[Senate Hearing 107-1048]
[From the U.S. Government Publishing Office]



                                                       S. Hrg. 107-1048
 
             SECURING OUR TRADE ROUTES: POSSIBLE SOLUTIONS

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

                             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 1, 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, Arkansas
    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 1, 2002.....................................     1
Statement of Senator Wyden.......................................     1
    Prepared statement...........................................     2

                               Witnesses

Bates, Del, Vice-President, Local 19, International Longshore and 
  Warehouse Union................................................    50
    Prepared statement...........................................    51
Brown, Admiral, Erroll M., Commander, 13th Coast Guard District, 
  United States Coast Guard......................................    11
    Prepared statement...........................................    13
Browning, Douglas M., Deputy Commissioner, U.S. Customs Service..    21
    Prepared statement...........................................    23
Cantwell, Hon. Maria, U.S. Senator from Washington...............    16
    Prepared statement...........................................    17
Cushing, John, President, eMODAL.com.............................    65
    Prepared statement...........................................    66
Dinsmore, Mic, Executive Director, Port of Seattle...............    25
    Prepared statement...........................................    27
Farrell, Timothy, Deputy Executive Director, Port of Tacoma......    39
    Prepared statement...........................................    41
Koch, Christopher, President and CEO, World Shipping Council.....    69
    Prepared statement...........................................    71
Marcus, Captain Don, Vice-President, Pacific International 
  Organization of Masters, Mates and Pilots......................    45
    Prepared statement...........................................    48
Murray, Patty, U.S. Senator from Washington......................     3
    Prepared statement...........................................     7
Schorer, Steven, President, L-3 Communications, Ocean Systems 
  Division.......................................................    80
    Prepared statement...........................................    82
Verma, Vikram, CEO, SAVI Technology..............................    60
    Prepared statement...........................................    62
Yap, Robert, Executive Vice-President, PSA Corporation...........    43
    Prepared statement...........................................    44











             SECURING OUR TRADE ROUTES: POSSIBLE SOLUTIONS

                              ----------                              


                          MONDAY, JULY 1, 2002

                                       U.S. Senate,
Subcommittee on Surface Transportation and Merchant Marine,
        Committee on Commerce, Science, and Transportation,
                                                       Seattle, WA.
    The Subcommittee met, pursuant to notice, at 2:30 p.m. in 
the Commission Chambers, Port of Seattle, Pier 69, Hon. Ron 
Wyden, Chairman of the Subcommittee, presiding.

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

    Senator Wyden. The Subcommittee will come to order, and I 
am pleased to be able to be here today in Seattle with my 
colleagues Senator Murray, and Senator Cantwell, who will be 
arriving shortly to convene today's hearing of the Subcommittee 
on Surface Transportation and Merchant Marine as part of the 
Senate Commerce, Science, and Transportation Committee; and it 
is a special pleasure to be here with Senator Murray.
    Senator Murray is particularly influential in this field as 
a Chair of the important Appropriations Subcommittee that deals 
with transportation-related issues, and she has been 
extraordinarily helpful to the people of Oregon and the 
Northwest on those issues. I am just going to have a brief 
opening statement, and then I am going to recognize Senator 
Murray for her complete statement and the substance of the work 
that she is doing on these important issues.
    This is one of a series of hearings that is being held 
around the country to look at port security questions, and it 
comes at a critical time. Right now there is a conference 
between the House and the Senate on legislation to address a 
number of important port security issues.
    I am a member of the conference committee, and I intend to 
use this input to work on the conference committee on issues 
that have special importance to the Pacific Northwest, and of 
course, will be teaming up with Senator Murray in her work on 
the Appropriations Subcommittee.
    It is very clear to me that seaports are tempting targets 
for terrorists, when you look at how open they are, how 
accessible they are, how close to metropolitan areas they are, 
in many instances.
    With respect to Portland and Seattle, both of our ports, 
both of our major Northwest ports are in the top 20 of the 
ports nationwide in terms of moving cargo in and out. It is 
clear that these are issues that that we are going to have to 
spend considerable time on.
    Just this morning it was reported in USA Today, the 
newspaper, it was reported that one of Bin Laden's chief 
lieutenants had papers that were seized that looked to attacks 
on tankers and cruise ships; and this was just described this 
morning. So these are important issues for us in the Pacific 
Northwest.
    There will be a number of issues that we will be examining 
today in Seattle and in Portland; but suffice it to say the 
central challenge here is to strike a balance between making 
sure that there are the national security protections in 
place--the security protections are essential to the people of 
the Pacific Northwest--while at the same time promoting the 
efficiency that is so critical in order to be able to move 
goods in and out of the Pacific Northwest and have the family 
wage employment that is tied to international trade.
    In the Pacific Northwest, something like one out of six 
jobs revolved around international trade. The trade jobs pay 
better than the nontrade jobs, and we have got to find a way to 
address the security issues while at the same time promoting 
the free flow of goods and services into, into our region.
    There will be a number of issues that we will look at that 
can facilitate striking that balance. In particular the 
technology allows us some opportunities to address these issues 
in a cost effective way, and I will be asking our witnesses 
some questions on that, because I also chair on the Commerce 
Committee, the Subcommittee on Technology, and so we will ask 
our witnesses about a number of those issues.
    There will also be some questions with respect to privacy 
rights and the background checks, and others will be essential 
to addressing these issues, and of course, the bottom line is 
to make sure that all of our ports have in place a clearly 
understood, clearly defined security plan, and that will be one 
of the essential issues that will be addressed in the 
conference committee that will be meeting when the Congress 
reconvenes after the Fourth of July.
    So I will ask our recorder to put our full statement in the 
record in its entirety, and I do want to allow Senator Murray 
to make whatever remarks she chooses, but to again express my 
appreciation to her. She is, in fact, the Senate's leader on 
these issues, the Northwest leader on these issues, and I thank 
her for all of the help she is giving our region, and it is 
good to be with you, Senator Murray.
    [The statement follows:]

     Prepared Statement of Hon. Ron Wyden, U.S. Senator from Oregon
    Senators Murray and Cantwell, I would like to thank you for your 
hospitality, and that of the Port of Seattle, in hosting the fifth 
field hearing in series that the Senate Commerce Committee has held on 
the issue of seaport security. Previously our Committee has held 
hearings in Florida, Louisiana, Texas, South Carolina, and I am pleased 
to be chairing the first hearing that we will hold on the West Coast.
    Port security is a critical issue for the Pacific Northwest given 
our region's reliance on trade and maritime commerce. The West Coast/ 
Pacific Rim is the fastest growing and most dynamic segment of 
international trade in this nation, and well over 50-percent of all of 
our overseas trade comes into or leaves our coasts here on the Pacific 
side of our nation.
    The incredible expansion of trade has globalized, for good or bad, 
all aspects of our economy, last year over 9 million truckloads of 
marine containers were shipped through U.S. ports (imports and 
exports), that volume is expected to more than double by the year 2020.
    Most importers and exporters rely on just-in-time cargo deliveries, 
and rarely have more than ten days of inventory before they run out. 
Many of these manufacturers have to purchase their parts from foreign 
sources. So, in essence, this long supply chain spanning the globe, 
functions as a moving warehouse, and disruption of this chain of 
movement would not only harm the people who work in our ports and work 
on transportation, but it would devastate our manufacturers, and our 
suppliers, and every other associated down business. So the stakes are 
enormous in what we do to ensure the protection of our overseas trade.
    Since September 11th, we have looked very intently at the maritime 
trade of our nation. The protection of our maritime boundaries poses 
unique challenges because of the breadth of our coastline, the 
proximity of the public to maritime businesses and endeavors, and the 
sheer volume of shipments of containerized cargoes and shipments of 
bulk petroleum product and hazardous materials. Literally, we have 
thousands of tons of hazardous cargoes, originating from foreign 
nations being transported by foreign vessels, but being transported 
right through the heart of many U.S. cities. Additionally, the maritime 
trade is very open, and we do not have the best or most reliable 
information about shipments, vessels, or the crew members who man those 
vessels. It is a difficult issue to address.
    Lloyd's List International reported that a NATO country's 
intelligence service has identified 20 merchant vessels believed to be 
linked to Osama bin Laden. Those vessels are now subject to seizure in 
ports all over the world. Some of the vessels are thought to be owned 
outright by bin Laden's business interests, while others are on long-
term charter. The Times of London reported that bin Laden used his 
ships to import into Kenya the explosives used to destroy the U.S. 
embassies in Kenya and Tanzania.
    Several months ago, a suspected member of the Al Qaeda terrorist 
network was arrested in Italy after he tried to stow-away in a shipping 
container heading to Toronto. The container was furnished with a bed, a 
toilet, and its own power source to operate the heater and recharge 
batteries. According to the Toronto Sun, the man also had a global 
satellite telephone, a laptop computer, an airline mechanics 
certificate, and security passes for airports in Canada, Thailand and 
Egypt. We have had repeated information that has indicated that 
terrorists may attempt to enter into the U.S. through maritime means. 
So we know of the threat, and we know that we need to work together to 
address this crucial issue.
    We need to work closely with all aspects of the maritime and trade 
communities to coordinate a policy that can help address some of the 
glaring problems and issues that face. Tomorrow, the Subcommittee will 
be taking this show on the road, to visit Portland, and the issues in 
Portland a river port, are different than they are here in Seattle, so 
we need to have a certain flexibility to recognize and react to the 
different threats and circumstances.
    In particular, today the Subcommittee is focusing on how we might 
be able to work with foreign nations to help coordinate law 
enforcement. If we can agree to station Customs inspectors in foreign 
ports, we can get the benefit of whatever law enforcement actions they 
are working on, and vice-versa. I know that Customs has started down 
this path, but we need to see how it might work, and whether it is 
feasible.
    Using technology to create secure systems of transportation will be 
critical. Right now, only 2-3 percent of inspected cargo is inspected 
by customs. We need to develop better systems to identify and screen 
suspicious cargo.
    We also need to work with the private sector to see what can be 
done to encourage the development of secure systems for the movement of 
cargo. What can the government do to encourage technology, what can we 
do leverage the security of the private sector. I know we have some 
witnesses that can address some of these issues, and I look forward to 
hearing from them.

                STATEMENT OF HON. PATTY MURRAY, 
                  U.S. SENATOR FROM WASHINGTON

    Senator Murray. Thank you very much, Mr. Chairman, and 
welcome to Washington State. We are delighted to have you here 
today, and I appreciate the opportunity to participate in 
today's hearing.
    As Senator Wyden said, this is one of several hearings that 
is being held in several ports around the Nation, and these 
hearings are designed to help us respond to the new security 
challenges facing our ports since September 11.
    Our solutions to these challenges must be comprehensive, 
but they also must be flexible enough to reflect the unique 
elements of each port--including those here in the Pacific 
Northwest.
    No survey of our nation's port systems would be complete 
without a look at what is happening in Washington State. We 
provide a unique perspective on the challenges and the 
solutions.
    To help us do that, we have assembled representatives from 
the domestic port community, government, foreign seaports, 
technology companies and organized labor to share their ideas 
on improving security. It is going to take all of us working 
together to implement good solutions, so I want to thank all of 
the witnesses for being here, and I want to extend a special 
welcome to one of our witnesses, Mr. Robert Yap. He is the 
executive vice-president of PSA Corporation which handles the 
Port of Singapore and other international ports. He is 
accompanied today by Mr. Vincent Lim, who is deputy president 
of PSA, and welcome you to the Puget Sound.
    Their perspective from a foreign port will help us 
understand how various proposals would affect our ability to 
trade with other countries. As we work to improve our security, 
we do not want to penalize the foreign shippers who use our 
ports, or we will pay the price in lost jobs and commerce.
    Washington State is in a unique position to help shape our 
Nation's seaports security work. Washington is the most trade 
dependent State in the Nation, and our seaports are the life 
blood of our economy.
    The Ports of Tacoma and Seattle together form the third 
largest load center for containerized cargo in the United 
States; 1.8 million containers pass through this region each 
year. That cargo generates billions of dollars of goods each 
day and supports tens of thousands of good paying, family-wage 
jobs.
    The Puget Sound also has marine security challenges that 
other regions do not. We share a land and sea border with 
Canada. We have several important defense installations that 
share our waterfront, and we have the largest passenger ferry 
system in the country.
    In the Northwest, we have to balance all of these security 
needs with the continuing need to keep cargo moving 
efficiently. I want to outline the challenge before us, talk 
about the steps we have taken so far, and lay out some 
principles that I feel we should have for a national solution.
    For decades, we have built our port infrastructure and 
procedures around economic efficiency, and we have done a 
pretty good job. The people in this room have helped make our 
port system efficient, and that has helped our economy and our 
communities. But since September 11th, we now need to add 
another element to the equation, security. We have got to 
realign our port system around efficiency and security, and we 
really are starting from scratch.
    There are few standards for handling or inspecting foreign 
cargo as it enters our ports. Often, we do not know where a 
container has come from or what is inside. There are many 
players involved in moving goods to and from our ports, 
including buyers, sellers, banks, freight forwarders, inland 
carriers, foreign seaports, carriers, governments and 
consolidators. The wide range of participants in itself adds to 
our security challenge.
    Because we are starting from scratch and involving so many 
players, our response must be prompt, and it must be 
comprehensive. We cannot wait 10 years for one group or agency 
to develop a plan. So I hope today's hearing will help lay the 
foundation for us to meet these challenges together.
    We must be mindful that it does not slow down the progress 
we have made in expanding the productivity and efficiency of 
our ports. The United States receives some $750 billion of 
cargo at 360 seaports every year. That is roughly one-fifth of 
the U.S. economy. We do not want to gamble with such an 
important part of our way of life.
    In Congress, we have been working on seaport security for 
several months, and I want to briefly summarize some of the 
things we have already accomplished. First, the Puget Sound is 
going to get its own Marine Safety and Security Team through 
funding I secured in last year's Defense Supplemental 
Appropriations Bill. We are going to receive one of the first 
of the four teams in the Nation trained to operate fast 
response boats that can intercept ships carrying suspicious 
cargo well before they reach the port or the coast. The 
commissioning ceremony will be two days from now on Wednesday.
    I also included $93.3 million in the Defense bill for port 
security grants to help our ports pay for security assessments, 
enhanced facilities and operations and create better security 
partnerships. Those grants were released on June 17th. They 
provide $5.7 million for seaports and maritime security 
activities in Washington State, including $653,000 to assist 
security efforts on the Columbia River.
    In addition, I have used my position as Chair of the Senate 
Transportation Subcommittee to review our Government's security 
efforts. I have held hearings to examine the proposed budgets 
for the Coast Guard and for the new Transportation Security 
Agency. In May, I held a hearing on cargo security in 
Washington, D.C., and in April I held an Appropriations 
Subcommittee field hearing on this topic right here in this 
room. I have also attended a full set of Senate Appropriations 
Committee hearings on homeland security and seaport security.
    Because we have had an overwhelming number of applications 
for the original funding, I included an additional $200 million 
in this year's appropriations bill for seaport security grants, 
and $28 million for an initiative we are calling Operation Safe 
Commerce. That is an initiative at the Nation's three largest 
container ports, which includes the Ports of Seattle and 
Tacoma, to test and deploy a program that applies a system-wide 
approach to seaport security. It calls for all stakeholders to 
develop clear security standards from the point of origin to 
final destination. These standards would provide advanced 
information about cargo and ways to monitor it during transit. 
The supplemental also includes $59 million for the U.S. Customs 
Service Container Security Initiative which has similar goals 
to our Operation Safe Commerce.
    Finally, let us not forget that this Committee passed the 
Port and Maritime Security Act in December of last year. 
Senator Wyden has explained that to you. We are grateful to 
those on the conference committee who will be working with us 
to get that out.
    After looking at the challenging work so far, I would like 
to close by laying out a few principles for policy solutions. 
First, our solution must involve all of the stakeholders in the 
shipment of goods, both private and public, foreign and 
domestic. By developing a plan together, we can establish the 
trust and cooperation they will need to carry it out.
    The nature of container traffic makes it difficult to 
secure the trade route. Foreign manufacturers, points of 
origin, shippers, designation port authorities and organized 
labor are all critical elements in the shipping chain, and they 
are our best allies to securing the trade lanes. Without the 
cooperation of all of these players, any system we create will 
be vulnerable.
    Secondly, we must create clear standards where none exist 
today, and those standards must do two things. They must 
provide reliable information on cargo to everyone in the supply 
chain. That way officials at home and abroad can identify 
suspicious cargo and quickly determine if it poses a security 
risk. These standards must also ensure good communication among 
all the players in the system.
    Third, the cost of these improvements must be shared so 
that no single entity in the system is burdened with ensuring 
the security of the system as a whole. Because most of the 
players are private businesses, concerned with their bottom 
line, our approach should provide economic incentives to 
encourage everyone to work within the system. It must include a 
way for safe, reliable players to have better access to our 
markets and to remain active even if an incident should occur.
    A complete shutdown in the cargo container business could 
have a severe impact on our economy, a much larger impact than 
the one we saw when the aviation industry was grounded after 
September 11th. I think most of the private entities who are 
involved in trans-shipment of commercial goods would pay a 
premium for such an incentive.
    Fourth, our new system should not disadvantage American 
ports in this highly competitive environment.
    So our port security plans need to involve all 
stakeholders, must create international standards for 
information and communication, must spread the cost around, and 
must not disadvantage American ports.
    I recognize that is a tall order, but I think by working 
together, we can meet all those principles.
    One thing that will would help would be more interest and 
support from the current administration. Customs, INS, and the 
Coast Guard are all doing a great job of trying to address the 
vulnerability of our seaports, but this initiative needs more 
support from the top right now. So far, the Transportation 
Security Administration has only doled out responsibilities and 
has not yet developed any comprehensive approach that I believe 
we need.
    In fact, the additional $200 million in the pending 
supplemental for seaport security grants, and the money in the 
supplemental for our Operation Safe Commerce and for Customs 
Container Security Initiative, are not supported by the 
President, and he has said that he will veto any Appropriations 
bill that is above what he requested. So I hope that we can get 
a more cooperative approach from the White House and the TSA to 
help us and our ports make these needed improvements.
    One final thought. These initiatives are urgent. We cannot 
wait to do this. As I mentioned before, I helped to craft the 
Operations Safe Commerce Initiative that is now pending 
approval along with the rest of the 1902 Supplemental 
Appropriations bill.
    An important aspect of this government investment will be 
the requirement that government establish some standards for 
how we will manage these unique security challenges.
    But what we do in Congress will not be enough. We need 
every stakeholder to step up to the plate and begin addressing 
these issues. We are going to be your partner, but much of this 
initiative has to come from within the industry.
    Today, as I think you are all aware, the contract between 
the ILWU and PMA expires. A quick and fair resolution of a new 
contract is in everybody's interest. I mention this at this 
time because the discussions surrounding the contract 
negotiations have helped all of us appreciate the stakes, for 
our economy and our families, in continuing the efficient trade 
of goods and services across the Pacific. A disruption from a 
contract dispute would be costly. A disruption caused by a 
terrorist act will be lethal.
    We need to act together, despite whatever disagreements we 
might have, to make our ports, and by extension our economy 
more safe and more secure, and that is why I believe we need to 
act now.
    So again, I thank all of our witnesses for being here 
today, for Senator Wyden for coming and for the Commerce 
Committee having this really important hearing today.
    [The prepared statement of Senator Murray follows:]

               Prepared Statement of Hon. Patty Murray, 
                      U.S. Senator from Washington
    Thank you Mr. Chairman. I appreciate the opportunity to participate 
in today's hearing.
    This is one of several hearings being held in port communities 
around the nation. These hearings will help us in the Senate respond to 
the new security challenges facing our ports in the wake of September 
11th.
    Our solutions to these challenges must be comprehensive. But they 
must also be flexible enough to reflect the unique elements of each 
port--including those here in the Pacific Northwest.
    No survey of our nation's port systems would be complete without a 
look at Washington state. We provide a unique perspective on challenges 
and solutions.
    To help us do that, we've assembled representatives from the 
domestic port community, government, foreign seaports, technology 
companies, and organized labor to share their ideas on improving 
security. It's going to take all of us working together to implement 
good solutions so I want to thank all of the witnesses for being here 
today.
    I want to extend a special welcome to one of our witnesses--Mr. 
Robert Yap--the executive vice president of the PSA Corporation, which 
handles the Port of Singapore and others international ports. He is 
accompanied today by Mr. Vincent Lim, Deputy President of PSA. Welcome, 
Mr. Lim. Their perspective--from a foreign port--will help us 
understand how various proposals would affect our ability to trade with 
other countries. As we improve our security, we don't want to penalize 
the foreign shippers who use our ports, or we'll pay the price in lost 
jobs and commerce.
    Washington state is in a unique position to help shape our nation's 
seaport security work. Washington is the most trade dependant state in 
the nation, and our seaports are the life blood of our economy.
    The Ports of Tacoma and Seattle together form the third largest 
load center for containerized cargo in the United States. 1.8 million 
containers pass through this region each year. That cargo generates 
billions of dollars of goods each day and supports tens of thousands of 
good paying, family-wage jobs.
    The Puget Sound also has marine security challenges that other 
regions do not. We share a land and sea border with Canada. We have 
several important defense installations that share our waterfront. And 
we have the largest passenger ferry system in the country.
    In the Northwest, we must balance all of these security needs with 
the continuing need to keep cargo moving efficiently. I want to outline 
the challenge before us, talk about the steps we've taken so far, and 
finally lay out some principles for a national solution.
    For decades, we've built our port infrastructure and procedures 
around economic efficiency, and we've done a good job. Many of the 
folks in this room have helped make our port system efficient and 
that's helped our economy and our community. But since September 11th, 
we now need to add a new element to the equation--security. We've got 
to realign our port system around efficiency and security. We're really 
starting from scratch.
    There are few standards for handling or inspecting foreign cargo as 
it enters our ports. Often, we don't know where a container has come 
from--or what's inside. There are also many players involved in moving 
goods to and from our ports including--buyers, sellers, banks, inland 
carriers, foreign seaports, carriers, governments, and consolidators. 
The wide range of participants in itself adds to the security 
challenge.
    Because we're starting from scratch and involving so many players, 
our response must be prompt and it must be comprehensive. We can't wait 
10 years for one group or agency to develop a plan. I hope today's 
hearing will help us meet these new challenges together.
    We must be mindful that it does not slow down the progress we have 
made in expanding the productivity and efficiency of our ports. The 
United States receives some $750 billion worth of cargo at 360 seaports 
every year. That's roughly one-fifth the U.S. economy. We don't want to 
gamble with such an important part of our economy.
    In Congress, we've been working on seaport security for several 
months, and I want to so briefly summarize what we've accomplished. 
First, the Puget Sound will get its own Marine Safety and Security Team 
because of funding I secured in last year's Defense Supplemental 
Appropriations Bill. We will receive one of the first of four teams in 
the nation trained to operate fast response boats that can intercept 
ships carrying suspicious cargo well before they reach the port or even 
the coast. I'm pleased to report that the commissioning ceremony is 
this Wednesday.
    I also included $93.3 million in the Defense bill for port security 
grants. This money will help ports pay for security assessments, 
enhance facilities and operations, and create better security 
partnerships. These grants were released on June 17. They provide $5.7 
million for seaports and maritime security activities in Washington 
state including $653,000 to assist security efforts on the Columbia 
River.
    In addition, I've used my position as Chairman of the Senate 
Transportation Subcommittee to review our government's security 
efforts. I've held hearings to examine the proposed budgets for the 
Coast Guard and for the new Transportation Security Agency. In May, I 
held a hearing on cargo security in Washington, D.C. In April, I held 
an Appropriations Subcommittee field hearing on this topic--in this 
very chamber. I also attended a set of full Senate Appropriations 
Committee hearings on homeland security where seaport security was 
discussed.
    Because we've had an overwhelming number of applications for the 
original funding, I included an addition $200 million in this year's 
Senate Supplemental Appropriations bill for seaport security grants. I 
also included $28 million for an initiative called ``Operation Safe 
Commerce'' in the Supplemental. This is an initiative at the nation's 
three largest container ports--which includes the Ports of Seattle/
Tacoma--to test and deploy a program that applies a system-wide 
approach to seaport security. The initiative calls for all stakeholders 
to develop international standards from the point of origin to the 
final destination. These standards would provide advanced information 
about cargo and ways to monitor the cargo during transit. The 
Supplemental includes $59 million for the U.S. Customs Service 
Container Security Initiative, which has similar goals to ``Operation 
Safe Commerce.''
    Finally, let's not forget that this Committee passed the Port and 
Maritime Security Act in December of last year. That legislation would 
improve cooperation among all the stakeholders, force ports to evaluate 
their security needs, better secure port facilities, require 
information about cargo shipments be evaluated before they're granted 
entry into a U.S. port, improve reporting of cargo and crew, and 
authorize grants to ports to help comply with these new mandates. That 
bill is now in conference with the House.
    After looking at the challenge and our work so far, I'd like to 
close by laying out a few principles for policy solutions. First, our 
solution must involve all the stakeholders in the shipment of goods, 
both private and public, foreign and domestic. By developing a plan 
together, we can establish the trust and cooperation we'll need to 
carry it out. The nature of container traffic makes it difficult to 
secure the trade route. Foreign manufactures, ports of origin, 
shippers, destination port authorities, and organized labor are all 
critical elements in the shipping chain. They are our best allies to 
securing the trade lanes. Without cooperation among all of these 
players, any system we create will be vulnerable.
    Second, we must create international standards, where none exist 
today. Those standards must do two things. They must provide reliable 
information on cargo to everyone in the supply chain. That way 
officials at home and abroad can identify suspicious cargo and quickly 
determine if it poses a security risk. These standards must also ensure 
good communication between all the players in the system.
    Third, the costs of these improvements must be shared--so that no 
single entity in the system is burdened with ensuring the security of 
the system as a whole. Because most of the players are private 
businesses--concerned with the bottom line--our approach should provide 
economic incentives to encourage everyone to work within the system. It 
must include a way for safe, reliable players to have better access to 
our markets and to remain active even if an incident should occur.
    A complete shutdown in the cargo container business could have a 
severe impact on our economy--a much larger impact than the one we saw 
when the aviation industry was grounded immediately after September 
11th. I think most of the private entities who are involved in trans-
shipment of commercial goods would pay a premium for such a incentive.
    Fourth, our new system should not disadvantage American ports in 
this highly competitive environment.
    So as I see it, port security plans need to involve all 
stakeholders, must create international standards for information and 
communication, must spread the costs around, and must not disadvantage 
American ports.
    I recognize that's a tall order, but working together I think we 
can meet those principles.
    One thing that would help would be more interest and support from 
the current Administration. Customs, the INS, and the Coast Guard are 
all doing a great job of trying to address the vulnerability of our 
seaport, but this initiative needs more support from the very top. So 
far, the Transportation Security Administration has only doled out 
responsibilities. It hasn't yet developed the comprehensive approach 
that is needed to properly secure our trade routes.
    In fact, the additional $200 million in the pending Supplemental 
for seaport security grants, and the money in the Supplemental for 
``Operation Safe Commerce'' and for the Customs' ``Container Security 
Initiative'' are not supported by the President. The President has said 
he will veto any Appropriations bill that is above what he requested. 
So I hope we'll have a more cooperative approach from the White House 
and the TSA to help us and our ports make these needed improvements.
    One final thought. These initiatives are urgent. We cannot wait to 
do this. As I mentioned before, I have helped to craft the ``Operation 
Safe Commerce'' Initiative that is now pending approval along with the 
rest of the `02 Supplemental Appropriations bill.
    An important aspect of this government investment will be the 
requirement that government establish some standards for how we will 
manage these unique security challenges.
    But what we do in Congress will not be enough--we need every stake 
holder: labor, the shipping lines, the shippers, and foreign and 
domestic ports to step up to the plate and begin addressing these 
issues. We will be your partner, but much of this initiative must come 
from within the industry.
    Today, the contract between the ILWU and the PMA expires. A quick 
and fair resolution of a new contract is in everybody's interest. I 
mention this at this time because the discussions surrounding the 
contract negotiations have helped everyone appreciate the stakes--for 
our economy and our families--in continuing the efficient trade of 
goods and services across the Pacific. A disruption resulting from a 
contract dispute would be costly. A disruption caused by a terrorist 
act could be lethal.
    We must act together, despite whatever other disagreements we might 
have, to make our ports--and by extension or economy--more safe and 
secure. And we must act now. So I again thank all of the witnesses and 
everyone here today. I look forward to hearing your testimony.
                                 ______
                                 
    As Chair of the Senate Transportation Appropriations Subcommittee, 
which oversees the Coast Guard's budget, Sen. Murray has been a strong 
advocate for the Coast Guard. Last year, Murray succeeded in increasing 
the Coast Guard budget by 10-percent, improving the service's search 
and rescue and communications capabilities, as well as providing a pay 
raise for personnel.
    Already this year, Murray has been briefed by the Customs Service 
and Coast Guard on port security and cargo security, and has held 
hearings on those topics both in Seattle and Washington, DC.
    Following are some of the successes Sen. Murray has had in her 
efforts to support the Coast Guard.
FY 2002 Transportation Appropriations Bill:
    $6 million was provided within the Coast Guard AC&I 
        programs for communications equipment that enhances the Coast 
        Guard's ability to provide Port Security including: Global 
        Maritime Distress and Safety System (GMDSS); Defense Message 
        System Implementation; and, Commercial Satellite 
        Communications. These items were all part of the 
        Administration's request made prior to 9-11.
FY 2002 Supplemental (within the Department of Defense FY2002 Bill):
    $93.3 million was provided for Port Security grants within 
        Transportation Security Administration's (TSA's) appropriation. 
        These grants were intended to supplement current security 
        initiatives and assist the states with security assessments and 
        enhancements.
    $41.3 million was provided for Anti-terrorism activities, 
        including Marine Safety and Security Teams (MSST) within the 
        Coast Guard Operating Expenses. Funding was provided for an 
        additional 348 full-time permanent positions for four MSST's. 
        While the Bush Administration only requested 2 MSSTs, Sen. 
        Murray insisted that 4 teams be funded. Further, Murray 
        directed that two of those teams be permanently stationed at 
        locations with the greatest concentration of naval military 
        assets--Seattle, Wa. and Norfolk, Va. The first MSST will be 
        commissioned in the Puget Sound on Wednesday, June 3, 2002.
    $2.4 million was provided to enhance the Coast Guard's 
        Strike Teams to respond to chemical & biological incidents.

FY 2002 Supplemental (For Further Recovery from and Response to 
        Terrorist Attacks): (this bill is currently in a House-Senate 
        conference committee)
    $200 million was provided for Port Security Grants for TSA 
        within the Senate Passed Supplemental. The House bill provides 
        $75 million.
    $27.9 million was provided for TSA for the ``Operation Safe 
        Commerce'' initiative for the purpose of expediting the testing 
        and deployment of the program. This is to be completed through 
        pilot projects involving the three largest container load 
        centers, which includes Seattle/Tacoma. The House bill has no 
        similar provision. The elements of these initiatives include:
         Secure packing requirements for loading containers;
         Auditable security standards at docks, manufacturing plants or 
        shipping facilities;
         Mechanical and/or electronic seals and devices intended to 
        identify containers whose security has been compromised;
         Integrated communications systems to track cargo throughout 
        the entirety of its journey;
         The transmission of tracking data in accessible format;
         Demonstration of ``secure trading lanes'' that ensures 
        container security from point of origin to point of 
        destination; and
         Establishing new requirements for all participants in the 
        supply chain that will allow federal agencies to get 
        information to appropriately target suspicious cargo.

    $59 million is provided within the Customs Service for the 
        Container Security Initiative. Money will be provided to the 20 
        largest seaports in the United States and 3 in Canada to help 
        them better monitor suspicious cargo. That definition would 
        include the Ports of Tacoma and Seattle. It urges technological 
        solutions to our security problem.
    $20 million was provided for TSA for incident training for 
        ports to train and exercise port security personnel. The House 
        bill has no similar provision.
    An additional $129 million above the Administration's 
        request was provided for Coast Guard Operating Expenses. These 
        additional funds were provided to expedite Port Vulnerability 
        Assessments among other things. The House bill provides $12 
        million more than the Administration`s request for Port 
        Vulnerability Assessments.
    The other Port Security projects within Coast Guard 
        Operating Expenses include, Maritime Domain Awareness, 
        Information and Communications, Sea Marshals, Maritime Security 
        Patrols, Security Readiness and Planning, Strike Teams, and two 
        additional MSST's. The Administration's request makes no 
        reference to any of these projects for the Supplemental; 
        however, all were included in their FY-2003 request.
    $12 million is provided within Coast Guard AC&I account for 
        Homeland Security Response Boats (87 foot). The House bill also 
        provides $12 million. This amount is projected to buy 6-8 
        boats, 2 of which are bound for Puget Sound (Bremerton and Port 
        Angeles).
    $18 million is provided within Coast Guard AC&I for various 
        communications projects that will enhance Port Security. The 
        House bill has no similar provision.
    $9.4 million is provided within Coast Guard AC&I for 
        Maritime Domain Awareness Information Management. The House 
        bill has no similar provision.

