[Senate Hearing 108-55]
[From the U.S. Government Publishing Office]



                                                         S. Hrg. 108-55

 
              CARGO CONTAINERS: THE NEXT TERRORIST TARGET?

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

                                HEARING

                               before the

                              COMMITTEE ON
                          GOVERNMENTAL AFFAIRS
                          UNITED STATES SENATE


                      ONE HUNDRED EIGHTH CONGRESS

                             FIRST SESSION

                               __________

                             MARCH 20, 2003

                               __________

      Printed for the use of the Committee on Governmental Affairs



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                   COMMITTEE ON GOVERNMENTAL AFFAIRS

                   SUSAN M. COLLINS, Maine, Chairman
TED STEVENS, Alaska                  JOSEPH I. LIEBERMAN, Connecticut
GEORGE V. VOINOVICH, Ohio            CARL LEVIN, Michigan
NORM COLEMAN, Minnesota              DANIEL K. AKAKA, Hawaii
ARLEN SPECTER, Pennsylvania          RICHARD J. DURBIN, Illinois
ROBERT F. BENNETT, Utah              THOMAS R. CARPER, Delaware
PETER G. FITZGERALD, Illinois        MARK DAYTON, Minnesota
JOHN E. SUNUNU, New Hampshire        FRANK LAUTENBERG, New Jersey
RICHARD C. SHELBY, Alabama           MARK PRYOR, Arkansas

           Michael D. Bopp, Staff Director and Chief Counsel
                      Jason Foster, Senior Counsel
     Joyce Rechtschaffen, Minority Staff Director and Chief Counsel
           Jason Yanussi, Minority Professional Staff Member
                     Darla D. Cassell, Chief Clerk



                            C O N T E N T S

                                 ------                                
Opening statement:
                                                                   Page
    Senator Collins..............................................     1
    Senator Coleman..............................................     3
    Senator Lautenberg...........................................     8
    Senator Pryor................................................    12
    Senator Akaka................................................    16
    Senator Fitzgerald...........................................    17
Prepared statements:
    Senator Lieberman............................................    45
    Senator Carper...............................................    46

                               WITNESSES
                        Thursday, March 20, 2003

Hon. Asa Hutchinson, Under Secretary for Border and 
  Transportation Security, Department of Homeland Security.......     4
Hon. Peter W. Hall, U.S. Attorney, District of Vermont...........    21
Stephen E. Flynn, Ph.D., Senior Fellow for National Security 
  Studies, Council on Foreign Relations..........................    24
Captain Jeffrey W. Monroe, M.M., Director, Department of Ports 
  and Transportation, City of Portland, Maine....................    28
Michael O'Honlon, Senior Fellow, The Brookings Institution.......    32

                     Alphabetical List of Witnesses

Flynn, Stephen E., Ph.D.:
    Testimony....................................................    24
    Prepared statement...........................................    70
Hall, Hon. Peter W.:
    Testimony....................................................    21
    Prepared statement...........................................    59
Hutchinson, Hon. Asa:
    Testimony....................................................     4
    Prepared statement...........................................    53
Monroe, Captain Jeffrey W., M.M.:
    Testimony....................................................    28
    Prepared statement...........................................    76
O'Hanlon, Michael:
    Testimony....................................................    32
    Prepared statement...........................................    81

                                Appendix

Photographs (submitted for the record by Chairman Collins).......    48
Chart entitled ``Participation in CSI Among Top 20 Foreign 
  Ports'' (submitted for the record by Chairman Collins).........    52
Responses to post-hearing questions for the record from:
     Hon. Hutchinson.............................................    84
    Dr. Stephen E. Flynn.........................................    97
    Capt. Jeffrey W. Monroe, M.M.................................   103
    Michael O'Hanlon.............................................   106

              CARGO CONTAINERS: THE NEXT TERRORIST TARGET?

                              ----------                              


                        THURSDAY, MARCH 20, 2003

                                       U.S. Senate,
                         Committee on Governmental Affairs,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 9:30 a.m., in 
room SD-342, Dirksen Senate Office Building, Hon. Susan M. 
Collins, Chairman of the Committee, presiding.
    Present: Senators Collins, Coleman, Fitzgerald, Akaka, 
Lautenberg, and Pryor.

             OPENING STATEMENT OF CHAIRMAN COLLINS

    Chairman Collins. Good morning. The Committee will come to 
order.
    As we convene this morning, our Nation is at war, and the 
threat level has once again been raised to orange, signifying a 
high risk of terrorist attacks on our Nation's citizens. Today, 
the Committee on Governmental Affairs will focus on what many 
experts consider one of our greatest vulnerabilities: Our ports 
and the global cargo container system, in particular.
    There are some 12 million cargo containers in the worldwide 
inventory. These containers move back and forth among major 
seaports more than 200 million times a year. Every day, more 
than 21,000 containers arrive at American seaports from foreign 
countries filled with consumer goods--from televisions to 
clothes to toys. In fact, about 90 percent of U.S.-bound cargo 
moves by container. We must ensure that these containers carry 
nothing more dangerous than sneakers or sporting goods, not 
``dirty bombs'' or even Al Qaeda terrorists. This hearing will 
assess the progress being made so far toward that goal.
    Currently, the Bureau of Customs and Border Protection in 
the Department of Homeland Security inspects only a small 
percentage of cargo containers. Some are scanned with x-ray 
equipment; others are physically opened to verify their 
contents. Either way, the process is time-consuming and 
burdensome, and historically, Customs has been able to 
physically screen only about 2 percent of these containers. 
That may have seemed sufficient prior to September 11, 2001, 
but we now realize that the stakes are much higher.
    For example, one news report last week suggested that some 
intelligence officials have a growing fear that Osama bin Laden 
is obsessed with the idea of building a nuclear weapon and 
smuggling it into our country via a contain ship.
    Whether the threat is nuclear, chemical, or biological, and 
whether it comes from a terrorist network such as Al Qaeda or a 
terrorist state such as Iraq, cargo containers offer a 
frighteningly simple and anonymous way to smuggle weapons of 
mass destruction into the United States. They arrived by sea, 
by road, and by rail. Compared to the aviation industry, 
however, containerized cargo shipments are less regulated, less 
standardized, and far less secure.
    For years, criminals have used cargo containers to smuggle 
narcotics, firearms, and people into our country. Last year, 
for example, four men pled guilty for their involvement in a 
scheme that smuggled seven cargo containers packed with 
stowaways to West Coast ports on five separate occasions. Human 
trafficking is believed to be an $8-billion-a-year business. 
Containers have also been used to smuggle a wide array of 
contraband, including illegal firearms and drugs, into our 
country.
    Smuggling rings know how to exploit the vulnerabilities of 
the global container system. Based on a training manual seized 
in England, we know that Al Qaeda has targeted smugglers for 
recruitment. The training manual also instructed Al Qaeda 
members to look for new terrorist recruits among those seeking 
political asylum and employees at borders, airports, and 
seaports.
    Our challenge is to prevent terrorists from exploiting the 
global system for moving goods as a means for attacking our 
Nation. The good news is that our government has been working 
to anticipate and respond to this threat. Since September 11, 
the Bureau of Customs and Border Protection has nearly doubled 
the percentage of containers examined from fewer than 2 percent 
in 2001 to nearly 4 percent in the first quarter of this year.
    Since most containers carry legitimate commerce, Customs 
officials are working to ensure that high-risk containers are 
targeted for inspection. Given that 96 percent of the incoming 
containers are not being inspected, however, and that it is not 
practical to inspect every container, the systems for targeting 
and screening cargo must be highly effective. I have questions 
about the system used to accomplish this task and the quality 
of the data on which it relies.
    In addition to increasing the number of inspections, the 
Department of Homeland Security has implemented important new 
programs to enhance container security. These programs, known 
as the 24-hour rule, the Container Security Initiative, and the 
Custom-Trade Partnership Against Terrorism, as well as 
Operation Safe Commerce, are well intentioned and designed to 
make us more secure. But do they?
    Today, we will evaluate how well these programs are 
performing. For example, we will hear testimony about Operation 
Safe Commerce, which began with a test shipment of a container 
of light bulbs from a factory in Slovakia to New Hampshire. 
This container was outfitted with tracking and intrusion 
detection equipment to test whether the widespread use of such 
technology was valid. Some officials were surprised that, 
despite crossing five international borders, the antenna, nest 
of wires, and power supply attached to the container raised no 
eyebrows. And you can see from the photographs \1\ we have the 
wires and other information sticking out from this container, 
which you would think might have caused an inspection of its 
contents. We will hear more about the results of that test in 
testimony today.
---------------------------------------------------------------------------
    \1\ Photographs referred to appear in the Appendix on page 48.
---------------------------------------------------------------------------
    The threat of an attack using cargo containers is serious 
and immediate. I look forward to learning from our witnesses 
about the progress that has been made so far and their ideas 
for implementing even better, long-term solutions for securing 
the global container system and reducing our vulnerability to 
this means of attack.
    I want to welcome the Senator from Minnesota, a very 
dedicated Member of this Committee joining us this morning. I 
know that he was presiding over the Senate late last night, and 
I appreciate his being with us.
    I would like to call upon him if he does have any opening 
comments that he would like to make.

              OPENING STATEMENT OF SENATOR COLEMAN

    Senator Coleman. Thank you, Chairman Collins, and just very 
briefly because I do want to hear the testimony and statement 
of the Secretary.
    One, I want to thank the distinguished Chairman for having 
this hearing now. As she has noted, the stakes have never been 
higher. The threats are very real and immediate, and as we all 
understand, the chain is only as strong as its weakest link. 
And all the things that we are doing across the board in terms 
of security, be it at airports and other places, there is a 
real issue on the minds of average citizens. I think people 
understand how we--I think they have a sense of understanding 
the enormity of the challenge, but people expect us to deal 
with it. And I would note, Chairman Collins, that this is not 
just an East Coast or West Coast issue. In Minnesota, we have 
the Port of Duluth on the Great Lakes, and this is a concern 
right in the heart of America. And so we are all deeply 
concerned at this time, and we are looking forward to this 
conversation and working together.
    Thank you, Chairman Collins, for having this hearing.
    Chairman Collins. Thank you very much.
    Our first witness this morning is Under Secretary Asa 
Hutchinson from the Department of Homeland Security. As the 
head of the Border and Transportation Security, Secretary 
Hutchinson is the government's highest-ranking official with 
direct responsibility for protecting our Nation's border and 
ports. Secretary Hutchinson's responsibilities include the 
Bureau of Customs and Border Protection as well as the 
Transportation Security Administration.
    We are delighted to welcome you here this morning. We 
appreciate your being with us, and I would ask that you proceed 
with your testimony.

TESTIMONY OF HON. ASA HUTCHINSON,\1\ UNDER SECRETARY FOR BORDER 
  AND TRANSPORTATION SECURITY, DEPARTMENT OF HOMELAND SECURITY

