[Senate Hearing 109-282]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 109-282
 
                             PORT SECURITY

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

                                HEARING

                               before the

                         COMMITTEE ON COMMERCE,
                      SCIENCE, AND TRANSPORTATION
                          UNITED STATES SENATE

                       ONE HUNDRED NINTH CONGRESS

                             FIRST SESSION

                               __________

                              MAY 17, 2005

                               __________

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



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       SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION

                       ONE HUNDRED NINTH CONGRESS

                             FIRST SESSION

                     TED STEVENS, Alaska, Chairman
JOHN McCAIN, Arizona                 DANIEL K. INOUYE, Hawaii, Co-
CONRAD BURNS, Montana                    Chairman
TRENT LOTT, Mississippi              JOHN D. ROCKEFELLER IV, West 
KAY BAILEY HUTCHISON, Texas              Virginia
OLYMPIA J. SNOWE, Maine              JOHN F. KERRY, Massachusetts
GORDON H. SMITH, Oregon              BYRON L. DORGAN, North Dakota
JOHN ENSIGN, Nevada                  BARBARA BOXER, California
GEORGE ALLEN, Virginia               BILL NELSON, Florida
JOHN E. SUNUNU, New Hampshire        MARIA CANTWELL, Washington
JIM DeMint, South Carolina           FRANK R. LAUTENBERG, New Jersey
DAVID VITTER, Louisiana              E. BENJAMIN NELSON, Nebraska
                                     MARK PRYOR, Arkansas
             Lisa J. Sutherland, Republican Staff Director
        Christine Drager Kurth, Republican Deputy Staff Director
                David Russell, Republican Chief Counsel
   Margaret L. Cummisky, Democratic Staff Director and Chief Counsel
   Samuel E. Whitehorn, Democratic Deputy Staff Director and General 
                                Counsel
             Lila Harper Helms, Democratic Policy Director


                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on May 17, 2005.....................................     1
Statement of Senator Inouye......................................     1
    Prepared statement...........................................    56
Statement of Senator Lautenberg..................................    53
    Prepared statement...........................................    53
Statement of Senator Bill Nelson.................................    76
Statement of Senator Rockefeller.................................    50
Statement of Senator Stevens.....................................     1
    Prepared statement...........................................    56
Statement of Senator Vitter......................................    75

                               Witnesses

Godwin, Jean, Executive Vice President/General Counsel, American 
  Association of Port Authorities................................    57
    Prepared statement...........................................    58
Hereth, Rear Admiral Larry, U.S. Coast Guard.....................    13
    Prepared statement...........................................    14
Jacksta, Robert, Executive Director, Border Security and 
  Facilitation, U.S. Customs and Border Protection...............     8
    Prepared statement...........................................    10
Koch, Christopher L., President/CEO, World Shipping Council......    60
    Prepared statement...........................................    62
Ruppersberger, Hon. C.A. ``Dutch'', U.S. Representative from 
  Maryland.......................................................     2
    Prepared statement...........................................     5
Skinner, Richard L., Acting Inspector General, Department of 
  Homeland Security..............................................    18
    Prepared statement...........................................    20
Wrightson, Margaret T., Director, Homeland Security and Justice 
  Issues, U.S. Government Accountability Office..................    24
    Prepared statement...........................................    26

                                Appendix

Collins, Thomas H., Admiral, U.S. Coast Guard, letter, dated 
  February 25, 2005, to Hon. Harold Rogers, Chairman, 
  Subcommittee on Homeland Security, Appropriations Committee....    94
Koch, Christopher L., letter, dated June 14, 2005, to Hon. Ted 
  Stevens........................................................    79
Response to Written Questions Submitted to Jean Godwin by:
    Hon. Daniel K. Inouye........................................    81
    Hon. Frank R. Lautenberg.....................................    81
Response to Written Questions Submitted to Rear Admiral Larry 
  Hereth by:
    Hon. Maria Cantwell..........................................    85
    Hon. Daniel K. Inouye........................................    91
Response to Written Questions Submitted to Robert Jacksta by:
    Hon. Daniel K. Inouye........................................    92
    Hon. Bill Nelson.............................................    82
Response to Written Questions Submitted to Richard L. Skinner by:
    Hon. Daniel K. Inouye........................................    80
    Hon. Frank R. Lautenberg.....................................    81
Response to Written Questions Submitted by Hon. Daniel K. Inouye 
  to 
  Margaret Wrightson.............................................    82


                             PORT SECURITY

                              ----------                              


                         TUESDAY, MAY 17, 2005

                                       U.S. Senate,
        Committee on Commerce, Science, and Transportation,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 10 a.m. in room 
SR-253, Russell Senate Office Building, Hon. Ted Stevens, 
Chairman of the Committee, presiding.

            OPENING STATEMENT OF HON. TED STEVENS, 
                    U.S. SENATOR FROM ALASKA

    The Chairman. Let me open by saying this hearing was at the 
suggestion of Senator Inouye, and we're trying to find ways to 
improve security and all modes of transportation. I'm pleased 
to have an opportunity to review these issues.
    Just a week ago, I spent the major part of the day at the 
Los Angeles Port, which has grown so large that it's hard to 
realize. Their terminals are out in San Bernardino for the sort 
of freight that's coming off of vessels, and they're building 
three railroads to move that freight to those terminals, 
because of lack of space right in the area of the port itself, 
so that means that the security in that port is about 100 miles 
wide. We have an enormous problem with security.
    I welcome the interest of my great friend from Hawaii. 
Senator Inouye?

              STATEMENT OF HON. DANIEL K. INOUYE, 
                    U.S. SENATOR FROM HAWAII

    Senator Inouye. Mr. Chairman, I thank you very much. I have 
a statement here, but I'm just concerned that, when we speak of 
security, I think the average American thinks of airports. They 
don't realize that we spend less than 10 percent for ports; 20 
percent of the global trade is maritime, and, of that amount, 
we have about 4 percent; but, whatever it is, our ports are 
always filled, and yet I don't think that our security there is 
sufficient, just like our borders.
    But I'd like to know what we should be doing. The Coast 
Guard is overwhelmed. They're doing a great job. All of the new 
security agencies are trying their best, but their best may not 
be sufficient, so we're here to listen, believe me, sir.
    The Chairman. Let me say that we have a series of votes 
that are going to start, so we do hope that the witnesses will 
recognize that timeframe and limit their statements so that we 
can go through the list. We have a list of six people who are 
going to testify between now and 11:10, so may I urge the 
witnesses--all the statements will be put in the record in 
full; if we're going to have a chance to ask questions and to 
get your responses to our questions, we'll have to limit the 
statements.
    Mr. Ruppersberger?