    Senator Wyden. Senator Murray, thank you for an excellent 
statement and for all the leadership that you have provided and 
the great chance to team up with you on these issues.
    Our first panel is going to be Rear Admiral Erroll Brown, 
Commander, 13th Coast Guard District, United States Coast 
Guard. He is accompanied by Captain Danny Ellis, Captain of the 
Port of Seattle, and we also have on this panel Mr. Douglas 
Browning, Deputy Commissioner, U.S. Customs Service, 
Washington, D.C., and Mr. Mic Dinsmore, Executive Director of 
the Port of Seattle. So we welcome all of you gentlemen. We are 
going to put your prepared remarks into the hearing record in 
the entirety. I know there is also a biological compulsion at 
Congressional hearings to read word for word your statements. I 
understand that. If you could just, in the interest of time, 
highlight the high points for us, we will put your statement 
into the record in its entirely, and that will leave plenty of 
time.
    Senator Murray. Mr. Chairman, this is Captain Ellis' very 
first day on the job, so we welcome you.
    Senator Wyden. Captain Ellis, welcome, and we are pleased 
that you accompanied Admiral Brown. Let us proceed, right to 
you, Admiral Brown.

          STATEMENT OF REAR ADMIRAL ERROLL M. BROWN, 
COMMANDER, 13TH COAST GUARD DISTRICT, UNITED STATES COAST GUARD

    Admiral Brown. Good afternoon, Mr. Chairman, Senator 
Murray, Senator Cantwell. Thank you for the opportunity to 
speak to you today about the Coast Guard's role in maritime 
approaches, and I would like to express my appreciation for the 
Senate support of the 209 million dollars in the first homeland 
security supplemental.
    As you mentioned, Mr. Chairman, I am accompanied today by 
Captain Danny Ellis, Puget Sound. Captain Ellis assumed command 
Friday, so has been on the job about 72 hours, and so far, so 
good.
    Clearly, the waterways of the Pacific Northwest are 
critically important gateways to the global economy. The marine 
transportation system in this region contributes substantially 
to the economic growth and stability of our Nation, the quality 
of life of our citizens and our Nation's security. Maintaining 
effective maritime domain awareness of this vast geographic 
watery region, encompassing nearly 3,500 square miles, is the 
centerpiece of our efforts to achieving Maritime Homeland 
Security.
    Maritime domain enables knowledge of people, cargoes and 
vessels to filter potential threats from the stream of 
legitimate commerce. This requires international and 
multiagency cooperation at all levels of government, as well as 
strong partnerships with the private sector.
    The Coast Guard has a long standing established 
relationship with the maritime communities in the Pacific 
Northwest. Using a model of awareness, prevention, response and 
consequence management, we have worked closely with our 
integral partners to ensure the safety, and now the security of 
our ports and waterways.
    Long before 9-11 we were already developing an overarching 
port security strategy which set the tone for leveraging the 
maritime community in its entirety, both public and private, as 
part of the solution to security--not just terrorism, but any 
illegal activity.
    In 1996, Puget Sound established a Harbor Safety Committee 
with representatives from Federal, State and local agencies, 
including the Coast Guard, Maritime Administration, U.S. Army 
Corps of Engineers, Washington State Department of Ecology, and 
Washington State Ferries, numerous maritime industry trade 
associations, environmental and aquaculture conservation 
groups, Indian tribes, and Washington Public Ports Association 
which represents the combined interests of the ports of 
Seattle, Tacoma, Bellingham, Olympia, Everett and Port Angeles. 
This body has engaged on numerous maritime safety and security 
issues, and provided an excellent foundation for the Captain of 
the Port in establishing nine regional port security 
committees, which have served as a significant avenue for 
region-wide security information flow since September 2001. The 
port security committees collaborate on security strategies, 
share information and improve security postures. We continue to 
partner with U.S. Customs, Washington State Department of 
Agriculture, the Federal Railroad Administration and Washington 
State Patrol to inspect great numbers of containers and insure 
cargo manifests and bills of lading are correct.
    A Memorandum of Understanding between Customs and the U.S. 
Coast Guard enables us to combine resources and eliminate 
duplicative effort in order to improve container and border 
security measures. While our combined efforts are critical in 
ensuring the security of our Maritime Transportation System and 
U.S. border, a container security inspection program must 
include international engagement to foster point of origin 
control and inspection of containers as they move.
    The Coast Guard maintains strong working relationships with 
the Navy and Law Enforcement. The Coast Guard continues to 
coordinate with other U.S. and Canadian Federal agencies who 
are instrumental in ensuring the execution of the Ridge/Manley 
``Smart Border Declaration'' and of the entire ``30-Point 
Action Plan.'' The Cooperative Vessel Traffic Service jointly 
operated by the U.S. and Canadian Coast Guards since 1979 is a 
critical traffic management tool for this complex waterway 
system between Washington State and British Columbia, and is a 
model of bilateral international cooperation.
    The system serves as a critical component serving enhanced 
maritime domain awareness--the overall knowledge of vessels, 
cargoes, and people, thus greatly reducing the threat posed by 
crews and passengers of vessels through advanced reporting and 
knowledge. We enjoy an equally close relationship with 
Transport Canada Marine Safety in the conduct of the Port State 
Control Program regarding eliminating substandard or suspicious 
foreign vessels entering our respective waters.
    In conclusion, the United States Coast Guard in the Pacific 
Northwest is an integral component of our Nation's homeland 
security efforts. The massive flow of people and goods across 
our maritime borders helps fuel our economy, but also serves as 
a potential conduit for terrorists and weapons of mass 
destruction. We are a principal agency in defending our 
Nation's maritime borders and ensuring the integrity of the 
maritime transportation system.
    The security of the several ports within Puget Sound, and 
particularly the Ports of Seattle and Tacoma has improved. One 
of the specific challenges we face today is balancing the 
security and economic needs of our country. Our Nation's 
harbors, including Puget Sound, are accessible to thousands of 
maritime workers and ships from all over the globe. We must 
filter out potential terrorist activities from the massive 
stream of legitimate commerce.
    A key success factor is improved awareness of the cargo 
entering our country and the people who own, operate and 
service the thousands of vessels entering the U.S. each year. I 
am confident that our successes can be directly attributed to 
outstanding and aggressive partnering resulting in increased 
information sharing, heightened awareness and implementation of 
preventive measures. We will make the best use of our existing 
resources and resources requested by the President to make sure 
that people and goods move safely.
    The Coast Guard is committed to the protection of our 
Nation against terrorist threats as well as maintaining our 
Search and Rescue capabilities and the other missions. Thank 
you for the opportunity to share the initiatives that the Coast 
Guard and the Pacific Northwest are engaging in today, and for 
your continuing support of the Coast Guard.
    I will be happy to answer any questions.
    Senator Wyden. Admiral Brown. Thank you. Excellent 
statement.
    [The prepared statement of Admiral Brown follows:]

  Prepared Statement of Rear Admiral Erroll M. Brown, Commander, 13th 
            Coast Guard District, United States Coast Guard
    Good afternoon Mr. Chairman and distinguished members. My name is 
Rear Admiral Erroll M. Brown and I am Commander of the Thirteenth Coast 
Guard District headquartered in Seattle, Washington. On behalf of the 
Commandant, Admiral Thomas Collins, thank you for the opportunity to 
speak to you today about the Coast Guard's role in securing our ports 
and waterways and maritime approaches.
Unique Challenges of Pacific Northwest Port Security
    The waterways of the Pacific Northwest are critically important 
gateways to the global economy. The marine transportation system in 
this region contributes substantially to the economic growth and 
stability of our nation, the quality of life of our citizens and our 
nation's security. The Pacific Northwest is a gateway to the Pacific 
trade routes to Asia. Over 5,000 foreign vessels transit our waterways 
each year. Approximately 50-percent of those proceed to Canadian ports, 
while nearly 2,500 vessels proceed to and from Puget Sound ports 
transporting over 1.8 million containers through the Seattle-Tacoma 
port complex each year making it the third largest container cargo 
complex in the United States. In addition, 12 billion gallons of oil 
move through the Strait of Juan de Fuca to four major U.S. refineries, 
which are crucial to the national economy, and provide all of the 
refined products used for civilian and military use in the north west. 
Over 600,000 recreational boaters with 250,000 registered recreational 
boats enjoy the waters in and around Washington State. Some of these 
boats have served as smuggling platforms and could potentially mask 
terrorists' movement. The Washington State Ferry System transports over 
26 million passengers and 11 million vehicles on about 180,000 transits 
a year and is the largest ferry system in the U.S. Our growing cruise 
industry, with over 230,000 passengers last year, is forecast to triple 
in volume over the next few years. Ensuring the safety and security of 
this massive movement of people requires extensive, collaborative 
effort. In addition, the Puget Sound is home to one of the largest 
concentrations of U.S. Naval Forces in the country. These strategic, 
national defense assets, must maintain the highest levels of security 
against a potential enemy. By all forecasts, use of these waterways for 
national defense, commerce, fishers, commuters, travelers, and 
recreation will continue to grow. Protecting our marine transportation 
system and critical infrastructure, including our ports and the cargo 
they convey from terrorist activities is a tremendous challenge.
    Compared to other U.S. ports, the distances and geography of this 
region are significant. From the open ocean, it is 123 miles to Seattle 
and 147 miles to Tacoma each direction, which equates to one-way 
transit times of six to ten hours. Washington State and Canada share 
approximately 150 nautical miles of maritime border accessible to 
anyone with a waterborne craft ranging from a jet ski to a commercial 
ship, complicating monitoring and enforcement of maritime laws. With 
distances of 12 to less than three miles between Canada and the United 
States, the San Juan Islands present a major challenge for law 
enforcement officials providing an area where smugglers can quickly 
cross the maritime border with illegal currency, drugs, weapons, and 
migrants.
    Maintaining effective Maritime Domain Awareness (MDA) of this vast 
geographic water region, encompassing nearly 3,500 square miles, is the 
centerpiece of our efforts to prevent threats from reaching our shores 
and achieving maritime homeland security. MDA enables knowledge of 
people, cargoes, and vessels to filter potential threats from the 
stream of legitimate commerce. This requires international and multi-
agency cooperation at all levels of government as well as strong 
partnerships with the private sector.
Cooperative Approaches to Maritime Security
    The Coast Guard has a long-standing, established relationships with 
the maritime communities in the Pacific Northwest. Using a model of 
awareness, prevention, response, and consequence management, we have 
worked closely with our integral partners to ensure the safety, and now 
the security of our ports and waterways in the Pacific Northwest. Long 
before 9-11 we were already developing an overarching port security 
strategy, which set the tone for leveraging the maritime community in 
its entirety, both public and private, as part of the solution to 
security-not just terrorism, but any illegal activity.
    The Department of Defense Appropriations Act for FY2002 
appropriated $93.3 million to the Transportation Security 
Administration for grants to enable critical national seaports and 
terminals to enhance their security. I am pleased to learn that the 
Port of Seattle, Washington State Ferries, Clipper Navigation Inc. and 
the Columbia River Steamship Operators Association received grants in 
excess of $5.7 million based on their proposals for increased security.
    Harbor Safety Committees have long been a means of sharing 
information, ideas, and forging cooperative solutions between 
government and the maritime community. In 1996, Puget Sound established 
a Harbor Safety Committee with representatives from federal, state and 
local agencies, including the Coast Guard, Maritime Administration, 
U.S. Army Corps of Engineers, Washington State Department of Ecology 
and Washington State Ferries, numerous maritime industry trade 
associations, environmental and aquaculture conservation groups, Indian 
Tribes and the Washington Public Ports Association which represents the 
combined interests of the Ports of Seattle, Tacoma, Bellingham, 
Olympia, Everett, and Port Angeles. This body has engaged on numerous 
maritime safety and security issues and provided an excellent 
foundation for the Captain of the Port in establishing nine regional 
Port Security Committees, which have served as a significant avenue for 
region wide security information flow since September 2001. The Port 
Security Committees foster local and regional cooperation to identify 
best practices, collaborate on security strategies, share information, 
and improve security postures regarding ferries, cruise ships, 
refineries, and intermodal transport.
    Washington State Ferries is a central component of the marine 
transportation system infrastructure in the Puget Sound. The Captain of 
the Port established a special port security committee focused solely 
on ferry security. The Washington State Ferry Security Committee 
includes members of Washington State Ferries, Coast Guard, and 
Washington State Patrol, and was chartered to identify preventive 
security measures, promote increased awareness, decrease vulnerability, 
and refine the existing response network for this critical extension of 
the highway system within the State. The internal measures developed 
and implemented by Washington State Ferries and the Washington State 
Patrol in coordination with the Coast Guard over the past nine months 
have incrementally decreased vulnerability of the ferry system. This 
partnership has been instrumental to decreasing vulnerability and 
increasing awareness through appropriate and prudent security measures 
being established to mitigate the current general threat to the public, 
our nation and its infrastructure.
    We continue to partner with U.S. Customs, Washington State Patrol, 
Department of Agriculture and the Federal Railroad Administration to 
inspect greater numbers of containers, ensure cargo manifests, and 
bills of lading are correct. There is an increased emphasis on 
identifying cargoes that have the potential to inflict the greatest 
harm on the U.S. Through our container inspection synergies, we have 
realized a force capability larger than we are, heightening security 
interest and proactive prevention measures among all elements of the 
container inspection process. A memorandum of understanding between 
Customs and the Coast Guard, enables us to combine resources and 
eliminated duplicative efforts in order to improve container and border 
security measures. While our combined efforts are critical in ensuring 
the security of our marine transportation system and U.S. border, a 
container security inspection program must include the international 
engagement to foster point of origin control and inspection of 
containers to most effectively assure the security of containers as 
they move through our seaports and our Nation.
    Since January of 2002, the Coast Guard Thirteenth District and Navy 
Region Northwest have co-chaired a Regional Force Protection Executive 
Steering Committee. This Committee has been working to enhance 
communication between various agencies and formulate Regional Force 
Protection policies and procedures. This Committee provides the venue 
for ongoing information sharing to best protect our strategic military 
assets in the Puget Sound region.
    The Coast Guard maintains strong working relationships with 
Canadian law enforcement and safety authorities. The law enforcement 
and intelligence communities have partnered to counter the threats 
along the US-Canada border. The Coast Guard continues to coordinate 
with other US and Canadian federal agencies who are instrumental in 
ensuring the execution of the Ridge/Manley ``Smart Border 
Declaration''. The Coast Guard has been a key participant in the 
process to implementing the entire ``30-Point Action Plan''. The action 
plan addresses common US-Canada border security needs ranging from the 
establishment of biometric identifiers to Integrated Border Enforcement 
Team resources, ferry operations, and joint communications 
capabilities. The Border Intelligence Group and Northwest Criminal 
Information Network meet regularly to share information, identify 
trends, and design and implement consistent solutions. The Cooperative 
Vessel Traffic Service (CVTS), jointly operated by U.S. and Canadian 
Coast Guards since 1979, is a critical traffic management tool for this 
complex waterway system between Washington State and British Columbia, 
and is a model of bilateral international cooperation. We have reaped 
huge benefits from this relationship. The system serves as a critical 
component serving enhanced Maritime Domain Awareness--the overall 
knowledge of vessels, cargoes, and people using the MTS, thus greatly 
reducing threat posed by crews and passengers of vessels through 
advanced reporting and knowledge.
    This single system affords us the opportunity to thoroughly vet and 
screen arriving vessels, and apply appropriate controls over those 
vessels moving through our waters and into our ports. We enjoy an 
equally close relationship with Transport Canada Marine Safety in the 
conduct of our Port State Control program regarding eliminating sub-
standard or suspicious foreign vessels entering our respective waters. 
Over the past five years, the our agencies have developed an exchange 
program between our marine inspection forces to ensure a more 
consistent approach and to develop closer working relationships and 
confidence in our respective safety regimes.
    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 7x24 
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 in the Pacific 
Northwest is an integral component of our nation's homeland security 
efforts. The massive flow of people and goods across our maritime 
borders helps fuel our economy, but also serves as a potential conduit 
for terrorists and weapons of mass destruction. We are a principle 
agency in defending our nation's maritime borders and ensuring the 
integrity of the marine transportation system. The security of the 
several ports within Puget Sound and particularly the ports of Seattle 
and Tacoma has improved. One of the significant challenges we face 
today is balancing the security and economic needs of our country. Our 
nation's harbors, including Puget Sound, are accessible to thousand of 
maritime workers and ships from all over the globe. We must filter out 
potential terrorist activities from the massive stream of legitimate 
commerce. A key success factor is improved awareness of the cargo 
entering our country and the people who own, operate and service the 
thousands of vessel entering the U.S. each year. I am confident that 
our successes can be directly attributed to outstanding interagency 
cooperation and aggressive partnering resulting increased information, 
sharing, heightened awareness, and implementation of preventative 
measures. We will make the best use of our existing resources and 
resources requested by the President to ensure people and goods move 
safely. The Coast Guard is committed to the protection of our nation 
against terrorist threats as well as maintaining our search and rescue 
capabilities and other missions. Thank you for the opportunity to share 
the initiatives that the Coast Guard and the Pacific Northwest are 
engaging in today, and for your continuing support of the Coast Guard. 
I will be happy to answer any questions you may have.

    Senator Wyden. We are also joined now by Senator Cantwell, 
and she had been a great addition to our congressional 
delegation. In particular, we highlighted a need to strike a 
balance between security and efficiency so that we can protect 
our ports and make sure that goods move in and out of the 
region in a speedy fashion, technology is going to be the key, 
and there is no member of the United States Senate that is more 
familiar with these kind of technology issues, and I want to 
recognize her for her opening statement.

               STATEMENT OF HON. MARIA CANTWELL, 
                  U.S. SENATOR FROM WASHINGTON

    Senator Cantwell. Mr. Chairman, I apologize for the delay. 
I will submit a statement for the record, but I very much 
appreciate the Chairman being here and conducting this hearing, 
not only here but in other parts of the West Coast, because it 
is critically important to make sure efficiency and security go 
hand in hand. I thank Senator Murray, who has done a great job 
in battling for the Coast Guard and battling for appropriations 
funds for security issues in the Northwest. I think it will 
help us play the leadership role that we need to play in making 
sure that our economic and security future are well 
coordinated.
    I am going to submit for the record, Mr. Chairman, a letter 
that I have sent to the President in the last 24 hours asking 
that an international protocol for security be accomplished 
with various ports around the world for the very reasons that 
you, Rear Admiral Brown, just emphasized, and that is that 
point of origin has to be a critical focus for us, and we can 
plan for all the security infrastructure here in Seattle, but 
once that container arrives on a dock in Seattle, it is too 
late.
    So the strategies that we have to deploy need to have 
international cooperation, and the only way we can do that is 
if the Administration at a cabinet level starts working on 
these protocols with various ports and establishes a standard 
by which the security measures can be assured.
    When you think about it, the Oklahoma bombing of the 
Federal Building, that level of explosive would take up about 
one fourth of a container, not to mention what kind of other 
dirty bomb activities could take place in a container that 
would be even more devastating to the Puget Sound area, so we 
must have international cooperation.
    I am very interesting in hearing from the panelists today 
their views about homeland security cooperation in the new 
agency. I am very interested in hearing specifically what is 
happening since September 11th as it relates particularly to 
cargo containers.
    We have heard a lot probably about moving of people, but we 
have not heard enough about moving of products, and we want to 
understand what has changed since September 11th, and lastly, 
about how we get this issue of technology right, in the sense 
that our future here really does depend on efficiency as well 
as security, and how can we move forward on some of these 
issues.
    And so I thank you, Mr. Chairman, for the ability to make 
those comments, and I will submit a longer statement.
    [The prepared statement of Senator Cantwell follows:]

              Prepared Statement of Hon. Maria Cantwell, 
                      U.S. Senator from Washington
Introduction
    Thank you Mr. Chairman, for your work in organizing this hearing 
and for ensuring that the Committee has a opportunity to take a serious 
look at some of the unique and common port security issues facing our 
region. I truly appreciate your work, and the ongoing efforts of 
Chairman Hollings and Chairman Breaux in persistently working to 
strengthen the security of our seaports and fighting to rapidly bring 
the Senate together in addressing these issues. I'd also like to thank 
my colleague, Senator Murray, who's been such a leader on the 
Transportation Committee in making sure that the Coast Guard has the 
resources to effectively carry out its increased port security mandates 
while also sufficiently fulfilling its other critically important 
missions for the Pacific Northwest; and who has also fought hard to 
obtain funding for our priority transportation and port facility needs 
in the supplemental appropriations bill that the Senate recently 
passed.
    Port activities are a crucial component of the Northwest economy, 
and I look forward to working with my colleagues to keep them safe and 
productive.
Why ports are important to NW
    In order for our Northwest economy grow our ports must remain safe. 
More than 100,000 workers in the Puget Sound area--including 
longshoremen and freight forwarders--depend on the ports of Seattle and 
Tacoma for their jobs. Those same ports generate over $700 million 
annually for the State of Washington. From those figures alone, it is 
easy to understand the tremendous impact that a terrorist act would 
have on the Northwest.
Since 9-11, concern over Port security has risen to new level
    The threat of attacks on America's ports and waterways is real. 
Just three weeks ago the U.S. Coast Guard in Seattle issued an alert 
for Washington state's waterways. The warning was based on what the 
Coast Guard called a credible threat to maritime interests. Officials 
gave no details on possible targets, but FBI agents have questioned 
scuba instructors in Washington and around the country about any 
suspicious activity.
    And we now know that the FBI considers Seattle one of the top 
targets for terrorist groups, and receives a disproportionate number of 
terrorism threats compared to other parts of the nation.
    And if we're a high-profile target, as unpleasant as this may be, 
we have to think about worst-case scenarios and vigilantly do 
everything possible to prevent them. King county is the 12th largest 
county in the United States, with over 1.7 million residents. On any 
given weekday there are as many as three-quarters of a million people 
in the City of Seattle. There are 95 public schools, 42 nursing homes, 
10 hospitals, nearly 800 day care facilities, 2 major interstates and 
seemingly countless bridges, and one of the top 25 busiest airports in 
the nation. A weapon of mass destruction attack would clearly have 
devastating consequences, and escape would be virtually impossible.
    But we also need to think about less direct threats as well. A port 
attack anywhere in America would likely have a devastating impact on 
the Northwest economy. Many manufacturers keep only several days of 
parts inventory on hand and rely on maritime shipping for many items, 
especially larger ones. Not only that, but many parts--such as the 
fuselage for the Boeing 737--arrive from other parts of US by rail. A 
full-scale disruption of the transportation system could halt Boeing 
operations within a matter of days, and many analysts predict that it 
could take months to carefully ``turn the system back on''.
Acknowledgement of local efforts Underway
    There is much work to be done in the effort to protect America's 
ports, but there are a number of initiatives underway already. The 
Puget Sound ports in cooperation with the Coast Guard have moved 
rapidly to conduct threat assessments, and they already have deployed 
gamma-ray scanning technology, which will allow inspectors to scan the 
contents of vehicles and containers without having to open them.
    Security initiatives undertaken by individual ports will go a long 
way toward strengthening our national security. For example, our Puget 
Sound ports have taken several steps to increase security. They have 
initiated a one-year program to develop partnerships with other ports, 
the shipping lines, and the federal agencies to ensure that containers 
are securely loaded at point of origin and to provide 100 percent 
verification of the contents at those ports. Ultimately, these 
partnerships will also employ the use of electronic seals to be applied 
at the point of loading and use tracking mechanisms to ensure secure 
transport of goods to the final destination.
New Federal programs and mandates
    While local port are on the front lines of keeping our ports safe, 
they need federal support to be effective. The Senate moved quickly to 
pass legislation proposed by Senator Hollings. Throughout his 
distinguished career Senator Hollings has been a strong advocate for 
national security, and I thank him again for all his work on this 
issue.
    Senator Hollings' bill takes a comprehensive approach to 
strengthening requirements and funding for improvements in port 
security and safety, and strengthening international cooperation for 
cargo security improvements. It will provide grants and loan guarantees 
for port security, authorize increased funding for customs to continue 
the deployment of screening technologies at ports and add new Customs 
inspectors; it would also require local port threat assessments, and 
allow the president to prohibit shipments from foreign ports considered 
insecure. The Senate bill also requires more specific manifest 
information that will help the Customs Service focus its resources on 
checking the containers of greatest concern, faster reporting of 
improperly documented cargo, and the development of limited-access 
security sensitive areas in our ports. Finally, the bill would create a 
``sea-marshal'' program to ensure the safety of arriving vessels.
    After September 11th, I worked with my colleagues in Congress to 
provide the funding and authority necessary for these domestic efforts 
to be implemented successfully. In addition to our ports, I've worked 
hard to double the number of INS agents which will be completed by the 
end of the year.
    Senator Murray has spearheaded an effort to upgrade Coast Guard 
resources to allow it to carry out its many missions. A strong Coast 
Guard is a critical for the security of our ports and waterways.
    I know that the Chairman and the Committee is working hard to get 
the conference completed on the seaport security bill and I hope that 
any outstanding issues can be expeditiously resolved. We need to help 
establish some certainty for our ports, the shippers, and the agencies 
so that they can most efficiently implement the new system.
    Congress also moved swiftly to create the Transportation Security 
Administration and mandate sweeping passenger and baggage reforms at 
our nations airports; we've added INS and Customs agents along our 
northern border; and very quickly provided flexible funds for our ports 
and federal agencies to implement new security measures.
    As a result, our federal agencies are taking actions to make our 
ports safer, and today's hearing will help us get a sense of what has 
already changed. In consultation with Congress, Customs and the Coast 
Guard have already taken a number of steps that are very encouraging.
    I applaud the efforts of Customs Service Commissioner Robert Bonner 
for developing the Container Security Initiative, which clearly seems 
to be heading in the right direction. We should be developing public 
and private partnerships with other nations and private ports so that 
we can inspect more cargo and have greater certainty about container 
contents before that cargo is shipped.
    I am concerned, however, that about six months after his initial 
announcement about CSI and nearly a year after September 11th, specific 
details of that initiative have yet to be provided and only a few 
agreements have been reached with foreign ports. Commissioner Bonner, 
in testimony to Congress, outlined that his objective was to reach 
agreements with the twenty largest U.S. trading partner ports, but we 
still need additional information about the timeline for reaching those 
agreements and specifically what we hope to achieve.
    I commend the Commissioner for his work in securing agreements with 
the governments of Singapore, Canada, Belgium, and the Netherlands to 
station U.S. Customs officers at specific ports there, but again, the 
details of those agreements--especially the number of inspectors that 
we'll be able to place in those ports and the extent of their authority 
to actually inspect high-risk containers remains unclear. I look 
forward to hearing more today about those agreements and the status of 
negotiations with the Pacific Asian ports that handle a vast amount of 
the cargo sent to Washington State ports.
Prioritizing point of origin inspection efforts
    If there is one thing that truly makes Puget Sound ports unique, it 
is that they sit directly adjacent to the downtown areas of our most 
populous cities.
    While inspections at our ports and additional security at those 
ports are essential, we simply cannot ensure the safety of our 
residents--and our dockworkers--unless we have systems in place to 
inspect and secure cargo at its point of origin.
    Every day 50,000 containers enter the Ports of Seattle and Tacoma, 
and nearly 6 million containers enter our nation's ports each year.
    Over 90 percent of Seattle's waterborne trade is with Pacific Asian 
nations, totaling more than $30 billion in total value in 2000. We 
still need to develop agreements with Hong Kong, Kobe, Tokyo, Shaghai, 
Kaohsiung, and the many other Asian ports that do large volumes of 
business with Seattle and Tacoma, and other northwest ports
    Now, I realize that this isn't as simple as snapping our fingers 
and sending money for technologies or law enforcement officers. 
International negotiations are tough, they take time, and they often 
require sacrifice. But frankly Mr. Chairman, I don't think we have a 
second to spare. Expanding security beyond our borders must be a 
critical element of our homeland defense strategies and it should be at 
the very forefront of this administration's foreign-policy agenda.
    That's why I wrote to President Bush last week suggesting that he 
establish a cabinet-level task force on cargo security, including the 
Secretaries of Commerce, State, and Transportation; and that his task 
force establish detailed plans for point-of-origin container security. 
I also encouraged the Administration to establish a special negotiating 
team comprised of the United States Trade Representative, the 
Commissioner of Customs, and the Commandant of the Coast Guard to 
negotiate agreements similar those reached with Singapore, Rotterdam 
and Antwerp,and the recently enacted Ridge-Manley ``Smart Border 
Declaration'' that has been implemented for inspections along the 
northern border.
    We need high-level leadership on this issue and we need it now. We 
should use our commercial leverage to push for international standards 
and agreements to place customs inspectors in foreign ports and for 
ensuring secure transport between ports.
    And if this requires additional resources to carry out this 
mission, I am confident that Congress would act quickly--as we did 
immediately after September 11th, to make those available. So I've also 
urged the President to submit a budget request to Congress for funds 
that he may need to assist foreign governments' and individual foreign 
ports in deploying inspection technologies in those ports cooperating 
with the United States in establishing point-of-origin inspections and 
evaluating systems integrated cargo security systems.
Conclusion
    Mr. Chairman, any homeland security plan that does not prioritize 
seaport security would be seriously deficient for cities like Seattle 
and Tacoma. So I again thank the Chairman for holding this hearing, and 
Senators Hollings, Murray, and Breaux for their work on this issue, and 
the witnesses who will share their expertise with us here today. I look 
forward to working with all of you as continue our efforts to keep our 
ports safe.

    Senator Wyden. I thank you, and we will also put the letter 
that you sent earlier into the record. I think it makes a 
number of important points, and congratulations to you for 
doing that.
    [The information referred to follows:]

                                 ______
                                 
Hon. George W. Bush,
President of the United States,
The White House,
Washington, DC.

Dear Mr. President:

    I am writing to express my serious concerns about the security of 
our nation's seaports and the status of efforts to improve the 
screening of cargo before it sets sail for ports in the United States, 
including those in the Puget Sound. Nearly one year after the September 
11th incidents, efforts by your administration to develop and implement 
comprehensive cargo-security safeguards to protect port cities such as 
Seattle have progressed slowly and with little cohesion.
    I am pleased that you have acted expeditiously to strengthen 
security along our borders and in improving the screening of passengers 
and baggage at our airports. After September 11th, I worked with my 
colleagues in Congress to provide the funding and authority necessary 
for these domestic efforts to be implemented successfully. I am 
concerned, however, that equivalent administration efforts to screen 
goods entering U.S. ports for weapons of mass destruction have been 
considerably less aggressive.
    While I applaud the efforts of Commissioner Bonner to develop the 
container security initiative (CSI), I am particularly concerned that 
nearly six months after his initial announcement, specific details of 
that initiative have yet to be provided and only a few agreements have 
been reached with foreign ports. Commissioner Bonner, in testimony to 
Congress, outlined that his objective was to reach agreements with the 
twenty largest U.S. trading partner ports, but did not indicate a 
timeline for reaching such agreements.
    I understand that the first completed accords, at least in 
principle, have been reached this month with the ports of Singapore, 
Rotterdam and Antwerp, but am not aware of any target dates set by your 
administration for the successful completion of the others, 
particularly with Asian nations that are the primary trading partners 
for Pacific Northwest ports. I also understand that the Coast Guard has 
engaged in discussions at the International Maritime Organization on 
creating strong standards for the inspections of cargo in transit.
    I believe that the safety of U.S. citizens living in close 
proximity to major U.S. ports must be a top priority for this 
administration. Every day 50,000 containers enter the Ports of Seattle 
and Tacoma. In a rush to establish strong domestic measures for 
securing the borders, we must not overlook the fact that some of the 
greatest threats to our nation may be delivered in one of the fifty 
thousand containers arriving in our ports daily. While scanning more 
cargo as it leaves our ports is important, inspecting those containers 
for potential threats before they leave their foreign ports of origin 
is absolutely critical for the safety of those working and living near 
our ports.
    I am also concerned that a series terrorist incident has the 
potential to bring global commerce to a virtual standstill, and could 
force manufacturers and retailers in the Pacific Northwest to cease 
operations within days of an attack. I am encouraged by the efforts of 
the Ports of Seattle and Tacoma, along with several east coast ports 
and ocean carriers, to implement the ``Operation Safe Commerce'' 
initiative that is testing concepts and technologies for the pre-
inspection and transport of goods, while maintaining the flow of 
international commerce.
    We need clear and aggressive efforts by your administration to 
prioritize container security at the highest levels and to lead 
international efforts, in cooperation with the private sector, toward 
the rapid establishment of international standards for point-of-origin 
inspections. To reach these objectives, I strongly urge you to take the 
following steps:

    1. Convene a cabinet-level team, including the Secretaries of 
Commerce, State, and Transportation, to establish detailed plans for 
point-of-origin container security;

    2. Establish a special negotiating team comprised of your trade 
negotiator, the Commissioner of Customs, and the Commandant of the 
Coast Guard to negotiate agreements similar to the Singapore accord and 
the recently enacted Ridge-Manley ``Smart Border Declaration'' that has 
been implemented for inspections along the northern border. A similar 
team should work within international organizations to develop 
standards and agreements to place customs inspectors in foreign ports 
and for ensuring secure transport between ports;

    3. Submit a budget request to Congress for funds to assist foreign 
governments' and individual foreign ports in deploying inspection 
technologies in those ports cooperating with the United States in 
establishing point-of-origin inspections and evaluating systems 
integrated cargo security systems;
    The development of a comprehensive system for screening cargo while 
maintaining the flow of commerce requires agreements on a range of 
complex issues between governments and between individual ports. The 
intricacy and importance of this issue necessitate the involvement of 
administration officials at the high-level. I urge you to make cargo 
security one of your highest priorities in your ongoing efforts to 
protect the homeland and look forward to working with you to ensure 
that you have all of the tools and resources necessary to implement 
these measures immediately.

        Sincerely,
                                             Maria Cantwell
                                              United States Senator

    Senator Wyden. And let us go now to Mr. Browning, and you 
can take five minutes or so. That will leave some time for 
questions.

