are done on an official basis. Just as they 
are evaluated on labor practices and on the quality of the 
products that they produce, these factories are going to be 
evaluated on their security procedures as well.
    As part of the import supply chain, PNITA logistics service 
provider and broker members are doing their part to comply with 
U.S. Customs' and other Federal regulations in terms of 
security to ensure that the products they move through their 
networks are coming from known shippers and are protected from 
tampering as much as they can.
    Positive voluntary steps like these will go a long way to 
protecting Americans. But despite all of these efforts to 
secure our supply chains, it may still be possible for 
terrorists to introduce weapons of mass destruction even in 
sealed containers without the knowledge of exporters, 
importers, logistic service providers. We need to acknowledge 
this fact and develop legislation that will make it difficult 
for terrorists to use containers for harmful purposes, while 
not jeopardizing the effectiveness that American businesses 
have fought so hard to gain over the years.
    PNITA members were pleased that the provision for the 
container data pre-notification 24 hours prior to vessel 
loading was deleted from H.R. 3983. If legislation is enacted 
or the Secretary, as defined by H.R. 3983, determines that risk 
assessment must be done at the port of loading prior to 
loading, then PNITA members will have to change their import 
processes. Importers will most likely have to build extra time 
in their supply chains in case factories cannot provide this 
information prior to vessel loading in a timely manner. This 
could result in increased inventory levels with the associated 
risks and costs.
    In many parts of the world vessel sailings are weekly or 
maybe twice a week at best, so if documentation is not made 
available by the factories early enough, that means that those 
containers will miss that vessel and possibly have to be air 
freighted at a higher cost to the importers. Adding time to the 
importers' supply chain could have a dramatic impact. Depending 
on the level of requirements that the government might end up 
enacting, the negative effects on companies would most likely 
result in lost revenues and strained customer relationships for 
those importing companies.
    Another area of concern is the potential requirement that 
importers provide a digitized product identifier to supplement 
the detailed product description that's already being provided 
via the vessel manifest. PNITA believes that fairly 
sophisticated importers shouldn't have too much trouble 
providing this type of detail with some programming and 
business process changes, but it's the small guys that are 
really going to have a tough time complying.
    Congress needs to keep this in mind. As an alternative, we 
recommend that accurate and detailed cargo descriptions be 
required from all shippers at time of transmission of the 
vessel manifest to Customs. The cost for PNITA importers to 
comply with Federal security regulations will be passed on to 
consumers--it's just the way it's going to be--through higher 
retail prices. These costs may be especially hard on small and 
medium sized importers who are unable to pass these along to 
consumers. The ripple effect on the nation's economy could be 
enormous as consumers pay more and more for imported products.
    This is not the result that the legislators intend when 
they're crafting this legislation, we're sure of that. But this 
is what's going to happen if the legislation includes 
provisions that are difficult for importers to follow. We 
believe that it would be far better to allow U.S. Customs to 
perform risk assessment while cargo is in transit as is the 
current practice, since this is an effective method.
    As I stated earlier, PNITA members and importers understand 
and support congressional efforts to protect our borders from 
further terrorist attacks. However, we appeal to Congress to 
enact legislation that achieves a balance between the need for 
greater maritime and border security and the increased cost and 
disruption to the supply chain and the nation's economy.
    [The prepared statement of Ms. Isbell follows:]

Prepared Statement of Monica Isbell, Vice President, Pacific Northwest 
                    International Trade Association

    In my capacity as Vice President of the Pacific Northwest 
International Trade Association (PNITA), I want to thank you, Senators 
Wyden and Smith, for the invitation to speak at this hearing, as well 
as for your continued interest in listening to our thoughts and 
concerns on maritime and border security issues over the past six 
months.
    PNITA is a private, non-profit organization committed to supporting 
global competitiveness under a fair and equitable trading system. We 
work hard to have a direct impact on trade, tax and transportation 
policies that affect the region's economic competitiveness. We are non-
partisan in politics and regional in our approach, representing leading 
corporations and small businesses located in Oregon, Idaho, and 
Washington State. Our members include importers and exporters in all 
sectors of the economy including agriculture, service and 
manufacturing, as well as customs brokers, logistics service providers, 
trade consulting firms, port authorities, legal firms, banks, and other 
interested companies and individuals.
    PNITA members have closely monitored the development of 
Congressional maritime and border security legislation and initiatives 
introduced by such government entities as the U.S. Customs Service. A 
PNITA delegation spoke to you, Senators Wyden and Smith and your staff 
during our April trip to Washington DC about our thoughts on these 
issues. You know we are committed to doing all we can to improve 
security in our supply chains and protect Americans from harm. We 
recognize that our costs of complying with new government regulations 
could be significant, but that the negative repercussions of another 
terrorist act could be even greater. We ask Congress to carefully 
evaluate the pending legislation that aims to protect our country but 
with a view of enacting reasonable and practical rules that do not have 
a deleterious affect on our national economy.
    There are many things importers can do to better secure their 
supply chains. Some PNITA importers are already in the process of 
voluntarily implementing security guidelines they expect their 
factories and logistics services providers to follow. These include 
adding security procedure checklists to annual factory audits. Just as 
they are evaluated on labor practices and quality of products they 
produce, factories will be graded on how well they adhere to 
recommended security procedures.
    Many PNITA importers have already notified their ocean carriers, 
airfreight forwarders, customs brokers and consolidators that they 
expect these logistics service providers to exercise sound security 
procedures when handling their cargo. Moreover, PNITA importers are 
working to create company-wide security programs.
    As part of the import supply chain, PNITA's logistics service 
providers and customs brokers are also doing their part to comply with 
U.S. Customs and other federal security guidelines to ensure the 
products that move through their networks come from known shippers and 
are protected from tampering as much as possible.
    Positive, voluntary steps like these will go a long way to 
protecting Americans. But despite all the efforts to secure our supply 
chains, it may still be possible for terrorists to introduce weapons of 
mass destruction into containers without the knowledge of exporters, 
importers, and logistics service providers. We need to acknowledge this 
fact and develop legislation that will make it difficult for terrorists 
to use ocean containers for harmful purposes, while not jeopardizing 
the efficiencies that America businesses have fought so hard to gain 
over the years.
    PNITA members were pleased that the provision for container data 
pre-notification for risk assessment 24-hours before vessel sailing was 
deleted from H.R. 3983. If legislation is enacted or the Secretary, as 
defined by H.R. 3983, determines that risk assessment and/or container 
inspection be done at the foreign port prior to cargo loading to a 
vessel, then PNITA members and importers in general will have to make 
changes to their import process. Importers will most likely need to 
build extra time into their supply chains in case factories are unable 
to present documentation in a timely manner. This could result in 
increased inventory levels with the associated risks and costs. In many 
parts of the world, vessel departures are weekly or two times per week 
at best. Delays necessary to complete such risk assessment or 
inspections will likely result in scheduled shipping dates being 
missed. Importers may then have no alternative but to ship time-
sensitive product by more expensive airfreight.
    Adding time to an importer's supply chain could have dramatic 
impact. Depending upon the level of requirements that the government 
might end up enacting, the negative effects on companies would likely 
result in lost revenues and strained customer relations for importing 
companies.
    Another area of concern is the potential requirement that importers 
provide a digitized product identifier as a supplement to a detailed 
product description prior to vessel arrival at the first U.S. port. 
PNITA believes that fairly sophisticated importers should be able to 
abide by this requirement in the future through systems programming and 
substantial changes in business processes, particularly as it relates 
to earlier presentation of commercial documents by factories. However, 
Congress needs to keep in mind that most importers are small with 
limited means, and will, therefore, have a very difficult time becoming 
compliant. As an alternative, we recommend that accurate and detailed 
cargo descriptions be required from all shippers for transmission to 
U.S. Customs via the vessel manifest.
    We also understand that container content information will be 
shared among government entities for risk assessment and intelligence 
purposes. We understand and accept the necessity of this, but request 
that confidential information beyond what is currently collected in 
transport carrier manifests for census purposes not be made public. It 
is important that the rights of importers be protected and the efforts 
they've made to prevent cargo theft not be compromised.
    The cost for PNITA importers to comply with federal security 
regulations will be passed on to consumers through higher retail 
prices. It is not unrealistic to think about this scenario multiplied 
thousands of times as importers across America do the same thing. These 
costs may be especially hard on small and medium size importers who are 
unable to pass them along to their customers. The ripple effect through 
the nation's economy could be enormous as consumers pay more to 
purchase imported products and businesses struggle to remain 
profitable.
    This of course is not the result that our national leaders intend 
when they craft maritime security legislation. But this is what will 
happen if the legislation includes provisions that importers find 
difficult to implement and follow. All forms of government regulation 
cause increased cost regardless of what inspires it. PNITA believes 
that it would be far better to allow U.S. Customs to perform risk 
assessment while cargo is in transit as is the current practice, since 
this is an effective method.
    As I stated earlier, PNITA members and importers understand and 
support Congressional efforts to protect our borders from further 
terrorist attacks. However, we appeal to Congress to enact legislation 
that achieves a balance between the need for greater maritime and 
border security and the increased costs and disruption to supply chains 
and the national economy.
    Thank you very much for your time and consideration. I am happy to 
answer any questions that you may have.