        STATEMENT OF HON. C.A. ``DUTCH'' RUPPERSBERGER, 
               U.S. REPRESENTATIVE FROM MARYLAND

    Mr. Ruppersberger. Yes, OK. Well, thank you, Chairman 
Stevens, Co-Chairman Inouye, Members of the Committee, Senator 
Rockefeller, Senator Lautenberg.
    I'm honored to be here today to participate in this 
critical discussion. And with your consent, Mr. Chairman, I 
have prepared a summary of my complete testimony to read into 
the record today, and I would ask that my entire testimony be 
submitted into the record, as well.
    The Chairman. All of the statements that have been 
submitted will be in the record, as well.
    Mr. Ruppersberger. Thank you.
    Now, Mr. Chairman and Members of the Committee, my main 
point to you today is that America's first-responders should 
not be Congress's second thought. Whether you call it port or 
maritime security, each of us understands three very 
fundamental principles:
    Number one, securing our Nation's more than 359 sea, river, 
and land ports is a broad, varied, and complex goal.
    Number two, it is simply not possible, nor do I believe it 
is practical, to protect all of our ports against every 
possible threat. The reality of limited resources and over 
95,000 miles of coastline means we must focus on good 
intelligence for credible threat information and prioritize our 
spending accordingly.
    Number three, our ports are absolutely critical to our 
Nation's economic security. In the world of just-in-time 
commerce and the global marketplace, our ports are attractive 
to terrorists to either import weapons for destruction or to 
shut down the global supply chain and cripple our economy. 
Either possibility makes port security a high priority for this 
Congress.
    The best example of this was in the fall of 2002, when the 
shippers and dockers went on strike at the West Coast ports. 
That cost our United States economy $1 billion a day.
    Port security is broad and a complex issue, largely due to 
the reality that ports are sprawling commercial hubs, usually 
centrally located in geographically diverse areas. Our working 
ports stretch across coastlines, riverways, and harbors, moving 
agricultural, mineral, petroleum, and paper products to connect 
with highways and railways for transport. Tons of goods are 
imported and exported through our ports every day in bulk in 
containers as well as roll-on/roll-off vehicles. Our ports are 
also home to some of our most beloved recreational activities, 
such as boating, fishing, and cruises, all of which contribute 
to our economy and our every way of life.
    With so many distinguished experts in port security 
following me on the other panels, I would like to focus my 
discussion today on one key piece of the security puzzle: the 
issue of security clearances, both in the general national-
security sense and within the specifics of the port-security 
realm.
    From my many roles in the local government as a county 
executive during and after the aftermath of 9/11 as a former 
prosecutor, to my current roles at the federal level, as a 
Member of the House Permanent Select Intelligence Committee, as 
Co-Chair of the Congressional Port Security Caucus, and as the 
Congressional Representative to both the Port of Baltimore and 
NSA, National Security Agency, I believe a modernized, working, 
security-clearance system is vital to defending our homeland, 
including our ports.
    The Federal Government needs to take further action to 
ensure that the ability to share information is neither 
obstructed by a lack of clearance nor by bottlenecks that 
persist today. Our current security-clearance system is not 
working. The problem is not just jeopardizing our port 
security, it is also jeopardizing our national security. Many 
of the state, local, and business interests, and even some 
federal officials, do not have the information they need to 
keep our country safe because they don't have the proper 
security clearances. The problems stem from basic situations, 
where workers don't know how to fill out an application, to the 
more complicated, where one department is not sharing 
information with another. We're still using a security-
clearance system set up to fight the Cold War, even though the 
Iron Curtain fell years ago and we are now fighting the war on 
terror. The process is fragmented, confusing, cumbersome, and 
long.
    There are approximately three million individuals at the 
federal, state and local, and private-sector levels with some 
level of security clearance. It is estimated that 480,000 
clearances are stuck in some sort of a backlog. The average 
security clearance takes over 1 year to complete. If there is 
any sort of problem along the way, it can take months, or even 
years, longer. There are inconsistencies within investigations, 
polygraph analysis, levels of security, and criteria 
considerations.
    In the 108th Congress, Congressman Waxman, former 
Congressman Bell, and I asked GAO to look at two critical 
questions regarding port security specifically, and homeland 
security in general. The report is being released today.
    First, we asked them to look at the issue of information 
sharing within the port-security domain, and investigate how it 
is working. Second, we asked them to look at port security as 
it relates to businesses that are connected to the port, and 
how funding is prioritized. Specifically, we asked them to 
investigate the risk-management approach being employed by the 
Department of Homeland Security in funding and grant decisions.
    The GAO report is entitled ``Maritime Security: New 
Structures Have Improved Information Sharing, but Security 
Clearance Processing Requires Further Attention.'' It is the 
first report GAO is delivering on that request. We asked GAO to 
review the processes set in place to improve information 
sharing within maritime security following in our post-9/11 
world with the passage of the Homeland Security Act of 2002 and 
the Maritime Transportation Security Act of 2002.
    The Coast Guard has an awesome task of protecting our 
waterways and securing our Nation's ports. For over 200 years, 
the Coast Guard has patrolled and protected our coastlines, 
which totals today over 95,000 miles. The Coast Guard is doing 
a good job based on their massive jurisdiction and the funding 
it has received, but more needs to be done.
    After the passage of the MTSA, the Coast Guard reorganized. 
Each of the country's 359 ports created Area Maritime Security 
Committees and Interagency Operational Centers to coordinate 
multiple local, state, and federal agencies, along with 
private-sector shareholders. This is a good thing. This is 
about sharing information with local, state, and the private 
sector. The goal is to facilitate the meaningful necessity of 
information sharing which is so important to protect our ports. 
Each committee designated one member, who is expected to have 
the proper clearance to be able to analyze classified 
intelligence information, one member of the 359 ports.
    The GAO report found that only 28 of the 359 members had 
submitted the proper paperwork to get a security clearance. 
That means less than 10 percent of our Nation's ports have 
access to critical information to keep us safe. Even if all of 
the remaining 331 members applied for clearance today, it would 
take at least 1 year to get them cleared. Al Qaeda is not going 
to wait until workers get clearance to attack our country and 
our way of life.
    We've identified the problem. Now let's address one of the 
many solutions. These solutions could not be achieved 
overnight, but they are some initial steps that will start a 
long journey to fix this problem.
    To start, and as a result of the hard work GAO is reporting 
today, I have introduced a bipartisan amendment with Chairman 
Tom Davis of Virginia, to the Homeland Security authorization 
bill expected on the House floor this week. Mr. Chairman, I 
have brought a copy of that amendment, submitted to the House 
Rules Committee today, and I would ask that it be inserted into 
the record, as well.
    [The information referred to follows:]

Amendment to H.R. 1817 Offered by Mr. Ruppersberger of Maryland and Mr. 
                         Tom Davis of Virginia

    At the end of title V, insert the following new section:

SEC.___.IMPROVING THE SECURITY CLEARANCE PROCESS FOR STATE AND LOCAL 
            FIRST RESPONDERS.

    (a) Establishment of Assistance for Security Clearance Desk.--
Section 3001 of the Intelligence Reform and Terrorism Prevention Act of 
2004 (Public Law 108-458; 50 U.S.C. 435b) is amended by redesignating 
subsection (i) as subsection (j) and by inserting after subsection (h) 
the following new subsection (i):

        ``(i) Establishment of Assistance for Security Clearance 
Desk.--

            ``(1) Not later than 90 days after the selection of an 
agency pursuant to subsection (c), the head of the entity selected 
pursuant to subsection (b) shall, in consultation with the Department 
of Homeland Security Office for State and Local Government 
Coordination, direct the establishment, within any federal department, 
agency, or entity, of an Assistance for Security Clearance Desk (in 
this subsection referred to as the `ASC Desk') to assist State and 
local personnel referred by any federal departments, agencies, or other 
entities for the purpose of obtaining personnel security clearances.

            ``(2) The ASC Desk shall provide information, assistance, 
and guidance on the processes by which State and local personnel apply 
for personnel security clearances; initiate and process personnel 
security investigations and periodic reinvestigations; have personnel 
security clearances adjudicated; and access information related to the 
database established and maintained pursuant to subsection (e).

            ``(3) The ASC Desk shall publish the information, 
assistance, and guidance required under this section on a Government-
maintained website, shall present such information, assistance, and 
guidance in a format that is easily accessible to State and local 
personnel, and shall operate a live, in-person, toll-free telephone 
service to answer questions about the information, assistance, and 
guidance provided.''.