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

    Mr. Browning. Mr. Chairman, first of all, Mr. Chairman, 
Senator Wyden, Senator Cantwell and Senator Murray, I want to 
thank you for the opportunity to appear before you today and 
testify.
    Since September 11th, the U.S. Customs Service's top 
priority has been responding to the continuing threat as our 
seaports and land ports, doing everything we responsively and 
reasonably can to keep terrorists and terrorist weapons from 
entering the United States. Today, I would like to describe the 
steps Customs has taken to secure our nation's seaports.
    In terms of logistics and economics, all nations should be 
concerned about the ways global trade would be impacted by a 
catastrophic event involving sea containers. (1) About 90 
percent of world trade moves in containers, much of it carried 
on ocean-going container ships. The devastation caused by 
terrorists if they were to succeed in concealing a weapon of 
mass destruction (2) is unthinkable, and the impact on our 
economy would amount to billions in losses. Much of world trade 
would grind to a halt as we struggled to create a system that 
would secure against another such attack.
    For these reasons U.S. Customs has taken several steps to 
tighten security at our seaports. (3) Customs officials have 
been operating at Alert Level 1 since September 11th and will 
continue to do so. This requires sustained, intensive anti-
terrorist questioning, and it includes increased inspections of 
travelers and goods at every port of entry. Customs has also 
deployed additional X-ray and gamma ray machines, (4) and other 
technology that will greatly enhance our security, as well as 
the flow of commerce through our ports. (5) Customs believes 
that it must work to push our line of defense outward away from 
our seaports and towards foreign ports of departure. This will 
allow Customs more time to react to potential threats, to stop 
them before they reach us and to expedite the flow of low risk 
commerce.
    (6) Customs builds on past successful security models 
between Customs and the trade designed to prevent legitimate 
commercial shipments from being used to smuggle illegal goods. 
(7) The Container Security Initiative, or CSI, places Customs 
personnel in the world's major shipping ports, the top 10 of 
which process about 50 percent of all sea containers imported 
into the U.S. The Customs officers will identify and pre-screen 
cargo containers that pose a high risk of containing terrorists 
or terrorist weapons before they are shipped to the United 
States. This simple concept represents a major revolution in 
standard Customs practice.
    Currently most customs services around the world including 
ours target and inspect high risk containers at the port of 
entry. This system has been adequate to meet the ordinary 
threats of narcotics smuggling (8), but it is not sufficient to 
address the danger posed by terrorists (9), the threat 
presented by weapons of mass destruction. We may be content to 
seize narcotics at the U.S. port, but if a container were used 
to smuggle a weapon of mass destruction, finding it at the port 
may be too late to save American lives and infrastructure.
    I am happy to report we have started the process of 
screening the 500,000 containers. (10) We have also confirmed 
arrangements to send our inspectors to Rotterdam, Antwerp, and 
Lettavre, and is in various stages of negotiating CSI 
partnerships with Singapore and Hong Kong. Technology and 
information are essential to successful container security 
strategy and to our counter terrorist mission in general. The 
more technology and information we have and the earlier in the 
supply chain we have it, the better.
    In addition to the examination and inspection devices 
already in the Customs' arsenal, we will continue with plans to 
develop and broadly deploy ``smart'' containers with electronic 
seals that will indicate when they have been tampered with. 
Effective use of technology depends largely on good targeting 
for which we have require advance information.
    Customs examines a small percentage of cargo entering the 
U.S. but these examinations are not performed randomly. In 
fact, our decisions are the result of careful screening based 
on information culled from a vast database on shipping and 
trading activities known as the Automated Manifest System. 
Customs analysts use targeting systems to locate anomalies or 
manifests that appear unusual, suspect or high risk. This 
system has served us well, but it can and must serve us better 
in light of September 11th.
    Legislation currently under consideration would make the 
electronic transmission cargo manifest information in advance 
of entry mandatory. This would increase the amount of 
information Customs can input into our targeting systems, 
thereby enhancing our ability to spot potential risks. This 
will take us much closer to where we ultimately need to be, and 
that is to have full information on incoming cargo before it 
even leaves a foreign port. We appreciate the support the 
Congress has shown for making the advance electronic 
transmission cargo manifest information mandatory, and we look 
forward to providing whatever assistance as may be necessary as 
you consider these issues.
    Today, I have described only a few of customs' efforts that 
are bolstering our defenses against terrorism. The Customs 
Service is committed to working closely with our law 
enforcement counterparts as well as with the international 
community and the private secter to deter terrorists that would 
strike America.
    Thank you again for the opportunity to testify, and I will 
be more than willing to take any questions that you have. 
Senator Wyden: Thank you, Mr. Browning. Very helpful statement.
    [The prepared statement of Mr. Browning follows:]

    Prepared Statement of Douglas M. Browning, Deputy Commissioner, 
                          U.S. Customs Service
    Senator Wyden, Senator Murray, thank you for the opportunity to 
testify here today.
    Since September 11th, Customs' top priority has been responding to 
the continuing threat at our land borders, seaports and airports. Our 
highest priority is doing everything we reasonably and responsibly can 
to keep terrorists and terrorist weapons from entering the United 
States. Today, I would like to describe for you the steps Customs has 
taken to secure our nation's seaports.
    From both a logistical and economic perspective, all nations should 
be concerned about the ways global trade would be impacted by a 
catastrophic event involving sea containers.
    Sea containers represent a vital artery of global commerce. 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.
    Unfortunately, sea containers are susceptible to the terrorist 
threat.
    The devastation caused by terrorists if they 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 each 
day is unthinkable. And the impact on our economy would amount to 
billions in losses. Much of world trade would simply grind to a halt as 
we struggled to develop a security system that would provide assurance 
against another such attack.
    For these reasons, Customs has taken several steps to tighten 
security at our seaports. Across the country, Customs officials have 
been operating at Level One alert, which requires sustained, intensive 
anti-terrorist questioning, and includes increased inspections of 
travelers and goods at every port of entry. Customs has also deployed 
to its seaports additional x-ray and gamma ray machines, radiation 
detectors, and other technology that will greatly enhance security as 
well as our ability to speed the flow of commerce through our ports.
    But our efforts to secure America's seaports from the terrorist 
threat must go beyond fortifying our own ports. Customs believes that 
it must also do everything possible to push our line of defense 
outward--away from our seaports and towards foreign points of 
departure. Pushing our security outward will allow Customs more time to 
react to potential threats--to stop them before they reach us--and to 
expedite the flow of low-risk commerce across our borders.
    The Customs-Trade Partnership Against Terrorism, ``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. Trade is now tightening its supply chain 
security to prevent legitimate commerce from being exploited by 
terrorists.
    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 its foreign port for the United States.
    The Container Security Initiative, or CSI, places Customs personnel 
in the world's major shipping ports--the top ten of which process about 
50-percent of all sea containers imported into the U.S. The Customs 
officers will identify and pre-screen high-risk cargo containers that 
pose a risk of containing terrorists or terrorist weapons before they 
are shipped to the U.S.
    This simple concept represents a major revolution in standard 
practice. Currently, most customs services around the world--including 
ours--target and inspect high-risk containers as they sit in the port 
of entry. Historically, this has been adequate to meet the ordinary 
threats of narcotics smuggling or evasion of customs duties.
    But this system is not sufficient to address the danger posed by 
terrorists for one simple, yet sobering, reason--the threat presented 
by weapons of mass destruction. We may be content to seize narcotics at 
a U.S. port, but if a cargo container were to be used to smuggle a 
weapon of mass destruction set to detonate upon arrival, finding it at 
the port may be too late to save American lives and infrastructure.
    This is why we must work with our foreign counterparts to screen 
the cargo at the port of origin, rather than at the port of entry in 
the U.S.
    CSI is well underway. We have started the process of screening the 
500,000 containers that come to the US each year from Montreal, 
Vancouver, and Halifax. Customs has confirmed arrangements that will 
allow us to send personnel to Rotterdam, Netherlands; Antwerp, Belgium; 
and LeHavre, France, and we are in various stages of negotiating CSI 
partnerships with Singapore and Hong Kong.
    Technology and information are essential to a successful container 
security strategy and to our counter-terrorism mission in general. The 
more technology and information we have, and the earlier in the supply 
chain we have them, the better.
    In addition to the examination and inspection devices already in 
Customs' arsenal, we should continue with plans to develop and broadly 
deploy ``smart'' containers--with electronic seals that will indicate 
tampering.
    The effective use of technology depends largely on good targeting, 
for which we require advance information. Customs examines a small 
percentage of cargo coming into the U.S. Yet it is important to note 
that these examinations are not performed randomly. In fact, our 
decisions are the result of careful screening based on information 
culled from a vast database on shipping and trading activities known as 
the Automated Manifest System, or AMS. Customs analysts use targeting 
systems within AMS to locate anomalies or manifests that appear 
unusual, suspect, or high-risk. This system has served us well, but it 
can and must serve us better in light of September 11th.
    Legislation under consideration would make the filing of electronic 
transmission cargo manifest information in advance of entry mandatory. 
For Customs, this would increase the amount of information we can input 
into our targeting systems, thereby enhancing our ability to spot 
potential risks. This bill will take us much 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. But for us to work most 
effectively, we need legislation to mandate that Customs receives the 
information, whether for imports or in-bond shipments, even before the 
container is loaded on board the ship bound for the United States.
    We appreciate the support Congress has shown for making the advance 
filing of electronic transmission cargo manifest information, 
mandatory. We look forward to continuing to assist Congress in its 
efforts to enact seaport security legislation.
    Today I have described only a few of Customs' efforts that are 
bolstering our defenses against terrorists. The Customs Service is 
committed to working closely with our law enforcement counterparts, as 
well as with members of the international community and the private 
sector, to deter terrorists who would strike America.
    Thank you again, Senator Wyden, Senator Murray, for this 
opportunity to testify. I would be happy to answer any questions you 
may have.

    Senator Wyden. Mr. Dinsmore?

 STATEMENT BY MIC DINSMORE, EXECUTIVE DIRECTOR, PORT OF SEATTLE

    Mr. Dinsmore. Thank you very much. What a pleasure to have 
you here in Seattle and at the Port of Seattle. Today I have 
the opportunity to talk about a critical issue of port security 
and specifically answer the question how do we secure our port 
communities, and in doing that, how do we ensure the movement 
of commerce through these communities in a fast and efficient 
manner.
    Ever so briefly allow me to give you a little background on 
the Port of Seattle. We are one of the most diverse ports in 
this Nation. Yes, we have both an airport and a seaport, and 
the combination of both impacts economic viability in this 
State in excess of $34 billion annually. In the container 
business, combined with Tacoma, as Senator Murray indicated, we 
are the third largest load center for containers in this 
Nation, and as of next year, we will have over 400,000 
passengers moving through our harbor with the new activities 
relative to the cruise industry.
    What I would like to do is make five points during my 
presentation. One, making sure ports and the goods shipped 
through them are secure, and that is absolutely essential if we 
are to avoid severe economic distress in this country and 
abroad. Two, we are pleased, very pleased with the help 
Congress has provided so far, but more is needed, and it must 
be rapid. Three, in order to achieve the greatest return from 
our port security effort, we must rely on existing and emerging 
technology. Four, whatever processes we use to make our 
facilities more secure ought to allow us to expedite the flow 
of commerce through our gateways, and lastly, it is important 
to ensure that foreign goods coming into the U.S. from both 
Canada and Mexico experience the same inspection rigor that 
goods coming to the U.S. from other foreign ports experience.
    The vast majority of goods consumed by the American people 
come from some other country, and 90 percent of those goods 
travel to this Nation by waterborne vessels, because we no 
longer have huge warehouses and distribution centers solely for 
the storage of these goods. Instead they use ocean containers 
to control inventory and a concept we know called ``just in 
time delivery.'' This means that before the commerce reaches 
final designation for sale, the inventory will be either in a 
container or on board a container vessel.
    This system makes waterborne commerce even more critical to 
the Nation's economy, because it is on the water, and it is in 
most cases in ocean-going containers that much of the inventory 
for the next few weeks are kept.
    If the system through which these goods are delivered is in 
any way disrupted because of a terrorist act, at the present 
time, it would call into question the entire system, and the 
Federal Government would indeed have to shut the system down. 
In doing so, it would not only stop goods from being delivered 
to U.S. ports, but would also stop the flow of freight between 
ports in Asia and Europe and the rest of the world as well as 
others that rely on a regular and uninterrupted flow of goods 
in exchange for products their citizens create that will be 
consumed by Americans.
    If the system shuts down for more than a week, the 
consequences to many businesses that rely almost solely on 
foreign goods would be devastating, and as we lived through the 
9-11 experience, we had our Nation's airports shut down for 
four or five days. The impact of shutting down our seaports 
would be much more challenging to turn over and start up again.
    We must find ways to secure port facilities so that it 
makes it more difficult for a terrorist to cause damage either 
hurting our people or citizens or facilities. We must make sure 
that the security of goods coming into this country and going 
into other nations is absolutely assured. We must be absolutely 
sure that what was loaded in the container is what is stated on 
the manifest, and this needs to be verified independently of 
the shipper or even the shipping line. We need to make sure 
that the goods during their voyage across the ocean and 
overland to their final designation does, in fact, remain 
secure.
    Tim Farrell of the Port of Tacoma will speak to the 
specific effort that the Ports of Seattle and Tacoma have begun 
to secure our facilities and the goods that flow through them.
    I want to thank you, Senator Murray, for the $93 million 
that was recently distributed to harden our facilities in the 
supplemental appropriations bill, to continue that wonderful 
work. There is also funding in the supplemental appropriations 
bill that will begin addressing what I refer to as point-of-
origin container security.
    Between the Ports of Seattle and Tacoma more than 3,000 
individual ocean-going containers cross our terminal facilities 
each day and are trucked or taken by rail to points outside our 
immediate port boundaries. The only evidence we have of what is 
in these containers comes directly from the manifests which are 
provided to us, which of late are more specific but still do 
not come with an absolute guarantee of accuracy.
    There is about $28 million in the supplemental 
appropriations bill devoted to Operation Safe Commerce which is 
an attempt, and I think a very good attempt, to guarantee the 
accuracy of the manifest and to track and identify tampering of 
those containers.
    Once again I want to applaud Senator Murray for including 
these dollars in the supplemental appropriations bill and thank 
you, Senator Cantwell and Senator Wyden, for your support of 
this bill. I urge you once the supplemental bill is passed to 
make sure that any dollars made available for Operation Safe 
Commerce are distributed as quickly as possible, because we 
obviously do need them.
    Tim will talk again a little later on the Safe Commerce 
Initiative which is a port and private sector-based initiative 
that we believe has the best chance of securing goods that come 
from overseas. There is also funding in the Treasury portion of 
the supplemental appropriations bill for U.S. Customs Container 
Security Initiative or CSI as it is affectionately called. 
These funds should also be made available because Safe 
Commerce, in conjunction with CSI, will enhance container 
security at foreign ports.
    I want to talk a moment now about how we make both our 
seaports and goods that come into our areas more secure through 
technology. We must move rapidly in deploying technology that 
will create a more secure environment for the international 
trade arena. There are many, many vendors, some in this 
hearing, competing for a piece of the security pie. We favor, 
absolutely favor the use of tested and proven technologies and 
extensive involvement of private sector entities and ports in 
testing and deploying new technology, especially when there is 
a need to closely work with our foreign partners.
    Federal Government agencies must be providing oversight and 
working closely to ensure that their standards are met, but 
port districts and many private entities are more nimble than 
the Federal Government agencies. In addition, we have extensive 
business relationships with shippers, shipping lines, foreign 
ports and others in the chain of custody for goods coming into 
and leaving the country. Our ability to rapidly deploy and test 
a particular technology and then actually using the technology 
long term clearly is a plus for all of us. We want to reach a 
point where a significant number of boxes that come through the 
Ports of Seattle and Tacoma are guaranteed to have been loaded 
according to particular standards, that can verify the manifest 
accurately reflects the goods that are loaded. We also want to 
make sure that the goods can be tracked from where the box is 
loaded to where it is unloaded and the goods distributed----
    Senator Wyden. Mr. Dinsmore, I am sorry to have to 
interrupt. I just want to ask my colleagues for their 
questions. Are there any other particular points that you would 
like to make?
    Mr. Dinsmore. No, I have made those points.
    Senator Wyden. I just want to go to both of them. They have 
spent a lot of time on these issues.
    [The prepared statement of Mr. Dinsmore follows:]

        Prepared Statement by Mic Dinsmore, Executive Director, 
                            Port of Seattle
Solutions for Secure Commerce
    Good afternoon, Senator Wyden, Senator Murray and Senator Cantwell. 
Thank you for the chance to speak to you on the critical issue of 
seaport security and specifically, solutions to the question: How do we 
secure our port communities and the goods flowing through them?
    First, let me give you some background on the Port of Seattle. We 
are one of the largest and most diverse ports in the nation. We operate 
Sea-Tac airport and have many other commercial maritime and non-
maritime businesses. Our contribution to the state's economy is more 
than $34 billion annually. In the container business, combined with the 
Port of Tacoma, we are the third largest container ``gateway'' in North 
America. We are also one of the nation's fastest growing cruise ports, 
and next year, we will see more almost 500,000 people sailing from 
Seattle.
    I want to make five points during my presentation: 1) Making sure 
that ports and the goods shipped through them are secure is absolutely 
essential if we are to avoid severe economic distress in this country 
and abroad; 2) We are pleased with the help Congress has provided so 
far, but more is needed and it must come rapidly; 3) In order to 
achieve the greatest return from our port security efforts we must rely 
on existing and emerging technology; 4) Whatever processes we use to 
make our facilities more secure ought to also allow us to expedite the 
flow of goods through them; and 5) It is important to ensure that 
foreign goods coming into the US through from Canadian or Mexican ports 
experience the same inspection rigor that goods coming into US ports 
receive.
    While this may sound like a very dramatic and maybe somewhat 
outlandish statement, it is a very possible scenario if we do not 
adequately prepare ourselves. A terrorist incident at a major port in 
this nation right now would produce the biggest economic downturn this 
nation has experienced since the Great Depression. Let me explain why.
    The vast majority of goods consumed by the American people come 
from some other country and 90 percent of those goods arrive in this 
nation at US ports on waterborne vessel. Businesses no longer have huge 
warehouses and distribution centers solely for the storage of these 
goods. Instead, they use ocean-going containers to control inventory 
and a concept called ``just in time delivery,'' which means the goods 
reach their final destination just before they are placed on the retail 
shelf.
    This system makes waterborne commerce even more critical to the 
nation's economy because it is on the water, and in most cases in 
ocean-going containers, that much of the inventory for next weeks goods 
are kept. If the system through which those goods are delivered is in 
any way disrupted because of a terrorist act, at the present time, it 
would call into question the entire system and the federal government 
would have to shut it down. In doing so, it would not only stop goods 
from being delivered to US ports, but it would also stop the flow of 
trade at ports in Europe and Asia, as well as many other places that 
rely on a regular and uninterrupted flow of our goods in exchange for 
products their citizens create that will be consumed by Americans. If 
the system shut down for more than a week, the consequences to our 
economy would be devastating.
    We must find ways to secure port facilities so that it becomes more 
difficult for a terrorist to cause damage to facilities on injury to 
people. We must make sure that security of goods coming into this 
country and going to other nations, is assured. We must be absolutely 
certain that what was loaded onto the container is what is stated on 
the manifest, and this needs to be verified independently of the 
shipper or even the shipping line. We need to make sure that the goods 
during their voyage across the ocean and overland to their final 
destination remain secure.
    I want to thank you for the $93 million that was recently 
appropriated to harden our facilities and we applaud the funds included 
in the supplemental appropriations bill to continue that work. There is 
also funding in the supplemental appropriations bill that would begin 
addressing what I refer to as ``point of origin'' container security. 
Between the Ports of Seattle and Tacoma more than 3000 individual 
ocean-going containers cross our terminal facilities each day and are 
trucked or taken by rail to points outside our immediate port 
boundaries. The only evidence we have of what is in these containers 
comes from the manifests that are provided to us, which of late are 
more specific, but still do not come with a guarantee of accuracy. 
There is about $28 million in the supplemental appropriations bill 
devoted to Operation Safe Commerce, which is an attempt to guarantee 
the accuracy of those manifests and to track and identify tampering of 
the container if it were to occur. I want to applaud Senator Murray for 
including these dollars in the supplemental appropriations bill and I 
want to thank Senators Cantwell and Wyden for their support for that 
funding. Once the supplemental bill is passed I urge you to make sure 
that any dollars made available for Operation Safe Commerce are 
distributed as quickly as possible without the usual wait we see with 
federal funds. Safe Commerce, which Tim will describe later, is a port 
and private sector-based initiative that we believe has the best chance 
of securing goods coming from overseas. There is also funding in the 
Treasury portion of the supplemental appropriations bill for the US 
Customs Container Security Initiative or CSI as it is affectionately 
called. These funds should also be made available because Safe 
Commerce, in conjunction with CSI, will enhance container security at 
foreign ports.
    I want to talk a moment about how we make both our seaports and the 
goods that come into them more secure through technology. We must move 
rapidly in deploying technology that will create a more secure 
environment for the international trade arena. There are many 
technology vendors competing for a ``piece'' of the security pie. We 
favor the use of tested and proven technologies and extensive 
involvement of private sector entities and ports in testing and 
deploying new technology, especially when there is a need to work 
closely with our foreign partners. The federal government agencies must 
be providing oversight and working closely to ensure that their 
standards are met, but port districts and many private entities are 
more nimble than the federal government agencies. In addition, we have 
extensive business relationships with shippers, shipping lines, foreign 
ports and others in the chain of custody for goods coming into and 
leaving this country. Our ability to rapidly deploy and test a 
particular technology and then actually use the technology long-term is 
a real plus.
    We want to reach a point where a significant number of ``boxes'' 
that come through the ports of Seattle and Tacoma are guaranteed to 
have been loaded according to particular standards that can verify that 
the manifest accurately reflects the goods loaded. We also want to make 
sure that the goods can be tracked from where the box is loaded to 
where it is unloaded and the goods distributed. In addition, it is 
important that we try to move goods more quickly using technology and 
not find ourselves having to slow the process because we need to be 
overly-cautious about what comes into this country. A slowdown in the 
process of moving goods through the system will ultimately result in 
making US ports less competitive, which will have a major impact on US 
ports and the US economy.
    I now want to talk about how we could easily secure our front door 
and leave other doors open if we are not careful. We need to make sure 
that the same processes that we send goods through when they enter a US 
port is duplicated for goods from overseas that are shipped into our 
country through adjacent borders--Canada or Mexico. We fear that if it 
becomes more difficult and costly to bring foreign goods into US ports 
because of security measures, there could be a rush to send those goods 
through either Canada or Mexico. If this happens, it will totally 
undermine all our security efforts and put the nation in a vulnerable 
situation. Overseas goods coming into the US from these adjacent 
nations should be subjected to the same rigor that goods coming into US 
facilities must face. It will be critical for the US Congress to make 
sure that this is the case.
    I will end by again thanking you for conducting your seaport 
security hearing in Seattle and at our facilities. I would like now to 
turn over the microphone to Tim Farrell, Deputy Executive Director of 
the Port of Tacoma.