    Mr. Hutchinson. Thank you, Madam Chairwoman, Senator 
Coleman. It is good to be with the Committee today, and I want 
to thank you for this opportunity to testify on a very 
important subject. As hostilities have commenced in the Middle 
East, our prayers and thoughts are certainly with our men and 
women in service, but this hearing is important to reflect on 
the security of our homeland during this time and at other 
times in our Nation's history. And I am pleased to be here on 
behalf of the Department of Homeland Security representing the 
Directorate of Border and Transportation Security.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Hutchinson appears in the 
Appendix on page 53.
---------------------------------------------------------------------------
    Let me first discuss the magnitude of the threat that the 
Chairwoman discussed this morning: That terrorists may use 
cargo containers as a means to transport weapons or people into 
the United States. And the fact is that nearly 6 million cargo 
containers arrive at U.S. seaports each year. That fact alone 
represents a challenge for homeland security and an opportunity 
to be exploited by those who wish us harm.
    Recent cases illustrate that cargo containers have been 
used to smuggle people, to smuggle cargo, and to smuggle 
narcotics, both here and to other countries. To illustrate this 
point in the area of narcotics, during the calendar year 2002, 
there were 32 cocaine and marijuana seizures in which 
containers, used in ocean transports, were utilized to 
transport narcotics. There were 19 shipments in which the cargo 
itself was used for concealment, and there were 13 seizures in 
which the discoveries were that the container was used as a 
concealment technique, such as false walls or flooring. And 
these seizures occurred from Fort Lauderdale to Miami to 
Newark, New Jersey, to Charleston, South Carolina, to 
Baltimore. In Fort Lauderdale, 654 pounds of cocaine were 
hidden in a shipment of edible gelatin, commingled with 
legitimate cargo. In Fort Lauderdale, it was cocaine in a 
shipment of commercial starch. In Miami, it was in a front wall 
of a refrigerated container. In Newark, New Jersey, it was 
3,000 pounds of marijuana concealed inside a shipment of cola 
nuts. In Charleston, it was a shipment of furniture involved. 
In Baltimore, it was another shipment of furniture.
    But it was just not narcotics. If you look at arms 
smuggling, you broaden it to a worldwide environment. In 
January 2002, Israeli forces seized the Tonga-registered vessel 
CORINNE A in international waters in the Red Sea, and 
discovered aboard the vessel were 83 canisters filled with 
weapons ranging from Strella SA-7 man-portable surface-to-air 
missiles to anti-tank mines. These canisters were hidden in 
crates and obscured by other cargo.
    In addition to the arms and narcotics smuggling, you have, 
as the Chairman pointed out, the human smuggling via 
containers. In January 2000, 18 illegal Chinese aliens were 
discovered in a container arriving at the Port of Seattle from 
Hong Kong aboard a vessel. Three of the smuggled aliens were 
found dead inside the 40-foot soft-topped container. That 
illustrates the danger in how they are utilized.
    On March 22 of last year, Canadian authorities captured 
three Romanians after having been found in a container of 
liquor on board the ZIM EUROPA, which had arrived in Halifax 
from Spain. The ultimate destination of the cargo was the 
United States, destined for the New York-New Jersey container 
terminal.
    In March of last year, in Savannah, Georgia, the Georgia 
Port Authority Police contacted Savannah authorities in 
reference to a suspicious container at the Port of Savannah. In 
this instance, a container was observed to have been 
compromised and that it had no seal as well as other physical 
abnormalities. A closer inspection of it indicated that the 
seal was missing, and it was determined that an individual most 
likely entered the container in Italy and left when the 
container arrived in Spain. And ultimately the destination, 
again, was Savannah, Georgia.
    In October 2001, an Egyptian was detained in an Italian 
seaport and there was wide media publicity about this 
particular apprehension. This came about because the police 
report reflected an Egyptian individual named Farid Rizk, found 
in a container that left Port Said, Egypt, and arrived in 
Italy. The container found--he had Canadian passports, maps, 
cell phones, laptop computer, airline tickets, and Thai 
Airlines security passes. All of these goods led to the 
perception that the individual was more than a simple stowaway.
    From these incidents, it is evident that there are 
vulnerabilities in our sea cargo container systems that have 
the potential for exploitation by terrorists. In fact, most 
experts believe that a terrorist attack using a container is 
likely. And so the logical question is: Well, what is our 
strategy to deal with this vulnerability?
    The first part of our strategy is the Container Security 
Initiative. I want to applaud Commissioner Robert Bonner for 
his aggressive approach to this initiative, the development of 
it, and the implementation of it. Under CSI, we are identifying 
high-risk cargo containers and partnering with other 
governments to pre-screen those containers at foreign ports 
before they are shipped to our ports. The four key elements of 
the Container Security Initiative are: First, to identify the 
high-risk containers; second, to pre-screen those high-risk 
containers at the foreign port before they are shipped to the 
United States; third, we use technology to pre-screen those 
high-risk containers; and, fourth, we desire to use smarter, 
tamper-evident containers, which can be inspected more easily 
to determine whether they have been tampered with.
    The goal for the first phase of CSI was to implement the 
program at as many of the top 20 container ports in terms of 
volume of cargo shipped to the United States as possible. 
Within 1 year of the announcement of CSI, 18 of the top 20 
ports agreed to participate.\1\
---------------------------------------------------------------------------
    \1\ Chart entitled ``Participation in CSI Among Top 20 Foreign 
Ports'' (submitted by Chairman Collins) appears in the Appendix on page 
52.
---------------------------------------------------------------------------
    The second part of the strategy is the implementation of 
the 24-hour rule. Because CSI requires us to identify and pre-
screen high-risk containers before they leave foreign ports, 
the advanced transmission of complete and accurate cargo 
manifest information on all arriving vessels is essential to 
achieving success. U.S. Customs issued a final notice on 
advanced manifest regulations on October 31 of last year, 
requiring the presentation of accurate, complete manifest 
information 24 hours in advance of loading the container on the 
foreign port. This rule is a huge leap forward in our 
container-targeting capabilities, largely eliminating the old 
manifest data standards that included vague descriptions of 
cargo, such as ``FAK,'' which meant freight of all kinds, and 
at the same time providing the data before the container is 
loaded.
    In some instances in the past, the government did not have 
a detailed description of a container's contents until 10 days 
after arrival in the United States. This has dramatically 
changed. Now we can identify high-risk containers prior to the 
ship leaving the foreign port.
    But if the high-risk containers are identified after they 
have set sail for the United States, Customs and Border 
Protection makes a determination on their level and source of 
risk. And depending upon that assessment, protocols have been 
established for working with a variety of agencies, such as the 
Coast Guard, to take appropriate steps to intercept the cargo. 
For example, when a determination is made that the cargo should 
not reach U.S. shores, Customs and Border Protection works with 
the Coast Guard to ensure that the cargo is screened and 
examined, including the possibility of conducting examination 
prior to entering a port.
    Another link in our strategy is the Customs-Trade 
Partnership Against Terrorism. It is called C-TPAT, and the C-
TPAT program developed and started in January of last year is 
an initiative designed to further reduce the risk. It does so 
by improving security along the entire supply chain and not 
just at the foreign seaports. By partnering with the trade 
community--U.S. importers, customs brokers, carriers, shippers 
and others--we can better protect the entire supply chain 
against potential exploitation by terrorists or terrorist 
weapons.
    So far, over 2,000 companies have signed an agreement with 
Customs and Border Protection to conduct a comprehensive self-
assessment of their supply chain security and to improve that 
security from foreign loading docks to U.S. borders and 
seaports. Using C-TPAT, security guidelines developed jointly 
with Customs and Border Protection and the trade community have 
been implemented.
    We have other additions to our protective measures. One of 
those is a broader initiative called Operation Safe Commerce 
that the Transportation Security Administration has the lead 
in. It is a public-private partnership dedicated to finding 
ways to protect commercial shipments from threats of terrorist 
attack, illegal immigration, and other contraband, while 
minimizing the economic impact upon the vital transportation 
system.
    This program develops and tests technology and systems to 
improve container security, consistent with the principles and 
security practices of ongoing programs. The OSC, Operation Safe 
Commerce, has an executive steering committee that includes the 
Department of Transportation, TSA, the Coast Guard, the State 
Department, the Commerce Department, the Justice Department, 
and the Homeland Security Council. And so it is a broad, multi-
agency effort to improve the safety of our commerce.
    Let me conclude by thanking Chairman Collins and the 
Members of the Committee for this opportunity to testify. I 
will be looking forward to my continued discussion and work 
with this Committee.
    Chairman Collins. Thank you very much, Secretary 
Hutchinson.
    When we look at a container ship, we often now worry that 
one of the containers may include the makings of a dirty bomb. 
But the case that you cited suggests that, as we are tightening 
security at our borders, one of those containers may actually 
be a means for a terrorist to get into the United States. And I 
would like to show the picture of the container that you 
referred to that the Egyptian-born Canadian, Mr. Rizk, was 
found in.
    As you can see, he had with him airport security badges, 
phone cards, maps of airports, computers, and a satellite 
phone.
    Now, those don't strike me as the typical possessions of a 
stowaway, an illegal immigrant who may be coming to this 
country illegally in search for a better life. And his 
container was headed from Egypt to Montreal, I believe.
    What has happened with this case, if you can disclose to us 
and bring us up to date? Is there concern that Mr. Rizk may 
have connections to Al Qaeda or another terrorist group?
    These containers have been used for years by smuggling 
rings to bring illegal immigrants into the United States. Is 
there evidence or do you have concern that terrorist groups or 
others who may wish to do us harm may tap into the knowledge of 
these smuggling rings to bring terrorists into our country via 
containers?
    Mr. Hutchinson. Thank you, Senator, and the case that you 
cited is a perfect illustration as to the sophistication of 
some of the smuggling operations through container ships and 
container cargo. Clearly, in this instance, with the cell 
phones, with the false documents that were available, there was 
a lot of preparation that went into this.
    This was a case that was investigated by those overseas, 
and although there was extraordinary concern because of the 
potential connection to terrorist organizations, it is my 
information that ultimately--the Italian police did warrants, 
did searches, continued the investigation and determined that 
there was no known connection between Rizk and Al Qaeda or any 
other terrorist organizations, and they have closed their 
inquiry.
    But despite that ultimate finding, it shows that there is 
sophistication in this network and that, as you pointed out, 
when there are organizations that will conduct this type of 
smuggling, terrorists are looking for opportunities to contract 
out, to find available means to move terrorists as individuals 
or their weapons through commerce into the United States or to 
other destinations. And so it raises our level of concern 
because this is something that can be exploited by those that 
wish to do our country harm.
    Chairman Collins. By the time a container carrying a weapon 
of mass destruction arrived at a U.S. port, an inspection at 
that point is too late. And that is why I commend you and the 
Department for initiating the CSI program of placing Customs 
personnel in overseas ports to pre-screen containers before 
they come here. We really need to get to the point of origin, 
because if we wait until they are already in the American port, 
the damage may already be done.
    According to the last information provided to the 
Committee, we currently have CSI teams from Customs stationed 
in 6 of the 20 largest foreign ports. I believe they are in the 
Netherlands, France, Belgium, Singapore, and two in Germany, 
and I have a map showing the locations. And those ports 
represent about 21 percent by volume of containers shipped to 
the United States.
    One of the concerns I have is that many of the mega-ports 
that are part of the system now are in lower-risk areas of the 
world. Do you anticipate an expansion of the CSI program to 
ports where there is a higher risk of terrorist exports, for 
example, in the Middle East and Africa?
    Mr. Hutchinson. Yes, we do. This is CSI Phase 1 in which 18 
of the 20 mega-ports have been signed up. But as you pointed 
out, only six of the ports have really been fully deployed and 
the program has been completely implemented. We want to move to 
the other ports that have been signed up. That is being 
aggressive pursued. And then, second, we want to expand it 
beyond the 20 mega-ports to other ports in areas of concern so 
that we can get the remaining percent of the cargo.
    I would emphasize, though, that notwithstanding the CSI 
only being in the mega-ports right now, the 24-hour rule is 
applicable everywhere. And so we will have advance information 
on all cargo coming to the United States so that it can be 
analyzed. But we do hope to expand the program as we are 
capable of doing so to these other areas of concern.
    Chairman Collins. Thank you. My time has expired. Senator 
Lautenberg.

            OPENING STATEMENT OF SENATOR LAUTENBERG

    Senator Lautenberg. Thank you very much, Madam Chairman. 
Madam Chairman, you had suggested initially that you weren't 
going to take opening statements. Has anything changed?
    Chairman Collins. If you would like to take a few minutes 
to make an opening statement.
    Senator Lautenberg. I would try to participate in the 
discipline that the stern Chairman has issued here and just to 
say that I ask unanimous consent that my full statement be 
placed in the record.
    Chairman Collins. Without objection.
    Senator Lautenberg. First of all, Mr. Hutchinson, you don't 
look any the worse for wear since you have taken this job. You 
must get awful tired crawling around these containers looking 
for things. But it is amazing that people can set up 
housekeeping in a container. Our Port of Newark and the New 
York harbor, New York-New Jersey harbor is a recipient, I 
think, one of the largest recipients of containers in the 
country. And how we stay on top of that has often kind of 
puzzled me because before I came to the Senate, I was a 
Commissioner of the Port Authority in New York-New Jersey. And 
we have always been concerned with security.
    Let me ask you this: When our inspectors or when the 
inspection process is underway, what are we looking for? Are we 
primarily targeting weapons, threats to our security? I know 
these people have a lot of responsibilities that have been 
considerably enlarged since the days that terrorism assaulted 
our shores.
    Do you look for dutiable items? Do you look for smuggling? 
Do you look for drugs? What is the mission of the inspection or 
the inspectors?
    Mr. Hutchinson. Thank you, Senator Lautenberg. And, first, 
I want to remark that I had a wonderful time visiting the Port 
of Newark. I was there and saw the enormous volume of 
containers and the work that had to be done. And I was very 
impressed with the targeting approach that had been implemented 
at that port. I think it is on the leading edge of what we need 
to do nationwide.
    But what we are looking for in our targeting approach are 
anomalies. We have a scientifically based, rules-based system 
in which certain criteria are asked, looking at the cargo 
manifest, where it is coming from, the nature of the cargo, the 
shipper, the transporters that are involved, the manufacturer, 
and their record of integrity for shipments. All of these 
things plus a whole host of other matters are used to target 
particular shipments.
    This whole program is designed to go after weapons of mass 
destruction, terrorist activities. Obviously, when you go after 
that, you find a whole host of things in suspicious cargo, 
including narcotics. But the CSI program is designed to go 
after the security matters that impact our Nation, and that is 
the focus of that. And the basis of the targeting would be that 
rules-based system that will identify those anomalies and give 
suspicion that creates a high risk of the cargo, and then it 
would be searched electronically, x-rayed, as well as manually 
if necessary.
    Senator Lautenberg. We must have a continuing research 
program for improving containers security. I know that, for 
instance, we are doing a lot of work on explosive-resistant 
cargo containers for aircraft. And when one looks at this 
housekeeping that Mr. Rizk set up there, you wonder how he 
could endure under any circumstances. But I think that 
technology can be a lot of help there, simple things such as 
motion detection and what have you, or air purifying or de-
purifying, whatever the term is. But you have an enormous task.
    The screening detection devices, are they being used at 
ports that ship to us, non-U.S. ports, obviously? Is that kind 
of equipment being used in those places?
    Mr. Hutchinson. Yes, indeed. In fact, the good thing about 
the ports that sign up for the Container Security Initiative is 
that they are required to do the inspections as necessary for 
the at-risk cargo at the foreign port. And so as our Customs 
and Border Protection inspectors are overseas at the Port of 
Rotterdam, working with the Dutch inspectors, they will 
identify suspicious cargo. Then it will go through x-ray, gamma 
ray machines, depending on what the level of concern is, and 
manually inspected if necessary. And the cost of that is borne 
by the foreign port, the inspection and of the equipment.
    If information comes to us after it leaves the foreign 
port, then that triggers further examination, exploration of 
the suspicious cargo, and confronting it off our shores. And 
so, again, we have the layered approach that puts the 
protection further out and gives us more time to work with the 
at-risk cargo to determine its nature.
    Senator Lautenberg. I assume that there are ports where the 
risks are much higher for smugglers, terrorists, etc. Are we 
able to cover those ports as efficiently as we would like? In 
many of those countries, their laws are not scrupulously 
observed. What do we do to protect ourselves against those 
higher-risk shipping points?
    Mr. Hutchinson. Well, there are ports out there that do not 
have the sophistication of detection equipment. They do not 
have the investment that is made. They do not have the 
background checks for the port workers. These are ports that 
are a much higher risk.
    What we have to do is to make sure that we give them 
incentives if they want to bring goods into the United States 
and export goods here; then they are going to have to upgrade 
their systems. And if we do not get the cargo information in 
advance, they will increase the level of risk, the level of 
inspections, and the delays as they bring goods on. And so as 
time goes on, we hope that there will be greater international 
standards at these ports, and the international community will 
put pressure on these ports that are not up to the 
international standards that we expect.
    Senator Lautenberg. Thank you very much, Madam Chairman. I 
appreciate it.
    [The prepared statement of Senator Lautenberg follows:]
           PREPARED STATEMENT OF SENATOR FRANK R. LAUTENBERG
    More than six million cargo containers enter U.S. ports each year. 
A large container ship can carry more than 3,000 of these cargo 
containers, hundreds of which may be off-loaded at individual ports. 
Once off-loaded from ships, the containers are transferred to rail 
cars, tractor-trailers, or barges for inland transportation.
    Container ships are a growing segment of maritime commerce and the 
focus of much attention because they are particularly susceptible to 
terrorist infiltration. For years, drug traffickers and unscrupulous 
companies seeking to evade tariffs have exploited lax cargo container 
security at our ports to smuggle their goods into the United States. 
Terrorist organizations could easily partner with these smugglers to 
move explosives, dangerous chemicals, biological agents, nuclear or 
radiological devices, or the benign precursors for any of these 
materials into the country undetected.
    The newly-created Bureau of Customs and Border Protection (BCBP) 
analyzes cargo manifest information for each container to determine 
which ones need closer inspection. At present, only two percent of all 
cargo containers are subject to ``target inspection.''
    Shortly after the horrific events of September 11, 2001, Stephen 
Flynn painted a vivid and chilling picture in testimony before this 
Committee about how a weapon of mass destruction (WMD) could be 
smuggled into Port Newark and the extent of the devastation and havoc 
it could wreak if detonated there.
    The New York/New Jersey Port is one of the top five domestic ports 
in terms of commercial and military significance. It is the 10th 
largest port in the world in terms of cargo tonnage and 14th with 
regard to the numbers of containers shipped. The Port's role is 
essential to our nation's commerce--in 2001, it handled $82 billion 
worth of cargo, or 58 percent of the market share of all the ports 
along the U.S. Atlantic Coast. It is the largest in the U.S. in both 
petroleum and automobile shipments and it supports 229,000 jobs.
    The Port Authority is a marvel of intermodal transportation 
infrastructure, facilitating the efficient movement of passengers and 
freight in a manner not duplicated anywhere in the world. But the high 
concentration of goods and people in such a limited area also poses 
unique security risks. As Mr. Flynn pointed out, within one mile of the 
container terminal at Port Newark are the Northeast Rail Corridor, the 
New Jersey Turnpike, and Newark International Airport. If all of these 
major components of our nation's transportation system were 
simultaneously crippled by a WMD smuggled into the Port and detonated, 
the effects on our country's travel and commerce would be disastrous.
    The January 2001 report of the U.S. Commission on National Security 
in the 21st (the so-called ``Hart-Rudman Commission'') described the 
worst-case scenario of a terrorist attack using a cargo container:

          If an explosive device were loaded in a container and set off 
        in a port, it would almost automatically raise concern about 
        the integrity of the 21,000 containers that arrive in U.S. 
        ports each day and the many thousands more that arrive by truck 
        and rail across U.S. land borders. A three-to-four week closure 
        of U.S. ports would bring the global container industry to its 
        knees. Megaports such as Rotterdam and Singapore would have to 
        close their gates to prevent boxes from piling up on their 
        limited pier space. Trucks, trains, and barges would be 
        stranded outside the terminals with no way to unload their 
        boxes. Boxes bound for the Untied States would have to be 
        unloaded from their outbound ships. Service contracts would 
        need to be renegotiated. As this system became gridlocked, so 
        would much of global commerce.