    (b) Incorporation of State and Local First Responders Into Federal 
Security Clearance Processes.--Section 3001 of the Intelligence Reform 
and Terrorism Prevention Act of 2004 (Public Law 108-458; 50 U.S.C. 
435b) is amended--

            (1) in subsection (a)(6), by inserting ``, and any State 
and local personnel,'' before ``to access classified information'';

            (2) by adding at the end of subsection (a) the following 
new paragraph:

            ``(9) The term `State and local personnel' has the meaning 
provided in subsection 892(f)(3) of the Homeland Security Act of 2002 
(6 U.S.C. 482(f)(3)).'';

            (3) in subsection (c)(1)--

                (A) by adding ``, as well as State and local 
personnel,'' before ``who require access to classified information''; 
and

                (B) by striking ``security clearances of such employees 
and contractor personnel'' and inserting ``such security clearances''; 
and

            (4) in subsection (e), by inserting ``, and State and local 
personnel,'' after ``or government contractor personnel''.

    Mr. Ruppersberger. This amendment creates a Help Desk, 
called the ASC Desk, which stands for the Assistance to 
Security Clearance Desk. This Help Desk is for state and local 
individuals applying for security clearances. It will guide 
individuals through the application, investigation, and 
adjudication process. While agencies still retain the power and 
authority they have under current law, the ASC Desk will help 
our first-responders on the front lines having so much trouble 
getting through our complicated security-clearance process. 
This security-clearance issue is a problem not only facing the 
maritime industry, but also facing many federal agencies. All 
will benefit from this solution.
    It is also important that Ambassador Negroponte, the new 
Director of National Intelligence, and his office have the same 
tools to keep our families and communities safe. Terrorists do 
not care if we are Republicans or Democrats when they target 
us, so we, as Members of Congress, must work together to solve 
this problem. It is our responsibility to oversee these changes 
and to ensure that we fix this problem to protect our country 
from a terrorist attack.
    I appreciate the opportunity to appear before you today.
    [The prepared statement of Mr. Ruppersberger follows:]

       Prepared Statement of Hon. C.A. ``Dutch'' Ruppersberger, 
                   U.S. Representative from Maryland

    Thank you Chairman Stevens, Co-Chairman Inouye and Members of the 
Committee. I am honored to appear before you today to participate in 
this critical discussion. With your consent Mr. Chairman, I have 
prepared a summary of my complete testimony to read into the record 
today and I would ask that my entire testimony be submitted into the 
record as well.
    Mr. Chairman and Members of the Committee, my main point to you 
today is that America's first responders should not be Congress's 2nd 
thought.
    Whether you call it port or maritime security, each of us 
understands 3 very fundamental principles:

        1. Securing our Nation's more than 360 sea, river and land 
        ports is a broad, varied and complex goal.

        2. It is simply not possible nor do I believe it is practical 
        to protect all of our ports against every possible threat. The 
        reality of limited resources and over 95,000 miles of coastline 
        means we must focus on good intelligence for credible threat 
        information and prioritize our spending accordingly.

        3. Our ports are absolutely critical to our Nation's economic 
        security--in the world of ``just in time'' commerce and the 
        global marketplace--our ports are attractive to terrorists to 
        either import weapons for destruction or to shut down the 
        global supply chain and cripple our economy. Either possibility 
        makes port security a high priority for this Congress.

    Port security is broad and a complex issue largely due to the 
reality that ports are sprawling commercial hubs usually centrally 
located in geographically diverse areas. Our working ports stretch 
across coastlines, river ways and harbors moving agricultural, mineral, 
petroleum, and paper products to connect with highways and railways for 
transport. Tons of goods are imported and exported through our ports 
every day in bulk and containers as well as roll-on/roll-off vehicles. 
Our ports are also home to some of our most beloved recreational 
activities such as boating, fishing, and cruises--all of which 
contribute to our economy and our very way of life.
    With so many distinguished experts in port security following me on 
your other panels, I would like to focus my discussion today on one key 
piece of the security puzzle--the issue of security clearances both in 
the general national security sense and within the specifics of the 
port security realm.
    From my many roles in local government (as a County Executive 
during and in the aftermath of 9/11, as a former prosecutor) to my 
current roles at the federal level (as a Member of the House Permanent 
Select Committee on Intelligence, as Co-Chair of the Congressional Port 
Security Caucus, and as the congressional representative to both the 
Port of Baltimore and NSA), I believe a modernized working security 
clearance system is vital to defending our homeland, including our 
ports.
    The Federal Government needs to take further action to insure that 
the ability to share information is neither obstructed by a lack of 
clearance nor by ``bottlenecks'' that persist today. Our current 
security clearance system is not working. This problem is not just 
jeopardizing our port security. It is also jeopardizing our national 
security. Many of the state, local, and business interests and even 
some federal officials do not have the information they need to keep 
our country safe because they don't have the proper security 
clearances.
    The problems stem from basic situations where workers don't know 
how to fill out an application . . . to the more complicated where one 
department is not sharing information with another. We are still using 
a security clearance system set up to fight the Cold War even though 
the Iron Curtain fell years ago and we are now fighting the War on 
Terror. The process is fragmented, confusing, cumbersome, and long.
    There are approximately 3 million individuals at the federal, 
state, local and private sector levels with some level of a security 
clearance. It is estimated that 480,000 clearances are stuck in some 
sort of a backlog. The average security clearance takes over one year 
to complete. If there is any sort of a problem along the way, it can 
take months or even years longer. There are inconsistencies within 
investigations, polygraph analyses, levels of scrutiny, and criteria 
considerations.
    In the 108th Congress, Congressman Waxman, former Congressman Bell 
and I asked GAO to look at two critical questions regarding port 
security specifically and homeland security in general. The report is 
being released today. First, we asked them to look at the issue of 
information sharing within the port security domain and investigate how 
it is working. Second, we asked them to look at port security as it 
relates to businesses that are connected to the port and how funding is 
prioritized. Specifically, we asked them to investigate the risk 
management approach being employed by the Department of Homeland 
Security in funding and grant decisions. The GAO report entitled 
``Maritime Security: New Structures Have Improved Information Sharing, 
but Security Clearance Processing Requires Further Attention'' (GAO-05-
394) is the first report GAO is delivering on that request. We asked 
GAO to review the processes set in place to improve information sharing 
within maritime security following in our post-9/11 world with the 
passage of the Homeland Security Act of 2002 and the Maritime 
Transportation Security Act (MTSA) of 2002.
    The Coast Guard has an awesome task of protecting our waterways and 
securing our Nation's ports. For over two hundred years, the Coast 
Guard has patrolled and protected our coast lines--which today totals 
over 95,000 miles. The Coast Guard is doing a good job based on their 
massive jurisdiction and the funding it has received but more needs to 
be done.
    After the passage of MTSA, the Coast Guard reorganized and created 
359 Area Maritime Security Committees and Interagency Operational 
Centers in ports across the country to coordinate multiple local, state 
and federal agencies along with private sector stakeholders. The goal 
is to facilitate the meaningful necessity of information sharing to 
protect our ports. Each committee designated one member who is expected 
to have the proper clearance to be able to analyze classified 
intelligence information.
    The GAO report found that only 28 of the 359 members had submitted 
the proper paperwork to get a security clearance. That means less than 
8 percent of our Nation's ports have access to critical information to 
keep us safe. Even if all of the remaining 331 members applied for 
clearance today, it would take a least a year for them to get cleared. 
Al Qaeda is not going to wait until workers get clearance to attack our 
country and our way of life.
    We've identified the problem. Now let's address one of the many 
solutions. These solutions can not be achieved overnight but there are 
some initial steps that will start a long journey to fix this problem. 
To start and as a result of the hard work GAO is reporting today, I 
have introduced a bipartisan amendment with Chairman Tom Davis of 
Virginia to the Homeland Security Authorization bill expected on the 
House floor this week. Mr. Chairman, I have brought a copy of that 
amendment submitted to the House Rules Committee today and I would ask 
that it be inserted into the record as well.
    This amendment creates a help desk called the ASK Desk, which 
stands for the Assistance to Security Clearance Desk. This help desk is 
for state and local individuals applying for security clearances. It 
will guide individuals through the application, investigation and 
adjudication processes. While agencies will still retain the power and 
authority they have under current law, the ASK Desk will help our first 
responders on the front lines having so much trouble getting through 
our complicated security clearance process.
    This security clearance issue is a problem not only facing the 
Maritime Industry but also facing many federal agencies. All will 
benefit from this solution. It is also important that Ambassador 
Negroponte, the new Director of National Intelligence, and his office 
have the same tools to keep our families and communities safe.
    Terrorists do not care if we are Republicans or Democrats when they 
target us so we as Members of Congress must work together to solve this 
problem. It is our responsibility to oversee these changes and ensure 
that we fix this problem to protect our country from a terrorist 
attack.
    I appreciate the opportunity to appear before you today.