    Senator Wyden. Very good. Let's go to our non-Isbell 
witnesses. Ms. Patrice Iverson-Summer.
    Senator Smith. Mr. Chairman, at the risk of being rude to 
our witnesses, I have an audience awaiting me at a luncheon 
speech, and I want you to know I have staff here who'll have 
some questions we'll submit to you for the record. But I 
apologize. I have to leave before everyone is concluded. Thank 
you so much all of you for being here. It's a very important 
hearing and each of you from labor to the Coast Guard are 
making a great contribution in getting this important piece of 
legislation just right. Thank you very much.
    Senator Wyden. Thank you, Senator Smith, as well. This is 
exactly the kind of issue that requires all hands be on deck in 
terms of protecting Oregon's position in the conference. I look 
forward very much to working with you when we get back to DC 
following up.
    All right. Let's go to our next witness.

  STATEMENT OF PATRICE A. IVERSON-SUMMER, PRESIDENT, COLUMBIA 
               RIVER CUSTOMS BROKERS AND FREIGHT 
                     FORWARDERS ASSOCIATION

    Ms. Iverson-Summer. I will comply with your request not to 
read my statement.
    Senator Wyden. Please do.
    Ms. Iverson-Summer. I think that there's some advantage to 
not having my reading glasses; I can't read it.
    Senator first of all, I do thank you for the opportunity to 
testify in this most important legislation, and I want to take 
the time to thank your staff people, Joshua and Gerhard and 
also Rob Freeman for all the time they spent with us lending 
their ear, lending their advice, and I just want to give you my 
thanks for that.
    Senator Wyden. Very good.
    Ms. Iverson-Summer. I am a small business owner. I've had 
my own company for 8 years now. Just had our eighth anniversary 
yesterday. After lots of trials and tribulations. I'm also the 
president of the Columbia River Customs Brokers and Freight 
Forwarders Association, and as such I'm speaking on the their 
behalf.
    I've spent 25 years working for promotion of international 
trade in Oregon, helping both customers, particularly small and 
mid-size companies, to form really the foundation of business 
through this state. Thanks to Nike and Columbia Sportswear and 
Intel, the large folks, they help hold it together, but there 
are hundreds and hundreds of small and mid-size companies, mom-
and-pop shops, mother-and-daughter teams, family operations, 
that do international trade. And so I'm going to be speaking on 
their behalf as well.
    A customs broker is kind of an unknown entity in this whole 
process, and I just want to explain a little bit of what we do 
and how we're an integral part of this whole process. I look at 
customs brokers as being the head of the octopus. We have our 
tentacles throughout the whole network of international trade. 
We have face-to-face contact with of course our customers. We 
know them and we know how they do business.
    We connect with all modes of transportation: the airlines, 
the rails, the ocean carriers, the truck lines. We touch with 
international bankers on the financial part of the transactions 
that we see. We are the filter through which raw data gets 
merged through regulations and requirements by different 
government agencies so that the information we receive is good 
and consistent and is complaint with what is required 
legislatively.
    We work with 40 other Federal agencies and we certainly 
support the talking or the working together of these agencies 
after a long time of not doing so. When I say Columbia, a key 
role in understanding how all these players fit together, we'll 
orchestrate these so that the ultimate goal is that the 
customer has the merchandise delivered in the time they need.
    There are, you know, essential things that are currently in 
the bill that we highly support. More information. I call it 
the four W's: the who, the when, the where and the what. The 
who is no problem. We support security requirements to know 
who's making the shipment and to whom it's going. We support 
what in the legislation about when it's to be filed.
    We support a good description. And this is where we do 
differ. We support a good description and I would like the 
legislation to keep in mind a good description may or may not 
necessarily be a six digit tariff description. In the third 
panel we talked about flexibility. I would like flexibility in 
a multi-faceted and multi-level approach to providing the 
information. All the customers on the small and mid-size 
companies do not have a tight supply chain. They get the 
information as best they can and they can supply it as best 
they can, but the tariff classification may not be the best way 
to describe their product. It is certainly open to a lot of 
interpretation and a lot of error.
    So what we're suggesting is that information be able to be 
supplied by the carrier electronically absolutely, but also be 
able to be supplied by the consolidators directly with benefit 
of confidentiality so that the end user is known to the people 
who are hands on, who handle the shipment when it is initiated 
is known. And that a description, however best can be described 
either by text in the case of chemicals, a cast number, which 
very definitely describes what that chemical is, by an import 
license issued by whichever agency issued in the area of arms, 
those can all be part of the equation so that we're not limited 
by that particular 15E or 14.
    There's over $2 trillion worth of cargo that moves by land, 
sea and air; $150 billion of that moves by sea. The port of 
Long Beach, Los Angeles moves over 8,000 containers a day, 
3,000 of which are in-bond moves. Sixty-five percent of those 
direct arrivals, the entry port is filed prior to arrival. That 
leaves the other 35 percent that doesn't have to be filtered 
through definitely the system that Customs is using now. All 
the other agencies use these texts.
    In a January 3, 2002 Washington Post article, Jan Holmes of 
the Coast Guard cited that a port shutdown of the port of Long 
Beach, Los Angeles could be sustained for approximately a week 
to 10 days. After a month we're talking economic devastation. 
He was addressing this particularly to weapons of mass 
destruction and what could happen to the port.
    I'm suggesting there are two ways. One is weapons of mass 
destruction and one is in the legislation as it's written in 
that particular text. It could cause so much congestion in the 
port of Los Angeles that we will never see the cargo coming up 
to Portland in any length of time. We're talking approximately 
1750 containers a day that could be held. Multiply that by ten 
and that's 17,000. Multiply that by 30 and you get my picture.
    Senator Wyden. Let me do this because we are short of time 
and I'm going to have some questions. I'm going to direct our 
staff to work with you to followup on each one of the 
suggestions that you're making. I think it is critically 
important that this be seen through the prism of someone like 
yourself, a small business person. Somebody who's sweated and 
toiled for 8 years. Joshua and Gerhard both are going to 
followup on each of your suggestions and just sort of walk 
through the system and try to do everything we can to get it 
right. OK.
    Ms. Iverson-Summer. Thank you, Senator Wyden. And about how 
important in-bond moves are for Oregon.
    Senator Wyden. Sure.
    Ms. Iverson-Summer. We think that there are 48,000 to 
52,000 jobs in Oregon that depend on international trade. 
Seventy percent of our cargo comes in-bond. The maintenance of 
the in-bond program is vital. If we are forced to file 
basically entering at the port of arrival, what's going to go 
away is your customs people, your other Federal agencies. They 
won't be needed any more. Your ground handlers. All those 
people will be out of work.
    [The prepared statement of Ms. Iverson-Summer follows:]

 Prepared Statement of Patrice A. Iverson-Summer, President, Columbia 
        River Customs Brokers and Freight Forwarders Association