    It is evident, therefore, that the security of cargo containers is 
crucial not only to the employees and nearby residents of the Port of 
New York/New Jersey, or any other port facility in the U.S., for that 
matter. Since it is not possible to inspect every one of the six 
million containers which are handled at our ports every year, we need 
to be sure that our security efforts are effectively coordinated and 
thorough.
    As a former Port Authority Commissioner, I understand the scope of 
the challenge which exists when it comes to inspecting cargo 
containers. Considering what is at stake and the resources available, I 
believe it is imperative that Federal agencies take leadership roles in 
coordinating security activities--including container security--at our 
ports.
    Thank you, Madam Chairman.

    Chairman Collins. Thank you. Senator Coleman.
    Senator Coleman. Thank you, Chairman Collins.
    I must admit, Mr. Secretary, I am rather daunted, a little 
overwhelmed by the enormity of the responsibility you have and 
the difficulty in fully addressing it. And I applaud--you know, 
I understand we have the use of technology. These are not kind 
of random searches. You are kind of looking ahead. But I must 
say that my State, like the Chairman's State, is a border 
State. There are vast expanses of my State where, by car or by 
boat, you could get across and nobody would know, and that is a 
reality. And so I am troubled, and I know that the Chairman 
faces that same reality.
    Saying that, two observations, two questions, and a little 
eclectic. One is on the labor side, and that is, it appears to 
me that your tasks and the functions of what folks were doing 
pre-September 11 are probably very different today, that your 
focus: Before it was national, now we are looking at 
international, placing people in other areas. Do you have the 
flexibility in terms of labor rules and everything else to move 
people quickly, to have them take advantage of new 
technologies, to shift work assignments? Are there any issues 
there of which we should be aware?
    Mr. Hutchinson. Congress gave a substantial amount of 
flexibility in the Homeland Security Act, and so in moving 
people for national security reasons, we have that capability. 
In the implementation of technology, we have that flexibility.
    What we do, which is the correct obligation for us, when it 
comes to new technology or new assignments, we have a 
responsibility to engage in substantial training, and those 
issues, if there is union representation, we discuss those with 
them and we make sure that those agreements are fulfilled.
    But we are pleased with the flexibility that we have. We 
are reviewing all of our personnel rules between now and the 
end of November when a report is due to Congress, and so we 
will be able to answer that more specifically as to what 
reforms we are making, adjustments we are making, and any 
additional needs that might be there.
    Senator Coleman. Because I think this is an important 
issue, and we need to know very quickly. These are challenging 
times, and having flexibility in the interest of national 
security is, I think, of the utmost importance.
    The other area of concern is U.S. companies located abroad. 
I presume we--and I am looking to the private side, perhaps 
advice you could give them. They probably get a lot of packages 
of things from foreign contractors shipping to them in 
containers. Are we working with the private sector in terms of 
their own kind of standard of care or standard of sensitivity? 
Are we training our folks? It may get past your folks, but are 
there things that folks on the private side can do if they were 
better educated?
    Mr. Hutchinson. Absolutely. And they are a critical part of 
the partnership. We can target and we can inspect, but unless 
there is integrity in the supply chain and that the 
manufacturers, the shippers, take responsibility for their own 
containers and the integrity of the shipments with proper 
seals, then all that we do really would have a minimal impact. 
It has to be complemented by the integrity of the supply chain.
    So what we are doing in that arena? Two thousand businesses 
have signed up in partnership with Customs and Border 
Protection in the arena of improving the supply chain, 
providing the protections, implementing best practices, and 
doing self-assessments of their own security.
    In addition, through the Transportation Security 
Administration, they have Operation Safe Commerce, which is a 
partnership with private business. Congress gave $105 million 
in grants for port security, with $28 million in grants for 
private industry to do assessments, to implement good practices 
in reference to those supply chains. So it is a recognition 
that we just can't get it done without their partnership, and 
they have really stepped up to the plate as well.
    Senator Coleman. I would hope they would be working with 
folks like the chambers of commerce and the National 
Association of Manufacturers and the trade groups and others to 
really involve them in this, because your point was--in my very 
brief preliminary comments, we are only as strong as the 
weakest link of the chain. And they are clearly part of the 
chain, and I would hope that we fully engage them.
    Thank you, Chairman.
    Chairman Collins. Thank you very much. Senator Pryor.

               OPENING STATEMENT OF SENATOR PRYOR

    Senator Pryor. Thank you, Madam Chairman. Always good to 
see you, Asa, and I am glad you are before this Committee 
today.
    Let me start by just saying that I know that this is a new 
program. There is always some trial and error in any new 
program. How is it working?
    Mr. Hutchinson. It is working well, and I say that with 
reservation because, as Senator Coleman pointed out, it takes a 
vast amount of cooperation in the private sector to make this 
work. But I am fully convinced that it is the right strategy, 
and I think that is the first test. The right strategy is to 
build with our private partnership, the private sector, and to 
expand these inspections overseas to get more information in 
advance.
    There is much more that needs to be done. As Senator 
Collins said, we have got to bring on some of the other ports 
that are of a greater concern. But it is the right strategy, I 
am convinced of that. There are instances in which we have 
detected suspicious cargo; we have stopped it coming into the 
United States. And I think it is a strategy that will have 
proven results in the future as well.
    Senator Pryor. It sounds like you have identified some 
areas that we need to work on, some areas where we need to 
improve. Could you tell the Committee about a few of those 
please?
    Mr. Hutchinson. Thank you, Senator Pryor. The areas that we 
have to work on are the supply chain and the integrity of the 
containers themselves. We have a working relationship with 
Johns Hopkins Applied Research Center that is doing examination 
of containers and how private industry can better protect in a 
cost-effective manner the integrity of the shipments. We have 
to work on the port workers in the sense of improving our 
background checks there. TSA is working on a transportation 
worker identification card program where there would be one 
background check done. They don't have to have a whole host of 
cards and security clearances, but one that would work in 
whatever transportation sector they would be in. This is in the 
initial phases, and we have to move that forward.
    The other challenge, if I might just elaborate on one more?
    Senator Pryor. Sure, go ahead.
    Mr. Hutchinson. This 24-hour rule for cargo applies to the 
exports coming into our country, the air and sea shipments. But 
we have not moved it to all modes of transportation, and so in 
Arkansas, for example, the trucking industry is a huge issue. 
They are very concerned about this, as well as the rail 
industry, so we have to have advanced manifest notice as well. 
But 24 hours doesn't work when it is on-time delivery, and so 
we are having to work with them. We are hearing comments of 
industry as to what kind of advance manifest information is 
workable in those other modes of transportation.
    Senator Pryor. Good. Well, as you identify those areas--and 
it sounds like you have a few already on your plate. But let us 
know as a Committee how we can help make our ports more secure. 
I know sometimes it boils down to money. Sometimes you may need 
more authority in one way or another. Or sometimes you just may 
need more time to allow things to work themselves out.
    I think I can speak for our Chairman here that we all want 
to make our ports as secure as possible, and we want to give 
you the tools you need to do that.
    Mr. Hutchinson. Thank you, Senator Pryor. I look forward to 
working with you.
    Chairman Collins. Thank you, Senator Pryor.
    Just a couple more questions, Secretary Hutchinson. When 
Customs inspects containers, it often uses detection equipment 
rather than physically inspecting the container.
    First of all, I assume that it is not really practical to 
physically inspect 6 million containers coming into our 
country. Is that an accurate assumption?
    Mr. Hutchinson. That is an accurate assumption.
    Chairman Collins. A November 2002 General Accounting Office 
report found that the radiation detection pagers used by 
Customs had limited range and that they were unable to detect 
weapons-grade radioactive material.
    Could you tell us what improvements you are making in 
getting the detection equipment up to par and able to detect 
threats such as that? And could you respond specifically to the 
GAO report?
    Mr. Hutchinson. What is important to remember is that the 
personal radiation detectors are not a cure-all to detect all 
harms coming into our country. It is just simply one tool that 
is used, and it has to be complemented by many other tools.
    We are working with the laboratories as additional 
information and improvements become available. We are listening 
to them in terms of our technology and having better training 
of our inspectors that use this equipment.
    Also, Senator, we are deploying--we are not just relying 
upon the personal radiation detectors, but we are deploying 
portable radiation detectors in the larger ports of entry and 
at our seaports. Thirty have been deployed now. I think there 
is another $60 million in that type of technology that is in 
future budgets. So we are moving the larger pieces, the more 
sophisticated radiation detectors out as soon as we can.
    Chairman Collins. ABC News did a test of the system in 
which they successfully shipped 15 pounds of depleted uranium 
inside a lead-shielded tube the size of a can of soda, and it 
was packed in a commercial shipping container among Turkish 
horse carts and vases.
    It is my understanding that shipment was targeted for 
inspection by Customs, but after an x-ray examination was 
allowed to continue, and that, again, raises concern about the 
sensitivity of the detection equipment.
    Could you respond to that case as well?
    Mr. Hutchinson. Well, first, I think it is a sign of 
success that it was targeted for inspection. It means that 
there is at-risk cargo that we correctly identified as cargo 
that should be inspected.
    Second, if it had been dangerous radioactive material, it 
would have been detected by the equipment that did the 
screening. But, in fact, obviously ABC News is not going to put 
radioactive material into a shipment, and so they put harmless 
material in it that had been deactivated. And so it was not 
sufficient to be picked up by the equipment. I think that point 
is conceded.
    If that material had been harmful, it would have been 
detected by our radiation equipment, and then it would have 
been subject to further examination.
    Chairman Collins. I want to follow up on a point that 
Senator Lautenberg made about using technology to help us track 
containers, because even if we do appropriate screening at the 
port of departure, we need a way to monitor the containers en 
route to make sure they are not tampered with.
    Could you give us some assessment of whether or not--where 
are we on the technology as far as using tamper-proof, self-
tracking containers so that we could seal them at the port of 
departure and monitor them en route to American ports to ensure 
that they have not been tampered with or diverted?
    Mr. Hutchinson. Well, really, the technology is there. You 
can make a container tamper-proof, or at least where it is 
clear if it has been tampered with, there is evidence of that. 
And there is technology for the GPS transponders. So that you 
can track each container as it goes through the shipment 
process. They use this to a large extent in the trucking 
industry.
    I think the issues would be whether the technology is 
affordable and cost-effective by industry and whether you can 
put such a huge mandate on them that would be very difficult 
for them to meet. And so that is what we are working in 
partnership with industry to explore as to what is the right 
tamper-proof or secure container seal and then, second, whether 
there should be any additional type of tracking system for 
those containers.
    Chairman Collins. Thank you, Mr. Secretary. Senator 
Coleman.
    Senator Coleman. Chairman Collins, just two questions, and 
actually following up on the last comment about the additional 
technology and other things.
    The airline industry has come to us and talked about the 
increased costs of security and has raised the question as to 
who shoulders that responsibility. What are we facing in terms 
of dealing with the private sector on us saying there are 
improved forms of technology and equipment, but obviously there 
are cost impacts? Are they coming to us, coming to the 
government and saying you have got to pay for that or share 
that burden?
    Mr. Hutchinson. Yes. They are coming to us, and they are 
coming to you. But that issue is there, and it is a shared 
cost. The responsibility for homeland security is a national 
one that is shared by every level of government and the private 
sector. So we have to negotiate and work through those 
balances. It is not our objective to put such stringent 
mandates on the airline industry that they can't operate. That 
doesn't accomplish what we want, and I know that is your 
objective.
    But one of the illustrations would be in the airports. We 
have the baggage screening devices and the equipment present, 
but they are in a very inefficient and cumbersome place that 
was really not designed to have those huge equipment processes 
there. And they need to move those, and there are going to be 
millions and millions of dollars in expense to accomplish that. 
The airports are concerned about them having to take that 
burden on. The airlines, of course whenever you are looking at 
the concern about MANPAOS, land-to-air missiles that could 
attack our commercial aircraft, and there are sensors that 
could be put on aircraft, but it is so hugely expensive, nobody 
could afford to buy a ticket.
    And so we have to balance this and what is needed for the 
appropriate level of security.
    Senator Coleman. In a similar light, again, talking about 
the money, we are certainly going to our trading partners and 
talking about things that they have to do. They are an 
important part of this process. In those discussions, are folks 
coming back to us, again, in terms of additional support? Talk 
to me a little bit about that.
    Mr. Hutchinson. Our international partners?
    Senator Coleman. International partners.
    Mr. Hutchinson. Tremendous response. If you look at it, the 
European ports signed up very quickly on it. They did it partly 
for the United States and our ability, but also they saw it as 
a means to improve the security of their own ports and also to 
stay competitive, to make sure that the cargo coming from that 
particular port didn't get held up. So it is to everybody's 
advantage to cooperate in this program. The international 
partners have been very supportive.
    The only concerns that have been expressed, the European 
Union expressed some concern that we were negotiating with the 
individual ports rather than the European Union as a whole. We 
are sorting through that. And then there have been some privacy 
concerns expressed, but these issues are being addressed in a 
very cooperative fashion.
    Senator Coleman. One last question, Chairman Collins.
    We are talking a lot about focusing on stuff coming from 
outside in. I presume that we have to be looking at what we are 
shipping out to our partners, are they coming back to us? Are 
they talking about our standards? And what are we doing in 
terms of addressing their concerns about the stuff that we are 
shipping? Is this a two-way street?
    Mr. Hutchinson. It is. Probably our concern maybe is a 
little bit greater than their concern. But there have been a 
number of instances in which they ask for reciprocal treatment. 
Japan is a good example. When their ports signed up, they 
wanted to have not just our Customs inspectors located in their 
ports, but they wanted to have inspectors in our ports looking 
at our outbound shipments. We agreed to that readily, and so we 
do treat this as a reciprocal relationship. And they have an 
interest in that.
    Canada is a perfect example. We have our inspectors located 
in Montreal and Vancouver. They have their inspectors located 
in Newark and in Miami. And so it is a very productive 
relationship, and I think that will increase.
    Senator Coleman. Great. Thank you, Mr. Secretary. Thank 
you, Chairman Collins.
    Chairman Collins. Thank you. Senator Akaka.

               OPENING STATEMENT OF SENATOR AKAKA

    Senator Akaka. Thank you very much, Madam Chairman. I want 
to add my welcome to Secretary Hutchinson.
    Mr. Hutchinson. Thank you.
    Senator Akaka. Good to see you again, and good to see you 
on the Hill.
    I also want to say personally thanks for the work you did 
before you entered this office.
    Mr. Hutchinson. That is very kind of you.
    Senator Akaka. Madam Chairman, I would like to make a 
statement if there is time. It will be your call. I will have 
some questions.
    Chairman Collins. Certainly.
    Senator Akaka. I regret that I was not present for your 
opening statement. However, I would like to take this 
opportunity to say, Madam Chairman, that I commend you for 
holding this hearing.
    The citizens of Hawaii and our State's economy are heavily 
dependent on imported goods. This vulnerability was 
demonstrated during the days following September 11 when the 
delivery of essential medicine and mail was halted because all 
airlines and their cargo were grounded. That was a serious 
problem, 98 percent of the goods imported into Hawaii are 
transported by sea.
    As you can see, shipping container security is critical to 
Hawaii. Honolulu Harbor receives more than 1 million tons of 
food and farm products and over 2 million tons of manufactured 
goods per year. In 2002, Honolulu received 1,300 overseas ships 
and about 300,000 containers. In 2002, over 8 million tons of 
cargo arrived at Honolulu Harbor alone. The State's heavy 
reliance on shipping products makes it uniquely vulnerable to 
disruptions in the normal flow of commerce. This reliance 
underscores Hawaii's need for better surveillance and detection 
equipment.
    Earlier this week, the Coast Guard raised the threat level 
at Honolulu Harbor in response to the war in Iraq. A number of 
proposals will be discussed this morning to improve shipping 
container security. However, I feel that more needs to be done.
    According to the American Association of Port Authorities, 
U.S. ports received only 10 percent of the funding needed to 
improve port security and enhance shipping container security. 
Also, more Federal dollars are needed for research and 
development of bomb detection equipment to assist the Coast 
Guard and local law enforcement to detect dangerous material 
and to prevent a potential crisis before it occurs.
    Madam Chairman, I want to thank you again for holding this 
hearing. I will be with you and doing all we can as we consider 
these proposals toward improving shipping container security 
and personally address Hawaii's unique challenges as well. 
Thank you, Madam Chairman.
    Chairman Collins. Thank you very much, Senator. Senator 
Fitzgerald.