    Senator Inouye. Congressman, did you say that the average 
time span required for security investigation is over 1 year?
    Mr. Ruppersberger. Over 1 year. That's the information that 
we have.
    Senator Inouye. And that we----
    Mr. Ruppersberger. And sometimes even longer.
    Senator Inouye.--that we have over 480,000 waiting?
    Mr. Ruppersberger. That's an estimate, but that's--about 
480,000. Complaints from all aspects. You know, one of the key 
elements in fighting terrorism is good intelligence, and it's 
also the relationship between our intelligence agencies and our 
private sector, some of the larger and smaller corporations. 
And wherever we go--and I think Senator Rockefeller would 
confirm this, and he's a Member of the Senate Intelligence 
Committee--that it's constant complaints about how they can't 
get the clearance, it just takes so long. It's an antiquated 
process, and, until we fix that process----
    My staff just handed me some information--450,000 backlog, 
850,000 waiting. So that's a serious process, not only with 
respect to our ports, but for the safety of our country. I 
mean, that's why we have a new Director of Intelligence. And 
hopefully that will be one of Ambassador Negroponte's high 
priorities.
    Senator Inouye. And did you say that only 10 percent of our 
ports have personnel who have been cleared to----
    Mr. Ruppersberger. Well, no, what you have is, the Coast 
Guard, who has an awesome responsibility, and they have put 
together what they call Maritime Security Committees in each 
one of their ports. And these committees are really the local, 
and state governments, and people involved working within the 
port. And that's almost like a strike-force concept. The main 
focus for the Coast Guard is information sharing. And what 
happens is that, with respect to information that the Coast 
Guard has, if it's classified, they have this information that 
could help protect the ports, but if the members on that 
committee, especially a designated member, do not have their 
clearances, they cannot share that information unless the 
clearances are there. That has to be fixed. Information sharing 
is one of the most important aspects of intelligence.
    Ten percent of Coast Guard identified committee 
stakeholders, that's all that has been cleared. And then, when 
they start the clearance process today, if we would go with the 
way it's working now, it would take 1 year. As I said in my 
testimony, Al Qaeda is not going to wait for us to get cleared.
    Senator Inouye. Thank you.
    The Chairman. Thank you.
    Any questions?
    Thank you very much.
    Mr. Ruppersberger. Thank you.
    The Chairman. The first panel is Robert Jacksta, Executive 
Director of Border Security and Facilitation, in Customs; Larry 
Hereth, Rear Admiral in the Coast Guard; and Mr. Skinner, 
Acting Inspector General of the Office--in Homeland Security; 
and Margaret Wrightson, Director, Homeland Security and Justice 
Issues, GAO.
    Let us proceed in the order in which I've announced them. 
And we'll have--I think if you'd wait until the time the GAO 
witness is before us before you put up those panels, it'll be 
better.
    Senator Rockefeller. You can't read them, anyway.
    The Chairman. Mr. Jacksta, then Mr.--then Admiral Hereth, 
then Mr. Skinner, then Ms. Wrightson. Let's have your 
statements, and then we'll ask questions.

    STATEMENT OF ROBERT JACKSTA, EXECUTIVE DIRECTOR, BORDER 
 SECURITY AND FACILITATION, U.S. CUSTOMS AND BORDER PROTECTION

    Mr. Jacksta. Good morning, Mr. Chairman, Senator Inouye, 
and distinguished Members of the Committee.
    Thank you for this opportunity to update the Committee on 
U.S. Customs and Border Protection, CBP, efforts to strengthen 
maritime security.
    CBP, as the guardian of the Nation's borders, safeguards 
the homeland foremost by protecting the American public against 
terrorism and instruments of terror. Today, trained CBP 
officers, technology, automation, electronic information, and 
partnerships with trade and foreign governments are concepts 
that underpin CBP's port security and antiterrorism 
initiatives. These concepts extend our zone of security outward 
and reinforce the components of our layered defense strategy.
    My remarks today will focus on progress related to the 
Customs Trade Partnership Against Terrorism, C-TPAT, the 
Container Security Initiative, CSI, our non-intrusive 
inspection technology, and implementation of the Maritime 
Transportation Security Act.
    As the Customs Trade Partnership Against Terrorism has 
evolved, we have steadily added to the rigor of the program. In 
order to join C-TPAT, a participant must commit to increasing 
its supply chain security to meet minimal supply-chain-security 
criteria. Perhaps most importantly, participants also make a 
commitment to work with their business partners and customers 
throughout their supply chain to ensure that those businesses 
also increase their supply-chain-security. Moreover, CBP has 
worked towards addressing a number of areas, as recommended by 
GAO. Today, CBP validation is based on risk, using a 
quantitative risk-assessment tool to identify certified members 
with high-risk supply chains.
    In addition, CBP has published a C-TPAT strategic plan 
clearly articulating program goals and strategies. CBP has also 
completed a C-TPAT human-capital plan, which addresses 
recruitment, training, and workload issues.
    Finally, steps have been taken to automate key processes 
and implement the records-management system to document key 
decisions and operational events, including decisions made 
through the validation process and tracking member status. 
Within 3 years, our experience has grown greatly with the C-
TPAT program, and we continue to work very diligently to ensure 
member compliance.
    To meet our priority mission of preventing terrorism and 
terrorist weapons from entering the United States, CBP has also 
partnered with other countries on our Container Security 
Initiative. Almost 26,000 seagoing containers arrive and are 
offloaded at United States seaports daily. In Fiscal Year 2004, 
that equated to 9.6 million containers. Under CSI, we are 
partnering with our foreign governments to identify and inspect 
high-risk cargo at foreign ports before they are shipped to our 
seaports and pose a threat to the United States. Today, CSI is 
operational in 36 foreign ports.
    In January 2004, CBP partnered with four C-TPAT importers 
to incorporate a container-security device into the container 
sealing-device process. This enhances container security. The 
initial phase of this initiative was designed to evaluate 
logistical and operational aspects, evaluate the technology 
being utilized, and collect and analyze technology-related 
data.
    Currently, CBP is conducting a second phase of activities 
in cooperation with the C-TPAT members. This expansion utilizes 
an enhanced version of the container-security device evaluated 
during previous activities and will incorporate additional 
sensing capabilities. The second-phase test will incorporate 16 
different trade lanes, touching three continents, and seven CSI 
ports.
    Non-intrusive technology is another cornerstone in our 
layered approach. Technologies deployed to our Nation's ports 
of entries include large-scale X-ray and gamma-imaging systems, 
as well as a variety of portable and handheld technologies, to 
include our recent focus on radiation-detection equipment. CBP 
has 166 large-scale NII systems deployed to our Nation's ports 
of entry. There are 59 of these large-scale systems deployed to 
our seaports.
    CBP is also moving quickly to deploy nuclear and 
radiological-detection equipment to our ports of entry. CBP has 
deployed over 400 radiation-isotope-identifier devices, and 
nearly 500 radiation portal monitors (RPMs). CBP is also 
implementing the deployment of RPMs in the maritime 
environment, with the ultimate goal of screening 100 percent of 
all containerized imported cargo for radiation.
    Additionally, CBP has deployed personal radiation detectors 
in quantities necessary for ensuring that there is 100 percent 
coverage at primary inspection sites, where the final point of 
contact with CBP takes place.
    CBP, in concert with our sister agencies, continues to work 
toward maritime security, as mandated by the Maritime 
Transportation Security Act. Efforts include the establishment 
of the DHS Commercial Operational Advisory Committee (COAC), a 
subcommittee to assist DHS with the trade perspective on cargo 
security-performance standards under the MTSA. The COAC 
recommendations have assisted CBP with understanding the trade 
community's concerns and priorities. Further, recommendations 
are assisting CBP's development of a proposed rule requiring 
that loaded containers be appropriately secured.
    CBP is also supporting the implementation of additional 
MTSA-related issues in coordination with TSA and the Coast 
Guard. These include the U.S. Coast Guard International Port 
Security Program, Area Maritime Security Committees, port 
vulnerability assessments, and the Transportation Worker 
Identification Credentialing.
    Mr. Chairman, Members of the Committee, I believe CBP has 
demonstrated, and will continue to demonstrate, its leadership 
and commitment to maritime security efforts. Thank you for the 
opportunity to testify. I will be happy to answer any questions 
you may have.
    [The prepared statement of Mr. Jacksta follows:]