    Senator Wyden. And we will go to Senator Murray.
    Senator Murray. Thank you very much, Mr. Chairman, and I 
want to start with Admiral Brown. This Administration has 
proposed combining over a hundred different Government 
organizations into a single Homeland Security Agency to protect 
the United States from internal threats, and as part of that 
proposal the President has called for the Coast Guard to be 
moved from the Department of Transportation to the new 
Department of Homeland Security.
    I wanted to find out while you are in front of us today 
whether you are concerned that that new agency focus on 
homeland security may diminish your ability to deal with Search 
and Rescue, Drug Enforcement, Environmental Management, 
Fisheries Management, that are such important missions of your 
agency.
    Admiral Brown. Thank you for the question, Senator. As you 
have indicated in your statement, and as I indicated in my 
statement, the other things we do as a multimission agency are 
critically important, Search and Rescue, Drug Law Enforcement, 
Marine Environmental Protections, just to name a few, and 
frankly not only are those things important, they are a center 
of synergistic contribution to homeland security and homeland 
defense.
    So as it relates to your question about diminishing our 
ability, diminishing our focus, diminishing our capacity on 
those other elements, the Commandant has been very clear on 
what he considers to be appropriate criteria which should be 
considered, and those are threefold.
    First and foremost is that the Coast Guard be moved as an 
entire entity. Second, that we maintain that multimission, 
maritime, military focus that we have had which gives us those 
capabilities, and third and final that we continue to have the 
complete mission set as a multimission agency. We get a lot of 
synergy from that. So given those, those elements, given a 
clear mandate and adequate resources, I see us continuing our 
ability to provide efficient and economic services to our 
Nation.
    Senator Murray. Should we be concerned that if you are 
under an agency whose only focus is homeland security, that we 
will lose some of our priority in each of Fishery Management, 
Search and Rescue or other missions?
    Admiral Brown. I think as I indicated, we will respond to 
the tasking that we are given. Right now we are a multimission 
agency with a broad range of mandates, and to the extent that 
we are transferred, and with singular focuses, the Nation will 
still have to get those services provided in some form or 
fashion.
    Senator Murray. Let me ask you about the 96-hour advance 
notice of arrival requirement that you have for ships coming in 
to supply you with names of crewmen. It has been reported that 
ships have come and gone before that information has been 
processed and returned. Coast Guard has said that this is a 
problem because of communications delays between them and 
Federal agencies with the information. I think the Coast Guard 
has said that because we do not have them submitted 
electronically, it is a problem, and we are supposed to have 
some kind of final rule in June. Can you tell me to your 
knowledge has the rule to require electronic submission been 
finalized yet?
    Admiral Brown. I am not personally familiar with the 
current status of it, but I can say that the ability to 
transmit those kinds of information electronically is critical 
to us getting advance notification. Not only is it critical to 
getting it in a timely fashion to review the content of the 
information, but also that it be credible. So I do not know the 
current status of it, but in terms of electronic submission, it 
is critical for our marine maritime awareness.
    Senator Murray. Captain Ellis, do you know if the rule has 
been finalized yet?
    Captain Ellis. Good afternoon, Senator Murray. I still have 
the route proposal right now. It is not finalized now.
    Senator Murray. Admiral, one problem with getting good 
information and intelligence is that the vast majority of the 
ships entering the United States are foreign flag and operated 
by foreign crews. So it is really important that we get 
international support to ensure that our vessels do not present 
a risk.
    One goal that the Coast Guard announced in this area is for 
an Automated Information System or transponders by 2004. We had 
a hearing on this in D.C. and the Coast Guard explained that we 
needed the cooperation of the IMO to implement that requirement 
and said that they would know more by late spring, a few months 
ago. Do you know what the, do you know the status of the IMO's 
position as yet on that proposed requirement?
    Admiral Brown. The proposal has been reviewed, and they are 
scheduling an intersessional which is a meeting in advance of 
the normal one. I think that is scheduled for December. Right 
now, the acceleration of the AIS is being favorably received. I 
think right now the only major signatory is Russia, but at this 
point, who is looking more at the original schedule than the 
accelerated one. So right now the intersessional in December 
will give us the final answer.
    Senator Murray. So we will not know until December whether 
the IMO is----
    Admiral Brown. Until it goes through its final regulations 
and voting on it, but that is, in fact, an advance over its 
normal conduct of business, and at this point is being 
favorably received.
    Senator Murray. Approximately 1.8 million containers enter 
Puget Sound ports every year. That is about 5,000 containers 
every day. Do you know short of opening and inspecting every 
container there is really no effective way to verify what is in 
those containers, and right now less than 2 percent of the 
containers entering the United States are actually looked at. 
It is clear if we increase the number of containers we inspect, 
we will have an impact on the efficient flow of commercial 
goods through our ports.
    I am curious whether our efforts in partnering with foreign 
ports, improving communications with Federal agencies, clear 
security standards and better inspection technology, lower the 
amount of cargo that we need to annually inspect?
    Admiral Brown. Absolutely, and as Mr. Browning said, while 
it is 2 percent, it is the right 2 percent. Focusing on which 
ones to look at, not looking at everything is really the right 
way of going on with business, and I defer to Mr. Browning on 
that point.
    Senator Murray. Mr. Browning?
    Mr. Browning. Actually, Mr. Brown is on point of that. We 
actually inspect 100 percent of containers that are determined 
to be high risk. We talked about the fact that we have a, what 
we refer to as a layered defense to determining what we want to 
take a look at. Anything short of that would, in fact, 
negatively impact the flow of legitimate trade. Also, but I 
think also, there is something that you need to understand 
about the 2 percent number that we are dealing with, and in 
that regard, I think a vote of thanks from the U.S. Customs 
Service due to your support on CSI, because we have recognized 
that we are probably financing our paradigm now, that the ALGS 
doing business from the Customs standards have to be 
reexamined, and that is why we pursued some of the initiatives 
such as CSI and the CT pack.
    When you look at the total volume of the containers that we 
are looking at, we are actually inspecting somewhere in the 
neighborhood of about 8 percent of all of the containers that 
come into the United States, which is somewhere in the 
neighborhood of 1.5 million containers a year get broken open 
by the U.S. Customs Service.
    But rest assured, that is not random breaking open 
containers. This is taking information, slamming it against 
your database, making a determination and giving that container 
a score, and at each successive step, ratcheting up the 
process, unless we are satisfied that it does not pose a risk 
or we are satisfied of the need to open it.
    Senator Murray. Mr. Browning, do you know that our 
intelligence agencies currently have adequate information about 
cargo transportation?
    Mr. Browning. I think our intelligence agencies have a lot 
of information. I cannot speak specifically about cargo, but I 
can, however, say it is one of the things that we are trying to 
do, and someone asked a question about what post-9-11, where 
are we going as an organization and as an agency. I think there 
has been an awful lot of cooperation between the law 
enforcement agencies, unprecedented, in fact.
    Senator Murray. Do you share all your information with the 
Coast Guard?
    Mr. Browning. We are marching lockstep with the Coast Guard 
with many things. The manifest system is information that we 
applied. The point that you raised about the MPR and the 96-
hour manifest, we are piggybacking our effort, and they are 
providing information to us as part of that process. So there 
is a great deal of cooperation that is going on between the 
agencies.
    I have the privilege as part of the Homeland Security 
Deputy Council to work on the Container Working Group, and that 
group has all of the concerned organizations involved in taking 
a look at what we do to shore up our defenses in that area.
    As to the specific information that the intelligence 
community has, I cannot speak to that with any level of detail, 
Senator. Sorry.
    Senator Murray. Thank you very much, Mr. Chairman.
    Senator Wyden. Thank you. Senator Cantwell?
    Senator Cantwell. Thank you, Mr. Chairman, and I thank the 
panelists for their valuable testimony.
    Like Senator Murray, I have security concerns about the 
Office of Homeland Security, and maybe commandeering some 
budgets, and we certainly do not want that to happen, and like 
Rear Admiral Brown, I did have a chance to ask which has 
oversight of some of the agencies going in that, specifically 
about the Coast Guard budget and whether it will be protected 
for those same things that Senator Murray outlined, and so 
hopefully, we will have a written answer from him that will 
help protect us in the future and clarify that as we go through 
the process of looking at this legislation in the Senate.
    I guess I wanted to focus my first question on, with so 
much public attention and actually probably public experience 
has been focused on either at the border or at the airports and 
our individual travel, and we know that the lines are longer 
and more identification is required, and more specifications 
about, about travel plans and designations, at least at our 
border. I am not sure that it is clear what exactly we have 
deployed since 9-11 as it relates to container cargo, what 
changes have we made that are different in how we handle cargo, 
say for example, in the State of Washington.
    Mr. Browning. Senator Cantwell, let me take a quick stab at 
the question. From the U.S. Customs Service prospective, we 
certainly have gone out with what we consider a wide array of 
nonintrusive inspection technology. In 1991, we had one 
nonintrusive inspection device which was an X-ray van. Today, 
we have devices that range the full spectrum of activities, a 
total of 86 pieces that are on line right now. Another, at the 
end of the day probably as many as 139 pieces. We have $102 
million worth of 0-2 funding including both our appropriations 
and supplemental that will give us additional equipment. Our 
goal is to have at every port of entry some form of 
nonintrusive inspection equipment or system available.
    Senator Cantwell. Just like X-ray or baggage, like the new 
equipment that will be deployed at the port?
    Mr. Browning. However, it is X-ray. It is gamma ray, and it 
is what we refer to as--or vehicle and core--inspection system, 
and we have taken those systems and modified those systems into 
every environment in which we work. We do it in rail. We do it 
in the seaport environment. We have taken them and put them in 
mobile and relocatable forms. The relocatable form allows us to 
move it within 8 hours, and the mobile allows it to deploy it 
within 20 minutes. So we have become very flexible in our 
ability to use technology.
    In addition, we recognize that there are some threat areas 
for which some of the existing technology has not evolved to 
the point that it is reliable. So we are working with a number 
of labs, including the Pacific Northwest labs to develop some 
of these technologies based on our specifications, so that we 
can go out to vendors and see if there are vendors that can 
meet those technology needs. We are looking at the biochem 
area.
    Senator Cantwell. What would that be specifically, because 
you are talking high risk cargo. Not every piece of container 
cargo goes through that system.
    Mr. Browning. Not every piece goes through.
    Senator Cantwell. The equipment that you have ordered, will 
it upgrade the number of at-risk containers to a higher 
percentage?
    Mr. Browning. What it does is allow us to move more of it 
through more quickly. So we are spending less time examining. 
If you break a container down, it can take you anywhere, 
depending on the nature of the cargo, a few hours to half a day 
to break that container down and inspect that container. If you 
have the nonintrusive technology, we can do nonintrusive 
technology and do a 40-foot container in less than 6 minutes, 
and in fact, depending on the type of equipment we are using 
and the type of container we are examining, it can be done very 
quickly. So the value of that is it allows us to do our job 
better and quicker, and I think this is the point that was 
raised earlier about trying to find that balance between 
security and facilitation, and these are the kind of tools that 
would help us to do that.
    Senator Cantwell. So primarily it has been the deployment 
of more nonintrusive equipment, so that investment----
    Mr. Browning. It has also been, also what has happened that 
has also made it is easier, we actually have done two 
additional things that are very, very important. We stood up an 
office of anti-terrorism within our organization, and that 
office has been responsible for coordinating our overall 
response to the counter-terrorism risk efficiency. We, also, to 
assist our people in the field, stood up an Office of Border 
Security whose whole mission was to take a look at our 
database, to take a look at our targeting tools and to refine 
those very sophisticated rules-based targeting tools to allow 
us to cull more information, to make a better determination 
about what level of risk to attach to a particular container. 
So what we have really done is to take our work product and 
refine that work product for the new environment, so that we 
can get information that our people need, get them the tools 
that they need to do the job quickly, and also so that they can 
make determinations on what is at risk and what we need to take 
a look at.
    Senator Cantwell. I want to come back to that, but I want 
to ask Mr. Dinsmore from the port's overall perspective, what 
has the port deployed in the container area that is different 
from what was pre-9-11?
    Mr. Dinsmore. Thank you, Senator. To begin with, I agree 
with what you stated on behalf of U.S. Customs and on behalf of 
Coast Guard, there is clearly a new awareness on the seaport 
side subsequent to 9-11, but that being said, there is still a 
tremendous opportunity for improvement.
    What is different? What we see that is different, Senator. 
We have still the need to make our land-side facilities more 
safe and secure, and that is an issue that we are talking about 
ongoing now, to on the water, when we have container ships and/
or cruise ship activity in our harbor. We do have much more 
presence of the U.S. Coast Guard, and so that is visible. We 
are, on our land side, we have much more participation with our 
own law enforcement police department on the land side with our 
facilities.
    Senator Cantwell. Just making sure that there are not 
suspicious activities.
    Mr. Dinsmore. That is correct, and I suggest there is much 
more ongoing dialogue with both U.S. Customs and the ports, 
U.S. Coast Guard and INS.
    That being said, I say again, there is still tremendous 
need to expand that so there is additional quantitative 
outcomes that will benefit all of the ports in this Nation 
including Seattle and Tacoma.
    Senator Cantwell. Well, the reason, again, I mention 
because I think we have had so much attention, and obviously 
personal experience on the movement of people, and we 
obviously, given the comments that have been made by detained 
Al-Qaeda members about potential threats to sea or underwater, 
obviously, that is increasingly important to us knowing that we 
are a population center close to a border with many access 
points.
    Back to this point of importance of point of origin as a 
concept, and the CSI system leans more towards that. Now, that 
is deployed in a limited number of places, correct? Singapore 
is probably our key spot. Is that correct?
    Mr. Browning. Actually, Commissioner Bonner was in Europe 
this past week, and coming out of that was an agreement between 
Rotterdam, Antwerp, and, Le Havre to also have a similar 
program in all three of those points. So with Singapore and 
those three and Canada, we will now have four. I am sorry, five 
locations where we will have CSI operational. Our intent is to 
deploy the personnel to support these programs by the end of 
this fiscal year. It should be fully deployed to all of the 
locations to support this.
    Senator Cantwell. The ones that you just mentioned?
    Mr. Browning. Of the five locations that I just mentioned, 
but we are continuing to have dialogues with several other 
ports that are on the list of our ports, and we are hopeful 
that we can have as many as 10 on line by the end of this year 
that will be commissioned.
    Senator Cantwell. But the Container Security Initiative is 
focusing at getting people at those points of origin, customs 
officials instead of doing the job at the point of entry, doing 
that job at the port of origin, but it seems to me that that is 
obviously labor-intensive and somewhat, I am not saying 
limited, but our ability to deploy that obviously is being 
phased in.
    And we definitely found with the Ransom case that people go 
to the weakest place, that and while we might be building these 
great infrastructures in the Netherlands or Singapore, somebody 
is going to pick this route that we are not thinking about. So 
this issue of getting an international protocol, getting some 
agreement and coordinator seemed to me to be a critical point 
in getting those countries to agree with us that this is the 
security standard, and then having that deployed so that it did 
not just depend on how many customs officers we deploy at 
certainly cities seems to be a critical issue.
    Mr. Browning. Actually, Senator, that is a very good point. 
There are actually a couple of issues that intrigue me about 
this initiative, CSI. I think you need to look at it in 
partnership with C-TPAT which is our partnership with the 
private sector, the private sector, people importing into the 
United States. A company like Microsoft, for example, has an 
awful lot of clout, leverage with the vendors that it deals 
with who do their international work, and their customs work, 
and one of the approaches that Microsoft is going to take as 
part of their participation in the Customs--Trade Partnership 
Against Terrorism was to start modeling guidelines for its 
vendors, and to go to its vendors and say if you are going to 
deal with us as a company, you have to do X, you have to do Y, 
you have to do Z, because as part of C-TPAT, we want to make 
sure that our cargo coming into the United States gets that 
specialized treatment that C-TPAT members who are agreeing to 
install these security standards are going to be eligible to 
receive.
    If you take that, and you partner that up with what we are 
doing in the CSI area, you are now starting to build what we 
refer to as supply chain security, not just container security, 
but supply chain security, and I think the point was raised 
earlier, what we are looking at is to build a system that 
builds a system from point of vendor to point of consignor is 
totally security, and that is what we are trying to do is marry 
up those two pieces, so we can start the concept at supply 
chain security and get the notion out there that all of us have 
a vested interest in this.
    One final point I will make to you, I had the occasion to 
speak with a gentleman from the Maersk line about the megaport 
concept, because we are receiving a great deal of criticism 
that said we are going to the megaports. You are closing off 
smaller ports that may not be in the same position as the 
megaports to have the infrastructure to build the degree of 
infrastructure, to allow your people to come there. We are 
never said as part of CSI that you could not import from any 
port in the world. What we are saying is that by handling the 
megaports, we give ourselves a level of certainty that the 
stuff that is coming in from those ports is relatively secure. 
That allows us to take our limited resources and direct them 
toward other areas that may pose a risk, and that is those weak 
points that may be coming in, and you are talking about 60 
percent of the universe that we have to look at. If we can deal 
with that large a share of our work product so that we can 
refocus our resources, that makes good sense from both a trade 
facilitation standpoint, a security standpoint and an 
enforcement standpoint, and that has been the kind of approach 
we have been trying to build with both CSI, C-TPAT, our use of 
our resources in the United States.
    Senator Cantwell. I want to turn this over to the Chairman 
who has been so good to be here in Seattle today, but C-TPAT 
is, I mean, we are not in total cooperation on that, and that 
is individual partners?
    Mr. Browning. We have made it very attractive for them. We 
have added some incentives to the C-TPAT process. Right now we 
have over 160, 170 companies that have come forward, and others 
are coming forward on a daily basis. We have provided some 
incentives that say if you are part of C-TPAT, you go to the 
green line, because we have some level of certainty about the 
movement of your goods, and that is, we have tried to make it 
attractive, so they will participate.
    Senator Cantwell. I think Rear Admiral Brown in his comment 
referred to the Manley-Ridge Agreement. The State Department 
also needs to take the lead in going to these countries and 
saying are you with us in the war on terrorism? If you are, 
part of it is helping to establish a security protocol for 
container cargo and agreeing on what those processes are going 
to be. Otherwise, we will be deploying Customs people in every 
port, every port in the world. I mean every exit point, and we 
need to build on the international cooperation of this. I do 
not know if you wanted to add anything?
    Admiral Brown. Just one thing to add to what Deputy 
Commissioner Browning said, and as we look forward to those 
kind of international agreements, the incentives and also the 
things that technology will bring us, at this point the Coast 
Guard is working very closely with a lot of the facility 
owners, port authorities through these mechanisms we talked 
about in port security committees. The Pacific Area Commander 
to Coast Guard has drafted guidelines for--security guidelines 
for facilities, and while they are not as sophisticated as some 
of the things that we have talked about for the future, today 
what we are doing is working with them to insure when we have 
places on our facilities, that we have security procedures for 
access control, for internal security. We are training for 
security members that wear I.D., procedures to make sure that 
the people that are coming into these facilities are people 
that are supposed to be there, that they are putting up 
barriers and those kind of things. So it is the fundamental, 
day to day, take care of business things that we are working 
with. We are working with the owners and getting those things 
in place here in the Port of Seattle, and that has happened 
since September.
    Senator Cantwell. Thank you, Mr. Chairman.
    Senator Wyden. I thank you, Senator Cantwell.
    I only have a couple of other questions, my colleagues said 
it so well. To pick up on Admiral Brown, on this question of 
how the Coast Guard is going to work in the new Homeland 
Security Office, you know, for the life of me, I do not see how 
this can be done without billions of dollars additional 
funding, and the issue of just the nuts and bolts of how you 
would make this, this transfer just seems to be staggering. I 
mean, any way you look at it, what you all were doing before 
September 11th did not involve a whole lot on the issue of 
securing the country's borders. That was not a primary function 
of the Coast Guard before September 11.
    So if you would, tell me, first, you said it would be done 
through synergies, and I know you have creative people there at 
the Coast Guard, and I am sure synergies produce some savings, 
and they will be great to see them at work, but how is this 
going to be done if you keep everything you have got, plus you 
are going to get these new duties, how is this going to be done 
without billions of dollars of additional money? And take us, 
if you would, through your sense just operationally how it is 
going to proceed?
    Admiral Brown. Mr. Chairman, I would probably lose this job 
if I turned down potentially billions of dollars for our new 
responsibilities.
    Senator Wyden. How much are the synergies going to cost?
    Admiral Brown. Sir, just a quick historical perspective, 
and then we will look ahead. As you know, we became part of the 
Department of Transportation, moving from the Treasury, 
continuing to do our multimission responsibility, and I kind of 
see the future the same way, and not to be glib with you, but 
we have, we, during World War II had a lot of these security 
responsibilities, but the Coast Guard at that time was a lot 
larger, and as I have indicated in my opening statement, in 
response to the first question that Senator Murray asked was 
that the clear tasking and appropriate resources, and I was not 
trying to be glib when I said that we get economies and 
efficiencies through our synergies, but that is at our current 
level.
    I think right now Senator Murray is aware of the support 
that she has provided, and we have been greatly appreciative of 
it, but I think the Commandant has been very clear to meet our 
material traffic, what we call Market One. That is our 
definition of a ``new normalcy,'' that we see a multiyear 
budget strategy of growing the Coast Guard. So at this point we 
are not in the notion where we are able to meet our own 
internal requirement for the task that we have at hand.
    So the short answer to your question is the resources will 
probably depend upon the requirements. If the requirements we 
have currently hold, we have a multiyear budget strategy that 
should get us there in about two to three years.
    Senator Wyden. Again, for me if you keep everything got, 
you are going to get all this new stuff, and you basically 
change the very nature of the agency. Even the physical move 
strikes me that it is going to cost a vast sum to do it. It is 
not going to come about through synergies, and you are a good 
man and a creative fellow, but for the life of me, this map 
does not have----
    Admiral Brown. Sir, I think a large part of what we will 
have to do or what we are currently doing--I mean one of the 
differences, for example, while we do search and rescue, SAR, 
we have a search and rescue posture. It is mainly kind of like 
the fire house where you are ready to go when you are needed.
    For security, it is probably greater emphasis on presence. 
So that is not constant patrolling. So to the extent that there 
are enhanced presence requirements, then those numbers grow. So 
clearly our force structure flows from the strategy, and to 
date all the strategies we see, we have put together the budget 
strategies for them.
    You talk about the physical movement. Those physical 
movements to the best of my knowledge and understanding will 
probably be small ones at the headquarters level. We are in the 
places where we need to be. We are in the ports that we need to 
be. We have the relationships that we need to have. So the 
movements from my perspective as a field commander that 
delivers a service, we are in the places that we need to be to 
deliver the services, that is what need to do.
    Senator Wyden. Gentlemen, every seaport has unique 
characteristics. There are certainty unique, geographical and 
operational characteristics with respect to security. What are 
the unique concerns with respect to this port, this seaport 
that the Federal Government has?
    Admiral Brown. Sir, I will take a stab at answering that 
first. We are enormously challenged by geology here. When you 
look at our ports versus East Coast ports, so when you talk 
about things, security things like escorts, that those tend to 
be long escorts. We have challenging weather here. It is very 
unforgiving. So some of the craft that we have some places may 
not be suited as well to do those types of duties and 
responsibilities out here. We have a very challenging mix of 
strategic assets in terms of the Navy and being able to ensure 
they have free communications to the sea force protection, and 
that they also have protection in their home ports which is a 
new issue, a new issue for our Navy. But it is our 
responsibility to work with them to ensure that, and while it 
is large on the one hand, as Senator Murray indicated, we also 
have a very, very large Washington State ferry system, the 
largest in the Nation. So you have what we call a triad of, of 
security, strategic security assets, that we need to be 
concerned about, one of the highest recreational commuter and 
also fisherman use of this area, and also recreational.
    So we need to tend to all of those, and I would say that 
when you combine all three of those, we do not have a port 
anywhere in the Nation--a lot of other ports have focuses like 
the Gulf is the oil, but here in the Puget Sound, we have as is 
indicated the third largest container complex, and so we are 
ranking in the top of all of those areas, and that, that myriad 
of diverse responsibilities is enormously challenging.
    Just for a minute to talk about some of the other business. 
I hoped my comment talking about security, but at the same 
time, law enforcement is a layer where if you are there, and 
you are present, and you knew what the routes are, the same 
people that are not currently engaged in legitimate business, a 
lot of the concept we are talking about focuses on legitimate 
business. The people that are not in legitimate business are 
going to find the other routes. To the extent that we are there 
for drugs that are not in legitimate, to the extent that we 
know their routes and their rationales, these are the type of 
things that we need to pay attention to.
    Senator Wyden. Just to wrap up, Mr. Dinsmore, the 
Interagency Commission on Crime and Security in U.S. Seaports 
has the ports of this country expressing a fair amount of 
concern with the Federal Government basically kept in the dark. 
The Government has a specific amount of information, and that 
did not get to the ports or to people at the local level. Is 
that a concern that you have now, and if so, what is being done 
to address it?
    Mr. Dinsmore. I would say, Senator, the interaction has 
improved, but is it still a concern. The answer is no and yes, 
and just to add to what Admiral Brown said, we also, few ports 
in the Nation are directly aligned with and contiguous to a 
downtown metropolitan area. We have now two strategic centers 
that are within a stone's throw of one of our large container 
ports. So we are unique.
    Senator Wyden. The conference bill is going to mandate that 
every port have a comprehensive security plan. My understanding 
is that you all do not have one of those today, but that you 
will support this requirement in the conference legislation. Is 
that right?
    Mr. Dinsmore. That is correct.
    Senator Wyden. Very good, gentlemen. Anybody want to add 
anything further? We have gone a little bit over on this panel. 
We appreciate all of you and the good service that you perform. 
We will excuse you at this time.
    Senator Wyden. Gentlemen, thank you. I am just going to 
have to be tyrannical in terms of insisting on the five-minute 
element. I want my colleagues to be able to lead off with their 
questions, and we will make your remarks as part of the record.
    If you would just summarize, Tim Farrell, to begin with. 
Welcome.

 STATEMENT OF TIMOTHY FARRELL, DEPUTY EXECUTIVE DIRECTOR, PORT 
                           OF TACOMA

    Mr. Farrell. Okay. Thank you. Thank you, Senator Wyden, 
Senator Murray, Senator Cantwell, for being here and for 
offering us the opportunity to speak.
    I am going to pick up, you know, you cut off Mic. I am 
going to pick up where he left off, since there are two of us, 
but I want to give you a little bit of background on the Port 
of Tacoma. The port sits on 5,000 acres 30 miles from here. We 
handle about 15 million tons of cargo each year valued at $22 
billion, and that is the international portion. That is about 
1.3 million containers last year, and on the domestic side, we 
handle about $3 billion worth of trade, mostly to Alaska. Some 
75 percent of the consumer goods bound for Alaska from the 
lower 48 go through the Port of Tacoma. Geographically 
speaking, more than 70 percent of the containers go east, most 
by train to places like the Midwest and the northeastern part 
of the United States. So the port is certainly a national 
asset. All told, the port generates over 100,000 jobs in 
Washington State alone. The Port of Tacoma is also one of the 
United States Department of Transportation Maritime 
Administration agency's 13 strategic ports, and that 
designation is based on the fact that the port provides to 
nearby military installations.
    Since September we have faced the challenge of enhancing 
our security while maintaining the efficient flow of cargo. 
This was not the first time we thought of that. The port had 
invested over a million dollars in the three years prior to 
September. The port maintains an armed, uniformed security 
force 24 hours a day, seven days a week.
    One of the things I would like to do today is to recognize 
Congress and the Federal agencies that we work with every day 
for acknowledging the Government role in supply chain security. 
Supply chain security is indeed a defense issue. Ports are 
border crossings, and they do serve multiple inland locations. 
The Port of Tacoma is working on enhancements in partnership 
with the Government as we are doing with port security grants 
recently announced. The $4.76 million jointly awarded to the 
ports of Seattle, Tacoma, and Everett will be used to assess 
our vulnerabilities and to harden our facilities for such 
things as fencing, lighting, gates and that sort of thing. The 
$93 million was a great first step. As you know, there are $700 
million of requests for that money, so there is a good bit of 
work yet to be done.
    As we improve security at home, obviously the next step is 
to push back the borders to the point of origin. The next step 
we feel is to assess vulnerabilities and assess security 
standards before the cargo reaches our shores. The ports of 
Seattle and Tacoma are working with 9 private sector 
partnerships and overseas ports and will be developing best 
practices for supply chain security including securing cargo at 
the port of origin and securing that the cargo stays on 
schedule and on route, and that there is no tampering with the 
cargo along the way of its distribution, which can be as far 
away as New England. This effort includes the Port of Tacoma 
and Port of Seattle contributing to Operation Safe Commerce, 
the principal objective of which is as its name implies a 
secure supply chain. Another objective is that there is minimal 
disruption of the supply chain and to raise enhancement of the 
supply lane along the way. As you are aware, the port 
authorities of New York and New Jersey and the Port of Los 
Angeles are also involved in Operation Safe Commerce. Operation 
Safe Commerce will be driven by proven and emerging standards 
and technologies. The standards and technologies will, one, 
ensure that the containers are securely loaded at the port of 
origin in secured containers, two, allow continual container 
monitoring throughout the voyage to the point of distribution 
in the United States, again ensuring that the cargo stays on 
route, on schedule and is not tampered with, and three, 
Operation Safe Commerce will supply a software system that 
ensures that all the suppliers in the secure supply chain will 
know the status of a container at any point from its loading to 
its distribution. Operation Safe Commerce will provide 
solutions to our security challenges while contributing to free 
flow of trade through U.S. ports. The program is completely 
consistent with U.S. Customs and CSI and C-TPAT that you have 
heard about today. In fact, what we are hoping is that the best 
practices that we are able to develop with these three load 
centers will be integrated into these programs. Operation Safe 
Commerce is a broad-ranging program. It will be supported by 
many of the existing efforts that are already under way, 
including those to develop cargo tracking technology and smart 
boxes. Coordinator of these various efforts under Operation 
Safe Commerce will be one of the deliverables of the program.
    I am going to leave off at that point, because I think it 
is valuable--you have heard from me, and you have heard from 
Mic. I think it is valuable that you have the opportunity to 
ask as many questions as you can. Thank you very much.
    Senator Wyden. Very good. Thank you.
    [The prepared statement of Mr. Farrell follows:]

Prepared Statement of Timothy Farrell, Deputy Executive Director, Port 
                               of Tacoma
    Good afternoon Senator Wyden, Senator Murray and Senator Cantwell. 
My name is Tim Farrell, Deputy Executive Director for the Port of 
Tacoma. I appreciate the opportunity you have given me today to discuss 
some possible positive solutions to the challenge of securing our 
international trade routes from disruption by terrorism.
    Let me first put my comments about maritime security into context 
by describing our business. Each year, the Port of Tacoma handles more 
than 15 million tons of cargo, amounting to more than $22 billion in 
international trade--the vast majority with Asia. The Port of Tacoma 
moved more than 1.3 million containers across its docks in 2001 and, 
when combined with the Port of Seattle, Puget Sound represents the 
nation's third largest intermodal gateway. More than 70 percent of the 
containerized imports that cross our docks are loaded onto trains and 
shipped to consumers throughout the Midwest and East Coast.
    Additionally, the Port of Tacoma handles $3 billion worth of trade 
as the Gateway to Alaska, with more than 75 percent of all consumer 
goods bound for Alaska transported through Tacoma on CSX and TOTE 
ships. All of this activity contributes to more than 100,000 family 
wage jobs for the citizens of Washington state.
    Another important distinction Tacoma has is serving as one of the 
U.S. Department of Transportation Maritime Administration's 13 national 
``strategic ports''--a designation based on the military support 
capabilities the Port of Tacoma provides to Fort Lewis.
    Whether we are importing shoes from Korea, exporting Washington and 
Oregon agricultural products to China or supporting U.S. military load-
outs from Fort Lewis, the fast and efficient flow of freight through 
our Port is not only a key regional concern, but also a critical 
national interest.
    In the days since September 11th, we have been faced with the 
challenge of accelerating security improvements while maintaining the 
efficient flow of cargo. This has been one of my key responsibilities 
as the Port's Deputy Executive Director. We have long recognized that, 
due to our key position as one of the nation's largest container ports, 
security must be a top priority. To that end, the Port of Tacoma 
invested more than $1 million in facility security enhancements and 
related security upgrades prior to the terrorist attacks in New York.
    This is in addition to ongoing operating expense associated with 
the Port's proprietary, non-commissioned--but armed--security force of 
uniformed officers. In 1999, the Port installed an access control 
system for all facilities. A database of more than 1,500 cardholders 
includes members of the longshore workforce, Port employees, terminal 
operators and stevedore employees.
    I would like to thank Congress and other governmental agencies for 
recognizing the federal role in port and supply chain security and 
their funding assistance that allows us to continue the process of 
security improvement. The $4.76 million jointly awarded by the 
Transportation Security Administration to the Ports of Tacoma, Seattle 
and Everett will be used to assess our vulnerabilities and harden our 
facilities. The grant funding of $92.3 million was a tremendous first 
step, but because seaports are, quite literally, the economic borders 
of our nation, we believe that more must be done. The Ports of Puget 
Sound, in fact, were among hundreds of ports and maritime organizations 
nationwide that submitted requests that totaled nearly $700 million.
    As we strengthen security at home, the next logical step is to 
``push back'' our economic borders overseas to the point of origin. We 
must assess vulnerabilities and establish perimeters of security long 
before cargo reaches our shores. This is an objective of Operation Safe 
Commerce. The program is designed to develop practical alternatives to 
traditional security measures. As a key player in this program with the 
Port of Seattle, the Port of Tacoma is actively developing a solution 
that substantially increases the security of trans-Pacific 
containerized cargo, while not impeding the free flow of trade. As one 
of the nation's three largest load centers, the Ports of Tacoma and 
Seattle are working with the Ports of Los Angeles and Long Beach and 
the Ports of New York and New Jersey to establish procedures and 
technologies to determine ``best practices'' in supply chain security.
    The objective of Operation Safe Commerce is to secure intermodal 
trade corridors across the Pacific Rim. The program brings 
ACCOUNTABILITY for cargo security up and down the entire supply chain 
from the point of loading--whether it's in China, Japan or Korea--
through the Puget Sound load centers and by rail on to points of 
distribution, such as Chicago or New York.
    Operation Safe Commerce is a progressive initiative that will be 
driven by both proven and emerging technologies that will:

    Ensure that containers are securely loaded at the point of 
        product origin and provide 100 percent verification of 
        container contents.
    Employ technology that will be placed in or on the 
        container, continually monitoring container status throughout 
        the voyage overseas to the point of distribution here in the 
        United States.
    Use advanced cargo tracking technology to ensure that 
        federal agencies, shippers, shipping lines and others know the 
        status of a container at any point from loading to 
        distribution.

    Senators Wyden, Murray and Cantwell, we believe Operation Safe 
Commerce is a logical solution to a pressing security challenge. 
Moreover, it is a solution that will contribute to the efficient flow 
of trade through U.S. Ports. As you know, the security of the logistics 
chain is an element of national security, and we appreciate your 
efforts to bring federal funding to the implementation of these 
programs.
    The major load centers of the nation are not alone in their request 
for federal funding to extend our economic borders to the point of 
origin. U.S. Customs has relied on an automated system to collect 
information on imports that is becoming inadequate and antiquated. We 
support the funding and maintaining of U.S. Customs' Automated 
Commercial Environment (ACE). Without this system, imported cargo 
clearance must be completed manually on paper. The current Automated 
Commercial System (ACS), to be replaced by ACE, now processes 
approximately $1 trillion in imported-goods entries each year. ACS is 
currently operating at a capacity well beyond its design 
specifications. Without the ACE upgrade, the system is headed for a 
serious failure, especially with increasing volumes of cargo.
    I would also like to take this opportunity to comment on the 
maritime security authorization bill (S. 1214, H.R. 3983) that 
originated in your Committee and is currently before a House-Senate 
conference committee. We appreciate the willingness this Committee has 
shown to listen to the views of the overall port industry as expressed 
by the American Association of Port Authorities (AAPA). The Port of 
Tacoma is working with other large ports on some additional thoughts on 
conference issues, which we will be sharing with you soon.
    One conference issue that our representatives in Washington have 
already discussed with you is our concern about the diversion of cargo 
to Canada, especially the diversion of cargo from Puget Sound ports to 
the Port of Vancouver, British Columbia. We are losing more and more 
cargo to Vancouver, due in part to federal policies like the U.S. 
harbor maintenance tax. We are concerned that this maritime security 
authorization bill might impose burdensome security regimes and fees on 
cargo transiting U.S. ports that are not imposed at Canadian ports. 
That would divert even more cargo to Canada, which would not only hurt 
the Ports of Puget Sound and the U.S. economy, but also undermine the 
security goals of this legislation.
    We are especially concerned about the discussion of a security fee 
on waterborne cargo. Taxes and fees on cargo tend to distort trade 
flows by diverting cargo to ports and modes of transportation where the 
fee is not imposed. They also hurt the competitiveness of U.S. exports. 
Maritime security is a national security issue; therefore, its costs 
should be borne by the U.S. Treasury (As a part of the U.S. Treasury, 
U.S. Customs ranks among the largest revenue source for the federal 
government).
    If a security fee is imposed in this bill, we urge you to craft it 
very carefully so that it does not cause cargo diversion to Canada--
even for a short period. Once cargo is diverted to new routes, it may 
never come back.
    On behalf of the Port of Tacoma and the citizens of Pierce County, 
I thank you for this opportunity to discuss maritime security today.

    Senator Wyden. Mr. Yap, I join Senator Murray in the 
welcome that she gave you earlier.

    STATEMENT OF ROBERT YAP, EXECUTIVE VICE-PRESIDENT, PSA 
                          CORPORATION

    Mr. Yap. Thank you. Senator Wyden, Senator Murray and 
Senator Cantwell, my name is Robert Yap, and I am the executive 
vice-president for information technology for PSA. Thank you, 
indeed, for the opportunity to testify before this Committee 
today. It is an honor to be here.
    Let me by way of introduction introduce the company that I 
represent this afternoon. PSA operates the world's largest hub 
at our terminals in Singapore. Our Singapore terminals recorded 
1.44 million TEUs in May 2002, and we expect to handle 17 
million TEUs for this year. Together with our overseas 
terminals, PSA's throughput grew by 24 percent over the past 5 
months.
    We provide every shipper an unrivaled choice of 250 
shipping lines with connections to over 600 ports in 123 
countries. We have daily sailings to every major port in the 
world with an average two daily sailings to U.S. ports, 
including Seattle and Tacoma. Our partnership with these two 
ports is important to PSA, and I am honored to be here with my 
two partners this afternoon as well. We operate technologically 
advanced container terminals with the comprehensive 
infrastructure that allows the accurate and timely handling of 
vessels and containers. This infrastructure includes 37 berths 
or terminals handling an average of 60 vessels a day, 45,000 
Twenty-foot Equivalent Units of containers and in excess of 
100,000 TEUs held within PSA's yards on any given day.
    Outside of Singapore, PSA also manages 30 ports in 8 
countries around the world included Brunei, China, India, 
Italy, Korea and Portugal. The recent acquisition of two large 
ports in Belgium, namely Antwerp and Zeebrugge, has given PSA a 
substantial presence in Europe for the U.S. East Coast trade. 
Collectively, PSA manages 24 million TEUs amounting to 10 
percent of the world's container throughput.
    PSA deploys extensive information technology to manage its 
24 million containers yearly. PSA has won numerous awards for 
IT innovation in the ports and logistics industry in the U.S., 
the most recent being the Smithsonian award for our terminal 
operating system, and our part man. PSA's comprehensive 
technology infrastructure in Singapore rides on a 6,000-km 
fiber optic network, and real time transfer of information 
between 500 cranes and 700 terminal trucks within the 
terminals, and ultimately onto our Port Community System called 
PORTNET'. PORTNET' facilitates the 
business-to-business transactions among all players in the port 
and shipping community in a highly secured Internet 
environment. We deploy multi-tier firewall and data encryption 
technology, to secure our data communication networks spanning 
both private and public access.
    The Port Community System brings all parties in the port 
and shipping community to electronically transact through a 
common Web-based portal. This serves as a common interface and 
a central system for all parties to obtain and transmit 
information.
    Steamship lines, freight forwarders, port authorities, 
government agencies, trucking and rail companies input 
container and shipping information into this system. The Port 
Community System subsequently connects to the terminal 
operator's system, enabling the tracking of containers from 
factory to terminal, onto ships, to the next port of call, and 
ultimately to its final designation.
    For example, in Singapore, PORTNET' 
electronically captures information of every container 
entering, leaving or passing through the port. It also captures 
information related to bulk or loose cargo. The 
PORTNET' system has been operating in Singapore 
since 1984 and currently has a foot- print of 7,000 users, 
generating around 70 million transactions a year. By far this 
is the world's largest port community system. Besides 
Singapore, PORTNET' is operational in other ports of 
the world.
    An operating and proven port community system coupled with 
an established container tracking infrastructure provides that 
clear information trail. This trail begins with the input of 
container information into the system, fixing of the electronic 
seal on the container, enabling real time tracking of 
containers globally.
    Subsequently, the information trail can be expanded to 
include who owns the cargo, who packed the container, which 
tracking company handled the container, and the duration from 
point to point. The information can be cross-referenced with 
related systems and databases forming an extensive source of 
information for the U.S.-led Container Security Initiative.
    In effect, the container's movements will be tracked from 
source to designation physically, with hand over between 
multiple parties, well documented and audited.
    As more port community systems are established globally, 
they collectively and invariably form a container security 
backbone.
    The farsighted decision by the Port of Seattle to implement 
PORTNET' in Seattle has essentially provided a 
platform and a unique opportunity for the Port of Seattle to 
take the lead in the implementation of a PCS in the U.S. This, 
in essence, could potentially become the U.S. container 
security information management layer.
    Once again, thank you for the opportunity to share my 
thoughts with you on this critically important issue. I look 
forward to answering any questions you have.
    [The prepared statement of Mr. Yap follows:]

    Prepared Statement of Robert Yap, Executive Vice-President, PSA 
                              Corporation
Senator Wyden,
Chairman Murray,
Senator Cantwell,

    Thank you for the opportunity to testify before this Committee 
today. It is an honour to be here.
    PSA operates the world's largest container transhipment hub at our 
terminals in Singapore. Our Singapore terminals recorded 1.44 million 
TEUs in May 2002, and we expect to handle 17 million TEUs for this 
year. Together with our overseas terminals, PSA's throughput grew by 
24-percent year-on-year over the past 5 months.
    We provide every shipper an unrivalled choice of 250 shipping lines 
with connections to over 600 ports in 123 countries. We have daily 
sailings to every major port in the world, with an average 2 daily 
sailings to US ports, including Seattle and Tacoma. Our partnership 
with these two ports is important to PSA and I am honoured to be here 
with my two partners this afternoon.
    We operate the most technogically advanced container terminals, 
with a comprehensive infrastructure that allows the accurate and timely 
handling of vessels and containers. This infrastructure includes 37 
berths, handling an average of 60 vessels, 45,000 Twenty-foot 
Equivalent Units (TEUs) of containers and in excess of 100,000 TEUs 
held within PSA's yards, on any given day.
    Outside of Singapore, PSA also manages 13 ports in 8 countries 
around the world. These include Brunei, China, India, Italy, Korea and 
Portugal. The recent acquisition of 2 large ports in Belgium, namely 
Antwerp and Zeebrugge which entails 22 terminals, has given PSA a 
substantial presence in Europe for the US East Coast trade. 
Collectively, PSA manages 24 million TEUs amounting to 10-percent of 
the world's container throughput.
    PSA deploys extensive Information Technology to manage this 24 
million containers. PSA has won numerous awards and accolades for IT 
innovation in the Ports and Logistics industry. The most recent being 
the Smithsonian award for our terminal operating system and the 
Computerworld Honors Laureate for PORTNET'.
    PSA's comprehensive technology infrastructure in Singapore rides on 
a 6,000 km fibre optic network, enabling the real time transfer of 
information between 500 cranes and 700 terminal trucks within the 
terminals, and ultimately on to our Port Community System called 
PORTNET'.
    PORTNET' facilitates the business-to-business 
transactions amongst all players in the port and shipping community in 
a highly-secured Internet environment. We deploy multi-tier firewall 
and data encryption technology to secure our data communication 
networks spanning both private and public access.
    The Port Community System brings all parties in the port and 
shipping community to electronically transact through a common web-
based portal. This serves as a common interface and a central system 
for all parties to obtain and transmit information.
    Steamship lines, freight forwarders, port authorities, government 
agencies, trucking and rail companies input container and shipping 
information into this system. The Port Community System subsequently 
connects to the terminal operator's system--enabling the tracking of 
containers from factory to terminal, onto ships, to the next port of 
call and ultimately to its final destination.
    For example in Singapore, PORTNET' electronically 
captures information of every container entering, leaving or passing 
through the port. It also captures information related to bulk or loose 
cargo. The PORTNET' system has been operating in Singapore 
since 1984 and currently has a foot-print 7,000 users, generating 
around 70 million transactions per year. By far this is the world's 
largest Port Community System. Besides Singapore, PORTNET' 
is operational in other parts of the world.
    An operational and proven Port Community System coupled with an 
established container tracking infrastructure provides a clear 
information trail. This trail begins with the input of container 
information into the system, fixing of the electronic seal on the 
container, enabling real time tracking of the container globally.
    Subsequently the information trail can be expanded to include, who 
owns cargo, who packed the container, which trucking company handled 
the container, and the duration from point to point. The information 
can be cross referenced with related systems and databases forming an 
extensive source of information for the US led container security 
initiative.
    In effect, the container's movements will be tracked from source to 
destination physically, with hand-over between multiple parties well 
documented and audited.
    As more Port Community Systems are established globally, they 
collectively and invariably form a container security backbone.
    The farsighted decision by the Port of Seattle to implement 
PORTNET' in Seattle has essentially provided a platform and 
a unique opportunity for the Port of Seattle to take the lead in the 
implementation of a PCS in the USA. This, in essence, could potentially 
become the US container security information management layer.
    Once again, thank you for the opportunity to share my thoughts with 
you on this critically important issue. I look forward to answering any 
questions you may have.