            OPENING STATEMENT OF SENATOR FITZGERALD

    Senator Fitzgerald. Thank you very much, Madam Chairman, 
and thank you Secretary Hutchinson for being here. I would like 
to thank the Chairman for holding this hearing on the important 
issue of cargo container security. I also would like to welcome 
Secretary Hutchinson and the other witnesses who will be here 
today.
    The scope of this issue cannot be understated. 
Approximately 90 percent of the world's cargo moves by 
container. Each year, over 48 million full cargo containers 
move between seaports throughout the world and more than 16 
million containers arrive in the United States by ship, truck, 
or rail.
    Last year, I raised the issue of air cargo security on a 
number of occasions during Senate consideration of this issue. 
While the Federal Government has taken some steps, I believe 
that much more can be done to secure cargo in all modes of 
transportation.
    The U.S. Customs Service reports that trade volume moving 
through the 102 seaports of the United States has nearly 
doubled since 1995. In 2001, U.S. Customs processed more than 
214,000 vessels and 5.7 million sea containers.
    In addition to considering the sheer number of containers, 
it is also important to consider the flow of trade as it 
impacts our economy. More than $1.2 trillion in imported goods 
passed through our country's ports of entry in 2001. Almost 
half of the incoming U.S. trade by value arrives by ship.
    The issue of cargo container security is of special 
importance to my home State of Illinois. Chicago is one of the 
Nation's major transportation hubs where Federal highways, 
major railroads, and trans-ocean shipments intersect. The Port 
of Chicago is a vital link for shipments from the Atlantic 
Ocean which traverse through the St. Lawrence Seaway and 
continue on by truck throughout the region or by barge down the 
Illinois and Mississippi Rivers to the Gulf of Mexico.
    If a terrorist were to smuggle a weapon of mass destruction 
into any one of our Nation's ports in a cargo container, the 
effects would be devastating to area residents, our 
infrastructure, and our economy. In fact, on March 10, the 
Chicago Tribune reported on a war game conducted by government 
and industry officials which involved the explosion of a so-
called ``dirty bomb'' in downtown Chicago. In the war game 
scenario, the bomb was hidden in a shipping container which 
entered through an East Coast port.
    After the terrorist attacks of September 11, it quickly 
became apparent that the Federal Government needed to do more 
to ensure the safety of cargo containers entering our country. 
I commend the administration for launching the Container 
Security Initiative, known as CSI, in January 2002. Under the 
CSI program, Customs officials are stationed in foreign ports 
and work with local inspectors to pre-screen containers before 
they arrive at U.S. ports.
    In addition, the National Strategy for Homeland Security, 
released by the White House in July 2002, also highlighted 
container security as a major initiative for improving border 
and transportation security.
    I understand that CSI agreements have been concluded with a 
number of foreign governments which have so-called mega-ports 
that process the vast majority of cargo containers. I look 
forward to hearing from the witnesses about the current status 
and effectiveness of the CSI program and how these CSI 
agreements will help increase the security of cargo shipments 
bound for the Port of Chicago and other ports throughout the 
United States.
    I also look forward to hearing how the three primary 
Federal agencies that are responsible for protecting our 
seaports and shorelines from weapons of mass destruction--the 
Coast Guard, Customs Service (now part of the Bureau of Customs 
and Border Protection), and the Transportation Security 
Administration--are coordinating within the new Department of 
Homeland Security.
    Thank you, Chairman Collins.
    Chairman Collins. Thank you very much.
    Senator Akaka, it is my understanding you do have a few 
questions for Secretary Hutchinson.
    Senator Akaka. Yes, thank you very much, Madam Chairman.
    Mr. Secretary, as I noted in my statement, the citizens of 
Hawaii are heavily dependent on shipped goods. The State of 
Hawaii requested $3.24 million in TSA grant funding for port 
security and has currently received $775,000. This amount 
represents less than one-quarter of the funding Hawaii 
indicates it needs to meet security mandates identified in a 
Coast Guard vulnerability assessment.
    How can we ensure that a State such as Hawaii receives the 
funding needed to meet its unique port security needs?
    Mr. Hutchinson. Thank you, Senator, and Hawaii probably 
more than anyone is dependent upon the reliability of the ports 
and the security of the ports. And in reference to the 
potential grant funds, there will be another round of port 
security grant funds that are available through the 
Transportation Security Administration. There was $105 million 
available for vulnerability assessments and infrastructure 
improvements. And so I am sure that your leadership in Hawaii 
will be applying and probably have already applied for those 
funds. And I am sure that they will receive a high priority, as 
they should.
    Senator Akaka. As I mentioned, Hawaii is unique. Port 
security is critical, and exclusively Hawaii almost exclusively 
relies on shipping for life-essential goods. However, unlike 
many U.S. mainland ports, Hawaii cannot rely on alternative 
transportation such as rail or trucking.
    What is your plan to respond to a terrorist attack where 
there are limited means of alternate transportation in such a 
place as Hawaii?
    Mr. Hutchinson. We have to recognize the uniqueness of 
Hawaii, and the plan should not be the same plan that works for 
New York or Washington State. And that is the reason that your 
State has developed their own homeland security plan in order 
to make sure there is adequate cooperation among the agencies 
and a proper response is coordinated.
    It is based upon that plan that is individualized for 
Hawaii that we are able to put forth the funding, whether it is 
ports but even more significantly to the equipment and the 
first responder money. And so we are working through our 
agencies there, from the Coast Guard to Customs and Border 
Protection, to Immigration and other agencies, working with 
your State officials to make sure the plans are technically 
right and provide the support that is needed. But, clearly, it 
is a different circumstance in Hawaii. We recognize that, and 
we applaud the efforts of your State officials to develop a 
plan that is suitable for your State and the needs there.
    Senator Akaka. I really appreciate your response. Thank you 
very much.
    Chairman Collins. Thank you very much.
    Senator Fitzgerald, we have held Secretary Hutchinson here 
for quite a while, but do you have some questions you would 
like to ask?
    Senator Fitzgerald. Real quickly. Thank you very much.
    Mr. Hutchinson, the Customs Service launched the CSI 
program last year. What impact, if any, has the reorganization 
of the Customs Service within the Department of Homeland 
Security had on the progress of implementing the CSI program?
    Mr. Hutchinson. It has had a neutral effect in terms of any 
adjustments. The reorganization that we have accomplished 
focuses all the border agencies, from Border Patrol to all the 
inspection services combined into Customs and Border 
Protection. And so there is a clear chain of command and clear 
mission for that particular bureau of Customs and Border 
Protection. And so there is no negative impact. The message is 
we want to make sure this has the highest priority and the 
implementation is completed.
    I actually think that there is a positive impact because 
the mission is clearly defined. For example, the enforcement 
side of the investigative agencies is separated out. And so 
Commissioner Bonner can focus extraordinary energies on this in 
the implementation of it, and I think it is going to march 
forward with really increased energy.
    Senator Fitzgerald. Well, thank you very much, and in light 
of the time you have spent before this Committee already, I 
would yield back to the Chairman. Thank you very much for being 
here today.
    Mr. Hutchinson. Thank you, Senator.
    Chairman Collins. Thank you very much. I would now like to 
welcome our second panel of witnesses.
    Peter Hall is the U.S. Attorney for Vermont. Mr. Hall co-
chaired a law enforcement coordinating committee of State, 
local, Federal, and Canadian law enforcement officials that 
conducted the first real-world test of smart container tracking 
and intrusion detection technologies.
    Dr. Stephen Flynn is a senior fellow for national security 
studies at the Council on Foreign Relations. He is a retired 
U.S. Coast Guard commander and an expert in homeland security 
and border control. He also has served as director of the 
Independent Task Force on Homeland Security Imperatives, co-
chaired by former Senators Gary Hart and Warren Rudman, which 
produced the report ``America: Still Unprepared--Still in 
Danger.''
    Captain Jeffrey Monroe is the director of Ports and 
Transportation for the City of Portland, Maine. He supervises 
the operations at Portland's marine facilities, the Portland 
International Jet Port, and coordinates the city's surface 
transportation programs. Previously he served as deputy port 
director for the Massachusetts Port Authority, executive 
director of Governor Weld's Commission on Commonwealth Port 
Development, as a professor at the Massachusetts Maritime 
Academy, and as a master in the U.S. Merchant Marine.
    Dr. Michael O'Hanlon is a senior fellow in foreign policy 
studies at the Brookings Institution. From 1989 to 1994, he 
worked in the National Security Division of the Congressional 
Budget Office. He recently co-authored a book entitled 
``Protecting the American Homeland: A Preliminary Analysis.''
    I want to welcome all of you today. I look forward to 
hearing your statements. I would ask that you limit your 
testimony to 10 minutes each so that we have ample time for 
questions and answers. And your full written statements will be 
entered into the record. Mr. Hall, we will begin with you and 
welcome.

TESTIMONY OF HON. PETER W. HALL,\1\ U.S. ATTORNEY, DISTRICT OF 
                            VERMONT

    Mr. Hall. Thank you, Chairman Collins, distinguished 
Members of the Committee. It is a privilege and an honor to be 
asked to testify before this Committee concerning cargo 
container security and an interagency, intermodal, and 
international initiative for cargo container security called 
Operation Safe Commerce-Northeast.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Hall appears in the Appendix on 
page 59.
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    As brief background--and I won't go through my entire 
statement because I know it is on file with this Committee--
since the early 1980's and the advent of the Law Enforcement 
Coordinating Committees, sponsored by DOJ and the U.S. 
Attorney's Offices, there has been an expansive, cross-border 
effort in the Northeastern United States and Eastern Canada, 
and really this includes the States of Maine, New Hampshire, 
and Vermont, and northern New York and western New York as 
integral partners in this on our side of the border; Ontario 
and Quebec and New Brunswick on the northern side of the 
border.
    We came together regularly to share working intelligence 
information at all levels of law enforcement--local, State, 
provincial, and Federal--and to discuss and address issues of 
common concern.
    It was against this backdrop and out of this culture of 
cooperation, which really has been going on for two decades, at 
least, that Operation Safe Commerce, the first one to take that 
moniker, was born in August 2001, a month before the events of 
September 11, 2001. The group was aware historically from our 
work together that drug shipments came into the Port of 
Montreal. For many of us, that is our port, and, Senator 
Fitzgerald, I would just add as an aside that in many respects 
it is your port as well for Illinois because much of the cargo 
container traffic that comes into your area comes into North 
America through the Port of Montreal and the Port of Halifax, 
as you already know.
    Operation Safe Commerce-Northeast first manifested itself 
as a loose-knit working group that evolved from a cross-border 
intelligence-sharing group comprised of law enforcement 
representatives principally from northern New England, northern 
New York, Quebec, and eastern Ontario. The original aim was to 
guard the cargo container supply chains against the insertion 
of materials not listed on the container manifest--that is, 
smuggling--and the extraction of materials from the container 
manifest as it was in transit.
    The purpose of OSC-Northeast was to begin identifying where 
injection and removal points for a cargo container occurred in 
a simple cargo container supply chain and to begin testing some 
possible technologies to detect intrusions and to track the 
container for anomalies. Coming together to start the process 
of addressing the potential devastating impact on world 
commerce, which had been described to us at our first meeting 
by then-Commander Flynn, who is now here, of course, on this 
panel to testify before you, were representatives from the 
Northeastern United States of the following agencies, and many 
of them have been moved into the Department of Homeland 
Security, but, principally, the U.S. Customs Service, the U.S. 
Coast Guard, U.S. Immigration and Naturalization, U.S. 
Attorney's Office, and U.S. Marshals Service.
    Important to this and really key to our public-private 
partnership and the philosophy underlying the operation that we 
undertook were the State economic communities, and at this 
point, particularly those of New Hampshire, and through their 
State economic development office, members of the private 
sector. And we would certainly like to note the participation 
here of Osram-Sylvania, who really, out of a sense of 
patriotism and nothing more, volunteered their supply chain to 
be analyzed in what, of course, is a relatively simple milk 
run, an easy supply chain, since it starts with them, 
originates with them, and ends up with them.
    The U.S. Attorneys for the Districts of New Hampshire--that 
is, my colleague, Thomas Colantuono--and Vermont, together we 
appointed a joint Law Enforcement Coordinating Committee 
Subcommittee, and I think uniquely here we had it tri-chaired 
by each of us, and by the then-Governor of New Hampshire. I 
will note that the current Governor of New Hampshire has agreed 
to follow up and sit as a tri-chair of our LECC working group 
and our committee.
    Operation Safe Commerce, as conceived a year ago, had a 
single mission, and this was one evolved by the working group, 
and I would just like to read it for you:
    ``Operation Safe Commerce represents a comprehensive 
coalition of Federal agencies, State governments, and private 
sector businesses committed to the concept of enhancing border 
and international transportation security without impeding free 
trade and international commerce. Operation Safe Commerce 
gathers and provides information and assists in collaborative 
efforts to develop new models for international freight 
monitoring and transportation that maintains open borders and 
facilitates commerce while improving security.''
    As a working group, we reminded ourselves on a regular 
basis that we had come together in substance ``on a spit and a 
handshake.'' We were there because we wanted to work together, 
and we knew the importance of this project. Agency egos were 
``checked at the door,'' and that grew out of the culture that 
we already had in place, thankfully, up in our neck of the 
woods, Madam Chairman.
    The group came together by telephone conference and face-
to-face meeting, first, to assist the Volpe Transportation 
Center, which provided the work and analysis and really ran--
they were the working partner that ran the project for us--in 
refining the parameters of the proposed demonstration project; 
and, second, we came together to push the project along and 
oversee it as it was undertaken; and, finally, we with Volpe 
reviewed and analyzed their reports, and we assisted in the 
preparation of the final report, which I understand has been 
released by Volpe for restricted distribution and is available 
to this Committee, Madam Chairman.
    Throughout the process, our aim was to look at a prototype 
and to support and guide a process that would begin gathering 
data which could then be used to promulgate regulations and to 
set new standards for secure international transportation of 
cargo containers. Phase One was accomplished in two parts, both 
of them involving cargo containers, as I said earlier, used to 
ship automobile light bulbs from the Osram-Sylvania plant in 
Nove Zamke, Slovakia, and they went via the Port of Hamburg, 
Germany, to the Port of Montreal in Canada, across the U.S.-
Canadian border at Highgate Springs, Vermont, and ended up at 
their final destination point at the Osram-Sylvania plant in 
Hillsboro, New Hampshire.
    The first phase of the report or the first phase of the 
work was the Volpe team studying an actual supply chain, 
seeking to understand and report the way in which the cargo 
container that they studied was handled and the various 
potential problems for intrusion that could occur along the 
route. Second, Volpe put instrumentation and monitoring devices 
on another container to determine whether it could be tracked 
and monitored effectively with commercially available 
technology. The technology used is described in much more 
detail in their report, but, briefly, it involved global 
positioning satellite technology, tracking and multi-node 
downloads, with transmission of data from those nodes to a 
central point at Volpe headquarters; so important to understand 
is that it was not real-time data. We were not tracking the 
cargo containers that moved from point to point. We were 
getting information after the cargo container had moved, 
letting us know where it had been.
    There were also installed a series of sensors which 
detected light changes inside the container and detected 
possible intrusions through magnetic sensors similar to those 
used in a home security system. There was also an electronic 
seal--this was independent of the sensing operation--which was 
on the exterior door of the container, and that could contain 
information about whether it had been opened a number of times, 
although it did not transmit that data.
    The intrusion data monitored by the interior sensors and 
the GPS tracking data were downloaded at nodes, as I said, and 
transmitted back. These nodes were at the departure point, at 
the port entryways in Hamburg, Germany, at the Port of 
Montreal, and at the port of entry at Highgate Springs, 
Vermont, and, finally, at the receiving point in Hillsboro, New 
Hampshire.
    By and large, the equipment worked well and provided 
information at each of the nodes that was subsequently 
transmitted to Volpe. So we knew at least with the technology 
that was being tested on this one run that it did work. There 
were some problems with gathering data transmitted from the 
entryways at the Port of Hamburg. There were two choices for 
entryways, and that is always going to be the case in many of 
the ports because they are easily accessed.
    The test runs informed our working group that there is a 
basis for continuing to explore both container tracking and 
container intrusion. Our group, however, always saw itself as a 
vehicle for providing this data that we gathered, or that was 
gathered under our direction, to regulatory bodies within the 
United States and, through them, to entities throughout the 
world, which could be used for setting standards to ensure 
greater safety from intrusion in the handling and 
transportation of cargo containers. Indeed, in proposed Phase 
Two, Operation Safe Commerce-Northeast is partnering with 
Lawrence Livermore National Laboratory to test additional 
intrusion detection devices within the container and monitoring 
and detection equipment to be used in moving cargo containers 
at the ports.
    In this proposal, the ports of Halifax and Montreal, for 
reasons that I articulated earlier, are proposed sites. We 
recognize in our region that we have one large area that is in 
many ways interconnected economically and certainly through our 
cooperative law enforcement arrangements. And the Ports of 
Montreal and Halifax are integral to the transportation of 
international cargo into our area economies, and as I pointed 
out earlier, all the way into the heartland.
    Let me just note our conclusions here. The project 
Operation Safe Commerce initiatives are complementary to and 
intended to build upon the Container Security Initiative and C-
TPAT programs that are now in place. Almost invariably, 
however, extending the analysis and effectuation of security 
for cargo containers from point of origin to point of 
destination will go beyond dealing with the participants who 
are enrolled in C-TPAT and CSI. Container handling standards 
and technology solutions must ultimately affect manufacturers, 
shippers, freight haulers, terminal operations, shipping lines, 
warehouse operators, and the like, as well as government 
regulatory agencies.
    We have expanded our approach to include definitely the 
U.S. Attorney's Offices from Maine as well as northern New 
York, western New York, and Massachusetts. So we work as a 
loose-knit group. We stay in touch with each other on this 
important initiative in the container committee, and, Madam 
Chairman, that concludes my prepared remarks, and I look 
forward to answering questions when they are posed.
    Chairman Collins. Thank you, Mr. Hall. Mr. Flynn.