    Good Morning, my name is Patrice Iverson-Summer. I am the President 
and Founder of Global Trading Resources, Inc., located in Portland, OR. 
We are a customs brokerage and international transportation logistics 
provider. We just celebrated our Eighth year in. business yesterday, 
July 1, 2002, surviving and flourishing even in these difficult times. 
I am also the President of the Columbia River Customs Brokers and 
Forwarders Association which counts over 30 customs brokerage and 
forwarding firms in Oregon and Southern Washington as well as having 20 
other firms involved in international trade in the region. I am also a 
Director of the Pacific Coast Council of Customs Brokers and 
Forwarders. I also serve on the Oregon-SW Washington District Export 
Council and teach International Trade classes for the Small Business 
International Trade Institute. Overall, I have 25 years of experience 
in International Trade and particularly in the movement of cargo in and 
out of the country. I have worked for the promotion of trade and trade 
policy and most notably for trade moving through Oregon.
    Today I am addressing you as President of the Columbia River 
Customs Brokers and Forwarders Association. The majority of our members 
represent small to mid-size companies like mine whose livelihoods and 
those of its clients depend upon the steady flow of goods in and out of 
the country. As a small company, most of my clients are based in 
Oregon. While we do everything possible to have cargo move directly 
through the Port of Portland, the reality is that nearly 70 percent 
moves in-bond, which is a Customs Program that allows goods to move 
from the first port of discharge to Portland where final Customs entry 
is made.
    I am exceedingly grateful for the opportunity to testify before you 
this morning.
    Everyone knows where they were on September 11th, 2001 when they 
first heard the news of the events of the World Trade Center. We spent 
the day silently unloading an ocean container of Zambian artifacts for 
a warehouse sale to be held at our facility. Be assured that no one in 
our industry takes the issue of port security more seriously than we 
do. Since all of us in one way or another are either ourselves (or have 
close friends or colleagues) handling vast amounts of freight on a 
daily basis. Our organization has been following the developments of 
Port Security legislation very closely, more closely than at any other 
time in my career. We approach this with utmost seriousness and wish to 
contribute in the creation of legislation that not only promotes 
security but that makes sense and can be implemented in the real world 
of trade and transportation. We have had endless conversations via e-
mail, phone calls and panel discussions with our association of Customs 
Brokers and Forwarders, Port representatives, and importers and 
exporters for the purposes of analyzing and evaluating the proposals to 
synthesize what really makes sense for real security.
    As Customs brokers who are licensed by the Dept. of Treasury, we 
work as independent agents on behalf of our clients leading them 
through the maze of laws and regulations so that their goods are 
properly valued and classified at the time of entry and that they 
receive release of their goods in a timely manner. In this capacity we 
interface with carriers (Air, Land and Sea) as well as all other 
Federal agencies that have jurisdiction over imported cargoes i.e. the 
Coast Guard, U.S. Dept. of Agriculture, Food and Drug Administration, 
FCC, DOT, EPA, Bureau of Alcohol Tobacco and Firearms, The State Dept, 
Bureau of Export Administration as well as, of course, U.S. Customs. We 
are also in contact with the International Banking Community, Port 
officials and dock-workers. In the overall scheme of cargo movement, we 
act like the head of the octopus orchestrating its movement each step 
of the way.
    Who are our customers? While some of us do handle the large 
importers that register on Custom's radar screen, the majority of 
brokers across the country handle small to mid-size customers much like 
mine. These are companies who do not have the big databases to control 
the entirety of their supply chain nor who are capable of electronic 
transmissions of all purchase orders within their system. Most of them 
are struggling just to get documents prior to arrival of their freight 
... at the inland destination. More often than not, we receive copies 
of invoices only days before arrival if even that. Then we struggle to 
gather enough information to properly classify the entries. It is a 
certainty that carriers will not do this and cannot.
    The process of entry filing is like one of taking pieces of a 
puzzle and making a complete picture out of it. We take steamship 
information, importer information and then apply rulings and 
regulations, other agency coding and notifications, then finesse it 
into intelligible computer speak. We verify quantities and take actual 
shipper and consignee information, verify values and descriptions and 
sort through literally thousands of rulings to make sure the tariff 
classifications are correct. In other words, we act as filters for the 
oil that goes into the engine. If the oil or gasoline is not refined, 
the engine chokes. We are in a unique position to see the broad picture 
of how trade really works today, to see where improvements can be made, 
who can handle them, and what could potentially be a loose nut in the 
engine of trade. You know what can happen in a car engine if a part 
becomes dislodged. When it gets stuck, the engine freezes. We do not 
want this to happen.
    There are two types of terrorism, one type uses explosives and 
chemicals to kill and maim. Another uses fear to erode the public 
spirit and undermine its economy.
    The U.S. has over 2 trillion dollars worth of cargo moving by land, 
sea and air. $750 billion moves by vessel. The largest port on the West 
Coast, the port of Los Angeles/Long Beach sees over 5 million 
containers a year across its docks (8,000/day). 3000 containers are 
scheduled to move inland. J.M. Holmes of the Coast Guard, cited in a 
January 3, 2002 article in the Washington Post, that a shutdown of the 
port for a week could possibly be sustained, but a month would cause 
the economy of the Western U.S. to come to a screeching halt. The cause 
of this could be a terrorist action or it could be done by ourselves by 
drafting legislation that is overly detailed in its requirements which 
does not allow for possibilities of providing fundamental information 
necessary for port security via a multi-layered and multi-mode 
approach. The language of this legislation should not be so specific or 
micro managing in its scope so as to preclude participation by the 
smaller and mid sized companies who together represent a major 
component in the equation.

    What are the facts:

   Terrorists are worldwide and they are amongst us. A weapon 
        of mass destruction of chemical/biological means could easily 
        be put into place from within, as well as outside our borders.

   Terrorists are long range in their planning and terrorists 
        do not necessarily rely upon sophisticated technology . . . 
        i.e. box cutters, etc . . . 

   The U.S. does not have the capability to physically examine 
        all cargo that comes into the country, but must rely on shared 
        intelligence.

    Conclusion: We need as much (not limited) shared information by ALL 
parties of the trade.

    Customs brokers have long advocated government agencies sharing 
information. We also are well aware that the current level of 
information is not adequate. I spoke recently to local inspectors on 
the Manifest Review unit who were pleading for more information so that 
they could do their profiling. Currently they are receiving 
descriptions of ``freight all kinds'', ``general cargo'', shippers and 
consignees who are forwarders and forwarders agents and piece counts 
that are skids rather than number of boxes.
    We believe first that the U.S. Customs Service is the appropriate 
agency to receive and manipulate important arrival information. They 
have a system in place and can currently handle information as their 
systems such as the Automated Commercial Environment (ACE )and the 
International Trade Data System (ITDS) are being developed.
    We have specific comments on the legislation as passed:
    Section 108 of S. 1214 ``Mandatory electronic filing of manifest 
information in a time frame needed by respective federal agencies.'' We 
suggest that this be done via the AMS system as most carriers already 
use this system. Programs are readily available and we have been 
advised that they are in the process of being enhanced to allow 
multilayered reporting by OTI's (Other transportation intermediaries). 
The way business is currently done, carriers only have the names of the 
consolidator where as the consolidators (non vessel ocean common 
carriers or NVOCC's) do have actual shipper and consignee information. 
This is done purposefully for purposes of confidentiality.
    Sec. 431A Requiring full shipping papers 24 hours prior to loading. 
We submit that shippers filing via AES be allowed partial information 
particularly for agricultural products whose full quantity may not be 
known until after the ship has fully loaded.
    Sec. 115(e)(A) Still remains the most problematic part of this 
bill. It distinguishes in-bond cargo from direct discharge cargo. In 
our minds a container containing weapons of mass destruction is as 
dangerous to the port of arrival as it is anywhere along route to a 
final inland destination. This section requires that the consignee/
consignor, the country of origin and a description of the cargo by 
means of the Harmonized Tariff Code to the sixth digit level.
    As stated above, we agree that actual consignee/consignor 
information is vital. It can be provided via the above means.
    The country of origin is difficult to ascertain in this day of 
multi-country manufacturing. For entry compliance purposes, the country 
of origin can be very complex to ascertain. We feel much more germane 
to security is the country of export. Where the goods came from and who 
shipped them. Up until now only the last port of loading was part of 
the manifest. We feel that place of receipt should be part of the 
manifest data.
    The most detrimental issue presently is the requirement for a 6 
digit harmonized tariff number. While I do not wish to get into too 
much detail here, my colleagues and I feel that this issue is the most 
critical shortcoming. I will describe the issue briefly and be happy to 
provide additional testimony for the record, if you wish me to do so.
    The harmonized code system is a complex and extensive nomenclature, 
which intends to cover all commodities. To its credit it is expansive, 
to its discredit it is subject to interpretation and error. This is the 
reason that there are thousands of rulings and disputes in the Court of 
International Trade. The usage of the 6-digit tariff number has been 
suggested as being the best means of describing the goods being 
shipped. While we most certainly agree that there needs to be better 
descriptions than ``freight all kinds'' and ``general cargo'', we 
cannot agree that the 6 digit requirement is appropriate language for 
the legislation. Once you get to 6 digits in many areas there is wide 
room for error and interpretation.
    Case in point: I have several small textile importers whose jacket 
classifications change at the 4 digit level depending on whether or not 
the jacket length is above or below mid thigh. Sufficient information 
to determine a correct six digit classification is most likely not 
going to be provided on the carriers list of information that they have 
to file with the Coast Guard and Customs. It therefore would be 
incorrect and it does not add anything for security. The same goes for 
whether shoes have rubber soles or not. In addition, we do not find 
that this requirement allows for cargoes that may have 15, 20, 50, or 
100 different classifications. In discussions we have had with Customs, 
they have suggested that the 6 digits would be required for all cargo 
not just in-bond. While this change would level the playing field for 
all cargo, there are major concerns about how this information will be 
provided. The result could likely be an even greater negative impact. 
It also does not address the issue of in-bond freight still being on 
the chopping block, as importers will not want to file ``almost an 
entry'' at the port of arrival, then add 3 more data elements at the 
port of entry. Customs has stated that importers and shippers would 
collaborate and provide this information to the carrier, who would in 
turn, report it on the manifest. This is a very unrealistic scenario.
    We submit that Customs is now able to take text data. The customs 
automated targeting system takes text, INS takes text and so does the 
Coast Guard. It seems unreasonable that the legislative language should 
stipulate something that Customs cannot currently accept and that it 
should preclude any and all descriptions. Areas of particular concern 
are those covering chemicals and arms. Chemicals are much more 
appropriately described by using a CAS number and/or hazardous 
materials information, which in many cases are far more specific than 
the catch all ``other'' categories of the harmonized system. All arms 
or nuclear materials must have as part of their documentation import 
licenses. The issuing agencies have full details of all pertinent 
information.
    If profiling is the main objective in information gathering and 
this profiling is being done to distinguish the legitimate cargo from 
those shipments that have incongruities, it would appear that a large 
portion of small and mid-size companies could significantly be 
disadvantaged by not having an HS number available prior to arrival 
when in fact they would otherwise have good descriptions on the 
manifest. This is a portrait of what could happen to a large portion of 
cargo destined for Portland. Should this happen, the Port of Portland 
would fold. The 40,000 jobs dependant upon trade would evaporate and 
there would be no guarantees that the country would be any more secure. 
The congestion at the ports of arrival, I suggest, would make the 
possible West Coast IWLU strike look like a picnic.
    I believe that the efforts to secure our borders are highly 
commendable and so very important, but in those efforts I it is my hope 
that you will take the input from all of the concerned parties to 
assure that the final legislation is effective, flexible enough for 
changing situations and technological develops and most of all 
balanced.
    We all want security but we also want and need strong and viable 
trade to assure a strong economy. For this we need a balance of 
security enforcement along side of trade facilitation. This is the 
mission set before us by the President and reiterated by Customs 
Commissioner Bonner and Director of Homeland Security, Tom Ridge.
    Thank you again for the opportunity to testify today. My colleagues 
and I are ready and willing to assist you in every way possible as you 
go forward in finalizing this legislation.