    Senator Wyden. Very good statement, Mr. Yap, and we thank 
you. Captain Marcus?

       STATEMENT OF CAPTAIN DON MARCUS, VICE-PRESIDENT, 
        PACIFIC INTERNATIONAL ORGANIZATION OF MASTERS, 
                        MATES AND PILOTS

    Mr. Marcus. Good afternoon, Senators Murray, Wyden and 
Cantwell. I am testifying on behalf of the Puget Sound Ports 
Council of the Maritime Trades Department of the AFL-CIO. On a 
national level, the organizations that make up the Maritime 
Trades Department represent the vast majority of mariners 
operating United States flagged vessels in the international 
and domestic trade.
    It is gratifying and only right that seafaring labor has a 
place at this forum. We thank you and your staffs.
    Our perspective is somewhat different as seagoing labor 
protecting our trade routes starts overseas and on the high 
seas.
    Since ancient times every great trading nation has thrived 
only to the extent that it has been able to maintain and 
protect its ocean trade routes. 9-11 has demonstrated that 
commerce can be brought to a stop. What we do now to reduce our 
vulnerabilities will have lasting impacts.
    The overwhelming proportion of our imports and exports are 
carried by sea. Sadly, there are now only 102 U.S. flag vessels 
engaged in international trade, a pitiful 2.6 percent of our 
foreign commerce. It is difficult to think of any great trading 
nation that allowed itself to become as dependent on foreign 
shipping as the United States currently is. Our economic and 
military security, not to mention our port security, are now 
largely at the mercy of foreign flag ocean carriers, foreign 
shippers and foreign seafarers.
    Billions of dollars are being made transporting goods and 
materials to and from our shores. That immense power must not 
inhibit the changes that are necessary to protect our trade 
routes.
    Worse than the decline in the numbers of U.S. flag vessels 
is the loss of skilled mariners. Experienced seafarers are 
abandoning their careers in record numbers. Young Americans are 
not committing themselves to an industry that has no apparent 
future.
    We must not forget the lessons we learned in the Persian 
Gulf War, Vietnam, Korea and two world wars. The next terrorist 
attack will likely involve our brothers and sisters working on 
the high seas, in our harbors or on our docks. We will be the 
first responders. If our troops need supplies overseas or if 
foreign cartels decide to strangle or blackmail our economy, it 
will not be to the global village that our Nation will turn to 
for help. It will be to our citizens. We will be called upon to 
make the sacrifice. Without some forward thinking and action, 
we will not be able to rise to the task.
    9-11 has not changed the historical proof that a viable 
United States flag merchant marine plus the United States Navy 
are what is needed to secure our trade routes. We must 
establish a vigorous national maritime policy. Consider the 
following steps to increase our maritime security. At this time 
there are 47 ships in our Maritime Security Program. We urge 
you to expand and extend this program. A minimum of 100 
militarily useful vessels, and a 20-year program are needed to 
maintain the U.S. flag fleet in international trade. Maritime 
tax reform is essential to encourage investment in United 
States flag shipping.
    The proposed Merchant Marine Cost Parity Act, H.R. 3262, 
could provide the sort of tax and investment incentives enjoyed 
by our foreign flag competitors. We must continue to support 
the Jones Act and cargo preference laws. Our domestic trade 
must remain in United States control. Our cargo preference laws 
must be rigidly enforced. Title XI loan guarantees must remain 
available if our obsolescent domestic fleet is to be rebuilt. 
Investment in domestic shipping needs to be fostered, to 
improve our national transportation network, to protect our 
environment and to sustain our seagoing labor pool.
    Legislation such as the United States Cruise Vessel Act, 
S.127, should be enacted to ensure that some of the billions of 
dollars going virtually tax-free to foreign cruise ship owners 
gets redirected into the United States economy and tax base. 
The palatial foreign flag cruise ships that we see in U.S. 
harbors employ hundreds of low wage, poorly documented Third 
World seamen. These floating cash cows enhance neither our 
maritime capability nor our port security.
    The security of our trade routes is similarly not enhanced 
by certain misguided actions of the U.S. Customs Service and 
the U.S. Coast Guard. Last year the Customs Service extended 
the scope of the already disadvantageous 50 percent ad valorem 
duty on repairs to U.S. vessels. Customs regulations now 
subject maintenance and repairs performed by American crew 
members while underway on the high seas to the ad valorem duty. 
Owners of foreign flag vessels pay no such duty. This is absurd 
and must be stopped.
    The USCG subjects American mariners engaged in foreign 
trade to the latest requirements of the International 
Convention on Standards of Training, Certification and 
Watchkeeping, known as STCW 95. At the same time, the U.S. 
Coast Guard has delayed implementing these requirements for 
foreign seafarers. Foreign seamen are given a free pass into 
the United States disregarding one of the most effective means 
of differentiating between bona fide, properly trained 
seafarers and possible impostors, or at best, inadequately 
trained seamen. The U.S. Coast Guard must be instructed to 
vigorously enforce these standards aboard all flag of 
convenience vessels entering U.S. ports.
    U.S. citizen mariners are among the most highly regulated 
workers in this country. We do not expect that to change. 
However, since 9-11, there has been an irrational and 
unwarranted urgency to regulate U.S. citizen shore-side 
workers, yet no urgency to extend equivalent requirements to 
foreign seafarers. For example, while American seamen can be 
legally arrested, detained, fined, and deported by Canadian 
authorities upon evidence of past misdemeanor convictions, 
foreign seamen enter U.S. ports without effective scrutiny.
    American maritime workers and United States flag employers 
must not be burdened with more regulations, while the rest of 
the industry carries on with business as usual. This can only 
drive U.S. flag ship owners away from our flag and U.S. citizen 
mariners out of the industry.
    A New York Times article noted that the Al Queda owned a 
fleet of merchant vessels hidden under various flags of 
convenience. Every day, flag of convenience vessels whose 
owners are virtually anonymous enter our ports.
    Starting at foreign points of origin, shippers and ocean 
carriers need to be examined to ascertain responsible parties. 
Cargo profiles must be established to identify suspicious 
shipments. Vessel ownership, the identity of shippers and cargo 
manifest information must be transparent. There is absolutely 
no legitimate reason not to require all parties in the 
transportation chain to be gradually certified in order to 
continue doing business in this country.
    We in the maritime trades are calling for background checks 
and certification for the shippers and ocean carriers who bring 
their business into our ports. We support the proposed Port 
Threat and Security Act, S. 1587, and the Ship, Seafarer and 
Container Security Act, which reflect these interests.
    In summary, maritime security demands a viable United 
States merchant marine. Maritime security demands 
accountability for all participants in the transportation 
chain. In order to protect our trade routes, we must have a 
United States flag, citizen-crewed merchant fleet capable of 
carrying a reasonable proportion of U.S. foreign trade. Self-
reliance is the best guarantee of economic and national 
independence.
    Thank you for your attention, and I look forward to your 
questions.
    Senator Wyden. Thank you. Very helpful.
    [The prepared statement of Mr. Marcus follows:]
Statement by Captain Don Marcus, Vice-President, Pacific International 
               Organization of Masters, Mates and Pilots
    Good afternoon Senator Wyden and Members of the Subcommittee. I am 
testifying on behalf of the Puget Sound Ports Council of the Maritime 
Trades Department, AFL-CIO. On a national level, the organizations that 
make up the Maritime Trades Department represent the vast majority of 
mariners operating United States flag merchant vessels in international 
and domestic trade.
    It is gratifying and only right that seafaring labor has a place at 
this forum. We thank you and your staff.
    Every great trading nation since ancient times has thrived only to 
the extent that it has been able to maintain and protect its maritime 
trade routes. 9-11 has demonstrated that commerce can be brought to a 
halt. What we do now to reduce our vulnerabilities will have lasting 
repercussions.
    The overwhelming proportion of our imports and exports are carried 
by sea. Sadly, there are now only 102 United States flag vessels 
engaged in international trade. These vessels carry a pitiful 2.6-
percent of our foreign commerce. It is difficult to think of any great 
trading nation that allowed itself to become as dependent on foreign 
shipping as the United States currently is. Our economic and military 
security, not to mention our port security, are now largely at the 
mercy of foreign-flag ocean carriers, foreign shippers and foreign 
seafarers.
    Billions of dollars are being made transporting goods and materials 
to and from our shores under foreign flags. The immense power of this 
money must not inhibit the changes that are necessary to protect our 
trade routes.
    Worse than the decline in the numbers of United States flag vessels 
is the loss of skilled mariners. Experienced seafarers are abandoning 
their careers in record numbers. Young Americans are not committing 
themselves to an industry that has no apparent future.
    We must not forget the lessons of the Persian Gulf War, Viet Nam, 
Korea and two world wars. The next terrorist attack will likely involve 
our brothers and sisters working on the high seas, in our harbors or on 
our docks. WE will be the first responders. If our troops need supplies 
overseas or if foreign cartels decide to strangle or blackmail our 
economy, it won't be to the Global Village that our nation will turn to 
for help, it will be to our citizens. We will be called upon to make 
the sacrifice. Without some forward thinking and action, we will not be 
able to rise to the task.
    9-11 hasn't changed the historical proof that a viable United 
States flag merchant marine plus the United States Navy are the 
essential requirements to secure our trade routes. We must establish a 
vigorous, national maritime policy. Consider the following steps to 
increase our maritime security:

    At this time there are 47 ships in our Maritime Security 
        Program. We urge you to expand and extend this program. A 
        minimum of one hundred militarily useful vessels and a twenty-
        year program are needed to sustain a U.S.-flag fleet in 
        international trade.
    Maritime tax reform is essential to encourage investment in 
        United States-flag shipping. The proposed Merchant Marine Cost 
        Parity Act, H.R. 3262 introduced by Representatives Oberstar 
        and Young could provide the sort of tax and investment 
        incentives enjoyed by our foreign-flag competitors. This bill 
        would go a long way to reduce the high tax, insurance and 
        inspection costs that disadvantage United States ship owners.
    We must continue to support of the Jones Act and Cargo 
        Preference Laws. Our domestic trade must remain in United 
        States control. Our cargo preference laws should be rigidly 
        enforced. The current leakage of military cargoes to foreign-
        flag carriers needs to be stopped.
    Title XI Loan Guarantees must remain available if our 
        obsolescent domestic fleet is to be rebuilt. Investment in 
        domestic shipping needs to be fostered, to improve our national 
        transportation network, protect our environment and to sustain 
        our seagoing labor pool.
    Legislation such as the United States Cruise Vessel Act, S. 
        127 should be enacted to ensure that some of the billions of 
        dollars going virtually tax-free to foreign cruise ship owners 
        gets re-directed into the U.S. economy and tax base. The 
        palatial foreign-flag cruise ships that we see in U.S. harbors 
        employ hundreds of low wage, poorly documented third-world 
        seamen. These floating cash cows enhance neither our maritime 
        capability nor our port security.

    The security of our trade routes is similarly not enhanced by 
certain misguided actions the United States Customs Service and United 
States Coast Guard:

    Last year the Customs Service extended the scope of the 
        already disadvantageous 50-percent ad valorem duty on repairs 
        to U.S. vessels. Customs regulations now subject maintenance 
        and repairs performed by American crew members while underway 
        on the high seas to the ad valorem duty. Owners of foreign-flag 
        vessels pay no such duty. This is absurd and must be stopped.
    The USCG subjects American mariners engaged in foreign 
        trade to the latest requirements of the International 
        Convention on Standards of Training, Certification and 
        Watchkeeping (known as STCW 95). At the same time, the U.S. 
        Coast Guard has delayed implementing these requirements for 
        foreign seafarers. Foreign seamen are given a free pass into 
        the United States disregarding one of the most effective means 
        of differentiating between bona fide, properly trained 
        seafarers and possible imposters or, at best, inadequately 
        trained seamen. The U.S. Coast Guard must be instructed to 
        vigorously enforce these standards aboard all flag of 
        convenience vessels entering U.S. ports.
    United States citizen mariners are among the most highly 
        regulated workers in this country. We don't expect that to 
        change. However, since 9-11 there has been an irrational and 
        unwarranted urgency to regulate U.S.-citizen shore-side 
        workers, yet no urgency to extend equivalent requirements to 
        foreign seafarers. For example, while American seamen can be 
        legally arrested, detained, fined and deported by Canadian 
        authorities upon evidence of past misdemeanor convictions, 
        foreign seamen enter U.S. ports without effective scrutiny.

    American maritime workers and United States flag employers must not 
be burdened with more regulations, while the rest of the industry 
carries on with business as usual. This can only drive U.S.-flag ship 
owners away from our flag and U.S. citizen mariners out of the 
industry.
    A New York Times article (October 8, 2001) noted that the Al-Qaeda 
owned a fleet of merchant vessels hidden under various flags of 
convenience. Every day, flag of convenience vessels, whose owners are 
virtually anonymous, enter our ports.

    Starting at foreign POINTS of origin, shippers and ocean 
        carriers need to be examined to ascertain responsible parties. 
        Cargo profiles must be established to identify suspicious 
        shipments. Vessel ownership, the identity of shippers, and 
        cargo manifest information must be transparent. There is 
        absolutely no legitimate reason not to require all parties in 
        the transportation chain to be gradually certified in order to 
        continue doing business in this country.
    We in the Maritime Trades are calling for background checks 
        and certification for the shippers and ocean carriers who bring 
        their business into our ports. We support the proposed Port 
        Threat and Security Act, S. 1587 and the Ship, Seafarer and 
        Container Security Act S. 2329 which reflect these interests.

    In summary:

    Maritime security demands a viable United States merchant 
        marine.
    Maritime Security demands accountability for all 
        participants in the transportation chain.
    In order to protect our trade routes we must have a United 
        States-flag, citizen-crewed merchant fleet capable of carrying 
        a reasonable proportion of U.S. foreign trade.
    Self-reliance is the best guarantee of economic and 
        national independence.

    Thank you for your attention.

    Senator Wyden. Mr. Bates?

STATEMENT OF DEL BATES, VICE-PRESIDENT, LOCAL 19, INTERNATIONAL 
                 LONGSHORE AND WAREHOUSE UNION

    Mr. Bates. Yes, I want to thank you, Senator Wyden, Senator 
Cantwell and Senator Murray for having me testify today.
    As vice-president of the International Longshore and 
Warehouse Union, Local 19, representing working men and women 
in the Port of Seattle, I am pleased to submit these comments 
regarding the security of our port.
    The members of the ILWU are committed to making our port 
and surrounding areas safe, and secure and free of criminal or 
terrorist activities. Just as important, we are absolutely 
committed to insuring the security of our work force as well as 
the community where we live and interact. This is especially so 
since ILWU members face direct risk to their personal safety 
and livelihood from such criminal terrorist acts simply by 
virtue of the jobs we do and the areas where we work.
    Following the horrendous terrorist attacks of September 11, 
our port went on immediate security alert. The Longshoreman's 
Union has held joint meetings with the Coast Guard and all of 
our maritime employers to discuss the threats we now face and 
the actions we must now take. The U.S. Coast Guard has 
basically been our waterside enforcement agency within the 
Federal Government.
    To be perfectly clear, understand that land side 
enforcement is a different matter altogether. In Seattle, as in 
other major American ports, including those with ILWU 
jurisdiction, land side security enforcement has been a 
function of the local port and terminal operators.
    Land side security issues, container security seals, like 
luggage on airplanes, the containers on vessels and in port 
facilities need to be subjected to security screening to 
protect the 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 be done to ensure 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 ensure 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 ensure the origins of that cargo.
    A broken seal would alert port security that the container 
has been tampered with, and that it needs to be carefully 
inspected before entering a port facility or being placed on a 
vessel, and it 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.
    Empty containers, one of the most overlooked of potential 
security risks at the terminals, ships and port infrastructure 
is the proper handling of empty containers. On any given day as 
much as 40 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 for 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 be considered and planned for.
    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 were to take an empty container and place an explosive 
device inside and load it on a ship for detonation elsewhere? 
For years, inspection of empty containers was regularly done in 
America's largest seaports. However, this procedure was 
abandoned years ago. Once again, if we truly are desirous of 
creating safe and secure seaports, then the return to these 
inspections is a must. Thank you.
    Senator Wyden. Thank you very much.
    [The prepared statement of Mr. Bates follows:]

      Prepared Statement of Del Bates, Vice-President, local 19, 
              International Longshore and Warehouse Union
    As Vice President of the International Longshore and Warehouse 
Union, Local #19, representing working men and women in the Port of 
Seattle, I am pleased to submit these comments regarding the security 
of our Port.
    The members of the ILWU are committed to making our port 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 community where 
we 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, our 
port went on immediate security alert. The Longshore Union has held 
joint meetings with the Coast Guard and all of our maritime employers 
to discuss the threats we now face and the actions we must take. The 
Port and Maritime Security Act (S.1214) initially focused on criminal 
activities rather than national security and terrorism. The need to 
secure our port from the threats of international terrorism now is at 
the top of our security agenda. 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. To be perfectly 
clear, understand that landside enforcement is a different matter 
altogether. In Seattle, as in other major American ports, including 
those with ILWU jurisdiction, landside security enforcement has been a 
function of the local port and terminal operators.
    In the goal of maintaining secure seaports, to treat a longshore 
worker as security risks is both contrary to the facts and detrimental 
to the goal. 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 and often detect and report 
suspicious and unusual activity in the ports. The government should, 
therefore, enlist us as partners rather than as suspects in the effort 
to secure our ports.
    The ILWU opposes background checks on 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. They were asked 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 testimony 
before the Senate Commerce, Science, and Transportation Committee, the 
ILWU pointed out that the actions of one longshore worker at the Port 
of Tacoma led to the largest cocaine seizure in that 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 also critical that the government in response the new 
terrorism threats against our country, does not set policy which harms 
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. We must not, through rash government regulations, 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 from the ILWU 
International Officers designed to pinpoint critical security--
sensitive areas with specific delineations between landslide 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. When the Immigration 
Naturalization Service (INS) is given the documentation, they merely go 
through the documents without requiring the individual's 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 under 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 Qaida 
operates flags of convenience vessels.
*CONTAINER SECURITY SEALS--
    Like luggage on airplanes, the containers on vessels 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 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 be 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 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 terrorist act.
*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 
for some kind of explosive device is something that must be 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 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? 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 return to 
these inspections is a must.
*NON-INSPECTION OF TRUCKERS--
    The primary threat to American seaports is the ability of truckers 
gain access to dockside marine containers 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 D.C., 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 now demand I.D. upon entrance through marine 
terminal gates, but there is still no match-up of photo I.D. with the 
truckers themselves because they only have to produce the driver's 
license number for entrance. The truckers entering these marine 
facilities have virtually unobstructed access to the entire facility, 
enabling them to place anything, anywhere, at anytime.
*THE FAILURE TO PROVIDE SECURE CARGO HANDLING 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 upon containers, usually on an 
appointment basis. This is an excellent concept that has resulted from 
years of experience realizing that he best way to secure your facility 
is 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 be 
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, 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 Local #19 and 
I am prepared to answer any questions. 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.

        Thank you.
                                                  Del Bates
                                     Vice President, ILWU Local #19

    Senator Wyden. Let us go to Senator Murray for her 
questions.
    Senator Murray. Thank you, Mr. Chairman. Thank all of you 
for excellent input as we explore where we need to go. As I 
mentioned earlier, Puget Sound, and these grants are supposed 
to work us towards some sort of regional solution. In looking 
at them so far, they have mostly been awarded for preliminary 
work and access systems. So we have a long ways to go before we 
get, and probably a lot of significant resources before we get 
to the solution.
    Mr. Farrell, you have been working with local, state and 
government entities. Have they been willing partners in 
exploring innovative efforts to address seaport security?
    Mr. Farrell. We have, and first, let me start at the port 
level. You know that we worked very closely together with the 
ports of Seattle and the port of Everett, and that effort is 
based on the premise that you are only as secure as your 
neighbors are. The work that we have done with the U.S. Coast 
Guard in the establishment of the interim guidelines for the 
West Coast has been a good example of working closely together 
in an agency that is focused on making sure whatever 
regulations or guidelines come into place are attainable, and 
that the industry has a chance to look at them before they have 
put in place, and on the side of customs, and these are the two 
major players that we deal with on the Federal level, the 
cooperation has been quite good as well.
    We spent some time in D.C. and here on the local level 
talking to them to find out what with we can do to play a part 
in the CSI and the C-TPAT, and we feel that our involvement in 
Operation Safe Commerce is a successful program. So the 
cooperation has been, has been good to date on security issues.
    Senator Murray. Thank you. Mr. Yap, our security is only as 
good as our information, and I am curious what sort of 
enforcement mechanisms you envision that could be put in place 
to give our Federal agencies comfort about what is reported to 
be in any foreign containers?
    Mr. Yap. I can only speak from experience, what we do in 
Singapore, Senator Murray. More, what we do in Singapore, we 
have an extensive system. The information that we have contains 
purchase information, cargo manifests, shipper information, and 
everything else that goes together with the information.
    My take on this is basically that the information 
management layer becomes a critical success factor when it 
comes in terms of actually attaching relevant information to 
the box, and that actually comes in two forms. One is actually 
the box that leaves a particular port, and one as it comes to 
the port itself. My take on this is that as we basically move 
towards container security issues, one of the key things is 
application and databases, and it is got to be put in place to 
actually capture information. That actually then allows cargo 
systems as you draw on that information specifically to look 
for data of concern.
    Senator Murray. What do we do about countries that known 
terrorists operate in, like Malaysia?
    Mr. Yap. My sense, Senator Murray, is a lot of waiting for 
clarity to come from the U.S. government pertaining to, I think 
this has been alluded earlier on by one of the earlier speakers 
in terms of our body of information and I think by and large we 
are still waiting for some kind of mandate, if you like, in 
terms of that kind of information to be made clear, in terms of 
what specifically are we looking for in terms of the 
information that would really tie on top of the container 
security issues.
    Senator Murray. Well, one of the things that I think is 
important to understand is that this has to be economically 
feasible.
    Mr. Yap. Absolutely.
    Senator Murray. We have a plan we put together, and there 
have to be incentives for private businesses to get involved in 
this, and it seems to me that part of that is standards for all 
the players that we all know are usable and can be enforced, 
and if you could comment on that, Mr. Yap, I would appreciate 
it.
    Mr. Yap. I think that a couple of players that should be 
involved is the shippers community. These will be the 
manufacturers, if basically today in terms of the added layer 
of security comes into play would involve shippers having to 
induce a kind of a payment to really look at technology today, 
that would tie on top of those boxes that would be something 
that would have to be considered very seriously. We are waiting 
for clarity to come from the Container Security Initiative, 
whether it is sealed technology, whether it is information 
management on top of it, whether there is some kind of device 
that can be attached, proven concepts that are currently being 
conducted now.
    I would also like to inform Senator Murray that at this 
point in time, PSA Singapore is involved in a proof of concept 
as such. This proof of concept involves electronic sealing 
system. In terms of what they are doing as a proof concept, we 
are participating at that level as well, and this is in 
combination together with funding at the Singapore Government, 
how to tie in very closely with the needs of U.S. insofar as 
CSI are required.
    Senator Murray. Sounds like, and Mr. Farrell, maybe if you 
could comment on the willingness of our merchants and shippers 
in ports to share information that they have not been so 
willing to share in the past. Is that going to be problem?
    Mr. Farrell. Yes, it has been a problem in the past, 
because trade information obviously is commercially valuable to 
the various entities that are involved in trade. We have seen 
more of a willingness of our customers and our partners to 
become involved in these efforts, and we have not gotten to the 
point where we said, okay, we need this piece of information 
and this and this and this, and I think when we get to that 
point, when these projects get to this point, that is when we 
are going to find out just how willing these entities are, and 
I think Mr. Yap makes a very good point, and that is what are 
we exactly going to require, and if we can get, in the way that 
the Coast Guard has done with it, in terms of making sure that 
the industry is involved, I think operational carriers will 
hopefully get with us on that.
    Senator Murray. Just one final question. I would like to 
ask Mr. Bates, in our developing comprehensive solutions, have 
you been involved in the collaborative efforts in putting some 
of these issues forward?
    Mr. Bates. In putting which forward?
    Senator Murray. Any of the comprehensive solutions that we 
are looking at? If the port grants that have been funded or the 
comprehensive----
    Mr. Bates. No, we have not been in the Port of Seattle 
implementing these plans. We now inspect some of the containers 
that are, or the containers that are coming into the port, but 
we have not been involved in the, in the facility, itself, as 
far as what we are going to do with the facility. If that 
answers that.
    Senator Murray. It does. Captain Marcus?
    Mr. Marcus. Yes, I would concur with that. Basically we get 
directives, our people aboard ship, for example, the 96 hour 
notice requirement. As far as input into the process, I am very 
happy to say that we are getting more of an opportunity to come 
to the table. For example, we are here today, but it has been a 
difficult road to get input up to this point.
    Senator Murray. Thank you very much. Thank you, Mr. 
Chairman.
    Senator Wyden. Senator Cantwell?
    Senator Cantwell. Thank you, Mr. Chairman. If I could, I 
would like to follow up just a little, and Captain Marcus, 
thank you for that outline and specifically about various 
maritime issues. One day they will wonder why we do not have a 
merchant marine, and they will all wonder exactly how are we 
guaranteeing that security in time of war. So thank you for 
reminding us of that.
    Senator Murray hit on an important point which is how you 
are inputting into the process, and Mr. Bates, I think you are 
in the middle of a contract negotiations, are you not?
    Mr. Bates. Yes, we are.
    Senator Cantwell. And hopefully those will be resolved in a 
positive way, but are there issues that are part of that 
discussion that are part of the security issue about how you 
participate in the design of implementation of what your day to 
day work force is going to be required to do?
    Mr. Bates. In our contract talks?
    Senator Cantwell. Yes.
    Mr. Bates. Yes, there are. There is technology and 
jurisdictional issues that we are discussing that are not 
unlike what we dealt with with mechanization and monitorization 
in 1960 and 1961, and the technology, well, one of the issues, 
they would like to use that to get rid of some of the work 
force that is already is in place that is doing a lot of these 
jobs that we are doing right now. One of those is inspection, 
the inspection of the containers, the containers' seals, the 
empties, opening the doors, checking the empties and following 
through with that, possibly check them again when they go on 
the ship or vice versa when they come back from overseas.
    Senator Cantwell. I am not sure I understand. Who would 
check a container seal, whether it had been broken or not, if 
it was not a human being?
    Mr. Bates. I hear that electronically, they want to have 
some electronic seals. I just heard it today again. So we would 
have to check those seals. That is what I am saying. They want 
to get by with not checking the empty containers, for instance, 
coming in, not opening the doors and looking at every empty 
container and specifically talking about that. We check the 
seals of the empty or the loaded containers that come across.
    Senator Cantwell. Mr. Yap, does your system deal with empty 
containers?
    Mr. Yap. My system actually deals with the information that 
sits on top of, basically what we call track and trace 
information that is pushed into the system. We are really the 
front end system that sits on top in the front of the system.
    In terms of answering the question, I think the seal 
technology entails two things, one is the physical checking of 
the seal, itself, and the other has to do with the procurement 
of the information that attaches itself to the seal. So as I 
see it, both as information that attaches to the seal which 
needs to be computed as well as the physical checking of the 
seal, itself, which comes into the port
    Senator Cantwell. Mr. Bates is talking about checking empty 
containers, and obviously they are empty, but maybe somebody 
has infiltrated the system and added something to that 
container.
    Mr. Yap. Perhaps I could paraphrase. What you are saying in 
terms of information that attached to the seal, it actually has 
been tampered with. Is that the question?
    Senator Cantwell. I am not sure. I am not sure there is a 
seal. It is empty.
    Mr. Bates. No, excuse me, Senator Cantwell----
    Senator Cantwell. They are all sealed?
    Mr. Bates. No, they are not all sealed. The empties are not 
sealed.
    Mr. Yap. My sense basically is that when a container is 
actually taken together, one of two things actually happens 
here. First, there is a physical seal that attaches itself to 
the carrier, that has got to be basically physically watched in 
terms of tampering, in terms of any intrusion if you like, but 
I think what we are talking about is in terms of the 
information that attaches itself to the seal. We are talking 
about for example----
    Senator Cantwell. I want to get to that in a minute. I am 
asking that about your technology, but I think Mr. Bates is 
bringing up a good point, but maybe it is just an interesting 
thing to have it resolved as they work through their process, 
but there may be elements of the security system that is not 
about manifests, because there are no manifests, not about 
security seals, because there are no security seals, but they 
are about the infrastructure of the whole shipment and other 
opportunities that--that if somebody wanted to infiltrate the 
system, they might be able to do that, because it is not in a 
container that has a seal or a manifest.
    Mr. Yap. I think in terms of the seal technology, we are 
the layer that actually sits on top of the----
    Senator Cantwell. Captain Marcus?
    Mr. Marcus. Actually, if I might jump in on that, that is a 
concern that we see on board ship. An empty container is 
frequently undocumented. It is loaded aboard the ship as an 
empty. It is never inspected at either the loading terminal or 
the discharge terminal, so you have a empty container aboard 
the ship, but in reality, anything could be in that container. 
It is not manifested. It is listed as empty. It is not sealed. 
It is not locked. Frequently, it is loaded aboard ship, and you 
cannot get access though this container. For example, you may 
have a container that is buried in the hold. You may have it 
four or five tiers high, and that empty container is 
unaccessible. So it is a concern both aboard ship and ashore.
    Senator Cantwell. Mr. Yap, thank you for being here, and I 
understand you are the CIO of the organization. So maybe you 
could answer, the deployment of this is through the Port of 
Singapore, soon to be here in Seattle?
    Mr. Yap. That is correct.
    Senator Cantwell. Or the Port of Seattle. Are there any 
other parties that have deployed your system?
    Mr. Yap. We have introduced this technology essentially in 
China. That is going on now. The other is in Italy. That is in 
Genoa.
    Senator Cantwell. As you describe your system, it is an 
information database system, a layer, an information layer that 
sits on top of the security system?
    Mr. Yap. That is correct. So what we are doing here is 
basically just to keep you a line of information pertaining to 
the container, information pertaining to the shippers, 
pertaining to cargo, bill of lading, all the information that 
we have today, but that is actually the shippers' information 
that they declare. The shipping line information that we, that 
we are implementing. This is absolutely necessary when you have 
contracted cargo to sell. I think the question here in play is 
then information versus----
    Senator Cantwell. No, I am assuming, you are probably a 
closed platform or open platform?
    Mr. Yap. We are an open platform.
    Senator Cantwell. Could not, so other people can build on 
your architecture and build on it, and so on, and that is a 
positive thing in many ways, but I am assuming that the 
security of that system is guarded, I do not know, with some 
sort of security encryption technology?
    Mr. Yap. Yes, yes.
    Senator Cantwell. And you have had no problems with 
vulnerability of your system?
    Mr. Yap. None whatsoever. Coming from a nation such as 
Singapore, we have strict firewall technology. It is a three-
tier firewall technology, and also because it is data 
encryption to ensure data is actually being entered into the 
system, and actually being pushed, processed and also be 
mandated to have the highest level of integrity and 
correctness.
    Senator Cantwell. So your system deals with security, and 
it deals with security of information once it is compiled. You 
do not really focus on the security of the seal, per se, other 
than making sure that that information is transmitted?
    Mr. Yap. That is correct.
    Senator Cantwell. So do you have opinions about the 
security, in the sense of an optimal security solution being, 
as a CIO of a related technology, do you have any opinions on 
what kind of technology solution should be deployed for 
container cargoes in the current sealed process or other 
technology that some people have indicated that they have 
capability of actually attaching, you know, a device to, you 
know, wireless communication to every single piece of cargo and 
having that tracked and having that ping a mother ship every 
time there is a change in that? So then if something has been 
moved or changed, do you have input on that?
    Mr. Yap. My opinion in terms of the technology that stands 
today is that in terms of where we are, the technology 
enablement, the features are there. The ability for a company 
to pick up such a technology and deploy it exists. We see 
basically that there is a strong indication today that 
electronic seals which become such a deterrent in terms of 
looking, of absolutely foolproof in terms of its ability to 
prevent any box basically from being compromised. I do not 
think I have the answer at this point in time.
    Senator Cantwell. Well, I think something could be inside 
with the product, right inside the box. So if you ever have a 
sealed box, and you know the seal has not been broken, but 
guess whatever, inside there is----
    Mr. Yap. Absolutely, I think what price you are willing to 
pay, I think you put in the most advanced technology today, and 
you can basically look in terms of intrusion detection to the 
ninth degree, but if the costs are absolutely high and are 
prohibitive, then it becomes a deterrent, itself.
    Senator Cantwell. One more question, and then I want to 
turn it over. Is your company participating in any 
international organizations like TIET or the other 
organizations that build on standard for your kind of security, 
information security systems, so that we can either have 
compatible platforms, either compatible systems to your 
platform, but standardized on one platform for information 
sharing? Is that happening?
    Mr. Yap. Yes.
    Senator Cantwell. So that we do not--we like your success 
with Genoa and China and Seattle, but is there a way to get 
this standard to be more rapidly deployed with many more ports 
in the world?
    Mr. Yap. I think you alluded to the first point whether our 
system remains open. That is absolutely correct. You have an 
entire system that you can plug, and you can play, and you can 
play all the major data systems that are available globally, 
but most of them are still fairly much archaic, because it is 
built on legacy system. We are the only one that is 
international engaged.
    Secondly, from PSA's perspective, we are also represented 
in some of the international bodies like IMO for example, which 
takes this end and some of the data sources that is actually 
good to be procured.
    Senator Cantwell. I think that is an important point for 
the Commerce Committee and Chairman Hollings' interest in the 
port security issue, if there is a way that the Committee could 
encourage such an international cooperation, encouraging the 
participation of people coming together and standardizing, Mr. 
Yap's technology being open, lots of people, you know, you 
could have a somewhat like the fingerprint system that the FBI 
and other countries use. We need a similar----
    Senator Wyden. That is an excellent point. We will follow 
it up. I think we have seen again and again on these technology 
issues, and you have pointed out that we can huff and puff and 
do all kind of useful things in this country, and then what 
happens in other parts of the world?
    Senator Cantwell, thank you very much. Any other questions?
    Senator Cantwell. No.
    Senator Wyden. Just one question, Mr. Bates. How often do 
you find an unsealed container?
    Mr. Bates. Daily. The empties are unsealed that come into 
this port.
    Senator Wyden. To most folks, this is an issue that is like 
my kids say, this is a ``hello'' kind of issue. I mean if you 
have unsealed containers, it seems to me they are just 
potential magnets for terrorists, because they are not subject 
to any of the rules. They are just sort of out there. Am I 
missing something?
    Mr. Bates. No, I believe that is, it is very true. In fact, 
I know that, and coupled with the fact that our proximity to 
Canada and the truck deliveries that come in that do not have 
empties checked when they are carrying an empty container. You 
know, it just to seems to me that that is mind boggling that 
that happens.
    Senator Wyden. We are going to work with all of you. This 
is something that we can take up in the conference committee. 
You all have already indicated you are going to support that 
requirement as well, and in the legislation, but my colleagues 
asked a number of questions with respect to this 
containerization, you know, questions which just seem to me to 
state the obvious. If you have got unsealed containers floating 
around, this is a clear, unquestioned security problem, and we 
will work with you to get it taken care of.
    You all have been great.
    I have some other questions that I would ask Captain 
Marcus. I was particularly exasperated as I heard about some of 
the issues relating, you know, to the Coast Guard and the 
certification requirements. Some of them apply to U.S. flag 
vessels, and then do not apply to overseas, and our Government 
basically let those other people off the hook, and that just 
does not seem to be right either, and I know this is something 
that is probably of concern to you, and I want you to know that 
this is an area that I am going to follow up on.
    Gentlemen, we have got another long panel ahead. So we will 
excuse you at this time. Thank you for all the excellent input.
    As I said, I do pledge to put all of your remarks into the 
record. If you could just summarize your principle concerns in 
your five minutes, that would be great.