  TESTIMONY OF STEPHEN E. FLYNN, Ph.D.,\1\ SENIOR FELLOW FOR 
    NATIONAL SECURITY STUDIES, COUNCIL ON FOREIGN RELATIONS

    Mr. Flynn. Thank you. Good morning, Madam Chairman. Thank 
you so much for having me here today. I started my Coast Guard 
career on a cutter out of Portland, Maine.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Flynn appears in the Appendix on 
page 70.
---------------------------------------------------------------------------
    Chairman Collins. Good training.
    Mr. Flynn. That is where I got my sea legs. And, Senator 
Coleman, I am delighted to appear before you as well, and also 
to share this witness panel with Peter Hall, who really is, I 
think, just the model of the kind of leadership that is 
ultimately going to get us where we want to go, taking this at 
a local level and really mobilizing this coalition and pulling 
people together who don't normally talk to each other. That is 
the extraordinary story of Operation Safe Commerce, and its 
success is largely due to the extraordinary efforts of Peter 
Hall.
    I would like to submit my written testimony for the record 
and use the opportunity here orally to do three things: First, 
to reinforce the stakes that are involved with this cargo 
container security problem; second, give a framework of where 
we should be; and finally, to offer a brief assessment of where 
we are.
    The bottom line is anybody in the world right now who has 
$1,600 to $3,000 and 30 tons of material can order a box, have 
it delivered to their home or to their workplace. They can load 
it to the gills, close the doors, put a 50-cent lead seal on 
it, and it is off to the races. There is no requirement that 
there be any adult supervision at that loading point. There is 
no requirement that the container even be sealed. It is done as 
a normal commercial practice in order to ensure a handoff from 
one conveyor to another. But it is not formally required. There 
is no requirement that in any of the handling of the container 
by a truck or a train or a ship or anywhere in the terminal 
that anybody exercise any form of protocol of due diligence. 
Some companies do for commercial reasons, but there is no 
requirements that they do so.
    We built the intermodal transportation system for 
efficiently, reliability, and low-cost, and it has achieved 
these magnificently. It has been a major fare behind U.S. 
competitiveness. The ability to outsource the way companies do 
today, to maintain the razor-thin inventories, to go from 
design to production, to get products to the consumer in 
incredibly compressed production cycles has been built around a 
revolution in transportation that basically attributable in 
small part to this box.
    But the essence of the problem is, of course, that there 
was no security built into that revolution. And the 
opportunity, as you have laid out, Madam Chairman, of what we 
have seen from the crime sectors, something I have been 
following for the last decade, suggests that moving to a more 
nefarious purpose, a terrorist attack with weapons of mass 
destruction, is a high risk.
    The consequence of that is not just simply that we have a 
potential weapon of mass destruction going off in the United 
States with the loss of life and the destruction that could 
wreak. Another, probably even more daunting consequence is the 
reality that we are still struggling to come to grips within 
regards to terrorism, and that is, when we have these acts, as 
we saw with the airline attacks on September 11, as we saw with 
the anthrax mailings, as we saw also last fall with the 
Washington area sniper attacks, the assumption by the general 
public when these incidents take place is of generalized 
vulnerability, unless the government can prove otherwise. It 
creates an enormous challenge for re-establishing public 
confidence when you have these incidents in these critical 
sectors.
    So the core issue that we are wrestling with in terms of 
where we need to be is what would the President of the United 
States say, after we had a catastrophic event, to reassure the 
American public that the 20 million containers that washed 
across American shores or crossed American borders, last year, 
in a truck or a train or on a ship, in fact, don't pose a 
similar risk. And it would have to be sufficiently credible 
that the public would say: That is OK, I am willing to let that 
trade keep running; I am not feeling that my neighborhood is at 
risk.
    If we had to shut down this system for just 3 weeks, the 
entire global container system would grind to its knees. What 
would happen is overseas ports would have to close the gates to 
all incoming trucks and trains because, otherwise, it would 
turn the port virtually into concrete. So all those chassis 
would be stuck outside the gate. All the ships that are loaded 
with U.S.-bound goods would have to be brought back to the 
piers and have things offloaded and reloaded. All the contracts 
built around time would have to be renegotiated. In 3 weeks, 
the entire system basically comes undone and 90 percent of the 
world's freight stops moving. And that is the assembly lines of 
most of our major manufacturers, and that is the warehouses of 
most of our modern retailers. Those are the stakes that are 
involved here.
    Right now, it is hard for me to imagine if we have an 
incident involving the containers that we will not face the 
challenge of turning off the system and that we will have a 
huge challenge from a public confidence standpoint to restore 
public faith in a truck sector, rail sector, and a maritime 
sector that is so critical to our economy.
    Where do we need to be? We need to be, it seems to me, in a 
position where we can do two things: We have to have confidence 
that when something is loaded into this intermodal 
transportation system it is legitimate and authorized; and we 
have to have confidence that when it is on the move it has not 
been intercepted or compromised. Because if you can't do those 
two things, there is no such thing as risk management. You 
cannot say because you are periodically dabbling in checking 2-
5 percent of the containers, whether overseas or here, that 96 
percent or more of the remaining boxes can just slide by when 
you have no basis to say that there was controls at the outset 
that you can have confidence in, or that when it was handed off 
from a truck, to a train, to a ship, and stood around at the 
various depots, that somebody couldn't have caused mischief, 
especially within a high-terrorist threat environment.
    So where we must be is where we can accomplish those things 
by initiating some standards where if you want access to the 
global intermodal transportation system, there are some certain 
practices that you need to do, and those need to be audited 
periodically. It doesn't necessarily have to be a public 
auditing, but somebody needs to be able to check to make us 
comfortable with that.
    The second part is we need to be able to track things as 
they move through the system, and we need to be able to have a 
sense of the integrity. But just the tracking is key for doing 
three things. If we have intelligence, which we hope we might 
have, given this 20 million, needle-in-a-haystack problem, we 
would have to be able to act on that without disrupting the 
whole system. If we had a case where we had a CIA operative 
attached to the Al Qaeda network and they witnessed the loading 
of a weapon of mass destruction in a box, heading in a lorry 
down to Karachi, and that is the only piece of intelligence we 
had, and we can't find the box, it is an incoming, we would 
have to shut down the whole system. That is unacceptable. You 
have to have a means to act on that intelligence when you have 
it.
    But the facts are we are not often going to get that 
intelligence. Most of it is going to be done from what is 
called in the regulatory world pattern recognition. What we 
know about capable terrorists and capable criminals is they try 
to blend in, just like the terrorists did on September 11. They 
try to blend in as normal market actors, but they almost never 
get it right because they are not normal market actors.
    And so if there is sufficient transparency through 
documentation and a clarity of control, you can pick out things 
that allows the targeting to be good targeting and, therefore, 
check things that pose a risk and have confidence that low risk 
is, in fact, low risk.
    But a final critical point of this exercise is the need for 
forensics. It goes back to public confidence. Let's look at 
aviation safety. We put black boxes in planes for the purpose 
of being able to diagnose the problem if they fall out of the 
sky. If every time a plane fell out of the sky the President of 
the United States and the aviation industry shrugged and said, 
well, it doesn't happen too often, only barnstormers would be 
flying in planes today.
    The reality is doing forensics to figure out how something 
happened in this industry would be an investigator's nightmare, 
as I am sure Mr. Hall probably would attest. That means in the 
interim, all the conspiracy theories, concerns, and so forth 
would start to surface. So by building through the data trail, 
by building through the tracking and so forth the means to do 
the forensics, ``how did it happen,'' if you could identify it 
was a truck exploiting front companies that sent it from 
Karachi, you wouldn't have to close the border between Canada 
and the United States and cut the flow of GM parts. You would 
be able to localize what the disruption was.
    But where are we right now? We are in a situation where we 
have got three good building blocks in the programs we talked 
about this morning, but they all have limits. The Container 
Security Initiative is highly promising because it allows for 
the targeting at the loading point. But there are 16 U.S. 
Customs officers currently assigned overseas, as we pointed 
out, in six ports. This has not revolutionized, given the 
number of boxes, our ability to inspect. It has provided the 
means for coordination in the port, but the challenge still is: 
What is the targeting? How good is it? And is it built 
primarily around manifest information, which historically is 
the most unreliable data in the whole commercial trade system? 
We need to drill down on this targeting issue.
    I would say one thing that I would encourage the Committee 
to consider is asking the GAO or directing Customs to do a 
test. Randomly pull out 100 containers and see how many 
problems there are, and then using your targeting criteria, how 
many are you finding? If you are finding through the random 
process things you never would have targeted are still 
problems, then that would suggest that you need to continue to 
refine, as I know they are trying to do, their targeting data. 
But this whole credibility is built around the capacity to do 
good targeting, and we have to make sure that is the case.
    The C-TPAT has the very laudable goal of engaging the 
private sector, but there is no auditing of the system. 
Everybody who signed up, the 2,000-plus companies, knows that 
U.S. Customs does not have the manpower to come check the 
books. There is no requirement that they periodically adapt or 
review their self-help, self-enforcement mechanisms. You have 
got to give this thing some teeth if it is going to be 
credible, and Customs needs to have the resources put in place, 
the controls--it is trust but verify, as we did in the arms 
negotiation field.
    Finally, OSC, I think, has a great deal of promise because 
it helps us to be able to really go back to the full supply 
chain, brings in a lot of the stakeholders to be able to really 
get us to drill down to the vulnerability, but also test what 
is commercially viable in terms of processes and in terms of 
technology. But the end game must be not lots of tests. The end 
game must be to work towards having international standards 
that introduce security into the global container trade that 
underpins global commerce. This is a high-stakes issue to which 
we are dedicating very few resources.
    When we comparatively look at that, the Secretary of 
Defense testified before the House Appropriations Committee in 
February that he is spending $5 billion more each year on 
protecting U.S. bases, 20 percent of which he doesn't need 
because he doesn't have the force structure for them. So he 
said he is wasting $1 billion protecting U.S. bases, and the 
total budget we are talking about here for port security this 
year is $104 million. It seems like we have got our priorities 
a little out of whack.
    Thank you, Madam Chair.
    Chairman Collins. Thank you very much, Mr. Flynn. Captain 
Monroe.

  TESTIMONY OF CAPTAIN JEFFREY W. MONROE, M.M.,\1\ DIRECTOR, 
DEPARTMENT OF PORTS AND TRANSPORTATION, CITY OF PORTLAND, MAINE