   Prepared Statement of Robert Jacksta, Executive Director, Border 
     Security and Facilitation, U.S. Customs and Border Protection

    Good morning Mr. Chairman, Senator Inouye, and distinguished 
Members of the Committee. Thank you for this opportunity to update the 
Committee on U.S. Customs and Border Protection's (CBP) efforts to 
strengthen maritime security.
    CBP, as the guardian of the Nation's borders, safeguards the 
homeland--foremost, by protecting the American public against 
terrorists and the instruments of terror; while at the same time 
enforcing the laws of the United States and fostering the Nation's 
economic security through lawful travel and trade. Today, trained CBP 
Officers, technology, automation, electronic information, and 
partnerships with the trade and foreign governments are concepts that 
underpin CBP's port security and anti-terrorism initiatives. These 
concepts extend our zone of security outward and reinforce the 
components of our layered defense strategy.
    My remarks today will focus on progress related to the Customs-
Trade Partnership Against Terrorism (C-TPAT), the Container Security 
Initiative (CSI), Non-Intrusive Inspection (NII) and Radiation 
Detection Technology (RDT), and the implementation of the Maritime 
Transportation Security Act of 2002 (MTSA).

Customs-Trade Partnership Against Terrorism (C-TPAT)
    As the Customs-Trade Partnership Against Terrorism (C-TPAT) has 
evolved, we have steadily added to the rigor of the program. In order 
to join C-TPAT, a participant must commit to increasing its supply 
chain security to meet minimal supply chain security criteria. Perhaps 
most importantly, participants also make a commitment to work with 
their business partners and customers throughout their supply chains to 
ensure that those businesses also increase their supply-chain-security. 
By leveraging the influence of importers and others on different 
participants in the supply chain, C-TPAT is able to increase security 
of United States bound goods to the point of origin (i.e., to the point 
of container stuffing). This reach is critical to the goal of 
increasing supply-chain-security.
    Moreover, CBP has worked towards addressing a number of areas as 
recommended by the General Accountability Office. Today, CBP initiates 
validations based on risk, using a quantitative risk assessment tool to 
identify certified members with high-risk supply chains. CBP's new 
validation objective identifies and validates high-risk supply chain 
components, while engaging C-TPAT members with the greatest leverage 
over their foreign components of the international supply chain. This 
refined validation objective allows CBP to direct resources 
accordingly, where they can have the most impact in meeting the overall 
objectives of the C-TPAT program. In late October 2004, in discussions 
with the trade community, we began drafting more clearly defined, 
minimum-security criteria for importers wishing to participate in the 
C-TPAT program. After months of constructive dialogue, we developed 
minimum security criteria designed to accomplish two important goals: 
first, to offer flexibility to accommodate the diverse business models 
represented within the international supply chain; and second, to 
achieve CBP's twin goals of security and facilitation. The minimum-
security criteria for importers became effective on March 25, 2005.
    In addition, CBP has published the C-TPAT Strategic Plan, clearly 
articulating program goals and strategies, and completed the C-TPAT 
Human Capital Plan, which addresses recruitment, training and workload 
issues.
    CBP recognizes the need for effective measures to determine the 
success of the program. While new measures are under development, C-
TPAT currently uses quantifiable workload measures, but gauging 
deterrence and prevention remains a challenging task. We continue our 
efforts in this area, focusing on effective measures that help gauge 
the success of C-TPAT partnership.
    Finally, steps have been taken to automate key processes, and 
implement a records management system to document key decisions and 
operational events, including decisions made through the validation 
process, and tracking member status. With 3 years' experience in the 
program, C-TPAT has successfully increased supply-chain-security 
through the voluntary enrollment and enhancement of supply-chain-
security by the private sector, and learned much about the program and 
its participants.

The Container Security Initiative (CSI)
    To meet our priority mission of preventing terrorists and terrorist 
weapons from entering the United States, CBP has partnered with other 
countries on our Container Security Initiative (CSI). Almost 26,000 
seagoing containers arrive and are off loaded at United States seaports 
each day. In Fiscal Year 2004, that equated to 9.6 million cargo 
containers annually. Because of the sheer volume of sea container 
traffic and the opportunities it presents for terrorists, containerized 
shipping is uniquely vulnerable to terrorist exploitation. Under CSI, 
which is the first program of its kind, we are partnering with foreign 
governments to identify and inspect high-risk cargo containers at 
foreign ports before they are shipped to our seaports and pose a threat 
to the United States and to global trade. Today, CSI is operational in 
36 ports. CBP is working towards strategically locating CSI in 
additional locations focusing on areas of the world where terrorists 
have a presence. CBP will continue expanding the CSI security network 
by using advanced technologies while optimizing resources such as the 
National Targeting Center as a communications hub coordinating domestic 
and international communication. Through a framework for security and 
facilitation of global trade, endorsed by the World Customs 
Organization, CBP intends to strengthen trade data and targeting by 
promoting harmonized standards for data elements, examinations and risk 
assessments. Further, to inspect all high-risk containers before they 
are loaded on board vessels to the United States, CBP plans to continue 
fostering partnerships with other countries and our trading partners.