        STATEMENT OF VIKRAM VERMA, CEO, SAVI TECHNOLOGY

    Mr. Verma. Chairman Wyden, Senators Cantwell and Murray. To 
begin, I would like to take a moment to thank you, all of you, 
for the leadership you have demonstrated on the issue of the 
vulnerability of the global supply chain to terrorism. I would 
also like to commend Mic Dinsmore and the Port of Seattle for 
hosting this event. Since September 11, Mic has been a vocal 
and tireless advocate of moving quickly to address the 
vulnerability of our ports and the global supply chain to 
terrorist actions while at the time ensuring the free flow of 
goods into the United States.
    I have two comments on the nature of the threats we are 
facing. First, the container security threat is real. With the 
expectation that we will be attacked, we must look at what is 
most likely to be the next target. Candidly, I believe the 
global supply chain is the prime target and in its present 
state is especially vulnerable to terrorist attack.
    Second, the threat is systemic. Simple solutions designed 
to prevent point attacks only or to provide 100 percent 
inspection at designation ports will not work for the entire 
supply chain. Though extremely complex, we must look at the 
problem holistically, and as Senator Murray and Senator 
Cantwell said earlier, we need to put in place a security 
system preventing the threat at the point of origin before it 
hits our ports in the United States.
    In terms of the policy response, we believe Congress is 
moving in the right direction. The Senate Commerce Committee's 
legislation on maritime security passed in December of last 
year and currently in conference negotiations with the House is 
thoughtful and measured. We especially view the considered 
policy of a ``cargo grading'' system based on secure supply 
chain systems to be an important policy, since it will not only 
enable secure and fast trade lanes, it also enables a system 
with a ``reset'' button, so to speak, in other words, control/
alt/delete. So should any terrorist incident occur, the system 
would come back on in reverse order to which it was shut down. 
We strongly support this measure and encourage its rapid 
passage.
    Also, Chairman Murray's Transportation Subcommittee's 
legislation on the implementation of an Operation Safe Commerce 
program is extremely positive in my view.
    All of these are vital requirements that not only add 
security to the system but will also result in efficiency 
benefits with better tracking, monitoring and visibility 
capabilities.
    However, it has been almost 10 months since the horrific 
terrorist attack on our country, and in my view there has been 
too much discussion and not enough action coming out of 
Washington. This is a very complex issue, and we recognize the 
importance of taking the time to develop thoughtful public 
policy, but we do not believe that equates to conducting 
lengthy science experiments on process and technology. In 
short, as Mic said, we need to get moving using proven, 
reliable immediately available technology and best practices to 
address these threats now. Fortunately, there are technology 
and best practices available today that can immediately be put 
to use to ensure the safety and security of our supply chain.
    You heard a little bit about PORTNET'. You will 
hear about eModal. One model that I want to share is the 
Department of Defense's Total Asset Visibility network.
    After the Gulf War, the U.S. Department of Defense began 
testing and implementing innovative track and trace 
technologies to gain comprehensive visibility of the supply 
chain as well as acquire ``in-the-box'' visibility. This led to 
the development of the radio frequency identification network, 
spanning 36 countries, 350 nodes at seaports, airports, rail 
terminals, military bases, tracking 250,000 conveyances as they 
move around the world.
    The Department of Defense has named this global logistics 
infrastructure the Total Asset Visibility network. This network 
is comprised of active RFID tags that support full electronic 
container manifests, and the ability to seal and secure 
intermodal containers from the loading point at manufacture, 
through truck, train, and ship transport. Once these radio tags 
are affixed to containers, essentially making these containers 
``smart,'' wireless readers deployed at strategic points feed 
real-time information on the status, location and other events 
into a global asset management software application. The Total 
Asset Visibility Network enables the DOD to track, locate and 
secure all en-route containers.
    Over the last seven years, the system has been battle-
tested across over 5 continents and has been used to track all 
military deployments from weapons to boots to foodstuffs to 
toilet paper.
    Why do I know so much about this system and the benefits? 
Because my company, Savi Technology, developed and implemented 
the TAV network for the Department of Defense. Based on 
agreement with the Department of Defense, this global 
infrastructure can readily be made available for commercial 
security use.
    In short, the U.S. Department of Defense, one of the 
largest shippers in the world, has invested over $200 million 
to build a visible and secure global supply chain network. In 
addition, in the last three to four years, industry has spent 
over $100 million on research and development to enhance this 
technology and make it more cost effective for commercial use. 
We feel this provides a rapid deployment capability to address 
the principles of Operation Safe Commerce, a grading system for 
secure cargo, and the Customs Container Security Initiative.
    In summation, the supply chain is vulnerable. The threats 
are real and immediate. There are best practices and systems 
already in place based on proven, reliable technologies that 
can be immediately leveraged. These include PSA's 
PORTNET', eModal, and L-3 Communication to enhance 
legacy systems that are already in place. I urge the Members of 
this Subcommittee to move quickly and expediently to make these 
systems available for implementing maritime and port security.
    Once again, I appreciate the opportunity to address the 
Committee.
    Senator Wyden. Thank you, very much.
    [The prepared statement of Mr. Verma follows:]

        Prepared Statement of Vikram Verma, CEO, Savi Technology
Senator Wyden, Members, and Distinguished Guests,
    I want to thank you for giving me the opportunity to provide 
testimony to the Committee on what I believe is one of the most 
important national security issues facing the United States.
    To begin, I have three comments on the nature of the threats we are 
facing.
    First, the container security threat is real. Although it is 
virtually impossible to predict the precise target or method that 
terrorists may deploy in their war on the civilized world, we can with 
confidence predict that, in all likelihood, the U.S. and other 
developed nations will continue to be the target of further terrorist 
activities.
    With the expectation that that we will be attacked, we must look at 
the world through the eyes of a terrorist in order to determine what is 
likely to be the next target. What is both accessible and can be 
destroyed or leveraged to create maximum societal and economic 
disruption and damage? The global supply chain is one such target and 
it is especially vulnerable to terrorist attack.
    The characteristics of an efficient, lean, high-velocity global 
supply chain--openness, ubiquity, diversity, agility--are also why it 
is an extremely attractive target for terrorists. The global supply 
chain is an accessible and tremendously efficient delivery system whose 
reach can allow a terrorist to strike virtually anywhere in the world--
with potentially catastrophic results.
    In addition--the supply chain is the foundation of the economy. The 
health and well being of our economy is directly tied to the continuous 
availability of efficient freight transportation. It has been estimated 
that a disruption that shuts down the global supply chain will cost the 
world economy $1 Trillion dollars per week. Sinister elements wanting 
to destabilize the economies of the US and other industrial nations are 
certainly aware of this direct linkage.
    Secondly, the threat is systemic. The vulnerability of the supply 
chain must be viewed from two perspectives; point attacks against a 
single element and systemic attacks against the infrastructure as a 
whole. Because of the decentralized and redundant character of the 
freight system, many believed that systemic vulnerability was low. 
September 11 showed that terrorists could carry out operations that are 
more complex. This made us more aware of systemic risks via indirect 
attack upon the overarching interconnected, interdependent 
transportation infrastructure.
    With over 300,000 miles of freight rail networks, 45,000 miles of 
interstate freeway, 600,000 bridges, 500 commercial airports, and 
several hundred of ocean freight terminals handling 16 million 
containers every year--the physical infrastructure supporting freight 
transportation is vast and poses a tremendous challenge to effectively 
monitor, safeguard and control.
    Solutions designed to prevent point attacks will not work for the 
supply chain. Though extremely complex, we must look at the problem 
holistically--and put in place a security system that is capable of 
being as ubiquitous and flexible as the supply chain itself. This 
system must leverage best-of-breed technologies and proven processes to 
integrate the various components of the transportation system into a 
single command and control infrastructure that deters and prevents 
terrorists from using the supply chain for their activities, and also 
provides authorities the means by which to continuously monitor the 
supply chain and intelligently respond to security threats as they 
occur.
    Thirdly, the threat is asymmetric. As has been widely discussed, 
full frontal conflicts--much like the Gulf War--are probably a thing of 
the past. Terrorist organizations will leverage their strengths of 
radically decentralized organizations with fervent followers employing 
low tech means to attack the U.S. We cannot respond on the same terms.
    Now, what is to be our response to the ongoing asymmetric, 
systemic, real threats in port and maritime security?
    First, as many of you have said, there is no single solution. We 
need effective intelligence, deterrence, monitoring and tracking, and 
response capabilities to secure the global supply chain. These 
capabilities however must be delivered through an integrated, 
comprehensive, systems-based approach that spans policy, security 
procedures, business practices and technology. With respect to 
technology, given the asymmetrical nature of the conflict, we need to 
employ high-tech means to prevent low-tech attacks. Equally as 
important, all participants in the global supply chain from port 
operators to port workers to global importers and exporters to shipping 
lines to technology companies need to work together.
    Secondly, in terms of the policy response, we believe Congress is 
moving in the right direction. The Committee's legislation on maritime 
security is thoughtful and measured. We especially view the considered 
policy of a ``cargo grading system based on secure supply chain 
systems'' to be an important policy since it will not only enable 
secure and fast tradelanes, it also enables a system with a `reset' 
button (so to speak) should any terrorist incident occur. This is a 
vital point: if we shut down the nation's ports indefinitely or even 
for several days in the event of an incident, we will hand the 
terrorists a multi-trillion dollar win. We simply must keep the supply 
chain running securely and smoothly.
    The Senate Subcommittee's legislation on the implementing of an 
``Operation Safe Commerce'' program is also very positive in my view. 
The concepts of Operation Safe Commerce get to the physical nature of a 
complex problem, specifically:

    The development of auditable security standards for 
        maintaining secure loading docks and ports
    The outfitting of containers with mechanical and/or 
        electronic seals and devices intended to identify containers 
        whose security has been compromised
    The establishment of integrated communication systems to 
        track containers throughout the entirety of their journey 
        through the global supply chain
    The transmission of that tracking data in accessible format 
        to appropriate Federal agencies
    The demonstration of secure trading lanes that ensure 
        maritime and container security from point of origin to point 
        of destination
    The establishment of new requirements which will pertain to 
        all participants in the supply chain to allow Federal agencies 
        sufficient information on the contents of each container and 
        its expected journey.

    All of these are vital requirements that not only add security to 
the system but will also result in efficiency benefits with better 
tracking, monitoring, and visibility capabilities. Further, ports and 
global importers and exporters are the key strategic control points in 
implementing these standards.
    Finally, US Agencies are also taking positive proactive measures to 
secure the nation's transportation network and supply chain. Admiral 
Loy and the Coast Guard were especially admirable the day of and 
immediately after 9-11. They have taken that momentum and have 
instituted new security policies and procedures as well as have 
recruited a volunteer network to help monitor our nation's ports.
    US Customs and Commissioner Bonner have been actively pursuing 
raising the security of the global supply chain through:

    1. The Customs Trade Partnership Against Terrorism (CTPAT) Program
    2. Customs' Container Security Initiative (CSI)
    3. Bilateral agreements with our top trading partners

    A third point, I would like to strongly emphasize is that this is 
no time for science experiments in process or technology. In a 
conversation I had both in April and just last week with the CEO of one 
of the largest port operators in the world, he is convinced there will 
be an incident in the global supply chain. We must use proven, reliable 
immediately available technology to address these threats now. We must 
leverage existing best practices currently in use.
    Pilots and ``proof of concept'' projects are being proposed that 
will take years to complete. Then--and only then--can you begin the 
time consuming task of actually implementing the tools, technologies, 
and processes that will address the problem.
    Fortunately--there are technologies and best practices available 
today that are proven, reliable, and can immediately be put to use to 
ensure the safety and security of our supply chain. One model I want to 
share with you is the Department of Defense's Total Asset Visibility 
Network.
    After the Gulf War, the U.S. Department of Defense began testing 
and implementing innovative track and trace technologies to gain 
comprehensive visibility of the supply chain as well as acquire ``in 
the box'' visibility. This led to the development of the world's 
largest active radio frequency identification (RFID) network, spanning 
36 countries, 350 nodes at seaports, airports, rail terminals, and 
military bases, tracking 250,000 conveyances as they move around the 
world. The DOD has named this global logistics infrastructure the Total 
Asset Visibility network.
    The Total Asset Visibility network is comprised of active RFID tags 
that support full electronic container manifests and the ability to 
seal and secure intermodal containers from the loading point at 
manufacture through truck, train and ship transport. Once these seal 
tags are a affixed to containers--essentially making these containers 
``smart''--wireless readers deployed at strategic checkpoints 
worldwide, most prominently in ports, feeds real-time information on 
the status, location, and other events into a into a global asset 
management software application. The Total Asset Visibility Network 
enables the DoD to track, locate, and secure all enroute containers.
    Over the last seven years the system has been battle tested across 
over 5 continents, runs at 99.999-percent uptime, and has been used to 
track all military deployments from weapons to boots to foodstuffs. 
While the system was designed and the infrastructure was deployed to 
track all Department of Defense supplies leaving the country and 
landing in foreign ports, it can be used just as efficiently to track 
all goods entering the country with active RFID seal tags being applied 
at foreign port of origin by certified parties.
    Total Asset Visibility could enable U.S. authorities--US Customs, 
the U.S. Department of Transportation (DOT) Transportation Security 
Agency (TSA), and the Office of Homeland Security--to physically track 
and trace containers' physical movements from the manufacturer's dock 
to the U.S. port of discharge and beyond. Electronic active RFID seal 
tags on containers enable a security layer to detect potential 
intrusions and tampers. Alerts and exceptions can be programmed into 
the Total Asset Visibility network to automatically alert authorities 
of suspect container movements and to locate questionable containers 
quickly. Further, hazardous materials shipment information can be 
encrypted and tracked on electronic manifests affixed to containers to 
increase security and safety.
    Why do I know so much about this system and its benefits? Because 
my company, Savi Technology, developed and implemented the TAV network 
for the Department of Defense and we are continuing to operate and 
extend the system for commercial applications. Based on agreement with 
the Dept. of Defense, this global infrastructure can readily be made 
available for commercial security use. In short, the US DOD, one of the 
largest shippers in the world, has invested over $200M of the public's 
money to build a visible and secure global shipping network for their 
supply chain. To the extent that best practices and available 
technologies are considered, we feel this provides a rapid capability 
to address the principles of Operation Safe Commerce and Customs 
Container Security Initiative.
    In summation, the supply chain is vulnerable; the threats are real 
and immediate. The problem is complex--and no simple, point solution 
will be adequate to address the problem. There are systems already in 
place based on proven, reliable technologies and processes that can be 
immediately leveraged to create a comprehensive system that will deter 
and prevent security breaches and will enable authorities to 
efficiently monitor and immediately respond to events that occur in the 
supply chain. I urge the Members of this Subcommittee to move quickly 
and expediently to make these systems available for the sake of the 
continued safety and security of our economy, our country, and most 
importantly our people.
    Once again, I appreciate the opportunity to address the Committee 
and further welcome any questions.

    Senator Wyden. Mr. Cushing?

        STATEMENT OF JOHN CUSHING, PRESIDENT, eMODAL.COM

    Mr. Cushing. Thank you. Good afternoon, Senator Wyden, 
Senator Murray, Senator Cantwell. I am going to take you up on 
your suggestion and leave my submitted comments, and I would 
like to take my five minutes----
    Senator Wyden. Bless you.
    Mr. Cushing. I am still going to take my five minutes, and 
I thought I would tell a quick story, and the story is about 
solutions. That is what we are looking for today is security 
solutions, and since September 11, we have all geared up and 
taken further action, but in the United States, there has been 
a lot underway leading up to that, and it goes back a few years 
to November of 1994, and in the Nation's busiest port complex, 
L.A.-Long Beach, drivers boycotted work, and they said we are 
not going to work anymore, because the queues are too long, and 
a number of other issues, and we brought the truckers to the 
table, the terminal operators to the table. We all sat down, 
and we said we have got to come up with a system between 
trucking companies and terminal operation. What we did was we 
built the Nation's first port community system, and since that 
day, we now have that port community system in 14 ports around 
the United States. We also have it in Central America and 
Europe. It has been a very collaborative effort. It has 
involved marine terminal operators, steamship lines, port 
authorities, trucking companies. We have got over 3,000 
registered companies as part of eModal. It is a Web-based 
system. It is a single portal working system in the United 
States for importers, exporters. We have got from mom and pop 
importers to Wal-Mart, K-Mart, Target are all part of this 
system. Registered users include Customs, the Coast Guard, 
include port authorities. In fact, most of the terminals and 
trucking companies here in the ports of Seattle and Tacoma are 
already on board with this port security system actively 
working to address some of the issues.
    What are some of the issues we have worked on since? One of 
the big ones is security. We had a system where we got together 
with the truckers and the terminals and said, How can we deal 
with trucker identification? There is no simple solution for 
that, so we put together what we call Trucker Check, a Web-
based system.
    To date right now over 12,000 drivers' status is being 
checked while we sit here. They are in the database trying to 
get in and out of terminals. That system is being expanded to 
other terminals and other ports. The system we use as I mention 
is Web-based, but for the identifying card, credentialing, we 
went with the driver's license for a number of reasons. Number 
one, if you are driving, you must legally have a driver's 
license with you.
    If you are running a terminal, you want to be sure that for 
risk management purposes, those coming onto the terminal have a 
driver's license. There is a standard set up. Driver's licenses 
now have barcoding and swipe capabilities. We were able to put 
all 50 states plus Canada and Mexico into the system. So we 
work on logical, everyday use that the industry is comfortable 
with, but take it up a notch by introducing technology to those 
methods.
    We also have what is called eModal Scheduler. It is an 
appointment system. While it provides efficiency at the 
terminals, what it also does is it allows the terminal 
operators to verify purpose. It is one thing to say I can come 
onto your terminal because I can verify who I am with whatever 
trucking company, but this asks what are you doing here on this 
day, this time block? We put purpose on it.
    Other things, we talk about documentation being a lot of 
loose paperwork floating around. Right now if we have our 
customs brokers, they will go in their file with customs cargo 
cleared, and then what they do is they give an order to a 
trucker to go deliver the goods.
    Well, it is a paper order. They have couriers running 
around with this information. This is oftentimes in technology, 
traditional--this is archaic to have people running around with 
hazardous cargo information, destination, things like that. We 
sat down with the customs brokers and terminal operators and 
truckers and said what do we have to do to make this thing 
work? It is a closed system with digital certificates 
downloaded, but it works. So it is approaching things from a 
logical approach.
    We have got the community working behind it, which is key, 
because this is a very, very fragmented industry we are in, the 
transportation industry, many different carrier modes. We have 
many different carrier facilities, many different systems. So 
what we have done is brought them all together and by working 
with them to create this Port Community System.
    Senator Wyden. Very excellent presentation. Thank you very 
much.
    [The prepared statement of Mr. Cushing follows:]

       Prepared Statement by John Cushing, President, eModal.com
    I would like to thank the Subcommittee on Surface Transportation 
and Merchant Marine of the Committee on Commerce, Science, and 
Transportation for having this hearing to address these very important 
and critical issues. My name is John Cushing. I am the president of 
eModal.com, a Web-based Port Community System. eModal's Port Community 
System is currently in place at terminals in 14 major Port complexes 
around the United States. At this very moment, eModal has more than 
400,000 containers and 12,000 truck drivers' information in our 
database that is being applied to various working applications. More 
than 3,000 transportation and transportation-related companies, 
including the United States Customs Service, the United States Coast 
Guard, Port Authorities, marine terminals, trucking companies, 
railroads, importers, exporters, Customs brokers and others are 
registered and participating at various levels within the eModal Port 
Community System. I am happy and encouraged to report that terminals 
and the trucking community right here in the Ports of Seattle and 
Tacoma are actively engaged in the eModal Port Community System.
    As a very brief background to what eModal is all about, it is fair 
to say that we were born out of a need to address disarray and 
fragmentation in the Ports. In November of 1994, truck drivers 
boycotted work in our nation's busiest Port complex in Southern 
California. While there were many issues that were on the table, 
including queuing at terminal gates, it became obvious that the various 
transportation carrier modes and the terminals needed to improve the 
level of communication and coordination. eModal's solution brings the 
various industry participants to the table on a common platform--a 
single portal.
    Although eModal's Port Community System addresses many of the needs 
of the transportation industry to operate efficiently in both a safe 
and secure manner, there is clearly more that needs to be done. The 
single portal Community-based concept allows all users to work together 
to ensure that this be accomplished.
    Prior to the September 11th attacks, eModal was already working 
with marine terminals to provide security at the terminal gates. A 
leading cause of crime at a terminal occurs when a bad truck driver 
misrepresents them self at the terminal gate as a truck driver for the 
company that was supposed to be on the premises to pick up or deliver 
cargo. To address this, eModal developed and has implemented the eModal 
Trucker CheckTM. Participating marine terminals require that 
trucking companies and truckers wanting access to their terminal 
register with eModal. The process requires that the trucking company 
register with eModal and be assigned a unique User Name and Password. 
Registering trucking companies are required to fill an application, 
identify their Standard Carrier Alpha Code, and enter verifiable 
information about truckers employed or contracted with them wanting 
access to terminals. The information about each trucker includes: first 
name, last name, driver's license number, state of issue (50 states, 
Canada and Mexico), driver's license expiration date, contract period 
if under contract, a unique Personal Identification number (PIN) that 
uses the National Motor Freight Traffic Association's Standard Carrier 
Alpha Code (SCAC) prefix for the trucking company along with a 
computer-generated four-digit random number, and the tractor plate(s) 
for that trucker. The trucking company also attests that the trucker's 
driver's license is current and that the trucker has agreed and signed 
allowing their information to be viewed for verification purposes.
    The process begins as the identity of a trucker is verified before 
the trucker enters the terminal. The terminal's trucker verification 
then includes a match of the driver's license picture, a match of the 
data input to verify the driver's license, verification that the 
tractor being used matches the trucking company and the trucker in the 
data base, and confirmation with the trucker entering their PIN. The 
eModal Trucker CheckTM has been designed to receive 
biometric files for match and can query other government databases in 
an ongoing basis as well.
    The eModal Trucker CheckTM uses the state-issued 
driver's license for many reasons. eModal's Trucker CheckTM 
database can query DMV databases for ongoing updates. As most driver's 
licenses issued now have magnetic reader strip or bar coding, fraud 
detection is readily available. The eModal/DMV connections also allow 
for immediate address with any outstanding police issues that are 
questionable with third party cards.
    As indicative of the Port Community System, participants in the 
transportation industry are looking for greater interface, not less. 
Unique Port-wide cards restrict truckers' abilities to free flow 
between various Port complexes--a traditional trait of cargo flow. 
Truckers are legally required to carry their driver's license. This 
also provides terminal risk managers assurances when allowing truckers 
onto their terminals. There is also the ongoing issue that the 
introduction of another card only increases the opportunity for loss. 
State-issued driver's licenses are already in place and can more easily 
be standardized than ``reinventing the wheel.''
    The eModal Trucker CheckTM system provides security 
verification without impacting terminal operations. Terminal gates can 
be secure and maintain their efficiency. It is imperative that we 
maintain our position as a productive nation as we address our security 
needs.
    Just as important as important as verifying the person(s) wanting 
access to Ports' terminal facilities is to verify the purpose for those 
wanting access. While it is important to be able to match a person with 
a company, it is also important to verify their purpose for wanting 
access to a facility.
    Originally designed to provide a tool for terminals to set 
appointments for truckers delivering or picking up cargo, the eModal 
SchedulerTM provides terminal operators with a tool to 
determine the purpose of a truck coming onto their terminal. In 
addition to the requirements placed on the trucker to prove 
verification for terminal access, the eModal SchedulerTM 
requires the trucker to have a transaction number associated with the 
date and time they want access. While a trucker can be verified in a 
system as driving for a particular company as an employee or as an 
independent contractor, terminals need verification that the trucker 
has a purpose for coming on to their terminal. The eModal 
SchedulerTM provides a single platform for all of the 
terminals to post their time options for when truckers can select to 
come to the terminal. The truckers select the time option that works 
operationally for them. Both parties are then provided the matching 
transaction number with the cargo being delivered or pick-up. Secure 
access to providing the transaction number is limited.
    Using a unique User Name and Password, a marine terminal's 
Administrator accesses the required tool sets within eModal. At that 
point, the Administrator sets up the criteria for posting available 
time options, based on how they lay-out their terminal as well as how 
many trucks they can handle at a given time. With criteria in place, 
the trucking company's Administrator logs on to eModal using their 
unique User Name and Password and selects the options that work. The 
transaction number that the trucking company receives at this point is 
then assigned to the trucker calling at the terminal where it will be 
matched against the container to be picked or delivered to the date and 
time slot appointed.
    In addition to providing another access requirement, the eModal 
SchedulerTM provides yet another operational tool for the 
terminals to use to maintain efficient productivity.
    While the eModal Trucker CheckTM and the eModal 
SchedulerTM assure that the trucker is verified with a 
company and that their purpose is confirmed for wanting access to a 
Port terminal, it is important to look at other exposed areas. While 
the cargo flow is often addressed as the area to be monitored, it is 
equally important that the documentation attached to cargo is securely 
managed.
    The United States Customs Service requires Customs brokers to file 
documentation electronically with them. Once U.S. Customs has cleared 
an entry, the Broker can begin the process of notifying a trucking 
company to send a trucker to pick up the cargo; advise the marine 
terminal of which trucking company will be coming down for the cargo; 
and post the same information to the steamship line that delivered the 
cargo to the terminal. The process, commonly known as a Delivery Order 
(DO), is either sent by fax and/or via a courier. Some terminals 
require a signed copy. The DO contains vital information that 
identifies the commodity, where the cargo is destined, hazardous IMO 
information, name of trucking company, and in the absence of eModal's 
Trucker CheckTM and SchedulerTM, the container 
and bill of lading number--two numbers that some terminals still use to 
release cargo.
    eModal has worked with the Customs brokers to develop an electronic 
Delivery Order. After the broker receives clearance from the United 
States Customs Service that the cargo may be picked -up, the Customs 
broker now has the ability to continue with a paperless process. The 
eModal electronic Delivery Order (eDOTM) sends this vital 
information through eModal electronically. As with the other 
applications, access is limited to those registered with their own User 
Name and Password. Due to the sensitivity of the eDOTM, the 
companies designated by the Customs broker to receive the 
eDOTM must also download a secure digital certificate. This 
adds a further level of identification and verification as to who is in 
the secure loop to receive these electronic documents.
    In essence, once cargo is cleared with the United States Customs 
Service, it can have its documentation transmitted in a secure, 
digitally certificated manner to a select group of recipients--a truck 
company being one. At that point, while still logged in with the same 
User Name and Password, and with the Administrative rights assigned, 
the trucking company can select a date and time to dispatch for cargo 
delivery and/or pick up and be assigned an identifying transaction 
number to substantiate the purpose for the trucker arriving at a 
terminal at that time frame. In the sequential order, the trucker is 
then verified at the terminal gate with the many required criteria on 
file. These steps provide technological solutions but still more needs 
to be done.
    The eModal applications need to be expanded to address any and all 
person(s) wanting access on to a terminal. Vendors, maintenance, 
contractors, administrators and others need to verify whom they work 
for against a database as well as identify purpose for wanting access 
to a Port terminal. A match in a database can include files that 
contain pictures, Personal Identification Numbers, background clearance 
levels, biometrics and other. eModal has been accepted by 46 terminals 
in 14 Ports around the United States to provide a community-based 
system. The current applications will require expanded areas of input 
to add uniformity and standards to this endeavor.
    eModal's functional products also have application for importers 
and exporters of hazardous and dangerous cargoes. eModal is currently 
testing existing features for these uses. Further testing needs to be 
done to ensure complete use of verification and purpose of truckers at 
chemical, petroleum and other such related facilities.
    The use of technology will be required to meet the challenges that 
lie ahead. While eModal already has a proven use and success record 
within the Port Communities, it is evident that further expansion and 
development will be required for current products as well as new 
products to maintain an ongoing read of trucks, their drivers, their 
origins and destinations, accompanying and related documentation and 
the methods for input and retrieval to the eModal database.
    In closing, I would like to reiterate eModal's commitment to our 
nation's Port communities. As the largest Port Community System 
provider in the United States, we have taken a leadership role that 
ensures that the products that we deliver meet the rigid standards set 
by Ports and terminal operators. We have developed these applications 
to address security with a practical understanding and functional 
respect for needed productivity. As a result, we have contributed 
solutions to-date for the transportation industry and we look forward 
to working towards possible solutions to further our nation's security.

        Thank you

    Senator Wyden. Mr. Koch?