    Captain Monroe. Good morning, Madam Chairman and 
distinguished Members of the Committee. I want to thank you for 
the opportunity to come before you today and, in particular, to 
thank you, Senator Collins, for all of the attention that you 
have paid to port security and to transportation security back 
home.
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    \1\ The prepared statement of Captain Monroe appears in the 
Appendix on page 76.
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    In the 18 months since September 11, we have come a long 
way in securing our Nation's transportation system, 
particularly in aviation. The Transportation Security Agency 
has successfully managed the hardening of our aviation 
facilities on an accelerated schedule. They have supervised the 
installation of scores of screening devices and the training of 
thousands of new employees, and we commend their efforts. But 
now as the TSA turns its attention to seaports, it faces an 
even more difficult task. Our ports remain critically 
vulnerable. While we have made great strides in the area of 
port security, particularly in managing our international 
cruise ship passenger trade, we must still find solutions to 
the most serious problems on the waterfront besides container 
security which include: The lack of coordination between 
agencies regulating seaport commerce; a lack of standardization 
of procedures between and within agencies; a continuing lack of 
intelligence information available to port managers; agreements 
on manner, amounts, and sources of funding; and, finally, a 
long-term solution for providing qualified and well-trained 
personnel for port security programs.
    I would like to preface my comments by saying that I am in 
complete agreement with those who have advocated pushing back 
the Nation's borders when it comes to container security. We 
all understand that by the time something is found at the pier, 
it is already too late. We support the Container Security 
Initiative and the Customs Trade Partnership Against Terrorism. 
But these programs must be expanded quickly and immediately.
    Monitoring the supply chain and making brokers, freight 
forwarders, and carriers assume a new level of responsibility 
is critical. U.S. Customs must be the primary Federal agency 
that monitors the activities of carriers, brokers, and 
stevedoring companies that work in multiple ports.
    We fully support programs to harden our continental borders 
and propose the establishment of marine border crossings. 
Canada is our closest neighbor and, working together, our two 
nations must establish a set of procedures for cross-border 
commerce that allows that cargo to move quickly between our 
countries while establishing a joint continental boundary to 
protect our respective nations. I am encouraged by the exchange 
of Federal officers in some of our major ports where U.S.-bound 
cargo arriving in Canadian ports can be pre-screened and 
Canadian cargo arriving in U.S. ports is similarly handled.
    We also support tightening the loophole on the difference 
between an entry port and the point where the shipment reached 
U.S. territory. Cargo containers can no longer be allowed to 
continue their journey by highway or rail without declaration 
of their contents or being screened. Some of this cargo moves 
through the heart of our major population centers in bond 
before it is ever cleared or looked at by Customs.
    Cargo that is leaving the United States also needs to be 
checked as part of an international effort. We support the new 
24-hour rule, but we note that it will be extremely difficult 
for agricultural, seafood, and other suppliers of perishable 
products to strictly comply due to the fact that often these 
products go from harvest to the dock through a just-in-time 
delivery system. The handling of agricultural and similar 
products must be managed in a different but equally secure 
means.
    While we applaud the efforts of Congress and Federal 
agencies as they promulgate new rules for security and safe 
operations, we find ourselves in the unique position of acting 
as mediators between various rulemaking bodies. This situation 
cannot continue. On my desk, I have a plethora of paper 
designed to help me secure the port. These rules cover 
everything from the height of fences to the height of lettering 
on badges. They are issued by agencies without regard or 
knowledge of what other agencies are regulating. I fully 
understand that we are in a transitional phase as we design and 
implement our new Department of Homeland Security, but one of 
our first priorities must be the coordination between these 
agencies.
    In addition, the application of rules and standards must be 
the same in every port. Washington must educate their regional 
and field personnel how new regulations are to be applied and 
how to account for port differences. Field personnel must 
understand that there is a balance between the flow of commerce 
and the security of our borders. If that balance cannot be 
achieved, then those who seek to harm this Nation have found 
their success. There must be regulatory consistency between our 
seaports.
    I believe that our Federal, State, and local government 
agencies need to work together under the direction of the 
Federal Government and that industry representatives must be 
included as equal partners in determining what will work best 
locally.
    There also needs to be a significant effort within the new 
Department of Homeland Security to assess measures and 
response. Port commerce is not just about ships and piers. It 
includes trucks, rail, aviation, and a host of other 
transportation infrastructure that must be included in 
determining what will work best. To that end, I propose that 
the Transportation Security Administration establish a 
Coordination of Seaport Threat Reduction Task Force which would 
include officials from the various rulemaking bodies such as 
Customs and the Coast Guard, but would also include a number of 
port operations personnel representing a broad spectrum of U.S. 
ports and members from the aviation, rail, and trucking 
industries. The task force would advise the Secretary of 
Homeland Security through the TSA regarding threats and actions 
focusing specifically on analysis of alternatives and 
solutions, review of plans, timelines for implementation, and 
standardization of methodologies.
    This mediation and coordination of Federal agencies must be 
done in Washington and not at the local level. Protocols and 
procedures must be uniform through the system. Local 
decisionmaking cannot be incompatible from one geographic 
location to another, and quality controls must be put in place 
and closely monitored.
    The task force should also assist with the periodic 
examination of the mission effectiveness of the agencies that 
impact ports under Homeland Security. They would also ensure 
that all types of ports--including seaports, airports, 
railports, and highway border crossings--are dealt with in the 
exact same manner.
    Many of our smaller municipally-owned ports cannot begin to 
comply with the new rules, regulations, and requirements that 
are being proposed or implemented by various agencies. Towns 
and cities throughout this country are in dire financial 
condition, and many ports are still paying the bills from 
September 11 that will not be reimbursed. Port security is a 
national issue. Local taxpayers are unable to shoulder this 
additional burden and should not be expected to. The ports in 
Maine alone are struggling to keep their business and can ill 
afford to lose the many jobs associated with maritime 
activities.
    Ultimately, we are concerned that new concepts that may 
come out of our desire to solidify our borders may put smaller 
ports at a disadvantage. Some agencies have suggested that the 
number of container ports should be consolidated and that small 
feeder ports should be eliminated so that screening resources 
can be concentrated in the mega-ports. The distribution of 
feeder ports has been an asset to regional and local economies. 
We should encourage the ``Short Sea'' Initiative of the 
Maritime Administration and optimize use of water 
transportation along our U.S. coastline, keeping containers out 
of population centers and off our highways and rails until 
absolutely necessary. Only 70 percent of container traffic is 
concentrated in just a few ports in this country. That, in 
itself, makes mega-ports potential targets. I believe that 
smaller feeder ports have a better opportunity to identify a 
shipment that is potentially threatening. The Marine 
Transportation System should deliver cargo to geographic areas 
by water, reducing highway congestion as well as enhancing 
safety and security. Every port that currently handles 
containers should be equipped with the proper screening 
equipment and trained personnel to meet new security 
requirements.
    We must also develop a new generation of qualified 
professionals who can maintain those efforts far into the 
future. All of our Federal agencies are working hard to meet 
their newly expanded security missions. Personnel resources are 
getting scarce. I believe that we should support the inclusion 
of new educational programs at our maritime academies to 
prepare young men and women to take up the responsibilities in 
our ports and Federal agencies and that we should support the 
development of a U.S. Merchant Marine Reserve to utilize the 
expertise of those who are willing to help not only in the 
defense of our Nation, but also the protection of our seaports. 
Merchant mariners are an untapped area of great expertise that 
we have not availed ourselves of to date.
    With all of the new and increased focus on container 
traffic, I do not believe that our enemies will be able to 
deliver a weapon of mass destruction through a single shipment 
over water. I do believe, however, that through multiple 
conduits, such as seaports, airports, and border crossings, 
terrorists will be able to ship component parts that are 
disguised as regular cargo and can be assembled later to create 
a weapon that would be a significant threat to our Nation. 
Strict control of the chain of movement and good intelligence 
are the only defense we have against such an effort. We must 
look at our transportation industry and make an effort to 
ensure that those who are in critical positions are legitimate. 
The aviation industry was able to develop a system of screening 
airport personnel through a coordinated Federal database. That 
system must be extended, without exception, to all maritime and 
transportation workers. We cannot afford any more delays in 
instituting a Federal credential for transportation workers. We 
must also look at shippers, carriers, brokers, and freight 
forwarders to ensure they have every safeguard in place and 
that they have the support of our Federal agencies in 
coordinating efforts in screening shipments, and all of these 
people need to be trained.
    In 2001, I supported Senator Snowe's legislation to create 
a unifying Federal agency to oversee all sectors of 
transportation, which eventually became the TSA. I envisioned 
its primary mission as just such coordination and an agency 
that can respond rapidly to our Nation's transportation needs 
in times of crisis. It is time for the TSA to begin its active 
participation in our seaports.
    We have come a long way in 18 months, but the task is far 
from over, and our efforts must be coordinated and the 
responsibility shared for protecting our seaports as well as 
the entire transportation system. Every step we take puts up 
one more barrier to those who would seek to do us harm. Every 
step we take must also be measured so that the reaction to that 
threat is not so draconian that the mere possibility of a 
potential attack achieves more in impact than any single 
assault ever could. It is indeed the responsibility of every 
one of us at every level of our transportation system to ensure 
that we are working together as a team to protect our way of 
life while we seek to protect our Nation.
    Thank you.
    Chairman Collins. Thank you very much, Captain. Mr. 
O'Hanlon.