    Senator Wyden. Well said. As I say, we're going to followup 
on the suggestions you're making specifically and just sort of 
walk through this legislation in the eyes of what it would mean 
for somebody like yourself. Thank you.
    Senator Wyden. Captain Townley.

          STATEMENT OF CAPTAIN JIM TOWNLEY, EXECUTIVE 
              DIRECTOR, COLUMBIA RIVER STEAMSHIP 
                     OPERATORS ASSOCIATION

    Mr. Townley. Senator, good morning. I would like to repeat 
Patty's sentence with respect to the support your staff has 
provided, and Rob as well. Just a super job on preparing for 
this.
    My name is Jim Townley. I'm the executive director of the 
Columbia River Steamship Operators, and that association is 
made up of owners, operators, agents, towing companies and 
barge interests on the Columbia River. I'm also executive 
director of the Columbia River Port Rejuvenation Coalition, 
which is an ever-growing number of shippers, forwarders, 
brokers, carriers, and business interests in Oregon and 
Washington who have concerns about the cost competitiveness of 
the Columbia River and its future. And I will serve in that 
capacity until such time as they find competent help.
    That having been said, I really want to thank you, Senator, 
and Senator Smith as well, for giving us the opportunity to 
testify on a matter of grave importance to our nation and the 
region, and particularly as those relate to trade in securing 
our ports, which is so vital to Oregon, Washington and national 
commerce.
    Many of the people in the room today are aware of the fact 
that our industry on the morning of September 11th, took 
immediate measures to tighten security on the river system. The 
Coast Guard later told us that the actions that we took, the 
procedures that we voluntarily imposed on ourselves later 
became the national standards that were adopted.
    We pride ourselves on being proactive and innovative and 
very practical when it comes to meeting national, regional and 
global challenges and opportunities. As an example the 
Protector Alpha fire with loss of life in 1982, the flood of 
the century in 1996, the already twice mentioned New Carissa 
grounding and break up in 1999, and then two subsequent 
extremely low water situations which were very bad for commerce 
and the river reputation we had in fall of 2000 and fall of 
2001.
    Each one of those situations have given our industry the 
increasing experience of what I'll call the art and science of 
forging private/public partnerships, which we've done to good 
advantage. We've found ways of sharing those practices and in 
sharing lessons learned, and in finding innovative and cost 
effective solutions to the problems and challenges facing us. 
Unfortunately, the tragedy of September 11 has presented us 
with our greatest challenge thus far.
    Beginning on September 13, the Columbia River Steamship 
Operators Association initiated a series of meetings with other 
maritime industry members and Federal agencies to assess our 
own vulnerabilities, consider our threats and develop cost 
effective approaches to increased security, while minimizing 
adverse impact on commerce. We were looking for checkpoints not 
show points. These efforts led us to the concept establishing a 
regional maritime security coalition throughout our entire 
river system and along our coasts and ports.
    On Monday, June 17th, the Transportation Security 
Administration confirmed a Federal grant award of $623,000 to 
the CRSOA, to conduct a proof of concept test and demonstration 
of a prototype ``Regional Maritime Security Coalition.'' The 
grant will allow the establishment and testing of a public-
private model that will serve as an umbrella seaport security 
organization. Under this concept, the technical and information 
resources from the ocean shipping and public seaport sectors 
will be combined with the resources of pertinent Federal 
agencies, such as Coast Guard, customs, immigration, 
agriculture, FBI and FEMA, and with regional, state, and local 
law enforcement, emergency management, and possibly with 
national guard and reserve military assets.
    We believe the coalition should be operated as a public-
private partnership that aims at making maritime transportation 
security an integral part of daily trade and transportation 
operations, and that is financed--and this should probably be 
of great interest to you, Senator--from both public and private 
sector sources with regional generated moneys staying in the 
region.
    This coalition would integrate and coordinate government 
and industry information, intelligence, and operations to 
ensure appropriate and cost effective levels of security and 
that do not unnecessarily impede commerce.
    We believe that the proven wisdom of Congress as expressed 
in the Oil Pollution Act of 1990 presents a model for 
prevention of terrorist events and for first response to 
security incidents. We believe successful elements of OPA 90 
can be integrated in the legislation currently under 
consideration and that that particular legislative model is 
generally adaptive to homeland security purposes.
    Our experience tells us that best practices for homeland 
security prevention, detection, deterrence, the whole 
enchilada, could be used to augment whatever standards are put 
in place with additional nonregulatory standards of care. This 
is something we use routinely here and in the Puget Sound area, 
and it's generally a self-policing system of inspections and 
audits which are augmented with Federal spot checks and 
oversight to assure compliance with these adopted standards.
    One important goal we hope to achieve also is one-stop 
shopping for information collection from domestic and 
international carriers who currently have to deal with many, 
many Federal agencies, but primarily Customs and INS. Each one 
of the agencies has its own requirements and it's own format 
and so on and so forth, and it would be very nice if we could 
in fact in the interest of security consolidate all that into 
one location and make it a lot more user friendly.
    We believe risk analysis similar to what's required by OPA 
90 should be required and conducted for homeland security with 
the following specific enhancements: Risk and vulnerability 
assessments should be conducted on a continuous and real time 
basis as cargoes move through regional maritime transportation 
networks. While there are many ways by which these assessments 
could be conducted, fundamentally they would occur on a 
computer platform where as a minimum, information about cargoes 
on vessels could be combined with information about vessel 
locations, which could be combined with information about 
cargoes staged at waterfront facilities to give our 
intelligence and law enforcement agencies more timely and 
valuable information than is currently available to them today.
    Point of origin inspections and certifications, as other 
people have testified, should be investigated for both imports 
and exports allowing chain of custody security to be maintained 
over maritime transportation system passengers and assets as 
they move through the system from origin to destination.
    And because the west coast is a high tech center for the 
country, computer and other high tech capabilities should be 
marshaled to enhance the goals of homeland security for 
everything from intelligence assessments to confirmation of 
successful cargo delivery.
    And finally, Senator, I'll just mention a TSA grant once 
again has made even more critical a request we've made to your 
office for fiscal year 2003 Federal assistance that was made 
immediately following September 11th, to establish a vessel 
traffic information system here in the river. Since 1998, the 
ship operators and the Columbia River pilots have been working 
on a public-private partnership to establish a VTIS in this 
river. And in fiscal year 2000, the ship operators authorized a 
quarter million dollars in private sector money--which I have 
to add is a lot of money for an organization of our size--to do 
a proof of concept trial of the system. And the Department of 
Transportation Volpe Center is being retained under contract to 
do that.
    Once the system is in place, location, course, speed, and 
status of every vessel, its cargo and crew, can be made 
immediately known to appropriate authorities instantly. The 
events of September 11th, have obviously made such information 
even more critical. This VTIS system that I just mentioned, the 
Regional Maritime Security concept that I've outlined for the 
hearing today would substantially increase the public safety 
and security of the Columbia River region. Support of the VTIS 
funding on behalf of the region will allow us to significantly 
increase security for trade and seaports in fiscal year 2003, 
several years ahead of what we would be able to do otherwise on 
our own.
    Our industry is committed to establishing VTIS and building 
a Regional Maritime Security system and to providing needed 
support to any practical and cost effective idea that will 
improve the safety and security of our ports, waterways and 
commerce.
    That concludes my formal statement. I'd be happy to answer 
any questions you may have.
    [The prepared statement of Mr. Townley follows:]