CBP Smart Box Initiative
    In January 2004, CBP partnered with four C-TPAT importers to 
incorporate a Container Security Device (CSD) into the container 
sealing process, along with sealing standards and techniques, in order 
to develop and implement a Smart Box designed to enhance container 
security. The initial phase of the initiative was designed to evaluate 
the logistical and operational aspects, evaluate the technology being 
utilized, and collect and analyze technology-related data. Data 
collected during the initial phase, as well as subsequent phases, will 
be used to assist CBP in developing minimum standards for a Smart Box.
    Currently, CBP is conducting a second phase of activities in 
cooperation with a total of 14 C-TPAT members. This expansion utilizes 
an enhanced version of the CSD evaluated during previous activities and 
will incorporate additional sensing capabilities. This second phase 
test will incorporate 16 different trade lanes touching 3 continents 
(North America, Europe and Asia) and 7 CSI ports.
    Other efforts include participation in the evaluation of technology 
designed to incorporate additional sensing capabilities with the goal 
of providing six sided container security. The Department of Homeland 
Security (DHS) Science and Technology (S&T) Directorate lead this 
effort. CBP personnel are active members of an Integrated Process and 
Product Team (IPPT) and are working in coordination with DHS S&T to 
identify and evaluate future technologies.

Non-Intrusive Inspection and Radiation Detection Technologies
    Non-Intrusive Inspection Technology (NII) is another cornerstone in 
our layered strategy. Technologies deployed to our Nation's sea, air, 
and land border ports of entry include large-scale X-ray and gamma-
imaging systems as well as a variety of portable and hand-held 
technologies to include our recent focus on radiation detection 
technology. NII technologies are viewed as force multipliers that 
enable us to screen or examine a larger portion of the stream of 
commercial traffic while facilitating the flow of legitimate trade, 
cargo, and passengers.
    CBP has 166 large-scale NII systems deployed to our Nation's air, 
land, and sea ports of entry. There are 59 of these large scale systems 
deployed to seaports on both coasts and the Caribbean. The systems 
include the Vehicle and Cargo Inspection System (VACIS), Mobile VACIS, 
Truck X-ray, Mobile Truck X-ray, Rail VACIS, Mobile Sea Container 
Examination Systems, and the Pallet Gamma-ray system. CBP is also 
moving quickly to deploy nuclear and radiological detection equipment, 
including Personal Radiation Detectors (PRDs), Radiation Isotope 
Identifier Devices (RIIDs) and Radiation Portal Monitors (RPMs) to our 
ports of entry. CBP has deployed over 400 RIIDs and nearly 500 RPMs. 
CBP is also initiating the deployment of RPMs in the maritime 
environment with the ultimate goal of screening 100 percent of all 
containerized imported cargo for radiation. A variety of configurations 
have been developed and CBP is working with stakeholders to ensure that 
radiation screening does not significantly impact operations within a 
port. During the upcoming year CBP looks forward to working with the 
new DHS Domestic Nuclear Detection Office to couple these varying 
configurations into a cohesive global architecture to greatly increase 
the Nation's radiological and nuclear detection capability. 
Additionally, CBP has deployed PRDs in quantities necessary for 
ensuring that there is 100 percent coverage at primary, the first point 
of contact. Currently, over 10,000 PRDs have been deployed. Used in 
combination with our layered enforcement strategy, these tools 
currently provide CBP with a significant capacity to detect nuclear or 
radiological materials.
    Maritime Transportation Security Act of 2002 (MTSA) CBP, in concert 
with our sister agencies, continues to work towards maritime security 
mandates as outlined in the Maritime Transportation Security Act of 
2002 (MTSA). Efforts include the establishment of a DHS Commercial 
Operational Advisory Committee (COAC) subcommittee. As requested by the 
Border and Transportation Security Directorate (BTS), a COAC 
subcommittee was formed to assist DHS with a trade perspective on cargo 
security performance standards under MTSA.
    The COAC's recommendations have assisted CBP with understanding the 
trade community's concerns and priorities. Further, under the direction 
of BTS, recommendations are assisting CBP's development of a proposed 
rule requiring that loaded containers be appropriately secured by use 
of an International Organization for Standardization (ISO)-compliant 
high security seal and verified by the carrier prior to being 
transported by vessel to the United States. CBP is also supporting the 
implementation of additional MTSA related issues in coordination with 
BTS, USCG, and the Transportation Security Administration (TSA). These 
include:

   USCG International Port Security Program--CBP CSI teams work 
        in concert with USCG to conduct joint assessments of foreign 
        ports.

   Area Maritime Security Committees (AMSC)--CBP senior field 
        office managers are participating in the USCG led AMS 
        Committees.

   Port Vulnerability Assessments--CBP field offices 
        participated in the USCG port assessments addressing cargo 
        security operations.

   Transportation Worker Identification Credentialing (TWIC)--
        CBP is coordinating with TSA and USCG to assist their efforts 
        to develop this program.

Conclusion
    Mr. Chairman, Members of the Committee, I have outlined a broad 
array of initiatives and steps towards enhancing maritime security. I 
believe CBP has demonstrated and will continue to demonstrate its 
leadership and commitment to maritime security efforts, and we 
anticipate that working with our sister agencies under the Department 
of Homeland Security we will further these efforts.
    Thank you again for the opportunity to testify. I will be happy to 
answer any questions you may have.

    The Chairman. Thank you very much.
    Admiral.