    STATEMENT OF CHRISTOPHER KOCH, PRESIDENT AND CEO, WORLD 
                        SHIPPING COUNCIL

    Mr. Koch. Thank you, Mr. Chairman, Senator Murray, Senator 
Cantwell. Thanks for the opportunity to be here today. I will 
also put my written comments in the record with your permission 
and simply summarize.
    I think what we are dealing with here as we think through 
the liner shipping and the container portion of these security 
issues, is the $1.3 billion of commerce that is going through 
our ports every single day. How do we continue to have the 
efficiency of that system that benefits American commerce, and 
at the same time make it more secure? The observation that I 
would make is that security is not a single issue. There are 
multiple layers to this.
    I think you heard today, the first layer is the ship where 
the Coast Guard has jurisdiction. Basically, securing the ship 
is fairly straightforward. Then you then have the marine 
terminal, which is obviously a major interest to the ports of 
Seattle and Tacoma. We support the Senate legislation on this 
and believe that is a good start.
    Now you get into more interesting issues, such as personnel 
security. Do we do background security checks, and, if so, how 
and for whom? We are very supportive of the legislation that 
would establish such a system and think it is a good step 
forward.
    But the point I would like to make is about cargo security, 
which is probably the most difficult issue and will be 
certainly one of the challenges that the House and Senate 
Conference Committee on maritime security will have to deal 
with. The change here is really less about how transportation 
is conducted than it is about how trade is conducted, and let 
me make a couple of points.
    Before I do though, I would like to commend Customs 
Commissioner Bonner on the C-TPAT program where customs is 
working in partnership with the private sector, and the CSI 
(Container Security Initiative where they are working with 
foreign governments to establish protocols around the world to 
inspect and secure cargo before it is loaded on ships. Frankly 
CSI is a central beginning component of moving forward to build 
an infrastructure that will work.
    Senator Cantwell, your comment of an international protocol 
to do that is an excellent comment. Until that international 
struction is in place, I would suggest that CSI and custom's 
efforts be supported.
    Maritime security legislation is needed, and the House and 
Senate conferees have a big task ahead of them.
    Let me make a couple of points. The first is, hopefully out 
of this process, we will get clarity regarding Government 
organization and responsibilites. Regardless of whether you are 
talking about a Department of Homeland Security or not, we need 
clarity about who owns these issues and how they get dealt 
with.
    The Coast Guard has responsibility for the ships. It seems 
to have responsibility for U.S. ports. Customs has container 
security, usually, although the Transportation Security 
Administration's role is somewhat ambiguous in all that. But, I 
think we also need to consider who responds if we have an 
incident. At the present time, it is probably the Department of 
Transportation. There is a serious goverance problem if the 
people who are responsible for response are not the same people 
responsible for developing prevention protocols.
    Senator Murray, you were talking about crew manifests and 
how those issues are dealt with. To show you an example, an 
ocean carrier coming to the U.S. electronically files 96 hours 
ahead of time a crew manifest with the Coast Guard. It gives 
the paperwork to the Customs Service when it arrives. It gives 
the paperwork to the INS when it arrives, and the House version 
of the legislation would have carriers also give it to the TSA 
in advance. That is three existing, potentially four agencies. 
The industry has offered to submit it all 96 hours in advance 
to one place. We think a little coordinator in this effort----
    Senator Murray. Should that be, which agency?
    Mr. Koch. I believe the Customs Service system is the 
easiest to get it up and running. They have got it in place for 
the aviation industry and for use on cruise ships. It ought to 
be easy to get together for this industry as well.
    Then you get to the trade implications of enhancing 
security, and I would submit that this legislation also has to 
deal with these issues, namely what information importers and 
exporters have to provide, when do they have to provide it, and 
how accurate does it have to be. We have a number of holes in 
the system at the present time.
    Today, the way the information is transmitted by the ocean 
carriers is via cargo manifests. First, there is no agreement 
on what level of detail the cargo descriptions have to be from 
the shipper of the cargo. Second, to the extent accuracy is 
required, one must recognize that it is the ocean carriers who 
must rely on the shipper's description: all they are or can be 
doing is providing the information that is given to them by the 
shippers.
    As you can see from our testimony, we have indicated that 
we would be willing to accept a requirement from the Customs 
Service to provide cargo manifests before loading in a foreign 
load port, but that requirement has to be applicable to every 
carrier, including the non-vessel operating common carriers 
that handle over 30 percent of the inbound cargo.
    So in conclusion, what we would like to see is that the 
Government be organized clearly, that clear rules be 
established so that every party in the supply chain knows 
exactly what is expected of them, there is no ambiguity about 
who has to do what, and that we establish these rules--as all 
of you have said--in a way that still allows an efficient flow 
of trade, that does not choke trade.
    Take, for example, the seal technology that has been 
discussed. If we have one seal standard in the U.S. but the 
seal readers at the gates in the U.S. have a different 
technology or different system than those in Rotherdam, 
Singapore or other places, we have just created a big mess. So 
international standards are really going to be essential for 
this. The U.S. has been responding pretty well in supporting 
international initiatives in this regard. I think we just need 
to urge the continuation of that.
    Senator Wyden. Sounds too logical to me. Thank you. Very 
helpful.
    [The prepared statement of Mr. Koch follows:]

   Prepared Statement of Christopher Koch, President and CEO, World 
                            Shipping Council
    The government and all segments of the maritime industry, including 
liner shipping \1\, have spent considerable effort since last September 
to determine what new programs and rules should be developed to protect 
international trade from the risk of terrorism. Now that the Senate and 
House of Representatives have both passed versions of maritime security 
legislation and announced the formation of a conference committee to 
produce a final bill, we enter the most important stage of this 
legislative process. It is important because the Executive Branch 
agencies need additional authority to address the challenge. It is 
important because the agencies need to have their roles and missions 
more clearly defined and coordinated. It is important because the 
private sector needs to know what will be required of it. And it is 
important because what is required will not only affect enhanced 
security, but how efficiently and reliably, and at what cost, America's 
international trade will continue to flow.
---------------------------------------------------------------------------
    \1\ The World Shipping Council is a nonprofit trade association 
representing the international liner shipping industry. Its members 
carry roughly 90 percent of America's international liner cargoes, 
which represents two-thirds of the value of the country's ocean-borne 
international trade. A list of the member companies of the Council is 
attached at Appendix A.

---------------------------------------------------------------------------
I. Containerization and Liner Shipping

    Containerization was developed for the purpose of providing a more 
efficient, less expensive way to move goods, and its success surely 
exceeds what Malcom McLean hoped for when he began this revolution in 
the mid- 1950's. Last year, the United States moved roughly 7.8 million 
containers of import cargo and 4.8 million containers of export cargo 
through its ports. That is roughly $1.3 billion worth of containerized 
goods moving through U.S. ports every day. Seattle and Tacoma are major 
national gateways for the nation's international trade, as well as 
efficiently serving the import and export needs of Washington State. 
The movement of sealed containers has greatly reduced damage and 
pilferage of goods. It has facilitated intermodal door-to-door supply 
chains. And it has done so with remarkable efficiency--making ocean 
transportation a huge bargain for importers, exporters and consumers. 
Last year, for example, the cost of transporting all of America's liner 
imports, including all consumer, commercial and industrial goods, was 
only $133 per household.
    This remarkable system operates by carriers--truckers, railroads 
and ocean carriers--transporting sealed containers, like the postal 
service transports sealed letters and packages. The challenge we now 
face is how to ensure the continuation of this system's benefits and 
efficiencies that knit the world's economies together, while at the 
same time instituting new initiatives and rules that can enhance 
security.
    The international liner shipping industry has taken this challenge 
seriously. On January 17 of this year, the World Shipping Council 
issued a White Paper \2\ that made a series of recommendations on how 
the government should address the issue of maritime security. It was 
and is, not a solution to every possible concern, but a good-faith 
effort to propose meaningful improvements to the supply chain.
---------------------------------------------------------------------------
    \2\ The paper, entitled ``Improving Security for International 
Liner Shipping'', can be found on the Council's website at 
www.worldshipping.org.
---------------------------------------------------------------------------
    The immediate challenges are (1) to design the security process and 
deploy the capabilities necessary to minimize, detect and intercept 
security risks as early as possible--before they are loaded aboard a 
ship for delivery to their destination, and (2) to have the systems and 
international protocols in place to ensure the efficient flow of 
international commerce during all possible security conditions. We must 
protect the system that facilitates world trade, and prevent 
transportation assets from becoming means of delivering destruction. We 
must protect the lives of people who make the international trade 
system operate and who work and reside in areas through which trade 
flows. We must protect nations' ability to continue their trading 
relations in the event terrorists do attack. And, we must recognize 
that this terrorist threat is not going to go away, but only become 
more challenging as world trade volumes grow.
    For that reason, what is at issue is not just maritime security, or 
even the global, intermodal transportation system, but the flow of 
international trade and the world's economic health. The stakes are 
high. Consequently, the United States is focused on implementing 
security measures that begin as early in the transportation supply 
chain as possible.
    The World Shipping Council has provided this Committee with its 
White Paper recommendations and has previously testified about specific 
aspects of security regarding vessels, marine terminals and ports, 
personnel, and cargo documentation. I will not repeat that testimony 
today, but will instead offer some suggestions as the Committee enters 
into the final phase of writing maritime security legislation

II. The Government Organization Challenge

    Designing and implementing an effective maritime security program 
will require cooperation, information sharing, and coordination between 
government and industry, and because this is an international business, 
it will also require international cooperation between governments.
    A unified, coordinated U.S. government strategy must be designed 
not only to detect and prevent terrorist attacks on the international 
cargo transportation system, but also to provide adequate contingency 
planning for the management of the consequences should a significant 
attack occur, and--by all means not to be forgotten--to ensure the 
continuation of efficient, reliable, low cost transportation of 
America's commerce.
    The government organizational challenge is substantial. The 
Department of Transportation oversees transportation, and, in the 
immediate aftermath of September 11, the Congress created the new 
Transportation Security Administration (TSA) within DOT with very broad 
authority for transportation security in all modes, including maritime. 
Also within DOT is the Coast Guard with broad authority to address 
large segments of the maritime security issues involved, but not all. 
The Customs Service oversees trade, and has taken the commendable 
initiative to develop two programs to reduce the risk of terrorism, 
namely Customs' Trade Partnership Against Terrorism (C-TPAT) and the 
Container Security Initiative (CSI). C-TPAT is a voluntary program 
between Customs and industry to develop a more secure supply chain. CSI 
is a program pursuant to which Customs has begun establishing 
agreements with other nations' Customs organizations for the purpose of 
information collection, pre-screening, and cargo inspection. The 
Immigration and Naturalization Service and the Department of State are 
responsible for crew visas and entry into the United States.
    Improving the security of international commerce requires a tightly 
integrated, common approach and clear responsibilities. It also 
requires government agencies to effectively share the information that 
they require. President Bush's proposal to reorganize the government 
and create a Department of Homeland Security should help achieve this. 
In many respects, maritime trade is a ``poster child'' for this 
initiative. In fact, the maritime transportation industry was the first 
example used in the President's explanation of the new Department.\3\ 
The fact that there are numerous federal agencies, each with a portion 
of responsibility--often overlapping other agencies'--has not only 
caused confusion in the industry and within government, but it has 
delayed the development and implementation of problem solutions.
---------------------------------------------------------------------------
    \3\ ``The Department of Homeland Security''--President George W. 
Bush (June 2002)
---------------------------------------------------------------------------
    Let me provide some examples, both because they are illustrative of 
the problem and because we request that the maritime security 
legislation clearly address them. First, consider personnel security 
aboard vessels. Ocean carriers must file their crew manifests with 
three different federal agencies (the Coast Guard, the INS and the 
Customs Service) in different format at different times. The House-
passed maritime security legislation would add a fourth agency, TSA, to 
that list. Instead of having one agency responsible for checking crew 
members, or even having one system that all agencies can share, each 
agency has its own system and procedures. The three agencies are now 
working on plans to automate these systems for electronic advance 
filing of the information. But, each agency--motivated by recently 
enacted or envisaged legislation--is planning on having its own system, 
rather than a single system that all agencies could share. The present 
system is uncoordinated, confusing and inefficient. We strongly 
recommend that the final legislation require the establishment of a 
single system for the receipt of crew manifest information, and that 
agency responsibility for crew issues be clearly defined.
    The Coast Guard estimates that roughly 200,000 seafarers call at 
U.S. ports per year. It is entirely appropriate that security 
procedures for seafarers be in place. At the same time, it must be 
recognized that seafarers are, in many respects, the first line of 
defense to ensure that vessels are secure when they arrive in a U.S. 
port, and they should be treated fairly with clear, predictable, and 
uniformly applied rules.
    Let me provide another example of the need for clear government 
organization and role definition. The U.S. Customs Service appears to 
have the ``lead'' on container security issues, as both the C-TPAT and 
the CSI initiatives would indicate. Customs is awaiting enactment of 
the pending maritime security legislation by Congress which will 
authorize it to issue regulations changing the requirements applicable 
to cargo documentation for imports and exports and conduct better cargo 
security screening earlier in the transportation process. But the bills 
in conference do not agree on what Customs' role will be, as the House 
version of the legislation provides that, while Customs may collect 
cargo manifests from carriers to use for security screening purposes, 
TSA shall ``develop and maintain a antiterrorism cargo identification, 
tracking, and screening system for containerized cargo shipped to or 
from the United States''.
    This presents fundamental governance issues that must be resolved. 
First, which agency is responsible for the analysis and risk assessment 
of the acquired information, and, if that agency is not Customs, can it 
analyze and act on the information and communicate to Customs in time 
to identify cargo that requires further attention before loading aboard 
a vessel?
    Second, if Customs is responsible for screening and inspecting 
cargo and detecting security threats, but another agency is responsible 
for managing how and whether ports and vessels and trade would operate 
if there were a terrorist incident, there is a risk of an uncoordinated 
or inconsistent view of what needs to be done, when coordination and 
consistency will be most needed.
    It is essential that the enhanced security, screening and 
prevention programs be in precise alignment with the incident planning, 
management and response programs. If they are not, many billions of 
dollars worth of trade and millions of jobs in America and around the 
world could be adversely affected. The agency responsible for answering 
to the President for how the United States government would keep 
international trade flowing in the event of a terrorist event, must 
have complete understanding and confidence in the programs being put in 
place to address these risks on a preventive basis. Stated differently, 
the regime being designed for addressing the risk on a preventative 
basis also must be capable of addressing how trade would continue to 
flow efficiently if it had to respond to an incident.
    A Department of Homeland Security should help accomplish this. 
Already since the announcement of the President's proposal, we see some 
positive signs of closer agency cooperation. If there is one 
overarching concern over the initiative, it is that such a department 
would become so focused on the security of the transportation system 
that it would not properly consider the costs, delays, inefficiencies 
and complexities that new requirements could impose on America's 
international trade.

III. Supply Chain Security Analysis

    Defining what constitutes a secure shipment is relatively 
straightforward: a container should be stuffed in a secure facility, by 
approved people, sealed immediately upon stuffing, transported from 
that location to the ocean carrier in a timely manner that ensures the 
container is not compromised, stored in a secure facility where it is 
not compromised, and then loaded aboard a secure ship for transit. And 
if there is a security question about a container, it should be 
inspected by appropriate authorities before it is loaded aboard a ship.
    Implementing that vision is enormously difficult (1) because of the 
number of different entities in different jurisdictions involved in a 
shipment--those involved in loading and sealing the container, 
documentation of the shipment, storage, trucking, railroads, inland 
terminals, marine terminals, and the ocean carrier, (2) because of the 
current lack of a clearly defined and coordinated information system to 
receive, analyze and act on all the shipment data relevant to pre-
screening containerized shipments before they are loaded aboard a ship, 
(3) because of the limitations and expense of technologies that might 
be developed, and (4) because of the lack of an established or 
coordinated global capability to inspect containers, when warranted, 
before they are loaded aboard ships.

    C-TPAT and CSI

    The good news is that the government is taking positive steps in 
tackling this challenge. The Customs Service has undertaken two 
important initiatives: Customs' Trade Partnership Against Terrorism (C-
TPAT), and the Container Security Initiative (CSI).
    C-TPAT is a voluntary program focusing on U.S. importers. The 
theory is that if they undertake certain actions to improve the 
security of their supply chain, they will get preferential treatment of 
their cargo by Customs. C-TPAT importers will also be required to use 
ocean carriers that have C-TPAT agreements with Customs, to use C-TPAT 
brokers, C-TPAT NVOCCs etc, etc. While there are limits to how far C-
TPAT can go as a voluntary program without binding requirements, it is 
a good first step. C-TPAT recognizes that true security requires that 
the entire supply chain and all its component pieces be considered. For 
example, a seal on a container by itself is meaningless; it is an 
indicator of security only if it is part of a supply chain that is 
secure from the stuffing of the container through its final delivery.
    The World Shipping Council has been engaged in detailed discussions 
with the Customs Service about the C-TPAT program, and while there is 
no ocean carrier component of the program yet in place, our members are 
hopeful of accomplishing that with Commissioner Bonner in the very near 
future.
    Customs' CSI initiative is another very important initiative to 
address supply chain security, pursuant to which the Customs Service is 
seeking to enter into agreements with foreign governments and port 
authorities:

    establishing security criteria for identifying high-risk 
        containers
    developing and implementing a pre-screening process to 
        target containers before they are loaded aboard a vessel, and
    developing and deploying technology to screen and inspect 
        identified containers prior to loading, including the 
        stationing of Customs officials overseas in accordance with the 
        principle of reciprocity.

    Customs has entered into such agreements with Canada, Mexico, 
Singapore, the Netherlands, and Belgium, and is in the process of 
entering into agreements with several other European governments. Such 
arrangements provide a level of security capability and communication 
not otherwise easily achieved. The competencies and protocols that can 
emerge from CSI are essential to screen cargo before it is loaded 
aboard a vessel. This is especially important because secure intermodal 
supply chains will take considerable time to develop, and even then, 
the capability to check and inspect containers will be essential.
    The CSI complements, but does not compete with, the international 
efforts being undertaken at the International Maritime Organization. 
The IMO is working to amend the existing international convention 
regulating ships in order to institute new vessel security 
requirements, and to develop a new international agreement to address 
physical security standards and requirements for port facilities. But 
by sharing cargo information and developing negotiated agreements for 
how cargo security can be monitored and verified, the CSI agreements 
fill a hole in current international cargo security capabilities.
    Another aspect of such CSI agreements is that they are important to 
manage the continuation of trade if the industry is ever beset by a 
terrorist attack. Without such agreements and without the technology in 
place to inspect containers in ports of origin, what system would 
provide sufficient security confidence to keep international trade 
flowing following an incident? It would be difficult to over-emphasize 
the importance of this initiative and its urgency. Similarly, it must 
be recognized that CSI must not focus on just the largest ports around 
the world, otherwise terrorists would simply know that there is less 
risk of detection by using ports which are not among the largest.

    Cargo Documentation Requirements

    Beyond these Customs' initiatives, enhanced container security 
requires a clearly defined and coordinated government information 
system capable of receiving, analyzing and acting on data determined by 
the government to be necessary to screen shipments. Such data should be 
transmitted electronically and early enough to meet the government's 
needs. This requires enactment of the pending legislation and some 
clear direction to be provided. Because this remains one of the more 
complex and unresolved areas of the legislation, I would like to take a 
moment to address some of the questions involved, specifically:

    What information must be filed with the government?
    When must the information be filed?
    Who must file the information?
    What level of detail and accuracy is required?
    Who will analyze and act on the information?

    What information?

    We fully support the provisions of S.1214, which set forth thirteen 
specific items of information must be included on a cargo manifest, and 
urge that section 115(a)(2) of the Senate bill be retained in 
conference. Its clear enumeration of what is required will provide 
necessary clarity and uniformity.
    The cargo manifest filed by a carrier was never designed to provide 
all the information that might be relevant to a security analysis, and 
it is not likely to ever do so, because that would require information 
beyond the knowledge of the carrier and involve commercially sensitive 
information that shippers may not want to share with a carrier. We 
recognize, however, that until a new system is developed, cargo 
manifests will be the interim means to gather relevant information. We 
request, however, that cargo manifests not be perceived as the means to 
gather any and all information of interest, and that Customs be 
instructed not to require ``additional'' information on cargo manifests 
unless it is appropriate information to be provided to and by a carrier 
and is essential for security screening.

    When must the information be filed?

    Today, cargo manifests are not required to be filed until the 
vessel arrives in port, although for those carriers that file manifests 
electronically via Customs' Automated Manifest System, they file 48 
hours before the vessel arrives. Both the House and Senate bills 
require that cargo manifests will be filed electronically in advance of 
arrival in such manner, time and form as the Customs Service requires. 
Customs officials have indicated that, when this bill is enacted, they 
intend to require carriers to file import cargo manifests 24 hours 
before loading in a foreign port. The logic of this is clear. If you 
want to perform a security screening of a container before it sails for 
the United States, you need the shipment information before loading.
    This will be a substantial change for carriers and shippers, and it 
will affect how a lot of cargo is transported. Ocean carriers can 
accept such a requirement, but only if the requirement is applicable to 
all carriers equally, including non-vessel operating carriers. If this 
information serves a sufficiently important security function so as to 
be required earlier than today, then all carriers and all shipments 
must be required to comply with the same rules, or else the system will 
be both unfair and will provide inconsistent levels of security.

    Who must file?

    Ocean carriers are required by law to file cargo manifests for all 
cargo they transport. Nonvessel operating common carriers (NVOs), 
however,--which carry between 30-40-percent of the containerized cargo 
moving in U.S. foreign trades--are not currently required to file cargo 
manifests for the shipments for which they are responsible. NVOs are 
common carriers that purchase space from ocean carriers on a 
``wholesale'' basis and then resell it to shippers on a ``retail'' 
basis. They issue the bills of lading to the shipper; they know the 
cargo descriptions; and they know the identity of the shipper and the 
consignee. Today, the only manifested information required for NVO-
controlled containers is from the ocean carrier's manifest, which 
typically provides only a very limited cargo description (e.g., 
``freight all kinds'' or FAK), and contains no information about the 
actual shippers or consignees of the cargo. Thus, the government has no 
advance visibility of cargo descriptions or, more importantly, the 
identity of the shippers or recipients of a huge percentage of our 
trade. A recent estimate, for example, was that from Hong Kong alone, 
over a quarter of a million ``FAK'' containers were sent to the U.S. 
last year.\4\
---------------------------------------------------------------------------
    \4\ Lloyd's List, June 21, 2002.
---------------------------------------------------------------------------
    The House bill does not specifically require NVOs to file cargo 
manifests, whereas Section 115 (a) (3) in S. 1214 requires Customs to 
issue regulations requiring NVOs to meet the same cargo manifesting 
requirements as ocean carriers.
    It is essential that the final legislation either require NVOs to 
file cargo manifests with the Customs Service for shipments for which 
they are responsible in the same time, manner and form as ocean 
carriers, or give this information to the ocean carrier to file with 
its manifest (an option that neither the NVOs nor the ocean carriers 
want). Without such a requirement, the government will have 
insufficient cargo descriptions and will have no advance information 
about the shippers or consignees of 30-40-percent of our imported ocean 
borne cargo. Without such a requirement, a shipper or consignee could 
conceal its identity from advance disclosure to the government by using 
an NVO rather than an ocean carrier to transport its goods. 
Furthermore, without such a requirement, the same shipment would be 
subject to less onerous security requirements if handled by an NVO than 
if handled by an ocean carrier. That would make no sense.

    What level of detail and accuracy?

    In modern ocean-borne transportation, the shipper is the party that 
provides the bill of lading information to the carrier. The carrier 
essentially transcribes the information into its system and issues a 
bill of lading on the carrier's form. Consequently, cargo documentation 
information is actually provided by the shipper.
    Regarding the required level of detail of cargo manifest 
information, there is presently no common, agreed standard for what 
level of cargo description detail is needed on the cargo manifest for 
security screening. Clear and uniform rules are needed to inform 
shippers what is required in the way of cargo descriptions. Recognizing 
that this early manifest filing is not needed or used for Customs entry 
or trade compliance purposes, such cargo description requirements 
should require only information that is needed for security purposes, 
and should not be so detailed as to impede the efficient flow of 
commerce.
    Regarding the accuracy of the cargo description, the ocean carrier 
by necessity must rely on the shipper's declaration to the carrier of 
the cargo, because the carrier can't open and verify the contents of 
sealed containers or crates. While shippers are subject to penalties 
for inaccurate information filed for customs entry purposes--a process 
that is not required until after the goods arrive in the United States, 
existing customs law (Section 431 of the Tariff Act) does not clearly 
require the shipper of the cargo, who has the necessary cargo 
information, to provide complete and accurate cargo descriptions for 
the carrier's cargo manifest. In addition, the law's current penalty 
provisions (Section 436 of the Tariff Act) authorize penalties only on 
the ocean carrier in cases where the cargo description on the manifest 
is incomplete or inaccurate. This may have made sense in the pre-
containerization days when the law was written and when carriers 
physically handled all the loaded cargo, but it is anachronistic and 
inappropriate when applied to cargo in sealed containers. With sealed 
containers, the ocean carrier by necessity must rely on the shipper's 
declaration to the carrier of the cargo because the carrier does not--
and cannot--open and verify the contents of the sealed container.
    In addition to being unfair, the current absence of clear statutory 
obligations fro shippers fails to ensure that the cargo interests, who 
possess the cargo information, have the proper incentives to provide 
accurate information that the government requires on the cargo 
manifest. We recommend that, if penalties are going to arise from 
inadequate cargo descriptions of cargo in sealed containers, then those 
penalties should be imposed on the cargo interests, not the ocean 
carrier which is simply transmitting what it has been told is in the 
container. The Tariff Act should be amended to make such penalty 
authority clear.

    Who will analyze and act on the information?

    The House bill (Section 101) would require the Under Secretary of 
Transportation Security to develop and maintain, by June 30, 2003, 
``a[n] antiterrorism cargo identification, tracking, and screening 
system for containerized cargo shipped to and from the United States 
either directly or via a foreign port''.
    The Senate bill appears to assume that cargo identification, 
tracking and screening for containerized shipments would continue to be 
the responsibility of the Customs Service. However, Section 207 of the 
bill also requires the Secretaries of Transportation and Treasury to 
``establish a joint task force to work with ocean shippers and ocean 
carriers in the development of systems to track data for shipments, 
containers and contents''.
    The lack of clarity over which agency is responsible for cargo 
security analysis should be clearly addressed by the conferees. It is 
essential that Congress: 1) clearly establish which agency is 
responsible for what portion of this security challenge, and 2) ensure 
that, if Customs is not the agency responsible for security analysis, 
then the lines of communications guarantee that identification of what 
cargo requires further review or inspection be communicated to the 
Customs Service in a timely manner. If the new regime is going to 
require substantial changes, such as filing import cargo manifests 24 
hours before loading, then the security screening system must be able 
to analyze and act on the information before the cargo is loaded, or it 
will not accomplish its objective.

    Export Cargo Documentation

    Section 115(b) of the S.1214 would require shippers to ``properly 
document'' all export cargo, meaning submit a ``complete set of 
shipping documents'' ``no later than 24 hours after the cargo is 
delivered to the marine terminal operator''. The bill provides that 
carriers cannot load cargo aboard a ship unless it has been ``properly 
documented''. The House bill does not specifically address export 
cargo.
    As you consider what requirements may be made applicable to export 
cargo, we request that you consider the following:

    The National Customs Brokers and Freight Forwarders 
        Association has recommended that filing with the Automated 
        Export System (AES) be made mandatory for all export shipments. 
        We believe that this would facilitate government acquisition of 
        export shipment data and simplify export procedures.
    Carriers should not be made responsible for whether a 
        shipper has properly interpreted and applied export rules 
        applicable to its cargo. For example, today an export 
        declaration may be required for a particular type of cargo, but 
        not another.\5\ The determination of whether a particular cargo 
        requires an export declaration is an obligation of, and should 
        be the sole responsibility of, the shipper.
---------------------------------------------------------------------------
    \5\ This would not be the case if export declarations were required 
of all shipments.
---------------------------------------------------------------------------
    When complete documentation is required can significantly 
        affect the flow and timeliness of commerce. For example, S.2534 
        would require exporters to provide a complete set of shipping 
        documents 72 hours prior to departure of the vessel. That would 
        require a large amount of cargo to just sit in a marine 
        terminal for several days before loading. Such a requirement 
        could cause delays to a significant amount of export trade and 
        create congestion in marine terminals. S.1214 would allow 
        shipments to be loaded for export if tendered just before 
        loading so long as the documents were complete.\6\
---------------------------------------------------------------------------
    \6\ S.1214 requires for export shipments that all documents be 
submitted to the vessel common carrier or its agent ``no later than 24 
hours after the cargo is delivered to the marine terminal operator'', 
and that no export container be loaded aboard a vessel unless this has 
been done. Thus a container could be delivered to the marine terminal 
the day the vessel sails and still be loaded aboard. (Section 115(b)).

    IV. The Role of Technology Improvements in Meeting the Security 
---------------------------------------------------------------------------
Challenge

    There is no question that technology can help address the security 
challenges. There is also no question that one must be careful not to 
assume technology can solve every security problem in a short time 
frame. The role of technology should be analyzed in the context of 
specific security challenges.

    Seals

    Today, there is no government standard for seals. A standard should 
be established promptly, which is internationally acceptable. We 
believe that in the immediate future, the standard should be for a 
hardened bolt-type seal. In the future, electronic seals may be 
required, but seal standards should not wait for the development, 
testing, and standard setting for electronic seals. Depending on the 
specific technology, electronic seals will also require different kinds 
of supporting infrastructure to be installed, such as readers at gates.

    Sensors

    There is interest in sensors that could be installed in containers 
to detect entry, and depending on the technology, perhaps even notify 
somebody of that entry. There are no commercially accepted or 
internationally accepted standards for such devices. Such devices also 
may require sophisticated supporting infrastructure depending on the 
type of sensor, such as satellite coverage. Finally, a requirement of 
such sensors is that they not be so costly as to be commercially 
impractical.

    Transponders on Ships

    The House bill (Section 107) would require the installation of 
Automated Identification System (AIS) transponders on any vessel built 
after December 31, 2002, on any vessel operating within a Vessel 
Traffic Service by that date, and on all other vessels, by December 31, 
2004.
    S.1214 does not have a comparable provision. However, S. 2329, 
which has been approved by the Senate Commerce Committee, would impose 
a requirement that AIS be installed by December 31, 2004, independently 
of when the vessel was built, or whether it was in a geography with a 
VTS system.
    The IMO is presently addressing this issue, and we agree with the 
G8 Transportation Security Summit conclusion of last week that the IMO 
is the most appropriate forum to accelerate implementation of AIS 
equipment requirements. If accelerated installation of AIS equipment is 
nevertheless required by Congress, we believe the S.2329 approach and 
timeframe is preferable, as it coincides with the G8 agreement. In 
addition, the following clarifications are requested if this 
requirement is included in the final security legislation: 1) The AIS 
transponders are short-range (approximately 30 miles) transponders--as 
there are no standards for long-range equipment. 2) There is some 
uncertainty as to adequate availability of these transponders by the 
proposed date. It would therefore be appropriate to link the 
implementation of the installation requirement to a positive 
determination by the Secretary of Transportation that the AIS equipment 
will be reasonably available to install on all ships in international 
commerce. 3) Shore-based radio facilities, manned and operated by the 
Coast Guard, do not currently have the necessary equipment to receive 
AIS signals, obviously diminishing the value of AIS for enhanced 
maritime security. It would seem appropriate, therefore, to include in 
the legislation a requirement that the Secretary of Transportation 
provide regular progress reports to the relevant Congressional 
Committees on the planned installation of the necessary equipment on 
shore-based radio stations for receiving short-range AIS communication 
signals.

    Personnel Credentialing

    The issue of credentialing and checking transport workers in 
security sensitive positions requires resolution. The industry has 
expressed its support for the House and Senate legislative efforts to 
establish a national credentialing program, with uniform, minimum 
federal standards, with a federal background check process using 
criminal history and national security data, and with ``smart card'' 
technology for the credentialing of appropriate transportation workers. 
The credentialing system adopted should cover people with access to 
restricted marine terminal areas and to vessels, the truckers hauling 
the containers, and other security sensitive positions. America's 
seaports, like America's airports, should have systems to ensure and 
record that only approved people who are supposed to be there are 
there, and only when they are supposed to be there.
    Regarding seafarers' documents, we were pleased to see the G8 
Transport Security Summit agreement agree to seek by June 2003 minimum 
standards for issuance of seafarer identity documents at the 
International Labor Organization, and minimum standards for the 
application of biometrics in procedures and documents by the spring of 
2003

    Cargo Inspection Technology

    The Customs Service is acquiring non-intrusive container inspection 
equipment for use at seaports around the country. These technologies 
are as important and useful as any in ensuring a secure supply chain, 
and such equipment should be installed at ports in other countries that 
load containers destined for the United States. This is an objective of 
the Customs Container Security Initiative.
    We understand that other inspection and detection equipment is 
being deployed to check for certain risks, such as radioactive 
materials. These kinds of technologies should be among the highest 
priority acquisitions.
          * * * * *
    The challenges in developing and applying such technologies are 
many, but certainly include the following considerations. The first is 
internal to the government--clearly assigning organizational 
responsibility for developing and managing the process of reviewing all 
available technologies, setting criteria and standards for testing, 
judging the test results, and developing standards and requirements. A 
second challenge will be finding the right technologies for security at 
a reasonable cost. A third challenge will be making sure the standards 
and requirements are internationally accepted--an essential task when 
regulating international commerce, because the consequences of security 
requirements can affect equipment, systems, business practices and 
operating procedures around the world. Differing standards or 
disagreements could impede international commerce and cause substantial 
confusion.