Prepared Statement of Captain Jim Townley, Executive Director, Columbia 
                 River Steamship Operators Association

    Good morning. I'm Jim Townley, Executive Director to the Columbia 
River Steamship Operators Association, a not-for-profit association of 
ship owners, operators, agents, and towing and barge industry members. 
Thank you Senator Wyden and Senator Smith for holding these hearings. 
We are grateful for the opportunity to testify this morning on a 
subject of grave importance to our nation and region, particularly as 
our actions relate to protecting trade and securing ports that are 
vital to Oregon, Washington, and to National commerce.
    As many of the people in this room today are aware, the Columbia 
River Region's maritime industry took immediate measures to tighten 
security beginning on the morning of September 11th. The U.S. Coast 
Guard told us later that the heightened security procedures we 
voluntarily imposed on ourselves starting September 12th were 
subsequently adopted as the National standard several weeks afterward.
    The Columbia River Region's maritime industry has earned a 
reputation for being proactive, innovative, and practical when it comes 
to meeting regional, national, and global challenges and opportunities. 
The burning of the grain ship Protector Alpha, with loss of life in 
1982, the 1996 ``flood of the century,'' the grounding and break up of 
the Motor Vessel New Carissa in 1999, and two successive very low water 
seasons in the Fall of 2000 and 2001 gave our industry increasing 
experience in the art and science of forging public private 
partnerships, sharing ``best practices'' and lessons learned, and 
implementing innovate and cost effective solutions. The tragic events 
of September 11 presented us with our greatest challenge thus far.
    Beginning on September 13, 2001, the Columbia River Steamship 
Operators Association initiated a series of meetings with other 
maritime industry members and with Federal agencies to assess our 
vulnerabilities, consider threats and alternatives, and develop cost-
effective approaches to significantly increase security while 
minimizing adverse impacts to the movement of ships and cargos where-
ever possible. We sought to identify and establish ``check points'' not 
``choke points.'' We sought to combine our talents and resources into a 
single, unified regional security system.
     These efforts led to the concept of developing and establishing a 
regional maritime security coalition throughout our river system and 
along our coasts. On Monday, June 17th, the Transportation Security 
Administration confirmed a Federal Grant award of $623,000 to the 
CRSOA, to conduct a ``proof of concept'' test and demonstration of a 
prototype ``Regional Maritime Security Coalition.'' This Grant will 
allow the establishment and testing of a public-private model that will 
serve as an umbrella seaport security organization. Under this concept, 
the technical and information resources from the ocean shipping and 
public seaport sectors will be combined with the resources of pertinent 
Federal agencies such as the Coast Guard, Customs, Immigration, 
Agriculture, FEMA, and FBI, and with regional, state, and local law 
enforcement, emergency management, and possibly with National Guard and 
reserve military assets.
    The testimony I'm providing this morning outlines the concept we 
intend to prove with this Grant.
    The Columbia River maritime industry believes a regional maritime 
security coalition should be established that is operated as a public-
private partnership, that aims at making maritime transportation 
security an integral part of daily public and private sector maritime 
trade and transportation operations, and that is financed with public 
and private sector funds where regionally generated monies remain in 
the region.
    The mission of the coalition would be to regionally integrate and 
coordinate government and industry information, intelligence, and 
operations that ensure appropriate and cost effective levels of 
security and that do not unnecessarily impede commerce.
    We further believe that the proven wisdom of Congress as expressed 
in the Oil Pollution Act of 1990 presents a model for prevention of 
terrorist events and for first response to security incidents. We 
believe successful elements of OPA 90 can be integrated with 
legislation currently under consideration and is generally adaptable to 
homeland security purposes.
    Our experience tells us that ``Best Practices'' for homeland 
security prevention, detection, deterrence, and response could be 
translated into non-regulatory ``Standards of Care'' clearly and 
explicitly expressing the consensus of local government and industry on 
what is going to be done to prevent, detect, deter, and/or respond to 
homeland security incidents. We believe a self-policing system of 
inspections and audits, augmented with Federal spot checks and 
oversight, will assure compliance with these adopted standards.
    One important goal we hope to achieve is the establishment of ``one 
stop shopping'' for information collection from domestic and 
international carriers who currently must deal with several Federal 
agencies when arriving or departing U.S. ports and waterways (most 
notably the U.S. Coast Guard, Customs, and INS). At a minimum the 
diverse requirements for providing similar ship, cargo, and crew 
information to different Federal agencies at different times and 
places, using different formats and reporting rules, should be 
consolidated into single, uniform reporting requirements that will 
facilitate knowledge of vessel operating status, emergent 
vulnerabilities and risks, and intelligence interest for those involved 
in the safe and secure movement of people and cargos through our 
maritime transportation system.
    Communications and coordination between CRSOA and Puget Sound 
Steamship Operators Association, and between Columbia River and Puget 
Sound Harbor Safety organizations are being expanded and improved. We 
are sharing our collective experience and resources, ideas, and ``best 
practices.'' We are investigating ways of expanding the scope of 
security work that could be facilitated by organizations such as the 
Pacific Northwest Waterways Association and the Pacific Northwest 
Economic Region. Plans for doing even more are under development.
    We believe Risk Analysis, similar to what is required by OPA 90, 
should be required and conducted for homeland security with the 
following specific enhancements:

        Risk and vulnerability assessments should be conducted on a 
        continuous and ``real time'' basis as cargos move through 
        regional maritime transportation networks. While there are many 
        ways by which these assessments could be conducted, 
        fundamentally they would occur on a computer platform where as 
        a minimum, information about cargos on vessels could be 
        combined with information about vessel locations, which could 
        be combined with information about cargos staged at waterfront 
        facilities to give our intelligence and law enforcement 
        agencies more timely and valuable information than is currently 
        available to them today.

        ``Point of origin'' inspections and certifications should be 
        investigated for both imports and exports allowing ``chain of 
        custody'' security to be maintained over maritime 
        transportation system people and assets from origin to 
        destination.

    Because the West Coast is the high tech center for the country, 
computer and other high tech capabilities should be marshaled to 
enhance the goals of homeland security for everything from intelligence 
assessments to confirmation of successful cargo delivery.

    Finally, the TSA Grant award has made even more critical a request 
for FY 2003 Federal assistance made immediately following September 
11th for establishing a Vessel Traffic Information System. Since 1998, 
the CRSOA and the Columbia River Pilots have been working on a public-
private partnership to establish a VTIS in the Columbia River. In FY 
2000, the CRSOA authorized the expenditure of $250,000 of private 
sector funds to conduct a proof of concept trial of the system. The 
Department of Transportation's Volpe Center is being retained under 
contract to conduct this trial. Once in place, the location, course, 
speed, and status of every vessel, its cargo, and crew, can be made 
known to appropriate authorities instantly. The events of September 11 
made the availability of such information even more crucial.
    This VTIS system, when integrated with the Regional Maritime 
Security concept, would substantially increase the public safety and 
security of the Columbia River region. Support of the VTIS funding on 
behalf of the Columbia River region will allow us to significantly 
increase the security of our trade and seaports in fiscal year 2003, 
several years earlier than would be possible otherwise. Our industry is 
committed to establishing the VTIS, to building our regional maritime 
security system, and to providing needed support for any practical and 
cost-effective idea that will improve the safety and security of our 
ports, waterways, and commerce.
    That concludes my formal statement. I'd be happy to answer any 
questions you may have as well as provide additional written comments 
as necessary.