            STATEMENT OF REAR ADMIRAL LARRY HERETH, 
                        U.S. COAST GUARD

    Admiral Hereth. Good morning, Mr. Chairman and 
distinguished Members of the Committee.
    I look forward to discussing the Coast Guard's role to 
secure our ports and ensure the safe and efficient flow of 
commerce.
    The Coast Guard's overarching security goal is to prevent 
terrorist attacks within the U.S. maritime domain. Doing so 
requires a risk-based approach to identify and intercept 
threats, ideally before they reach our shores. Our Nation's 
maritime transportation system, as mentioned before, is 
extensive. Protecting this system is a significant challenge. A 
maritime terrorist attack, with its associated ripple effect, 
would have a severe impact on the Nation's economy; so, 
clearly, this is a system we must protect.
    Since trade is global, and terrorism is global, we felt 
obligated and necessary to build a global security regime. Our 
domestic and international efforts have focused on 
implementation of MTSA and the corresponding International Ship 
and Port Facility security code, or the ISPS Code, as it's 
known. We've collaborated with 147 other countries at the 
International Maritime Organization to build a new and 
substantial security code that applies to vessels and to port 
facilities around the entire world. The international 
requirements mirror the domestic standards set forth in MTSA.
    To complement the new security standards, we worked in 
parallel with the International Standards Organization to 
develop an implementation guide to aid companies as they put 
this--into practice this major change. The IMO and ISO have 
been key allies in developing the requirements and practical 
standards that lead to consistency and greater compliance. This 
international approach provides an efficient and effective 
security regime that can be checked by all our trading 
partners, not just the United States.
    Implementation, however, has been a big challenge to all 
the stakeholders. With over 9,000 U.S. vessels, 3,200 U.S. 
facilities, and 8,000 foreign vessels that trade with the 
United States, we have a huge challenge before us.
    I am pleased to report, however, that the compliance rates 
are near 99 percent across the board. This was due, in large 
measure, to the collaboration and excellent relationships we 
have with industry and with trade associations. You will hear 
from two of those trade associations in the later panel. The 
efforts of the AAPA and--American Association of Port 
Authorities and the World Shipping Council are representative 
of the helpful advice and support we received throughout the 
standards-development phase, and are to be commended.
    I also note that, as required by MTSA, we have established 
an International Port Security Program that works in concert 
with other federal agencies to identify foreign ports posing a 
potential security risk to the international marine 
transportation system. To date, we have visited 23 countries. 
Five countries are currently on our Port Security Advisory 
List, because they have not implemented the new international 
standards.
    There are, however, long-term challenges ahead. In the 
post-MTSA ISPF period, we realized the Coast Guard was planning 
or beginning work on numerous additional security projects. 
Those efforts were spread out amongst many various offices, and 
there was also a lot of interagency coordination underway in 
those efforts. To address this, we developed an inventory of 
projects to help us refine, align, and coordinate our efforts. 
Taken together, this list of projects represents the next wave 
of improvements to maritime security.
    Cargo security is another challenge, a long-term challenge 
that deserves comment. Customs and Border Protection has the 
lead role in cargo security, and the Coast Guard works to 
coordinate with our sister agency to align respective agency 
roles and responsibilities.
    When cargo is moved on the waterborne leg of the trade 
route, the Coast Guard has oversight of the cargo's carriage 
requirements and the care needed for that cargo while it's in 
transit, both on the vessel and at the port facility. Customs, 
CBP, has authority over the cargo contents and the container 
improvements. Using the information provided through the Coast 
Guard's 96-hour notice-of-arrival rule and Customs' 24-hour 
cargo-loading rule, we can act to control vessels, and, thus, 
their cargoes, that pose an unacceptable risk to our ports. 
With Coast Guard officers posted at Customs', CBP's, National 
Targeting Center, we have improved agency coordination, and our 
collective ability to quickly take appropriate action exists 
when notified of a cargo problem.
    Identity security is another vulnerability that must be 
addressed. Domestically, the Coast Guard is now supporting TSA 
to implement the Transportation Worker Identity Credential, and 
we'll do everything we can to expedite that process.
    With regard to foreign seafarers, we presently have a 
multi-agency workgroup tasked to define the potential 
improvements possible and provide a proposed course of action. 
That involves a number of different agencies, including 
Justice, State, Transportation, and a variety of elements from 
DHS.
    Thank you, again, for the opportunity to testify today. I 
will be pleased to answer any questions at the appropriate 
time.
    [The prepared statement of Admiral Hereth follows:]

   Prepared Statement of Rear Admiral Larry Hereth, U.S. Coast Guard

Introduction
    Good morning Mr. Chairman and distinguished Members of the 
Committee. It is a pleasure to be here today to discuss the Coast 
Guard's role in securing our ports in order to facilitate the safe and 
efficient flow of commerce.
    On September 10th, 2001, our primary maritime focus was on the safe 
and efficient use of America's waterways. However, as a result of the 
events of 9/11, we have made great progress in securing America's 
waterways, without impeding commerce. The men and women of the U.S. 
Coast Guard and the Department of Homeland Security remain committed to 
improving maritime homeland security each and every day through 
continued interagency cooperation and assistance from our partners at 
the local, state, and international levels as well as maritime industry 
stakeholders.

Reducing Maritime Risk
    The Coast Guard's overarching security goal is to prevent the 
exploitation of, or terrorist attacks within, the U.S. maritime domain. 
Doing so requires a threat-based, risk-managed approach to identify and 
intercept threats well before they reach U.S. shores. The Coast Guard 
accomplishes this by conducting layered, multi-agency security 
operations nationwide; while strengthening the security posture and 
reducing the vulnerability of our ports, with the initial focus being 
our militarily and economically strategic ports. As we seek to reduce 
maritime risk, we continually strive to balance each of the Coast 
Guard's mission requirements to ensure minimal degradation in service 
to the American public. Looking at their accomplishments, it is clear 
that Coast Guard men and women continue to rise to the challenge and 
deliver tangible and important results across both homeland security 
and non-homeland security missions.
    Today's global maritime safety and security environment requires a 
new level of operations specifically directed against terrorism without 
degrading other critical maritime safety missions. Most importantly, 
the Coast Guard must exercise its full suite of authorities, 
capabilities, competencies and partnerships to mitigate maritime 
security risks in the post-9/11 world.
    In terms of threat, vulnerability, and consequence, there are few 
more valuable and vulnerable targets than the U.S. maritime 
transportation system.

   Threat: While the 9/11 Commission notes the continuing 
        threat against our aviation system, it also states that 
        ``opportunities to do harm are as great, or greater, in 
        maritime or surface transportation.'' From smuggling to piracy, 
        suicide attacks to the threat of weapons of mass destruction, 
        the threats are many and varied.

   Vulnerability: The maritime transportation system annually 
        accommodates 6.5 million cruise ship passengers, 51,000 port 
        calls by over 7,500 foreign ships, at more than 360 commercial 
        ports spread out over 95,000 miles of coastline. The vastness 
        of this system and its widespread and diverse critical 
        infrastructure leave the Nation vulnerable to terrorist acts 
        within our ports, waterways, and coastal zones, as well as 
        exploitation of maritime commerce as a means of transporting 
        terrorists and their weapons.

   Consequence: Contributing nearly $750 billion to the U.S. 
        gross domestic product annually and handling 95 percent of all 
        overseas trade each year--the value of the U.S. maritime domain 
        and the consequence of any significant attack cannot be 
        overstated. Independent analysis and the experiences of 9/11 
        and the West Coast dock workers strike demonstrates an economic 
        impact of a forced closure of U.S. ports for a period of only 8 
        days to have been in excess of $58 billion to the U.S. economy.

    Lingering and new maritime safety and security gaps continually 
present themselves and it is these risks we will continually work to 
reduce. The Coast Guard guides its efforts by implementing policies, 
seeking resources, and deploying capabilities through the lens of our 
maritime security strategy.
Implement the Maritime Strategy for Homeland Security
    Considering the vast economic utility of our ports, waterways, and 
coastal approaches, it is clear that a terrorist incident against our 
marine transportation system would have a disastrous impact on global 
shipping, international trade, and the world economy, in addition to 
the strategic military value of many ports and waterways.
    The elements of the Coast Guard's Maritime Strategy for Homeland 
Security are in direct alignment with the DHS' strategic goals of 
Awareness, Prevention, Protection, Response and Recovery. These 
elements serve as guiding pillars in our efforts to reduce America's 
vulnerabilities to terrorism by enhancing our ability to prevent 
terrorist attacks and limit the damage to our Nation's ports, coastal 
infrastructure and population centers in the event a terrorist attack 
occurs. A brief overview of the core elements of that strategy with 
particular emphasis on creation and management of a robust security 
regime is presented here in the following paragraphs.

Enhance Maritime Domain Awareness (MDA)
    First, we seek to increase our awareness and knowledge of what is 
happening in the maritime arena, not just here in American waters, but 
globally. We need to know which vessels are in operation, the names of 
the crews and passengers, and the ship's cargo, especially those 
inbound for U.S. ports. Maritime Domain Awareness (MDA) is critical to 
separate the law-abiding sailor from the anomalous threat.
    The core of our MDA efforts revolve around the development and 
employment of accurate information, intelligence, and targeting of 
vessels, cargo, crews and passengers--and extending this well beyond 
our traditional maritime boundaries. All DHS components are working to 
provide a layered defense through collaborative efforts with our 
interagency and international partners to counter and manage security 
risks long before they reach a U.S. port. There are two hallmarks to 
today's security environment; complexity and ambiguity. Improving MDA 
will help us to simplify the complex and clarify the ambiguous and 
prove invaluable to facilitating effective resource, operational, and 
policy decision-making.