TESTIMONY OF MICHAEL O'HANLON,\1\ SENIOR FELLOW, THE BROOKINGS 
                          INSTITUTION

    Mr. O'Hanlon. Thank you, Senator Collins, Senator Coleman. 
It is an honor to appear today. I would like to speak in just a 
couple of broad terms about overall budget resources and try to 
be fairly brief and just give a couple of thoughts.
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    \1\ The prepared statement of Mr. O'Hanlon appears in the Appendix 
on page 81.
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    The broad message that I have is that the kind of work 
being done by my colleagues here on this panel and their 
previous associates is not yet adequately funded, in my 
judgment, and I think to put it in different terms, 
institutions like the Coast Guard and Customs now as part of 
the new Customs and Border Protection Directorate just aren't 
big enough. They aren't big enough for the new set of tasks. A 
lot of the new technologies and new procedures are promising, 
will allow us to do more with the same number of people, but we 
actually need to make these institutions bigger. And I want to 
concentrate on Customs, but let me first say a brief word about 
the Coast Guard. It is just the same spirit of calculation, a 
very rough, sort of back-of-the-envelope calculation about how 
large might these agencies have to become.
    The Coast Guard, as you know, is now doing 25 or 30 percent 
of all of its mission work in the area of homeland security. 
Prior to September 11, that number was very small. So it has 
essentially added 25 percent additional missions to an existing 
portfolio that I think all of us want to protect for the 
previous missions of boater rescue, environmental protection, 
and so forth.
    How is the Coast Guard managing? It was already 
underfunded, already operating aging equipment. How is it 
managing to do all this new work without a much bigger 
workforce? Well, at least it is getting more resources to buy 
the equipment it needs. As you know, the Deep Water Project and 
other kinds of modernization efforts are now being properly 
funded. The Coast Guard budget has gone up quite a bit since 
September 11. However, the size of the Coast Guard has not gone 
up very much. It has gone up just a little over 10 percent. And 
if you compare that 10 percent to the 25 percent additional 
missions that are being asked of the Coast Guard, I think we 
have a mismatch. So just in very rough terms, I am sure there 
are ways to do some of these homeland security missions more 
efficiently, and we will figure some of them out. And maybe we 
don't need the Coast Guard to increase in size by 25 percent, 
but it has got to go up in size by more than the roughly 4,000 
people that have been added to its end strength or the 3- to 5-
percent increase in the number of assets that it operates, the 
number of boats, the number of airplanes. These numbers have 
gone up very slightly, and it is not enough.
    And so in my testimony, I try very roughly to estimate what 
size Coast Guard might be adequate for the new needs we are 
asking it to carry out today, including port security, coastal 
waterway security against terrorist attack, and I estimate 
roughly another 5,000 to 7,000 more people and maybe another $1 
billion a year in rough terms are needed, including more boats 
and more airplanes.
    But that is the Coast Guard piece. I want to spend a little 
more time now on the Customs piece, with a similar sort of 
broad, rough calculation. And I don't know nearly as much about 
these agencies as my distinguished colleagues, so I am giving 
you a very rough way to sort of ballpark this number. I am sure 
my numbers are wrong. I am sure there are more efficient ways 
to do these things. But what I am struck by is that if you just 
do a crude estimate and you compare the needs to what we are 
actually funding today, there is a huge gap. And the 
incremental increase in some of these agencies' size does not 
seem commensurate with the new demands we are placing upon them 
in the area of cargo inspection that Customs used to do, 
Customs and Border Protection Bureau now performs.
    As you know, we used to have about a $2.5-billion-a-year 
budget for that function, for all Customs functions, I should 
say, and about 20,000 people were performing these tasks. And 
that was good enough to inspect 2 or 3 percent of all the cargo 
coming into the country. Steve Flynn and others have been 
instrumental in pushing some new ways to do these things more 
efficiently, figure out which ships we have to best inspect 
using new technology. You were asking earlier about nuclear 
detectors. All those things will help, but as Commander Flynn 
also pointed out, it is just not going to be good enough 
because intelligence is not going to be good enough that you 
can get by inspecting only 2, 3, 4, or 5 percent of all the 
cargo coming into the United States.
    The people I have talked to--and this is very 
impressionistic, but they tend to think you have to get up into 
the ballpark of double-digit percentages. You have got to be 
inspecting 10, 15, probably 20 percent of cargo coming into the 
United States, and if you combine that with all the source-to-
shipping tracking that is being proposed, all the new 
technologies, maybe you have a good enough inspection system to 
start to have some robustness.
    So let's say we should go up to about 15 percent as the 
amount of cargo that we inspect. If that is your goal, and 
today we are inspecting, let's say, roughly 3 to 4 percent, 
that tells me that Customs is about one-fourth the size it 
should be, or I should say the traditional role performed by 
Customs now being performed by the broader bureau inside DHS.
    Again, I am sure that number is wrong. I am sure there will 
be clever, innovative, new ways to inspect cargo with fewer 
people per container using technology, using other new 
procedures. But to me it looks like you have got to increase by 
several-fold the size of your workforce and the number of 
people involved in this. I said before Customs had 20,000 
people in the old days. Some of those people were doing 
internal pursuit of smugglers, so it wasn't all about border 
security. But if 10,000 to 15,000 of those people were 
primarily focused on inspecting cargo as it came into the 
United States, I think that number needs to be up in the range 
of 30,000, the number of people who are doing cargo inspection. 
The number we had before September 11 needs to increase by 
something like 10,000 or 15,000 people. These are not huge 
numbers, especially by comparison to DOD or certain other kinds 
of government agencies, but they are still very big compared to 
what is happening so far because the Bureau of Customs and 
Border Protection is increasing in size by just 10 percent. And 
it looks to me like it has to double or maybe triple.
    So I think, instead of increasing the number of people 
doing cargo inspection by a few thousand, we have got to 
increase that number by 10,000, 15,000, or 20,000. Again, I am 
sure my specific numbers--and I am couching them in broad terms 
because I don't have very precise ways of making the estimates. 
I am sure that my approach isn't quite right. But it is still 
illuminating that if you just do a back-of-the-envelope 
calculation, you compare the fact that we should be increasing, 
I think, the inspection rate by three or four times what it is 
today, we are only adding 10 percent to Customs' workforce, 
there is a big mismatch. And I think the Customs part, the 
cargo inspection part of this new bureau needs another budget 
increase of more than $1 billion a year, maybe in the area of 
$1.5 billion a year, and, again, 10,000 or more additional 
employees to do the job right.
    So that is just a broad way of looking at these problems, 
and my final word, it is part of the broader Brookings study 
that we have done that suggests a homeland security budget of 
roughly $50 billion a year. To us that looks like the right 
order of magnitude for what the Federal homeland security 
requirement really should be which is in contrast to the $41 
billion proposal of the administration. That is in the right 
direction, but we think it is still probably about $10 billion 
a year shy for the reasons like the ones I have just mentioned 
this morning.
    Thank you.
    Chairman Collins. Thank you for your testimony.
    Mr. Flynn, you have written a lot about the economic impact 
of a possible attack using a container. Could you expand on 
that? After the attacks on our Nation of September 11, we lost 
3,000 lives. It stunned the Nation. It sparked an economic 
downturn. But it did not cripple the economy. If 90 percent of 
U.S.-bound cargo arrives by container, what would be the impact 
if we had an attack using our cargo system?
    Mr. Flynn. There aren't hard numbers, of course, that give 
us a sense of that because of this elusive--how do you restore 
public confidence and what time would that take? There are the 
mechanics of just when you turn your system off, it is hard to 
turn it back on again for some of the reasons I have just 
outlined.
    But in the case of aviation after September 11, we 
grounded, of course, all the planes. We went through every 
single plane to verify there was no terrorist or means of 
terrorism on the planes before we restarted. That took 3 days.
    If you had to do it in surface transportation, intermodal 
transportation, just stop, freeze, and check, you are talking a 
minimum of about 6 months. That obviously is something that 
this country couldn't afford to do. But you are faced with this 
dilemma. If you had a box go off, potentially tens of thousands 
of people's lives lost. So people are looking in their streets, 
in their neighborhoods, and they are seeing rail cars come 
through as they come right by this Capitol Building here, or 
they are seeing trucks that are coming by, and they are saying: 
Where do these things come from? Who has checked them? What has 
happened here? And how do we have confidence something as 
horrific over there--and, of course, the other challenge the 
President will immediately face is all this chatter will start 
rising up. All the stuff that has been discounted by 
intelligence officials up to this point as perhaps not credible 
now will all be surged forward because we have this clear 
incidence.
    So there will be this great uncertainty. There will be a 
lot of public concern and angst, and there will be an 
accountability. OK, what is it that we have out there that 
should make me feel comfortable about this train, truck, or 
ship coming into my port or across my border crossing, or into 
my city or town?
    And my concern is that when you can't point to much beyond 
what we have, which is, as I laid out here, well, we have a few 
guys overseas, they checked about 1 percent with their allies, 
with the seals. We are still deliberating if we should go from 
a 50-cent lead seal to a dollar one. Some people are talking 
about the electronics. We haven't quite got the standards down, 
but 5 years from now we will have something before the 
international standards organization. This is not the basis for 
building much confidence.
    So what happens? What happens is we know that companies 
like Wal-Mart, basically, you know, live off of a--there is no 
warehouse in the back of the store. This is the most profitable 
corporation in our country, and it basically depends upon a 
supply chain getting goods there. The GMs and the automotive 
companies, Ford, they basically require that--they are ordering 
10 times a day shipments often coming across the Canadian 
border into the United States. That stops within the space of 
about 3 hours. They just don't have the parts to assemble cars. 
And that is true across the board for manufacturers.
    Many manufacturers are just-in-time--toys, for instance, 
are built around Hollywood promotions, around movies, and 
McDonald's and so forth here. There is a window of about 2 
weeks when you can sell a toy. If you have a delay, it is gone 
because the kids have moved on to something else, some other 
exciting thing.
    You have got basically--the core of our competitiveness, 
which has been a big part of it, has been low inventories, 
being able to very nimbly build things in a hurry, relying on 
vast networks of outsourcing. All that grinds to a halt. So it 
is our retail sector, it is our manufacturing sector, and plus 
all the workers of that service community that are 
dispossessed.
    All we can point to is the 10-day lockdown of the West 
Coast over the longshoremen's strike last--if there ever was a 
wake-up call on this issue, it seemed to me that should have 
been one. But it was viewed just as a labor-management issue. 
But those 10 days, the estimates are on the order of about $20 
to $30 billion of disruption. And it took a week for every day 
that you turn off the system to recover, just the mechanics, 
not the public confidence.
    I know I was a little long-winded on that, and there are 
not hard numbers, but that is a sense of the scale of what we 
are dealing with here.
    Chairman Collins. That is one reason I think this is such a 
tempting target for terrorists. Not only can they cause 
enormous loss of life, potentially, but they could cripple our 
economy, cripple the whole system of international trade.
    Mr. Flynn. And what we know is that is the stated goal of 
the Al Qaeda network.
    Chairman Collins. Right.
    Mr. Flynn. It is to do just that kind of things.
    Chairman Collins. Right. Mr. O'Hanlon.
    Mr. O'Hanlon. Senator, just very quickly, my colleague 
Peter Orszag, an economist, last year estimated the 
consequences of different kinds of terrorist attacks, and it is 
in our study. And this kind of a scenario that you are 
postulating was his No. 1 most potentially significant loss of 
economic activity, a container that winds up being the way in 
which a nuclear weapon or a major biological attack is 
generated in the United States. He estimated up to $1 trillion 
in potential economic damage--very rough estimate, and he would 
be the first to emphasize that. But it was top on his list of 
potential economic consequences of any and all terrorist 
attacks he could envision.
    Chairman Collins. Captain Monroe, you are on the front 
lines in operating a local port, the largest one that we have 
in Maine. Do you have a clear sense of who to go to in the 
Federal Government, who is in charge? Do you get clear and 
consistent guidance from the Federal Government?
    Captain Monroe. I have to say honestly it seems like every 
agency has got some level of responsibility, and it is really 
difficult sometimes to determine who really is in charge of the 
program.
    I find that the most effective way to do all of this in 
working with Federal agencies is to make sure we try to get 
everybody into the loop, which is an enormous effort. Many 
times we will have one agency talk to us and give us some 
guidance, ask us to do something, only to find out that it may 
not be consistent with what another agency would like us to do.
    It is creating an enormous amount of difficulty just 
getting people to talk and work with each other.
    Chairman Collins. That is of great concern to me because it 
is people like you who have to implement a lot of these 
programs in cooperation with Customs and with other agencies. 
And it seems to me that we are still having problems with 
coordinating, providing accurate information, and providing 
access to timely information so that you can do your job.
    Captain Monroe. I think one of the most significant 
problems we face is just a lack of intelligence, and obviously, 
we have heard the stated concerns about how we often find out 
from CNN a lot faster than we do from our own Federal 
Government as to what level of security threat we are at. But I 
find that just getting the information around from our Federal 
agencies is oftentimes disjointed.
    If we did not have the aviation sector to rely on, we would 
not get the information as far as we do.
    Chairman Collins. Thank you.
    Mr. Hall, before I yield to Senator Coleman, I want to go 
back to the case study that you conducted with the container 
that was shipped containing light bulbs from Slovakia to New 
Hampshire, and I want to put up the picture of the 
container.\1\
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    \1\ The photographs referred to appear in the Appendix on page 48.
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    It is my understanding--well, we have only to look at it to 
see. You have the tracking device, the light sensors. This had 
antennae, wires coming out of that. Were you surprised that all 
of this equipment didn't prompt an inspection of this 
container?
    Mr. Hall. Clearly, we were, Madam Chairman. Let me just 
point out, the photograph on the right is actually a photograph 
of what is in behind the door which is in the photograph on the 
left.\1\ So if an inspector had been prompted to inspect the 
container because the inspector saw the antennae and the wire 
on the back end, that is what the inspector would have seen 
inside, I suspect prompting even more questions. They never got 
to look at those gizmos on the inside, which were really parts 
of the sensing equipment and transmitting equipment.
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    \1\ The photographs referred to appear in the Appendix on page 48.
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    Chairman Collins. Do you think that the antenna which was 
on the outside should have prompted an inspection? I mean, 
clearly, it sounds like the wires that I pointed to were 
concealed inside. But there is still unusual material on the 
outside of this container by the antenna. Do you think that 
should have prompted it?
    Mr. Hall. Absolutely, Madam Chairman. When we were 
reviewing the initial studies at an oral presentation from the 
Volpe Center right after the completion of the project, that 
fact alerted every law enforcement officer in the room, and we 
had representatives from Customs, Coast Guard, Marshals 
Service, and our offices. The antennae--our antennae went up, 
and we asked specifically that Volpe include that as one of the 
essentially unintended consequences of what they found out. We 
weren't expecting to see that at all as an issue.
    Chairman Collins. And it is my understanding this container 
went through several ports. Is that correct?
    Mr. Hall. That is correct. It crossed, I believe, four 
international boundaries in Europe, went into a seaport, came 
back into a seaport in Montreal, cleared there, came over the 
port of entry from Canada into the United States.
    Chairman Collins. Thank you. Senator Coleman.
    Senator Coleman. Thank you, Madam Chairman.
    I have to say what a fabulous hearing this is. Both the 
distinguished Chairman and myself in the course of these 
discussions about homeland security often ask the question, 
What is the impact on the local level? And, for instance, when 
Secretary Ridge was here, we raised the questions about 
communications and have continued to do that. So I think it is 
important to get the local perspective, the grass-roots 
perspective.
    Captain Monroe, a specific question to you, though. Are you 
involved in the joint terrorism task forces? Because when the 
FBI folks were here, we talked about what was going on at the 
local level. It appeared that from their perspective--and I was 
both a former prosecutor and a mayor, and so I have had 
opportunity to work with these groups. But it appeared that the 
kind of grass-roots basis for sharing of information, the 
framework was built around these joint terrorism task forces. 
Are you involved in those efforts?
    Captain Monroe. We are involved in, I can roughly estimate, 
no less than 24 committees right now that are currently looking 
at all of this, and there is an enormous amount of effort at 
the Federal, State, and local level, with people trying to look 
at security. Part of our reason and our concern is that all of 
these efforts need to be focused and brought together.
    Senator Coleman. It appeared to us that the singular focus, 
at least when we had the FBI and the CIA and others at these 
joint terrorism task forces, it is obvious that when you get 
back to the local level, that message has to be much clearer 
and much more focused and easier for all of us to understand.
    Commander Flynn, you talked about a test, and you indicated 
that it would take 100 cargoes and just kind of pull them out 
and just kind of see if there are any problems. What do you 
mean by problems? Assuming we were to try to have that test 
become a reality, what would folks be looking for?
    Mr. Flynn. Well, the real issue here is that a risk 
management approach is having confidence that you are, in fact, 
pulling out of the queue all that which deserves an inspection, 
that is not compliant with the rules of commerce, so, 
therefore, might pose a risk. The only way, it seems to me, 
that you can have real confidence with what is in place is to 
routinely demonstrate that what you are not missing things in 
the low risk pool.
    The O.S.C. story is in part that of showing there are risks 
even with the ultimate trusted shipper. Osram-Sylvania couldn't 
have been a better corporate citizen. It should be commended in 
the Rose Garden for their support in trying to help improve 
supply chain security. But Osram-Sylvania doesn't exercise much 
in the way of control over what happens to this box as it moves 
through the system, and things could happen along the way, as 
they will be the first to attest as a part of this process.
    So what we need to be able to do, if we are going to stand 
up and tell the American people that we are checking the right 
containers, we have got to be able to point to how we are 
refining and working on that model. So for me, I guess what I 
would like as a comparison where we would periodically pull out 
100 randomly. If you find that 5 or 10 of those are not 
compliant but only 3 of those would have hit your risk 
criteria, then you know you better go back and refine the 
criteria.
    What I am worried about is not subjecting to scrutiny a 
blanket statement that ``we are getting the right ones, don't 
anybody worry about it.''
    I think it also requires a focused oversight effort over 
how that algorithm, the rulemaking process is being evolved. 
What we know is that the system was set up for regulatory 
compliance. The automated targeting system Customs used was for 
regulatory compliance is built around cargo manifests. That is 
just not sufficient in the new security environment we are in, 
particularly when we only are going to inspect such a small 
percentage. So making that robust--there are efforts underway 
with the coordination with the Office of Naval Intelligence and 
with the Coast Guard and so forth to try to advance and improve 
this, but day-to-day inspectors sitting down there flipping 
through the manifests do not have access often to all the 
available data, and they are largely using an old system to 
make their targeting choices.
    Senator Coleman. You are really then raising two issues, as 
I understand it. One is the issue of is the system working, so 
we are saying we have got a system that is working, and you are 
saying we can measure that. But then I think you are raising a 
larger issue, and I am not sure how to address it, by the way, 
and that is the issue of confidence. It is not a matter of 
whether if it is working. If it is working, do people believe 
that it is working? Our whole system of criminal justice, the 
reason we are not out there in vigilante groups enforcing law 
ourselves, or the reason that we don't cower in our homes when 
a murder takes place in our neighborhood is because we have 
confidence that those responsible will deal with it, even if we 
don't deal with every case.
    And what I am hearing being said here, if we have one 
incident of some material being sent through our cargo system 
that causes loss of life, we are fearing a whole system shut 
down, even though in other places around the world where there 
are terrorist attacks, such as Israel, life goes on. What I am 
hearing is we are not prepared for that here, psychologically 
not prepared. We don't have the level of confidence in the 
system, and as a result, we face shutdown. If we face shutdown, 
the consequences are enormous.
    So I think we have to be giving some thought not just to--
this is why I asked about your test--not just finding out 
whether it is working, but then having some discussion of what 
are the things that we do to generate confidence that even if 
there is a problem, we don't shut everything down.
    Mr. Flynn. Yes, Senator. I guess the only thing I can point 
to as an example is aviation safety. In its earliest years, 
that is an industry that started with barnstormers. Only stunt 
people got on planes. What the industry had to do, turn around 
that image to make it commercially viable was to build safety 
into every aspect of the plane, and have a built-in as a 
response capability. That some kind of infrastructure now has 
to be built in the supply chain around in the face of the new 
security paradigm. And I think projects like Operation Safe 
Commerce are designed to pull all the right stakeholders 
together and to help build that system and build that 
confidence that there is a way to get to where we need to be.
    But, the resources are very limited, and we are not moving 
very fast. Operation Safe Commerce was a quarter-million-dollar 
investment. That is the total amount of money the U.S. 
Government has spent on doing a full supply chain analysis and 
testing whether these technologies even work.
    Senator Coleman. Very helpful. Thank you, Madam Chairman.
    Chairman Collins. Thank you very much, Senator.
    Captain Monroe, I want to get back to an issue that you 
touched on in your testimony, and that is, some people have 
suggested that all cargo go to the mega-ports and that the 
smaller ports be cut out of the process and that would somehow 
improve security.
    In addition to the devastating economic consequences of a 
decision like that on smaller ports, could you expand on your 
proposal that it actually might be better to do the opposite, 
to divert more cargo from the mega-ports to the smaller ports, 
which might have more time to do the kinds of inspections that 
we have been discussing today?
    Captain Monroe. Well, I will make it akin to an example in 
the aviation industry. Imagine if we had a problem and 
everybody decided to close all the small regional airports and 
put everybody through Logan Airport. The reality here is that 
the mega-ports have to deal with a much more significant volume 
of cargo, and that a lot of cargo does come into the United 
States right now and is immediately moved onto feeder services, 
whether it is barge or small ship. It moves up and down the 
coast. So a lot of it could not even have to go down through 
highway systems and whatever. That cargo could arrive in bond 
at the very small terminals, and then in turn, more of that 
cargo could be identified, inspected, and checked.
    Whether it is outbound or inbound doesn't make any 
difference, and there has been a maritime transportation system 
initiative before the Federal Government for a number of years 
now, and it has never really gone anywhere, primarily because 
when focusing on that, we still move our containers mostly by 
rail or by truck through the system, and people don't recognize 
the value of the Waterborne System.
    I think in many cases we are much more capable of looking 
at our boxes more effectively. We know, for example, that every 
container that comes off our feeder ship from Halifax, Nova 
Scotia, is looked at by a member of the International 
Longshoremen's Association, primarily for damage, and the 
reason being that if there are any damages on the container, 
there are claims that are made. And when doing so, it is easy 
to look at that and see things that are abnormal.
    Now, for example, this antenna system, this array that was 
put on the outside of this container, probably would have been 
something that was picked up. Even though we have seen those 
things before, there have been a number of tests made for 
tracking containers through GPS transponder technology. But at 
the end of the day, somebody would have said there is something 
abnormal there. And when you involve only the Federal agencies, 
because a lot of times we say, well, that is just Customs' job 
to do it, it isn't. It is everybody on the pier. It is every 
longshoremen, every terminal operator, every stevedore, every 
port official, and every Federal agency who is down there on 
the dock looking. We should all be looking for those things. 
And I think we have a better capability by spreading that out 
and not just rely on Federal officers.
    The other thing, too, if we do have an attack on our 
transportation system, we are able to get that system up and 
running faster. After September 11, they closed the Port of New 
York, and in doing so a lot of mega-cruise ships had to be 
diverted to other ports. Ports like Boston and Portland, Maine, 
were able to absorb that. We were able to adapt the system. And 
I think we have that capability there, but putting all our eggs 
in one basket is not the right thing to do.
    Chairman Collins. Mr. Flynn, what is your opinion on the 
proposal to concentrate cargo in the mega-ports?
    Mr. Flynn. Well, it is the tail wagging the dog. It is 
basically saying we have got a finite amount of inspection 
resources; therefore, we will reconfigure the entire global 
transportation system to conform to those available resources. 
I mean, this is madness.
    Yes, the non-intrusive inspection equipment is costly, $1 
million for the package deal to install one of these screeners. 
But they need to be put in feeder ports.
    A core issue I have learned from focusing on the border 
security issue over the last decade is that the more 
inefficient you make a system, the less police-able it becomes. 
If you impose an inspection regime that essentially causes a 
fragmented market response you ceate more in security. I point 
to Laredo, Texas, as a perfect example of this. The drayage, 
the small truck owned by Mom and Pop operations, this is where 
old trucks go where they die. You have an incredibly transient 
labor force, about 300-percent turnover. All that trucking 
sector services the fact that you don't take a long-haul truck 
and sit for 6 hours to go across the border and come back 
empty.
    So sometimes your security measure will create a more 
chaotic environment which will be more difficult to police. The 
corollary of that is the more efficient we make transportation 
systems, as long as there is sufficient oversight and can we 
have confidence in their integrity, you actually have a 
national security rationale to improve the bottlenecks.
    We should have been working on our ports for a long, long 
time. We are an island nation, effectively, when it comes to 
global trade.
    The kind of keystone cop Federal behavior at ports makes no 
economic sense, but it also creates shadows that bad guys can 
exploit. We have a security rationale to improve efficiency. So 
we should not even see this as a tradeoff. These are mutually 
reinforcing. A more efficient transportation system with the 
eyes and ears, the collective ones, applied to it is the kind 
of direction we need to go. And I would recommend that all this 
work being done on retooling at our transportation 
authorization acts must have this conversation going on in 
parallel.
    Chairman Collins. Mr. Flynn, I had one other question I 
want to get your answer to, and that is, the Customs system 
relies very heavily on the accuracy of the manifest in order to 
target containers for a physical inspection or a technological 
inspection.
    How accurate do you think manifests are? Do you have a 
concern in that area that leads you to propose the random 
review of certain containers?
    Mr. Flynn. Well, I think you do periodic random reviews 
because they are necessary to ensure--there is some deterrent 
value, and they are also necessary to constantly refine your 
model. But they are, in fact, limited scale. You are relying 
primarily on this risk management analog, this matrix to choose 
what it is that you are looking at.
    The manifest traditionally has been the weakest link in 
commercial documentation. Basically, the common phrase used by 
carriers is ``is said to contain,'' because there is no time 
for a master to actually know what is actually in this box. He 
is stating that whoever his client is told him that this was a 
shipment of this or that, and all he is saying is that is what 
I think I have.
    You are talking about ports like Hong Kong and Singapore 
that have 5,000 trucks a day entering into a terminal with 
cargo. There are 120 movements an hour going onto that ship by 
three gartry cranes. The idea that you are somehow filtering 
all this is at the brow of the ship is unrealistic.
    So the manifest issue remains a challenging one for builing 
a credible targeting system. The 24-hour rule is getting at 
that saying we need some specificity in the manifest beyond 
``freights of all kind.'' But there is a whole range of other 
commercial documentation in electronic form that any company 
must use to maintain their supply chain.
    The problem has been that, again, it is the tail wagging 
the dog. Customs has been built to basically look at cargo 
manifests; therefore, all the rest of the industry has been 
directed to adapt to that by giving information Customs needs 
to make its machinery work. Customs is not being malicious or 
draconian. It has an ancient system that hasn't been well 
financed. The automated commercial environment is still 3 years 
away from being deployed.
    Now, there are means--there are efforts and initiatives 
underway in the Federal Government. Again, the Office of Naval 
Intelligence has been brought in on this, the Coast Guard is 
working on this. The real effort, though, must be to drill down 
to that commercial data from the purchase order, ideally. When 
we first know that something is going to happen, that gives us 
the ability to detect the abnormal behavior, to have the 
confidence when we target something as a potential problem that 
it is likely to be a problem. And so moving beyond the 
manifest, I think, is going to be absolutely essential.
    Chairman Collins. Captain Monroe, do you have any comments 
on that and, also, in general your evaluation of the programs 
that Customs has put in place?
    Captain Monroe. Well, let me talk about the manifest. This 
is something that was intentionally done, and the reason it was 
intentionally done is for many years organized crime targeted 
containers. So the more information that they had available to 
them, the more that shippers and the carrier community and the 
stevedoring companies eventually got to the point where they 
realized that the more vague we are, the less our chance of 
having a container or our cargo stolen.
    The technology exists to have very accurate manifests, and 
there is no reason that Customs can't demand those manifests, 
particularly if the new automated Customs system for computer 
tracking is implemented. That information does not have to be 
made available to many folks who might be handling the cargo, 
but it certainly should be available to Customs, and it 
certainly should be available to the ports, because they at 
least will be able to measure what might be potentially 
dangerous to their community if those containers come through. 
And as I say, that is an easy fix.
    As far as Customs is concerned, I think they are certainly 
headed down the right path, and I have to agree with Dr. Flynn 
that we have grossly underestimated what it is going to take to 
make our ports secure and to make sure that we have the 
resources available. I think if you look at the nature of what 
the value of our marine transportation system and the amount of 
cargo we move through that system is, we are not really taking 
it as seriously as we did the aviation system. We know that 
cargo doesn't vote, and that is part of the problem.
    The reality here is that unless we pay good attention to 
this, the programs that Customs wants to implement and the 
timeline they want to implement those programs on are not going 
to be accomplished effectively. So that is essentially the 
first step in moving this in the right direction.
    I honestly believe that Customs is headed down the right 
path. I sincerely hope that in doing so, in their zeal to get 
this closed in, that they do engage the industry. One of the 
problems we faced early on was the arbitrary decision that was 
made to have all containers bypass Portland and be cleared in 
Boston, and then those containers be brought back to us by 
truck. A lot of us raised our concerns when that happened, and 
it got put aside. But things like that cannot arbitrarily 
happen. There has to be an interchange. The best solutions for 
how to deal with seaport security and container security often 
lie with those of us who deal with it every day.
    Chairman Collins. Well said, and a good note on which to 
conclude this hearing.
    Mr. O'Hanlon, I want to thank you for bringing up the needs 
of the Coast Guard. Coming from the State of Maine, I am very 
aware of how stretched the Coast Guard is, and I am very 
concerned that we not jeopardize the traditional mission of the 
Coast Guard, which is so important in a fishing State like 
Maine. And we are making progress. The budget is up 
considerably. But your point about the number of Coast Guard 
members is a very good one. Providing more assets, providing 
more cutters is a step in the right direction, but the 
personnel are still very stretched. So thank you for raising 
that point.
    I want to thank all of our witnesses today for excellent 
testimony and to thank you for the thought and the expertise 
that you bring to bear on this subject. I believe this is our 
single greatest vulnerability, and it is going to take the 
collective wisdom of all of us at all levels of government and 
in the private sector as well in order to come up with 
solutions. So I very much appreciate your taking the time to be 
with us today. Thank you for your excellent testimony.
    The hearing record will remain open for 15 days. This 
hearing is now adjourned.
    [Whereupon, at 11:54 a.m., the Committee was adjourned.]
                            A P P E N D I X