    Senator Wyden. Very good, Captain. Mr. Holte.

  STATEMENT OF BRUCE HOLTE, PRESIDENT, LOCAL 8, INTERNATIONAL 
                 LONGSHORE AND WAREHOUSE UNION

    Mr. Holte. Senator Wyden, my name is Bruce Holte. I'm the 
president of the International Longshoreman Warehouse Union, 
ILW 8, representing 600 working men and women in the Port of 
Portland. I'm pleased to submit comments regarding the security 
of our nation's ports.
    Within the lower Columbia River there are approximately 
1350 ILW representing longshoremen, marine clerks, and foremen 
working in the ports of Astoria, Oregon, Vancouver, Washington, 
and Long View, Washington. The members of the ILW are committed 
to making our ports and surrounding areas safe, secure and free 
of criminal or terrorism activities. Just as important, we are 
absolutely committed to the security of our work force as well 
as the surrounding communities where we all live and interact.
    This is especially so since ILW members face direct risk to 
their personal safety and livelihood from such criminal and 
terrorism acts simply by virtue of the jobs we do and the areas 
where we work. Following the horrendous terrorist attack on 
September 11, ports throughout the country went on immediate 
security alerts. In Portland meetings have been held between 
the Coast Guard and local interests to discuss the threats we 
now face and the actions we must take.
    Familiarities have been established between key Coast Guard 
personnel and key local aid officers so that regular and 
constructive dialog can take place around security issues. The 
Port Marine Security Act S. 1214 initially focuses on criminal 
activities rather than national security and terrorism. The 
present need to secure our ports from the threats of 
international terrorism now overrides all other issues.
    There are substantial areas of omission in S. 1214 that 
need to be retracted to truly enhance our nation's seaport 
security. The U.S. Coast Guard has basically been a waterside 
enforcement agency within the Federal Government. For purposes 
of clarity, understanding that landside enforcement is a 
different matter altogether and major American ports, including 
areas of ILW jurisdiction, landside security enforcement has 
been a function of local port and terminal operators.
    The Port Marine Security Act S. 1214 focuses heavily on 
longshore workers as a significant security risk. It is 
absolutely contrary to the fact and to the goal of maintaining 
secure seaports to treat longshore workers as security risks. 
Longshore workers are not the problem, but rather a critical 
part of the solution to keeping our ports safe and secure.
    It is the well-established longshore work force that knows 
how things work best at ports, and perhaps most importantly it 
is ILW members who are best able to detect and report 
suspicious and unusual activities in the ports. The government 
should therefore enlist these dedicated workers as partners 
rather than as suspects in efforts to secure our nation's 
ports.
    In times of shrinking tax receipts, the most cost effective 
first line security available is the very workers who toil on 
the docks daily. The longshore worker must be embraced as part 
of the solution not part of the problem. In that the 
superstructure activity levels and operating procedures at 
ports vary substantially, it is imperative that local 
communities, investors, government and stakeholders work 
together to develop and maintain security procedures that meet 
the certain standards at a given port.
    As a significant stakeholder ILW must be actively included 
as a general matter of policy. ILW opposes background checks on 
any of our workers. During investigation of the Integrity 
Commission on Seaport Security, Gram Commission, ILW challenged 
the commission to prove their assertion that internal 
conspiracies are a problem at many of our nation's ports. We 
asked them for an example of an internal conspiracy where the 
committed crime involved ILW longshore workers. They could not 
produce one example of ILW workers at our nation's ports 
involving criminal conspiracies. Not one. Not one.
    In fact the only involvement our members have with serious 
criminal activities is reporting to the authorities suspicious 
activities and cargo. In previous testimony before the Senate 
Congress, Science and Transportation Committee we pointed out 
that the action of one longshore worker at the port of Tacoma 
led to the largest cocaine seizure in the port's history.
    In times of war the ILW members have delivered on their 
promise to load military cargo in the safest most efficient way 
possible. It is equally agreeable that the government not 
respond to new terrorisms against our country in ways that harm 
the productivity of our commercial seaports. Excessive or 
imprudent regulations that fail to account for the true 
realities of port operations will only result in further damage 
to the national and world economics at a time when they are in 
perilous circumstances.
    We must not through rash government regulations accomplish 
the very result our enemies seek, and we are trying to avoid 
the--I'd like to for a second, if you don't mind, I'd like to 
go off my written statement and hit on a point you talked about 
earlier. We have a major concern, longshoremen in general, in 
the ports of what you talked about seals and cans not being 
inspected. The Port of Portland, and this is just a scenario, a 
can can be taken off a ship, put on a truck and brought right 
out to the rail system, loaded on a rail and shipped out 
without anybody checking the seal, looking at the seal. Who 
knows what could be in there?
    For an example, you could have these al Qaeda or whatever 
you want to call them guys on that ship, they could unlash that 
can, they could load those guys in there, lash that back up, 
load that on a rail and off they go. You just don't know. 
Another example is they could make that a hot can, where it 
comes on the dock, as an example the topside operator might 
grab that can off a truck, put it on the ground and a yard guy 
will load that on a commercial truck and off they go.
    Senator Wyden. Just 1 second. Do any of you in the business 
community disagree with what Mr. Holte just said? Let the 
record show Mr. Holte talked about the threat of unsealed 
containers, containers that again have essentially no 
verification process, and his point, a point made by the labor 
union that deal with this, have been echoed by all the business 
witnesses on the panel. Go ahead, Mr. Holte.
    Mr. Holte. Thank you. With that I'll just go back to my 
written statement.
    Senator Wyden. I'll tell you what, can we put the rest of 
that in the record so I can get to a couple questions?
    Mr. Holte. Sure. It was thanking you for being here.
    [The prepared statement of Mr. Holte follows:]

 Prepared Statement of Bruce Holte, President, Local 8, International 
                     Longshore and Warehouse Union

    As President of the International Longshore and Warehouse Union 
(ILWU) Local 8 representing 600 working men and women in the Port of 
Portland I am pleased to submit comments regarding the security of our 
nation's ports. Within the lower Columbia River there are approximately 
1350 ILWU represented longshoremen, marine clerks and foremen working 
in the ports of Portland Oregon, Astoria Oregon, Vancouver Washington 
and Longview Washington. The members of the ILWU are committed to 
making our ports and surrounding areas safe, secure, and free of 
criminal or terrorist activities. Just as important, we are absolutely 
committed to insulating the security of our workforce as well as the 
surrounding communities where we all live and interact. This is 
especially so since ILWU members face direct risk to their personal 
safety and livelihood from such criminal and terrorist acts simply by 
virtue of the jobs we do and the areas where we work.
    Following the horrendous terrorist attacks of September 11, ports 
throughout the country went on immediate security alert. In Portland 
meetings have been held between the Coast Guard and Local 8 
representatives to discuss the threats we now face and the actions we 
must take. Familiarity has been established between key Coast Guard 
personnel and key Local 8 officers so that regular and constructive 
dialogue can take place around security issues.
    The Port and Maritime Security Act (S.1214) initially focused on 
criminal activities rather than national security and terrorism. The 
present need to secure our ports from the threats of international 
terrorism now overrides all other issues. There are substantial areas 
of omission in S. 1214 that need to be rectified to truly enhance our 
nation's seaport security. The U.S. Coast Guard has basically been a 
waterside enforcement agency within the federal government. For 
purposes of clarity, understand that landside enforcement is a 
different matter altogether. In major American ports, including areas 
of ILWU jurisdictions, landside security enforcement has been a 
function of the local port and terminal operators.
    The Port and Maritime Security Act (S.1214) focuses heavily on the 
Longshore worker as the significant security risk. It is absolutely 
contrary to the facts and to the goal of maintaining secure seaports to 
treat longshore workers as security risks. Longshore workers are not 
the problem but rather are a critical part of the solution for keeping 
our ports safe and secure from crime and terrorism. It is the well-
established longshore workforce that knows how things work best in the 
ports and, perhaps most importantly, knows who belongs where in the 
marine terminals. It is ILWU members who are best able to detect and 
report suspicious and unusual activity in the ports. The government 
should, therefore, enlist these dedicated workers as partners rather 
than as suspects in the efforts to secure our nations ports. In times 
of shrinking tax receipts the most cost effective first line of 
security available is the very workers who toil on the docks daily. The 
Longshore worker must be embraced as part of the solution, not part of 
the problem.
    In that the superstructure, activity levels and operating 
procedures of ports varies substantially it is imperative that local 
committees of industry and government stakeholders work formally 
together to develop and maintain security procedures that meet the 
circumstances of a given port. As a significant stakeholder the ILWU 
must be actively included.
    As a general matter of policy, the ILWU opposes background checks 
on any of our workers. During the investigation of the Interagency 
Commission on Seaport Security (the Graham Commission) the ILWU 
challenged the Commission to prove their assertion that internal 
conspiracies are a problem at many of our nation's ports. We asked them 
for an example of an internal conspiracy to commit crimes involving 
ILWU Longshore workers. They could not produce one example of ILWU 
workers at our nation's ports involved in criminal conspiracies. Not 
one. In fact, the only involvement our members have with serious 
criminal activity is reporting to authorities suspicious activities and 
cargo. In previous testimony before the Senate Commerce, Science and 
Transportation Committee, we pointed out that the actions of one 
longshore worker at the Port of Tacoma led to the largest cocaine 
seizure in the Port's history. In times of war, the ILWU members have 
delivered on their promise to load military cargo in the safest, most 
efficient way possible.
    It is equally critical that the government not respond to the new 
terrorism against our country in ways that harm the productivity of our 
commercial seaports. Excessive or imprudent regulations that fail to 
account for the true realities of port operations will only result in 
further damage to the national and world economies, at a time when they 
are in perilous circumstances. We must not, through rash government 
regulation, accomplish the very result our enemies seek and we are 
trying to avoid--the disabling of waterfront commerce.
    Accompanying this statement is a detailed proposal designed to 
pinpoint critical security-sensitive areas with specific delineations 
between landside and waterside operations. The proposals are designed 
to increase and improve port security protections in an economically 
feasible way.