    V. International Commerce Needs International Security Solutions

    A final point to consider is that ensuring higher security 
standards for international commerce requires international 
cooperation. Certain aspects of a security solution are beyond the 
direct reach of United States legislation. However, Congressional 
recognition and support of ongoing international efforts at the IMO, 
the ILO, the World Customs Organization and the G8 Summit is helpful.
    First, S.1214 calls on the Secretary of Transportation, in 
consultation with the foreign governments concerned, to assess the 
effectiveness of the security measures maintained at foreign ports, by 
determining the extent to which a foreign port effectively maintains 
and implements internationally recognized security measures. This 
approach is consistent with and supportive of the U.S. government's 
international initiative to develop such standards at the International 
Maritime Organization, and with the G8 Transport Security summit 
agreement. We support this approach in the Senate bill, and believe 
that it should help further promote international cooperation in this 
area.
    Second, the bilateral negotiations that are part of the Customs 
Service's Container Security Initiative are a critically important part 
of any security regime addressing the security of international cargo 
transportation. It will help detect and inspect security questions 
earlier, and will help governments manage the continuation of commerce 
under a wide range of security scenarios.
    Finally, it is obvious, but worth repeating, that the hundreds of 
ships and millions of containers serving America's trade travel to and 
between all nations. This transportation network, that allows American 
exporters and importers to move their goods to and from any location in 
the world, must operate under rules that are internationally 
acceptable.

    VIII. Moving Forward

    I would like to close my remarks by thanking the Committee for its 
leadership in addressing this issue. S.1214 was conceived before 
September 11. The Senate passed it during the last session. The 
Committee's continued perseverance on the issue is instrumental in 
making progress on an exceptionally difficult challenge. Your efforts 
are one of the reasons to be encouraged, if not by the present state of 
success, at least by the efforts and positive direction things are 
moving.
    I would also be remiss if I did not express thanks to the Committee 
for listening to all parts of the industry so that you understand and 
appreciate the consequences of the actions being considered. It is 
essential that maritime security legislation be enacted this year. It 
is also critical that the legislation and its implementation not unduly 
handicap commerce. International liner shipping is remarkably 
successful in providing America's international trade with efficient, 
reliable and low cost service. Great care should be taken to preserve 
those attributes at the same time that we improve security measures 
against the risk of terrorism.
    We can't always choose the circumstances in which we find 
ourselves, but we can choose how we respond to those circumstances. 
Governments are now engaged in an exceptionally difficult endeavor, 
namely to institute safeguards against the risk of terrorism while 
protecting the benefits of free trade. It is essential that governments 
succeed. It is incumbent on all the participants in this international 
transportation process to help governments succeed. The World Shipping 
Council is committed to helping the Congress and the Executive Branch 
agencies succeed in these efforts, and we commend those in industry and 
in public service who are doing their best to address this new and 
complex set of challenges.
                                 ______
                                 
Attachment A

             Member Companies of the World Shipping Council

    APL
    A.P. Moller-Maersk Sealand--(including Safmarine)
    Atlantic Container Line (ACL)
     CP Ships--(including Canada Maritime, CAST, Lykes Lines, Contship 
Containerlines, TMM Lines, and ANZDL)
    China Ocean Shipping Company (COSCO)
    China Shipping Group
    CMA-CGM Group
    Compania Sud-Americana de Vapores (CSAV)
    Crowley Maritime Corporation
    Evergreen Marine Corporation--(including Lloyd Triestino)
    Gearbulk Ltd.
    Great White Fleet
    Hamburg Sud--(including Columbus Line and Alianca)
    Hanjin Shipping Company
    Hapag-Lloyd Container Line
    HUAL
    Hyundai Merchant Marine Company
    Italia Line
    Kawasaki Kisen Kaisha Ltd. (K Line)
    Malaysia International Shipping Corporation (MISC)
    Mediterranean Shipping Company
    Mitsui O.S.K. Lines
    NYK Line
    Orient Overseas Container Line, Ltd. (OOCL)
    P&O Nedlloyd Limited--(including Farrell Lines)
    Torm Lines
    United Arab Shipping Company
    Wan Hai Lines Ltd.
    Wallenius Wilhelmsen Lines
    Yangming Marine Transport Corporation
    Zim Israel Navigation Company

    Senator Wyden. Mr. Schorer?

          STATEMENT OF STEVEN SCHORER, PRESIDENT, L-3 
             COMMUNICATIONS, OCEAN SYSTEMS DIVISION

    Mr. Schorer. It is always great to be last. Chairman Wyden, 
Senator Murray and Senator Cantwell, it is a pleasure to be 
here. I am Steve Schorer of L-3 Communications, Ocean Systems 
Division.
    While a lot of the time today has been spent on cargo 
vessels and containers tracking and tags, I would argue that 
the threat today includes everything from huge container ships 
to small pleasure boats. Thousands of water craft operate in 
our Nation's inland waterways as well as in our traditional 
ocean side harbors, making cities like Minneapolis and St. 
Louis as vulnerable to attack as New York and Seattle.
    The sheer number of vessels involved makes it almost 
impossible for the Coast Guard or the port authority to 
reasonably be expected to stop all potential terrorist 
activities using conventional methods. There have been recent 
reports in the press indicating Al-Qaeda are training in 
underwater operations, which lends an even greater sense of 
urgency to resolving this complicated issue.
    Much of the current discussion today centers around the 
threat of a terrorist organization smuggling in weapons or 
detonating explosives, conventional or unconventional in cargo 
containers, cargo vessels. A much more practical or realistic 
threat involves the threat posed by underwater mines or 
explosives placed at the access to a harbor, a choke point, on 
a pier's pilings, or on a pipeline running across the sea 
floor. Virtually any vessel, not just a cargo vessel, operating 
in our waters can covertly deploy mines. An enemy might not 
deploy his mines or explosives from a submarine or an aircraft, 
but instead could simply push them off the back of a pleasure 
craft or a freighter in the dark of the night.
    Mines are easy to build, inexpensive and readily available 
worldwide. A typical mine, like the widely exported Italian 
Manta is a anti-ship mine, commercially available, easy to 
deploy and very difficult to detect. The Manta comes with a 
290-pound warhead that could easily sink any of today's 
commercial cargo ships. Furthermore, the appearance of a mine 
in one harbor not only shuts down commercial activity in the 
affected port like Seattle, but could require examination of 
all other U.S. ports like L.A., New York, et cetera, and 
waterways to ensure that they are mine-free before normal 
activity reassumes.
    Mine clearance becomes a particularly onerous problem when 
you consider the vast majority of the U.S. Navy's mine warfare 
equipment is located in Ingleside, Texas. The transit time 
alone which could be on the order of two weeks from Texas to 
Seattle would result in an unacceptable delay in reopening the 
port for commerce. Once on station, some estimates indicate it 
could take as long as 3 weeks to conduct mine hunting 
operations in New York harbor alone. In comparison, it seems a 
much more complex problem. A 2 to 5 week shutdown with any of 
our major ports would have a devastating economic impact.
    The key to isolating newly planted objects in a harbor or 
waterway is knowing what is already there. Most harbor bottoms 
contain large amounts of junk, debris, trucks, cars, things you 
would not imagine are in the bottom of this harbor, and the 
clutter rates are excessive. This might include tires, making 
the job of locating newly implanted objects like mines 
extremely difficult.
    Traditionally, our Navy, the U.S. Navy has conducted Q-
Route surveys in military ports to locate and map objects on 
the bottom of a channel or operating area in peace time, so 
that in a heightened alert or wartime, they can go back and 
look at the same area and note the differences between the two 
surveys. Hence, focus on the new information, something that is 
newly implanted. In the presence of a threat, this enables them 
to quickly eliminate known objects and focus their attention on 
new mine-like contacts for neutralization. This an exceptional 
capability. However, is it extremely limited due to the size of 
the U.S. Navy's mine countermeasure force, their geographic 
location, as I said in Ingleside, Texas, and the fact that many 
of the assets are forward deployed for identification overseas 
in areas of conflict.
    To effectively counter the threat posed by an underwater 
attack to our ports and infrastructure requires dedicated 
assets and an ongoing, nearly continuous survey effort. In my 
view, the United States must intensify and broaden its conduct 
of what I will call civilian Q-Route surveys in our major ports 
and waterways to enable us to quickly recover from the mining 
of any port or harbor.
    I would offer the following as one possible concept of 
operations employing of use of sidescan sonar to conduct Q-
route surveys in our ports and waterways. I believe every major 
port authority in the U.S. should conduct a detailed initial 
survey to actually locate and plot bottoms, to locate and plot 
objects on the harbor approaches, shipping lanes and channel 
bottoms. The result of this survey should be stored in the 
national computer database which all future surveys could be 
compared to, thereby enabling port authorities to determine the 
appearance of new and potentially hostile objects.
    The survey system must be able to provide sufficient 
resolution to eliminate having to investigate every oil drum, 
debris, car, whatever piece of junk lies on the bottom today 
during a survey. The number of surveys conducted is largely 
dependent on the size of the search area and the number of the 
search assets available. While a harbor the size of Seattle 
seems formidable, the search area is actually somewhat more 
manageable since you are primarily concerned with the shipping 
lanes and choke points. Once a suspicious object is located, 
the port authority could isolate the affected area until it was 
cleared.
    This problem of searching a large volume of water in the 
ocean as a medium is much more different than in air. To search 
that volume of water in a very short period of time requires an 
extremely sophisticated underwater surveying equipment. The 
system must possess the ability to resolve very small targets 
in the ocean and accurately identify those with almost 
photographic image quality.
    Today, L-3 Ocean Systems produces such a high-resolution 
sidescan sonar. The system is presently in use with the 
Canadian Navy and was successfully used to locate SwissAir 
Flight 111, and this was, this was a crash site that no one 
else could find the aircraft. The U.S. Navy had assets on 
station. The Canada Navy had assets on station. No one could 
find that plane.
    So in summary, our Nation's ports are vulnerable to 
terrorist activity, and my opinion it is just a matter of time 
before a terrorist brings the war on terror to our shoreline. A 
single mine in a U.S. harbor could have a devastating social 
and economic effect. The approach I have proposed today is not 
a panacea for the defense of our harbors, but only serves as 
one strand in an overarching security net we must construct to 
counter the threat posed by an enemy waging an unconventional 
war against us. I have provided written testimony which further 
expands on this, and I thank you for the opportunity to be 
here.
    [The prepared statement of Mr. Schorer follows:]

 Prepared Statement of Steven Schorer, President, L-3 Communications, 
                         Ocean Systems Division
    Good afternoon Senator Wyden, Senator Murray, Senator Cantwell and 
members of the Port Authority. I am Steven Schorer, President of L-3 
Communications, Ocean Systems Division. Ocean Systems is a world leader 
in underwater detection technologies both domestically and 
internationally.
    The tragic events of 9-11 serve to illustrate the unconventional 
nature of the war we now find ourselves fighting and the pressing need 
to examine other potential vulnerabilities inherent in a free and open 
society. I applaud the Committee's and the Port Authority's actions 
today to bring into open discussion a critical element in any Homeland 
Defense strategy. While significant attention is now being focused on 
making the Nation's skyways safe, too little attention has been given 
to our relatively unprotected and open ports and harbors. Commerce is 
the lifeblood of our Nation and economy, but just as the terrorists 
used our own aircraft against us, they have the capability to exploit 
commercial shipping in similar and unimaginable ways.
    The threat today includes everything from huge container ships to 
small sailboats. Thousands of watercraft operate in our Nation's inland 
waterways, as well as in our traditional ocean side harbors, making 
cities like Minneapolis and St. Louis as vulnerable to attack as New 
York and Seattle. A major port like the Port of Los Angeles handles 
over 110 million metric revenue tons a year with cargo value exceeding 
$120 billion. Yesterday alone, over 100 container ships entered Los 
Angeles Harbor.



    The sheer numbers of vessels involved makes its almost impossible 
for the Coast Guard or Port Authority to reasonably be expected to stop 
all potential terrorist activities using conventional methods. There 
have been recent reports in the press indicating the Al-Qaeda 
terrorists are training in underwater operations, which lends an even 
greater sense of urgency to resolving this complicated issue. Small 
diesel submarines are widely available for purchase in the 
international marketplace and, as recently demonstrated in Columbia, 
submarines can be constructed by virtually any industrial facility for 
non-military uses.



    Much of the current discussion in the press centers around the 
threat of a terrorist organization smuggling in weapons or detonating 
explosives, conventional or unconventional, in a major city's port. The 
ensuing loss of life and disruption in commerce would have far reaching 
and possibly long lasting implications for our country. However this 
discussion seems to ignore other, equally devastating, scenarios. One 
example of this would involve the threat posed by underwater mines or 
explosives placed at the access to a harbor, in a choke point, on a 
pier's pilings or on a pipeline or cableway running across the sea 
floor. Virtually any vessel operating in our waters can covertly deploy 
mines. They are easy to build, inexpensive and readily available 
worldwide. A typical mine like the widely exported Italian Manta is a 
lethal anti-ship mine which is widely available, easy to deploy very 
difficult to detect.



    The Manta is a shallow water mine with a 290 lb warhead that could 
easily sink any of today's commercial cargo ships. The appearance of a 
mine in one harbor not only shuts down commercial activities in the 
affected port, but it requires an examination of all other ports and 
waterways to ensure they are mine-free before normal activities can 
resume. Communication and electrical cables, sewage lines, oil 
pipelines and bridge pilings are all possible targets for attack. 



    Mine clearance becomes a particularly onerous problem when you 
consider the vast majority of the US Navy's mine warfare equipment is 
located in Ingleside, Texas. The transit time alone (2 weeks) from 
Texas to Seattle would result in an unacceptable delay in re-opening 
the port for commerce. Once on station, some estimates indicate it 
could take as long as three weeks to conduct mine-hunting operations in 
New York Harbor alone. To complicate matters further, the undersea 
environment poses some unique challenges not encountered in surface 
based surveillance methods. Detection and detection ranges are affected 
by numerous, constantly changing, variables such as bottom type and 
contour, salinity, temperature gradients, water depth and ambient noise 
levels. 



    Historically, the perceived mining threat was from an enemy intent 
on bottling up the US Navy or merchant Fleets in time of war--today's 
threat is no different. What is different is that the enemy might not 
deploy his mines or explosives from a submarine or aircraft, but 
instead could simply push them off the back of a pleasure craft or 
freighter in the dark of night. It is reasonable to expect that an 
enemy intent on disrupting port operations could attach an explosive 
device to the bottom of an oil tanker or large merchant ship as well. 



    The key to isolating newly planted objects in a harbor or waterway 
is knowing what is already there. Most harbor bottoms contain a fair 
amount of existing debris; things like cars, refrigerators, 55-gallon 
drums and the like, all appear on a sonar operator's screen and make 
the job of locating new objects more difficult.




    Traditionally, the US Navy has conducted Q-Route surveys in 
military ports to locate and map objects on the bottom of a channel or 
operating area (OPAREA) in peacetime, so that in wartime they can look 
at the same area and note the differences between the two surveys. In 
the presence of a threat, this enables them to quickly eliminate known 
objects and to focus their attention on new mine-like contacts for 
further investigation and neutralization. This is an exceptional 
capability, however it is extremely limited due to the size of our mine 
countermeasures force, their geographic location, and that many of the 
assets are forward deployed supporting international operations. The 
Navy uses specially designed and equipped ships of the MCM and MHC 
classes to conduct these surveys, in addition to limited helicopter 
borne search assets. While the sonars used aboard these ships and 
aircraft are good, they do not provide the kind of photographic 
resolutions necessary for use in harbor defense. To effectively counter 
the threat posed by an underwater attack to our ports and 
infrastructure requires dedicated assets and an on-going, nearly 
continuous, survey effort. Furthermore, this survey must encompass more 
than just shipping channels, but must also look at other potential 
underwater targets. In my view, the United States must intensify and 
broaden its conduct of civilian q-route surveys in our major ports and 
waterways to enable us to quickly recover from the mining of a harbor. 
Since 9-11, the Canadian Navy has plans to conduct this type of survey 
of the Saint Lawrence River and most, if not all, Canadian ports.
    The problem of searching a large volume of water in a short period 
of time requires the use of extremely sophisticated underwater 
surveying equipment. The system must possess exceptional resolution 
under a variety of water conditions, depths and sea states for the 
accurate identification of targets. Resolution must be such that a 
detected object's geographic location is accurately plotted on a chart 
to facilitate removal or further investigation by other assets--this 
degree of accuracy is not typically available in commercial sonars. 
Additionally, the equipment operator must be able visually identify the 
detected object to eliminate false targets and to effectively 
coordinate removal activities.



    The system must be user friendly enough to require minimal operator 
training, and should be easily deployable from existing vessels rather 
than requiring the construction of a dedicated search platform. Given 
the large size of many of our harbors, the system must also provide the 
user with a high rate of search coverage. 



    I would offer the following as one possible concept of operations 
employing the use of a sidescan sonar to conduct commercial Q-Route 
surveys and to perform periodic surveillance to detect mines or other 
suspicious devices in our waterways. Upon acquisition of a suitable 
system, the port authority would conduct a detailed initial survey to 
accurately locate and plot objects on the harbor or channel bottom. The 
results of this survey are then stored in a national computer database 
to which all other surveys will be compared to, thereby enabling port 
authority officials to determine the appearance of new, potentially 
hostile, objects. As I previously stated, the system used must be able 
to provide sufficient resolution to eliminate having to investigate 
every coffee can or car detected during the survey. Additional surveys 
can be then conducted to rapidly identify objects requiring further 
investigation. The number of surveys conducted is largely dependent on 
the size of the search area and the number of search assets available. 
While a harbor the size of Los Angeles, New York, or Seattle seems 
formidable, the search area is actually somewhat more manageable since 
you are primarily concerned with the shipping lanes, choke points, 
cable and pipeline crossings and waterfront approaches. Additionally, 
survey assets can be deployed to specific locations in response to a 
treat or to reports from surface based observers. Once a suspicious 
object is located, the port authority can isolate the affected area 
until the object can be visually identified, removed or neutralized.
    L-3 Ocean Systems currently produces a high-resolution sidescan 
sonar system with the ability to locate and display objects as small as 
a piece of \3/16\'s inch chain with nearly photographic imagery. All of 
the sonar images in this presentation are taken from unretouched raw 
sonar output. The system is presently in use by the Canadian Navy and 
was successfully used in locating and mapping the wreckage of SwissAir 
flight 111 that crashed off the coast of Halifax on September 2, 1998. 
The L-3 sidescan sonar system provides a credible, near-term, solution 
to closing one area of port vulnerability in our Homeland Defense 
strategy.
    Since most modern sea mines are designed specifically to reduce 
sonar reflectivity, the L-3OS side scan sonar system possesses a high 
shadow contrast ratio allowing the operator to determine the shape, 
size, and orientation of underwater objects. Positional accuracy of 
plotted contacts is approximately three meters RMS, which enables rapid 
reacquisition of the contact for further investigation or removal. The 
system is easily installed on the stern of virtually any surface ship, 
but for port operations it would ideally be placed on a harbor craft of 
100 tons or greater. The system is capable of search speeds of up to 10 
knots and, due to its superior detection ability, resolution, increased 
range and accuracy, its search area coverage is equivalent to that of 
many airborne sonar systems towed at 25 knots. It uses an automatically 
stabilized towed body with motion compensated beam steering coupled 
with a motion compensated handling system. This design results in a 
system capable of effective operations in up to Sea State 4, which 
translates into wave heights of approximately 6 to 7.5 feet.
    The threat to our Nation's ports is real. In my opinion it is just 
a matter of time before a terrorist group exploits this vulnerability 
and once again brings the war on terror to our shoreline. We must act 
proactively to avoid another 9-11 style attack on America. The approach 
I have proposed today is not a panacea for the defense of our harbors, 
but only serves as one strand in the overarching security net we must 
construct to counter the threat posed by an enemy waging an 
unconventional war against us. I have provided the Committee with a 
copy of the detailed performance specifications and capabilities of the 
L-3 sidescan sonar system. I thank the Committee for giving me the 
opportunity to address this important issue.

    Senator Wyden. Senator Murray?
    Senator Murray. Mr. Chairman, I think this panel has really 
shown us why the complex problem of seaport security has been 
one the TSA has sort of hunted on and focused on, and this is a 
very complex and challenging problem, and each one of you 
focused on a different area, and I am just curious, Mr. Verma 
and Mr. Cushing, you both talked about technology, truckers and 
the information. How do you talk to each other? Is this 
information compatible? Mr. Schorer?
    Mr. Verma. I think we just started. I think eModal is an 
information layer. We are much more at the data gathering. I 
think Senator Cantwell asked the question how do you make sure 
whether the containers have been opened. We will have the 
manifest of the carrier, and then, you know, push that 
information either into eModal or PORTNET', which 
basically does the information layer on top of that. Robert 
talked about this layer. We are the background layer which is 
just the container security layer.
    Mr. Cushing. By trade, I am not a techie, but since getting 
involved in this, I can tell you ever since I have got involved 
in it, there is talk about standards, and every time someone 
comes up with a standard, somebody else comes up with a new 
standard. Right now we are working with 46 marine terminals. 
They are all sending us their data, and what we do is provide 
them a map and say this is how we need to receive it. They talk 
to each other. They do. You know, will we ever get another 
standard, you know, spend a billion dollars? This is going to 
do an XML.
    We are in an industry that is not that advanced. 
Admittedly, the transportation industry is not the most 
technically savvy group, and we admit it, and that is, my 
background is transportation, and we are not all that 
technical, but we can make these things work, and these two do 
talk to each other.
    Senator Murray. And I am assuming that you are also saying 
that, does the United States need to move forward with that 
standard first, or should we wait for the IMO, and if the U.S. 
comes forward with one, will the rest of the international 
community come forward?
    Mr. Cushing. As soon as my mike is on, I will go. By 
standards, yeah, the procedural, I think we just need to get 
going in the United States. For example, in the various ports, 
people are submitting their security plans by terminal, and 
they are wondering what will be acceptable and what will not. 
Just set up some standards.
    Senator Murray. Will the rest of the international----
    Mr. Verma. It is a combination of things. You have to do 
standards in conjunction with everything else, but industry if 
it starts moving, de facto standards are a whole lot more 
effective than in facto. Seventy percent of ocean cargo is in 
the hands of a limited number, three, four port operators, and 
so if you get those guys, three, four, five critical major port 
operators, you get started and make sure that you keep working 
with the IMO.
    But we are finding that there is a lot of incentive to move 
forward, because these port operators are concerned, because if 
what happened to the airport network (Network) ever happened to 
the ports, you are talking significant losses to all these 
people. That is why the grading system is a good idea, so they 
get differentian, and by the way, what we are finding is that 
several of them have started talking to each other. It is not 
about technology, really. I think somebody, Chris, I think, 
talked about it.
    A reader in Rotterdam has to be able to be the same; or the 
reader in Singapore has to be the same as the reader in 
Seattle. If you get that, and if you find that the majority of 
the ports are in the hands of four or five or six people that 
start working together to make it happen.
    Senator Murray. Thank you very much to all of you. Thank 
you, Mr. Chairman.
    Senator Wyden. Senator Cantwell?
    Senator Cantwell. Thank you, Mr. Chairman.
    Mr. Verma, I think your testimony must have had one of the 
most significant lines of anything that we have heard this 
afternoon, and I think summarizes the challenge that we are 
facing in Washington, D.C., when you say that with respect to 
technology given the asymmetrical nature of conflict, we need 
to employ technology that is a high-tech means to prevent low-
tech attacks.
    Mr. Verma. Correct.
    Senator Cantwell. How do we get that understanding into the 
decision making process of Washington, D.C.? For agencies who 
are multilayered, may not have the same kind of CEOs on board 
within the various agencies that understand those choices?
    Mr. Verma. That is a great question. It is a standard 
technology adoption problem that I think you face in the high-
tech industry all the time. I think candidly Washington is no 
different.
    Senator Cantwell. A slow adapter is what you are saying?
    Mr. Verma. Exactly. They tend to be the laggeres in 
technology, but I think this is one of those things where there 
has to be a large degree of business process plus technology to 
come up with a complete, comprehensive solution, and we need a 
critical mass of people to go in there and say here is the way 
that we are going to proceed. We will start this thing. We will 
start moving. We will assure these certain requirements that 
you have, and we want to help you observe it, and we want to 
help grow it, but we want your support. I think one of the 
things that Chris faces, once some of these systems start to be 
deployed, you want to make sure that the guys who are the 
entrepreneurs are not punished, and if you start to get a much 
better security coming out of certain ports or certain 
shippers, you need to make sure that there is some benefits to 
these guys, whether it be a grading system----
    Senator Cantwell. Let us try to categorize it, then, 
because you are saying, you know, high-tech means for low-tech 
attacks, which I think certainly crystallizes the challenge 
given that you know so much of what our organizations were as 
far as information processing, focused on a superpower and 
analyzing what that superpower might do, and now we are talking 
about lots of networks all over the world, and so we have to 
get the FBI to get rid of seven layers and all of that, but in 
the system, you were critical, now then go to this approach 
that this is the problem, the thing that we know best. Go out 
and do some pilot programs and tell us in two years.
    Mr. Verma. Three years and 5 billion dollars later, I am 
sure we will have a system.
    Senator Cantwell. But no attacks during that period?
    Mr. Verma. That is my point. My point is I think to some 
extent what you have to do is use existing technology. It may 
not be a hundred percent----
    Senator Cantwell. My question then is this, from what 
perspective, what do you think the timeline of deployment of an 
international system should be? What do you think, knowing what 
we know today, what do you think the real timeline is if 
bureaucracy was not the issue? What really could we guarantee 
to the American people would be the timeline for the deployment 
of this system?
    Mr. Verma. Six to 9 months.
    Senator Cantwell. How do we get there then?
    Mr. Verma. We will talk to you in about a week and a half, 
if you have got a critical mass of players, we are going to 
start putting our own nickel in and start building a system, 
and we will work with a lot of you folks and get moving on it, 
work with all of you to make sure that this is consistent with 
what we are trying to achieve, we will build more on that.
    Senator Cantwell. Mr. Koch, what do you think of that? 
Given that your, obviously, council members are people like 
United Arab Shipping Company, and Italia Line and all over, all 
over the world? Do you think that they would participate in 
that process, be behind the deployment of these international 
standards, working with their governments? Do you think that 
they are the vehicle or do you think it is more us putting on 
pressure to go and negotiate these agreements with these 
various companies?
    Mr. Koch. I think the industry is already participating and 
will continue to participate in these ventures, including 
Operation Safe Commerce, and I think what the industry really 
is looking for is an answer to the problem. Nobody wants to 
figure out how to deal with this more than our industry, 
because we do not want to be the conduit or the vehicle by 
which terrorists attack the United States or any of the 
economies in the world right now.
    I think the difficulty for the industry is as was stated 
earlier. Unless everybody has to do it, there is really no way 
to ensure security. Unless there are requirements that are 
understood and enforced. If we want to make progress on this, 
if you want to change people's commercial behaviors, it has got 
to be by requirements that are internationally understood.
    And the other point I would make is that the technology 
solutions always tends to sound simple but be the most 
confusing, the most difficult to get resolution on.
    We should not lose sight of the fact there are technologies 
that can be and are being deployed, such as Customs container 
inspection technology. Those are critical technologies. He said 
we have a plan to have 139 pieces of equipment in U.S. ports, 
but for the CSI initiative which is being rolled out to be in 
foreign ports, where is the equipment in the foreign port? We 
need to make sure that we are applying these technologies in 
the places that they need to be. We also need a process to 
develop, test and gain agreed standards for new technologies 
and seal standards. The industry is perfectly willing to 
support such efforts, with the obvious caveat that we want to 
know what it is going to cost. If sensors and seals end up 
costing as much as a container, it is going to be a big 
problem.
    Senator Cantwell. We will, but I think our interrogation of 
Al-Qaeda prisoners, and their revelation about possible 
underwater attacks on ports is no different than the Special 
Agent Crowley memo or the Phoenix memo. It is a piece of 
information talking about intent, and so we need to change the 
3 to 5 years to the 6 to 9 months.
    Mr. Verma. Absolutely.
    Senator Cantwell. And standardization seems to be the key 
in doing that, and so we are just going to have to figure, I 
applaud the business community if they will stand up and help 
drive that, because they obviously can move faster. They helped 
make that standardization happen. We push the governments to 
agree, but you know, we are not going to stop at government 
level in pushing it as well, but to me that seems to be the 
critical challenge that we are facing.
    Thank you, Mr. Chairman.
    Senator Wyden. Thank you, Senator Cantwell, and your 
expertise on all these technology issues is enormously helpful.
    I think, gentlemen, you all have been far too diplomatic in 
terms of characterizing Government's approach on this. I am 
chair for the Merchant Marine Subcommittee today, but I chair 
the Technology Subcommittee of the Commerce Committee, and I 
was struck in particular after 9-11, thousands of ideas were 
sent by technology companies to Washington, D.C. for products 
in this area, security, underwater technology and the like, and 
the Federal Government was simply unable to even consider them. 
I mean simply unable to even have any sort of process for a 
test bed or any kind of analytical capability. It really is a 
disgrace.
    I think you all have been very diplomatic, and I am going 
to be less so, and I have said as Chairman of the Technology 
Subcommittee, we are going to set up a one-stop process so that 
when technology leaders and entrepreneurs and companies have 
promising ideas, you will be able to go to one place in the 
Federal Government, and they will tell you, look, it is 
Commerce that needs your ideas. It is Customs that needs your 
idea, and I just want to restate the pledge, if I have an ounce 
of breath in my body at the time we consider that legislation, 
we are going to make that possible.
    Now, I think the other troubling thing about this is not 
only does the Federal Government not have a way to evaluate 
what you all bring them, they are really dawdling in terms of 
going out to you, and this seems to me to be pretty baffling as 
well. You have the law enforcement and the intelligence 
agencies, NSA, for example, talk about candor, last week said 
we are just light years behind the private sector.
    This a dramatic change from the Cold War and others where 
Government would lead, and now the Government is just admitting 
that they are sort of Luddites. They are just sort of behind 
the times and cannot keep up, and to me your point, Mr. 
Cushing, with respect to the amount of paper that flows in the 
customs field strikes me as sort of a classic case of instead 
of you having to come to your Government in order to put in 
place this new kind of system, your Government ought to be 
coming to you and saying, Look, we want to figure out a way to 
promote security while at the same time not having people 
traipse all over the countryside trying to get things processed 
and having paper and the like.
    And I would just be kind of curious whether you all can 
give us some instances where the Government was presently 
proactive instead of you having to come and, you know, pull 
them kicking and screaming to go along with any of these ideas. 
Are there any ideas where the Government----
    Mr. Verma. Can I take the Fifth? Not that we know of.
    Senator Wyden. Again, we are going to try, and Senator 
Murray with her influence in the Appropriations Committee and 
Senator Murray with all of her years in the technology field, 
we are going to try to make the Government, we are going to try 
to make a 180 degree about-face on this issue, try an approach 
in technology where they are proactive, where people who admit 
that they are light years behind are actually proactive and 
coming to you on things like digital certificates and some of 
your proposals, and I gather that again, Mr. Verma, you take 
the Fifth Amendment on that question. Are there any kind of 
instances where the Government has been proactive in coming to 
you?
    Mr. Schorer. You know, I will add the system that I talked 
about, we developed for the Canadian Navy. The Canadian Navy 
has this capability and has this ability on the St. Lawrence 
River and all their ports and harbors, but trying to sell that 
idea--and until the balloon goes up, no one is going to care--
but that capability in the U.S. Navy has been extremely 
difficult, because it is real, it is not seen as a high 
priority item today. So I cannot say that the community is 
receptive to these ideas, but I will say that there are many 
navys and countries taking it very seriously, but I do not find 
it in the United States.
    Senator Wyden. Well, one last thought by way of an 
invitation. We got out of the Commerce Committee two 
significant bills in the technology area that I think will be 
part of the technology package that the Senate will cover in 
the fall. One is the cyber security, and the other is 
legislation that I developed to set up a way the Federal 
Government would look to private companies to help respond in a 
disaster and also give suggestions as how to prevent them.
    Let me just close the hearing by saying that we would 
welcome your ideas and suggestions now about this technology 
package. We think it will go to the floor of the Senate in the 
fall. I want to let my colleagues wrap up if they have any 
additional comments.
    Senator Cantwell. I just want to say, Mr. Chairman, thank 
you for coming here and conducting this hearing. I know that 
you are having a similar hearing in Portland tomorrow. It is 
critically important I think that the people understand the 
West Coast dynamics are part industry, and that we do have 
competition from Vancouver, and if we do not get this figured 
out, we will have someone who will take advantage of that in 
short order.
    That is critically important, and that we obviously need to 
get the word back from Washington, and we appreciate you again 
doing this, because I know this will be officially part of the 
record and will be information that will flow to all members 
that we need to expedite that process that is happening, you 
know, in some ways with Singapore as an individual 
organization, but in a much more comprehensive way with the 
West Coast and Asia will be a primary focus for us on the West 
Coast, and we appreciate you being here today in Seattle, and I 
know that working with my colleague, Senator Murray in the 
various Committees, and we are glad to have another West Coast 
member join us in that and appreciate what the Commerce 
Committee can do in bringing about a quick timeframe for 
dealing with this issue.
    Senator Wyden. Thank you for your expertise on all these 
issues, Senator.
    Senator Murray. Mr. Chairman, just let me thank you and all 
of our witnesses for coming today, and I really appreciate 
Senator Cantwell and her commercial background, and Senator 
Wyden, you have been wonderful in working with us here as we 
work.
    As Chair of the Transportation Appropriations Subcommittee, 
I do not have a blank checkbook with me, and we do have a lot 
of challenges in this year's Transportation committee. We do 
need to address the issue of port security and work together to 
be able to deal with the funding that we have available. So 
thank you very much.
    Senator Wyden. With that, we are adjourned.
    [Whereupon at 5:30 p.m. the hearing was adjourned.]

                                  
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