                              ----------                              


                PREPARED STATEMENT OF SENATOR LIEBERMAN
    Thank you, Madam Chairman, for holding this hearing today on a 
subject that should be of profound concern to anyone interested in 
safeguarding our nation from terrorist attack.
    The vulnerability of our ports--and in particular the vulnerability 
of containers--to terrorist mayhem is one of the more sobering pieces 
of information to emerge from an array of security assessments 
conducted over the past few years. It is a vulnerability that the 
Federal Government--in partnership with state and local governments and 
the private sector--must turn to in earnest, with a commitment of 
adequate resources, to protect not just people and property, but the 
very hear to of our economy.
    We have a panel of knowledgeable witnesses here today--some like 
Commander Steve Flynn and Michael O'Hanlon who have established 
themselves as premier experts on maritime security and from whom we 
have received valuable advice in the past. I'm sure their testimony 
will once again aid the government's efforts to prevent, prepare for, 
and respond in the event of a terrorist attack on our ports.
    Our ports and borders must be securely defended because they are 
our mail links to the global trade that has, without question, fueled 
our economic progress and provided all Americans with the highest 
quality of life in the world today.
    According to the second report on national security produced by 
former Senators Gary Hart and Warren Rudman, 11 million containers 
carry 90 percent of the world's cargo today. Yet, there are no required 
security standards governing the loading or transport of containers. In 
fact, the architects of the inter-modal transportation revolution never 
really took security into consideration. Their priorities were lowering 
costs, and increasing the speed and efficiency of operations. They 
achieved their goals brilliantly, which, ironically, now leaves us open 
to peril.
    In December 2001, shortly after the shock of September 11, this 
Committee held a hearing on port security. One of the witnesses, F. 
Amanda DeBusk, a former commissioner of the Interagency Commission on 
Crime and Security at U.S. Seaports, laid out the challengers in 
coordinating port security. Most ports, she told us, are chartered by 
states or local government. Some are operated by public port 
authorities, some by private concerns. There were at least 15 federal 
agencies with jurisdiction at the seaports, in addition to state and 
local agencies and the private sector. Today, we have the Department of 
Homeland Security to coordinate this tangle of authority. But I 
hesitate to proclaim victory.
    Each day, five million tons of goods cross our borders by ship, 
truck, or train. Much of it arrives in the 21,000 containers that enter 
U.S. ports daily. The Administration tells us that only 3.7 percent of 
those containers are physically inspected, which means that, at any 
given time, authorities still have very little idea about the contents 
of thousands of multi-ton containers traveling on trucks, trains, or 
barges, on roads, rails, and waterways throughout the country. The 
cunning with which a terrorist might smuggle chemical, biological or 
even, nuclear weapons into one of those containers, without being 
detected, knows no bounds. And it would be foolhardy to doubt that an 
interruption of the flow of commerce would have anything but 
catastrophic consequences for all of us.
    Hypothetical scenarios have hinted at the potential impact of an 
attack through maritime trade. Listen to how one incident is played out 
by a group of experts from government and industry. On day one, an 
unknown number of dirty bombs enter the country through ship 
containers. One is found at the port of Los Angeles. And that port is 
closed. On day four, another dirty bomb is found while a container is 
being unloaded near Minneapolis. All ports and border crossings are 
closed, paralyzing the entire supply chain.
    On day five, the Dow is down 500 points. On day eight, fuel 
deliveries stop, gas prices skyrocket, and supply chains report 
inventory shortages and plant closures. On the 20th day, a freight car 
in Chicago explodes and half of all Fortune 500 companies issue 
earnings warnings. The experts conclude that port, shipping, and 
manufacturing activity will not return to normal for two months, at 
which point economic losses are estimated at $58 billion.
    It's scary stuff. But we can prevent a scenario like I just 
described if Congress, the Bush Administration, and the private sector 
come to understand--before disaster occurs--the consequences of 
inattention, inaction, and under funding.
    The President's FY 2004 budget, regrettably, does not reflect an 
understanding of the risks at hand. As is the case in general with 
homeland security funding, the rhetoric simply is not matched by hard 
dollar commitments. One of the most glaring gaps--the physical security 
of our ports--is ignored by the Administration completely. The 
President's budget contains no money for even the most basic 
improvements--like perimeter fencing, security patrols, employee 
background checks--which the Coast Guard has estimated will cost $4.4 
billion. I believe $1.2 billion needs to be spent next year for these 
basic protections.
    The Administration has done a better job at inspecting high-risk 
cargo before it reaches our ports. Its Container Security Initiative, 
which we will hear more about from our witnesses today, stations 
Customs officers overseas to inspect containers before they begin their 
voyage to the U.S., though they will need technology on site to address 
the new task. Once again, however, the Administration is providing only 
a fraction of the money needed to ensure successs--$62 million for FY 
04. I have called for an additional $100 million to expand this program 
to track containers as close as possible to their point of origin.
    The Coast Guard has made a heroic effort--through Operation Noble 
Eagle and Enduring Freedom--to step up port supervision and still 
fulfill its other mission. But it has done so using antiquated 
equipment and limited resources. Before September 11, we were on track 
to modernize the Coast Guard over a period of 20 years, and the 
President has proposed spending $500 million in FY 2004 toward that 
effort. But that time frame and that level of funding is no longer 
practical. I have suggested an additional $700 million, for a total of 
$1.2 billion in FY 04, to complete the job in half the time.
    Finally, the Transportation Security Administration, which has 
concentrated so far on improving airline security, has virtually 
ignored the security of other transportation systems. Unfortunately, 
the Administration's proposed TSA budget of $4.8 billion is a 10 
percent decrease from last year's proposal. Only $85 million is 
requested for land security activities. I am urging an additional $500 
million to restore the Administration's proposed cuts and another $500 
million specifically for freight and passenger rail security 
improvements.
    No matter how you slice it, we need to make significant investments 
just to begin to bring our system of maritime trade security into the 
21st century. With the vast volume of merchandise passing through our 
ports and over our borders, we simply cannot inspect every container by 
hand. But we need to continue to work with the private sector and state 
and local authorities to use advanced technologies to make sure that 
all containers are scanned, coded, logged, and tracked with a 
transponder, and have their contents verified, starting as close as 
possible to their point of origin.
    The best way to protect, ourselves, of course, is to stop 
terrorists before they act. But we have learned the hard way that we 
must also prepare for the worst. In the case of port security, that 
means directing people, technology, and yes, money, toward the goal of 
keeping dangerous materials from entering and traveling around the 
country. We have much work to do to get our entire system of importing 
and exporting to a point where it is not just efficient but physically 
and economically safe. I am hopeful that the testimony we hear today 
will put us on track toward a sensible an sound strategy to do just 
that.
                               __________
                  PREPARED STATEMENT OF SENATOR CARPER
    Thank you, Madam Chair.
    I'm pleased today that the committee is holding a hearing on cargo 
container security, an issue of great importance to my state.
    The Port of Wilmington in Delaware is the 20th busiest port in the 
country for container traffic. It is also the largest importer of food 
in North America, leading the way in shipments of fresh fruit, meat and 
juice concentrate.
    In the months following September 11, 2001, the federal government 
moved swiftly to upgrade the security of our aviation system. We've 
spent billions of dollars hiring an army of baggage screeners and other 
security personnel and putting them to work at airports across the 
country. I applaud the Transportation Security Administration for 
meeting the tough deadlines Congress set for them in the Aviation and 
Transportation Security Act. Today, a passenger getting on a plane at 
any airport in the country is screened by a federal employee and has 
every piece of their baggage checked for explosives and other dangerous 
items.
    The federal government has taken smaller steps in the area of port 
security. Programs like the Cargo Security Initiative and Operation 
Safe Commerce are promising, but only a fraction of the containers that 
enter U.S. ports each year are inspected by Customs agents. Inspecting 
every ship and every container is impossible but I'd like to hear from 
Secretary Hutchinson about what percentage of cargo Customs can 
reasonably be expected to inspect I'd also like to hear how effective 
the pre-screening that is taking place under CSI has been and whether 
programs such as the Customs-Trade Partnership Against Terrorism that 
depend on businesses policing their own supply chain can really be a 
substitute for more inspections.
    In talking about port security, however, we should not forget that 
the cargo that comes off of ships at our ports does not stay there. 
Some of it goes onto trucks that drive through our cities and 
neighborhoods. Some of it also goes onto trains. Unfortunately, the 
federal government has done very little to improve security in surface 
transportation.
    The Transportation Security Administration was tasked after 
September 11 with securing our entire transportation infrastructure, 
from aviation to ports to rail. Despite the progress the agency has 
made in aviation, however, only a fraction of its budget is dedicated 
to other modes. Of the $18 billion included in the president's FY04 
budget for the Department of Homeland Security's Directorate for Border 
and Transportation Security, of which TSA is now a part, nothing at all 
is set aside for rail security.
    Last Congress, when this Committee, under Senator Lieberman's 
leadership, reported out a bill to creating the Department of Homeland 
Security, it included an amendment I authored authorizing $1.2 billion 
in new rail security efforts. This amendment was stripped from the 
final bill, however, and subsequent efforts to pass a similar rail 
security package with my colleagues Senators McCain and Hollings were 
blocked. The 107th Congress came to a close without taking any 
meaningful steps to improve the security of our nation's railroads or 
to protect the millions of Americans who travel by rail every day.
    For all of our commendable focus and attention on preventing future 
attacks against the aviation industry, it is unconscionable that we are 
unable to ensure that the roughly 25 million intercity passengers and 
many millions more that commute aboard our trains are as safe as the 
ones in our skies.
    To address this grave omission, Senator Hollings reintroduced his 
National Defense Rail Act this Congress. It provides funding for the 
Secretary of Homeland Security to conduct an assessment of rail 
security threats and to come up with steps railroads can take to 
protect rail infrastructure, stations, and facilities. The bill would 
authorize for the $515 million to undertake the assessments, addressing 
rail security threats or awarding grants to passenger and freight 
railroads to implement the Secretary's recommendations.
    I hope that Undersecretary Hutchison can comment on this issue 
today and discuss how the Department plans to address of rail security.
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