Waterside Security Issues
Match Personnel with Provided Documents
    Legislation should require crew and passenger lists including 
names, addresses, passports, and mariner documents be matched up in 
person with the documents submitted. Currently, when the Immigration 
and Naturalization Service (INS) is given the documentation, they 
merely go through the documents without requiring the individuals 
presence to insure he or she is who the documents say they are.

Implementation of Integrated Systems
    Implementation of integrated systems allowing Customs to inspect 
and/or review manifests containing identification of shipper, port of 
origin, and cargo shipped prior to vessel entering American waters.

Advance Security Clearances of Vessels
    The legislation should require advance security clearance 
requirements for all vessels, their owners, operators and crew before 
entering a U.S. port. Presently, these vessels operate wider secrecy 
and without regulations by the scheme of flying the flag of a country 
(flag of convenience) that lacks any meaningful regulations and 
scrutiny. The London Times reported that the terrorist group Al Queda 
presently operates flags convenience vessels.

Landside Security Issues
Container Security Seals
    Like luggage on airplanes, the containers on vessel and in port 
facilities need to be subjected to security screening to protect U.S. 
seaports and international maritime commerce. Obviously, it is both 
impractical and cost-prohibitive to inspect every one of the tens of 
thousands of containers that flow in and out of our ports each day. 
Proposed legislation should at least mandate that port workers who 
receive containers inspect the integrity of the outside seal on each 
container. Seal inspection must he done to insure that the seal number 
matches up with the consignee who was the last person who sealed that 
container up and is responsible for the cargo therein. To insure port 
security, this is one of the ``primary'' actions that must be 
undertaken. This act must mandate that the integrity of the seals be 
checked and rechecked against terminal documentation to insure the 
origins of that cargo. A broken seal would alert the port facility that 
the container has been tampered with and that it needs to be carefully 
inspected before entering a facility or being placed on a vessel, and 
should be immediately earmarked to Customs for inspection A systematic 
check of container seals provides authorities with a record as to the 
parties responsible for placing the seal on any container that may be 
the means of a terrorist act.

Documentation
    The industry trend is that we are seeing less descriptive 
documentation of a container's contents. Where not too many years ago, 
every container entering a terminal was accompanied by a load plan 
describing in detail its contents from head to door, that practice is 
being replaced to the point that the contents of many containers 
entering the terminal are completely unknown or the description is so 
vague as to be useless. Requiring full disclosure of a container's 
contents is only prudent before allowing access to a terminal.

Empty Containers
    One of the most overlooked of potential security risks to 
terminals, ships, and port infrastructure is the proper handling of 
empty containers. On any given day as much as forty percent of cargo 
delivered into any facility is comprised of empty containers. A 
physical inspection of these containers is vital for a number of 
reasons: (1) Terminal safety- knowing that in almost all port 
facilities empty containers are very rarely inspected, the potential 
for placement of some kind of explosive device is something that must 
he considered and planned for; (2) Vessel Safety or remote site 
endangerment--the concept where an uninspected empty container 
containing an explosive device would be loaded onto a vessel for 
detonation. In many ports throughout the world the inspection of empty 
containers is a requirement, for exactly many of the reasons that were 
outlined! What would happen if a terrorist cell in a foreign country 
for example were to take an empty container, place an explosive device 
inside, then load it up and ship it for detonation elsewhere? In the 
Port of Portland ILWU marine clerks inspect many of the empty 
containers, but the practice is mixed from terminal to terminal and 
from operation to operation within terminals. For years, inspection of 
empty containers was regularly done in America's largest seaports; 
however this procedure was abandoned some years ago. Once again, if we 
truly are desirous of creating safe and secure seaports then the full 
return to these inspections is a must.

Non Inspection of Truckers
    The primary threat to American seaports is the ability of truckers 
to gain access to dockside marine container terminals with ``carte 
blanche'' accessibility. THE MAJORITY OF ALL TRUCKERS ENTERING MARINE 
FACILITIES IN AMERICA'S LARGEST PORTS DO SO WITHOUT HAVING TO EXHIBIT 
ANY KIND OF IDENTIFICATION WHATSOEVER. Prior to the terrorist attacks 
in New York and Washington. DC, there was no requirement for truckers 
to produce any identification upon entrance to marine terminal 
facilities. However, even following the attack, only two marine 
container facilities in California now demand ID. upon entrance through 
marine terminal gates, but there still is no match-up of photo ID with 
the truckers themselves because they only have to produce the 
California drivers license number for entrance. Truckers entering docks 
in Portland are not required to produce any form of identification. The 
truckers entering these marine facilities have virtually unobstructed 
access to the entire facility, enabling them to place anything, 
anywhere, at anytime. They regularly leave their trucks to use restroom 
facilities, to visit with other truck drivers, to open empty containers 
for personal inspection, to unlock chassis, etc. Truck drivers entering 
the terminal should be confined to the truck.

The Failure to Provide Secure Cargo Holding Areas
    In many ports throughout the world, the local workforces take the 
cargo (now in steel cargo shipping containers almost all the time) and 
place them in secured ``holding areas, many times located next to 
marine facility entrance gates, awaiting truckers who are allowed only 
in these secured areas to pick up containers, usually on an appointment 
basis. This is an excellent concept that has resulted from years of 
experience realizing that the best way to secure your facility is to 
only allow those on the terminal that have immediate business needs. 
They then realized that to allow trucker's unlimited carte blanche'' 
access to all areas of the facilities was a dramatic error as it 
compounded the problems of security and congestion. What followed was 
the establishment of secure `holding'' for cargo retrieval.

Utilization of Existing Security Personnel
    Minimum manning standards and uniform, training procedures must he 
adopted for the existing professional security personnel to meet the 
growing security needs of our ports.
    The above outlined points are a collection of the most critical 
procedures that must take place if we are to safeguard our American 
seaports. We have worked within these ports every day for many years 
and our experience enables us the opportunity to share with you, the 
Committee, some of the protocols and procedures in a marine 
environment.
    I appreciate the opportunity to submit comments for the record on 
behalf of the International Longshore and Warehouse Union and I am 
prepared to answer any questions from Committee members. I look forward 
to the opportunity to work with you as we solve the problems of 
reviewing security issues so that commerce within our nation's seaports 
may continue uninterrupted in a manner prosperous, safe, and secure for 
many years to come.

    Senator Wyden. That's just the story of my life. Gets right 
to the point. Let me ask you what really just leaps out at me. 
All of you have suggestions and that was why I wanted to 
followup on Mr. Holte's point on unsealed containers. Mr. 
Townley has some proposals with respect to how we get 
additional resources. Our business community has made a number 
of very good suggestions in my view from Nike and the trade 
community and the various broker groups to streamline the bill. 
And I just wonder what's being done here to have more of a 
working partnership between all of you that are at this table?
    I know, I'm not going to put anybody on the spot here. I 
know there are not a lot of ongoing meetings between business 
and labor on these kinds of discussions. I think that's got to 
change. I think we've got to have more of a partnership, a day-
to-day ongoing partnership with respect to the people at this 
table. PNITA does terrific work. I've worked with PNITA all 
through my years in Congress. I think you've got to have labor 
people more involved in these kinds of discussions, because if 
we're going to get it right--we have security provisions that 
are important, people in the community and we're not putting 
business through bureaucratic water torture, and needless red 
tape--we've got to have you all talking. We've got to have 
people like yourselves leading discussions like this, walking 
out there and saying, Let's get together for coffee next 
Tuesday at nine o'clock. Let's followup on the things that 
Gordon Smith and Ron Wyden talked about and let's give them 
some suggestions.
    They're on a conference committee that's dealing with these 
kinds of issues. As far as I can tell the point that Mr. Holte 
is talking about that I got you all to agree on, is that 
everybody agrees we've got to do something about seals. The 
debate is over how you do it. And it seems to me that the labor 
people are volunteering to play a bigger role. I mean they're 
showing that they want to be constructive and work with 
business in this area, and I think we need business people to 
pick up on this.
    So tell me, if you would, what can we do to have a better 
partnership between all of you at this table to better attack 
some of these concerns that all of you here quite acknowledge 
are out there. Mr. Holte.
    Mr. Holte. I just want to say one thing about what you just 
said. We already have people on the docks. We have marine 
clerks and longshoremen that are willing, they're already 
there, to check the seals and to look at the cans. This is on 
the record. I want you to know that. We have got people already 
on the dock ready to do it.
    Ms. Iverson-Summer. Senator, we have been in dialog. We 
have been in dialog with PNITA people, with Customs. After 9/11 
we met and said what can we do to help this situation? We have 
been more than willing to invite you, to engage you in 
conversation as well as with the port. The Portland community, 
the international trade community, is a tight knit group. 
They're very willing to work together. Federal agencies and 
people in our industry are open with ideas and very willing to 
listen to us. We've got the forum so we can do it right here.
    Senator Wyden. I want to hear a report of those kinds of 
discussions, OK? I feel very strongly about this subject. I 
mean I think you know so much is coming up with home grown 
solutions, and we need to have people having these discussions, 
for example, about who can do what with respect to the problem 
of unsealed containers. I think it's clear it's serious and 
none of you suggests otherwise; but it means people are going 
to have to start working with some folks that probably over the 
years they have said, ``Oh, those people are just on the other 
side; there's no possible way we can find common ground.''
    And I just don't buy that. The times are too serious to 
just say we're going to stick with our position paper and you 
can read it at committee and Congress. And in the last 5 years 
we've got some people to set aside their position paper and try 
some new things. Other ideas?
    Mr. Isbell. Senator, there's a lot of containers that move, 
and when you talk about unsealed containers, we also talked 
about sealed containers and a seal can be jeopardized on that 
container. Nike has invested over $50,000 a year in Jakarta 
alone to put different types of locking seals on containers. 
One of those things that is of a major concern for us is this 
24-hour pre-notification. It does leave containers on docks in 
countries that are less sophisticated than the U.S. in terms of 
the security of those containers.
    In fact I was in Jakarta a week ago, and the day I left, 
one of our containers, even though it was supposedly double 
stacked with doors facing end-to-end the container was broken 
into. Did thieves use container information provided to port 
officials? Fortunately our container seal type lock on that 
container identified that that container had been opened and a 
couple of cartons of Nike shoes had been taken out. Staging 
containers at foreign ports is the other problem with the 24-
hour pre-notification process.
    We think the current system works today. Yes, we can invite 
the longshoremen as a vehicle today until the technology can 
arrive to maybe suggest that they take the electronic 
information from the data that is provided to them on the 
manifest with the seal number and develop maybe a good 
effective game plan that increases--doesn't jeopardize 
productivity on the port, but yet allows that seal number to be 
validated against the documentation. Because a container can be 
opened at a foreign port, a new seal can be put on that 
container but that seal number doesn't register. The technology 
that we need, Senator, is intelligent seals that can be 
passively read with technology as the container moves via a 
truck, via a rail car at 40 miles an hour, 50 miles an hour. 
Whatever the speed it could be read and could be validated that 
that container seal has not been tampered with.
    Senator Wyden. Mr. Isbell, not only do I agree with your 
point, I'm going to followup and our staff is going to talk to 
the marine people and see if there's somebody already working 
on this. Because, again, this is how we're going to, you know, 
build this, the value added part of that last answer, because 
part as you know--it's something you talked about in your 
testimony and it is something I agree with--the value added 
part of that last answer is you want to reach out to the 
longshore people and everybody else that you can find to work 
on an issue that we know is indisputably critical; and that's 
technology.
    And to be on this side of the dais, constructing the 
partnership, we're going to try to get you together with some 
of the people at RAINS, which is taking a leading role in 
cybersecurity, and see if you can find someone who's working on 
these intelligent seals as you call them and make sure that 
we've got all hands on deck in terms of providing a working 
solution.
    Mr. Isbell. We would be very welcome to do that. Protection 
of our cargo is just as important as, you know, protection 
against harmful acts to the container.
    Senator Wyden. Mr. Townley, who are you talking to in terms 
of this idea you have for trying to get extra revenue? 
Something your group likes? Are you out talking to labor or 
PNITA or somebody else to show that you're building a 
coalition?
    Mr. Townley. Yes, Senator. The discussions so far have 
involved the federal agencies I mentioned in my talk, the 
presentation this morning, as well as most of the ports up and 
down the river and including Coos Bay.
    Senator Wyden. Ever talk to Mr. Holte about it?
    Mr. Townley. I haven't talked to Mr. Holte yet, and there's 
a couple reasons for that mostly to do with negotiations with 
BMA and the ILWU. I want to make two points that I think are 
important for all of us in the room to be aware of, Senator. 
One is that CPR, the Columbia River Port Rejuvenation, one of 
its top goals is to find, and has been from the day they were 
formed, is to find new channels with the ILWU and ways of 
sustaining continuous communication with them. That's No. 1.
    Point No. 2, sir, the Regional Maritime Security Coalition 
that we're talking about, the concept itself involves getting 
everyone involved in the system thinking in terms of security 
with respect to every single task they perform in moving cargo. 
That means more than just making pilots on the ship or 
stevedores on the docks additional eyes and ears for our 
Federal agencies. It involves keeping them intimately involved 
in planning and procedures and all the processes that we put 
together as equal partners. And it's employing their talents, 
their knowledge and their skills on a continuous basis. That's 
the challenge of the concept that we're trying to improve.
    Senator Wyden. Anything you'd like to add, Ms. Isbell?
    Ms. Isbell. I'd like to just say that I think PNITA might 
be a very good vehicle to start this kind of dialog because 
we're neutral, we're non-partisan. We have a lot of different 
kinds of members. We're already talking to the brokers 
association here in Portland as well as in Los Angeles, and it 
might be a real good way to be the host organization. We have a 
transportation committee that is active in many different 
issues right now. So I would invite that as a vehicle.
    Senator Wyden. I'd love to see you do that. I think, you 
know, I've talked with you all on the channel deepening project 
over the years about getting the environmental people, the 
downriver ports and the labor people into it, and I think 
you're ideally positioned to play a bigger role in terms of 
trying to address some of these regional issues. And certainly 
today we're working on Port Security. But much of what you can 
build in these partnerships would be useful on other issues as 
well in terms of deepening the channel and other kinds of 
concerns.
    In a sense you're the ideal panel to wrap up with. I think 
we have prided ourselves in the Pacific Northwest. We're a long 
way from Washington, DC and much of what we have been able to 
contribute is that we get people like yourselves together and 
we come up with home grown creative ideas that work for us. And 
then people around the country say, Look what they're doing in 
Oregon again. Here they are leading the country. And I think 
there's a chance to do this on Port Security kinds of 
questions.
    You've been terrific to stay with us here I guess well over 
3 hours, and I'm going to followup on this. The business people 
please note I feel very strongly about the points that you have 
made, and I'm committed to making sure that we see that through 
the prism of what it's like for somebody who is a small 
business person and the cargo comes in from Los Angeles or 
somewhere and then makes its way, you know, to Oregon. And 
we've got to make these procedures and processes work to use 
our labor folks. A special thanks to you for being willing to 
be out front on security issues. Your people talked about it 
yesterday. You obviously were well briefed on it.
    Mr. Holte, we thank you. Mr. Townley, you always represent 
your people well. Many creative kinds of ideas.
    Is there anything that you all would like to add further? 
If not, the Subcommittee is adjourned.
    [Whereupon, the hearing adjourned at 1:20 p.m.]

                                  
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