Create and Oversee Maritime Security Regime
    Second, to help prevent terrorist attacks we have developed and 
continue to improve an effective maritime security regime--both 
domestically and internationally. This element of our strategy focuses 
on our domestic and international efforts and includes initiatives 
related to MTSA enforcement, International Maritime Organization 
regulations such as the ISPS Code, as well as improving supply chain 
security and identity security processes.
    Before 9/11 we had no formal international or domestic maritime 
security regime for ports, port facilities, and ships--with the 
exception of cruise ships. Partnering with domestic and international 
stakeholders, we now have both a comprehensive domestic security regime 
and an international security convention in place. Both have been in 
force since July 1, 2004. In executing the requirements of the Maritime 
Transportation Security Act (MTSA) and the International Ship and Port 
Facility Security (ISPS) code, the Coast Guard has:

   Reviewed and approved over 9,600 domestic vessel security 
        plans and 3,100 domestic facility security plans;

   Overseen the development of 43 Area Maritime Security Plans 
        and Committees;

   Verified security plan implementation on 8,100 foreign 
        vessels;

   Completed all domestic port security assessments for the 55 
        militarily and economically strategic ports;

   Visited 22 foreign countries to assess the effectiveness of 
        anti-terrorism measures and implementation of ISPS code 
        requirements. An additional 10 countries are scheduled for 
        visits by June 2005 with the goal of visiting all of our 
        approximately 140 maritime trading partners; and

   Oversaw the continuing development of the National Maritime 
        Security Plan.

    Aside from the statistics, MTSA and ISPS are truly landmark 
achievements within the maritime industry. Through a variety of 
measures, or layers, of regulatory requirements, these two regimes 
complement each other and have gone far to reduce vulnerabilities 
within the global maritime transportation system, the general framework 
of which includes:

   Physical Security: The first pillar of this framework is 
        physical security. Through the implementation of the MTSA, we 
        have significantly hardened the physical security of our ports. 
        Roughly 3,100 of the Nation's highest risk port facilities have 
        implemented mandatory access control measures to ensure that 
        only authorized persons are able to gain access. They have 
        established designated restricted areas within the facility 
        gates and facility owners and operators are now required, under 
        federal regulations, to implement screening protocols for 
        ensuring that cargo-transport vehicles and persons entering the 
        facilities are inspected to deter the unauthorized introduction 
        of dangerous substances and devices. At the facility gates, 
        containers are required to be checked for evidence of tampering 
        and cargo seals are checked.

   Identity Security: Identity verification is the second 
        critical element of port security, recognizing that we must 
        know and trust those who are provided unescorted access to our 
        port facilities and vessels. The 9/11 Commission report noted 
        that the September 11th hijackers obtained and used government-
        issued identification cards such as driver's licenses. The 
        Commission recommended that forms of identification be made 
        more secure. Congress partially addressed this issue in the 
        Maritime Transportation Security Act of 2002 with the 
        requirement for the Transportation Workers Identification Card 
        or TWIC. However, merchant mariner documents are, by statute, 
        identification documents, yet they contain virtually no 
        security features. This, among other reasons, is why the 
        Commandant, the Secretary of Homeland Security and the 
        President have proposed a complete update of the merchant 
        mariner credentialing statutes. We cannot, and must not, 
        continue with business as usual in the area of mariner 
        credentialing. The specter of a terrorist obtaining and using a 
        merchant mariner credential to access and attack vital areas of 
        a strategic port is one that is very real. The changes we have 
        proposed will enable the Department to heighten the security of 
        all mariner credentials in partnership with the mariners 
        themselves and the maritime industry.

        The Coast Guard is also working very closely with the 
        Transportation Security Administration (TSA), the lead for 
        implementation of the Transportation Worker Identification Card 
        (TWIC), to assist in the implementation of this new 
        credentialing program. Just over six months ago, TSA approached 
        the Coast Guard and asked for assistance in implementing the 
        TWIC in the maritime mode through a regulatory project. The 
        Coast Guard is fully supportive of this regulatory effort and 
        will do everything within our ability to assist TSA in the 
        development of this rulemaking.

   Cargo Security: Cargo security encompasses the process of 
        ensuring that all cargo bound for the U.S. is legitimate and 
        was properly supervised from the point of origin, through its 
        sea transit, and during its arrival at the final destination in 
        the U.S.

        Since Customs and Border Protection (CBP) has the lead role in 
        maritime cargo security, the Coast Guard has worked in concert 
        with our sister agency to align respective agency roles and 
        responsibilities regarding international trade. When a cargo is 
        moved on the waterborne leg of the trade route, the Coast Guard 
        has oversight of the cargo's care and carriage on the vessels 
        and within the port facility. The Coast Guard also oversees the 
        training and identity verification of the people who are moving 
        the cargo. CBP has authority over the cargo contents and 
        container standards. Using the information provided through the 
        Coast Guard's 96-hour notice of arrival rule and CBP's 24-hour 
        cargo loading rule, we can act to control vessels, and thus 
        their cargoes, that pose an unacceptable risk to our ports. 
        With Coast Guard officers posted at CBP's National Targeting 
        Center, we continuously improve agency coordination and our 
        collective ability to quickly take appropriate action when 
        notified of a cargo of interest. As a further improvement, the 
        trade community can file required passenger and crew 
        information via an electronic notice of arrival and departure 
        system. This streamlines the process for industry and improves 
        our ability to apply targeting and selectivity methods.

        The Coast Guard has worked hard to align all of our regulatory 
        and policy development efforts with CBP. We meet regularly to 
        discuss policy, we participate on inter-agency regulation 
        development teams, and we sit on the Operation Safe Commerce 
        Executive Steering Committee. Between DHS, CBP, and the Coast 
        Guard, we coordinate the work of our various Federal Advisory 
        Committees so that we all understand the trade community's 
        concerns and priorities. Now that MTSA and the ISPS Code are 
        fully implemented, we are monitoring compliance and carefully 
        noting issues for future improvements to the regulatory 
        framework.

        Looking at specific cargo-related initiatives, the Coast Guard 
        fully supports the Container Security Initiative and the 
        Customs-Trade Partnership Against Terrorism. We look forward to 
        the results of Operation Safe Commerce, which will highlight 
        technologies and business practices that will bring improved, 
        layered security throughout the supply chain. We also agree 
        with CBP's view that international compliance and the 
        establishment of international standards are needed to help 
        gain global compliance. In this way, the International 
        Standards Organization and the International Maritime 
        Organization have achieved great success in institutionalizing 
        both safety and security standards, many times incorporating 
        industry standards by reference. A multilateral approach 
        provides a more efficient and effective security regime. 
        Compliance with a common, acceptable standard is checked by all 
        our trading partners, not just the U.S. The evidence of success 
        can be directly measured in the level of compliance. A prime 
        example is the success of the ISPS Code implementation 
        evidenced by the 98 percent compliance rate achieved by foreign 
        vessels arriving in U.S. ports.

   Culture of Security: Finally, and perhaps most importantly 
        we have been able to take important steps to instill a culture 
        of security within a system previously focused almost 
        exclusively on efficiency. Reducing the vulnerabilities of our 
        vessels and ports required a cultural shift to put security at 
        the top of the agenda rather than as an afterthought. It is 
        centered on the people who must implement the new security 
        measures. Under our MTSA regulations, facilities and vessels 
        are required to designate individuals with security 
        responsibilities, including company security officers, facility 
        security officers, and vessel security officers. These 
        individuals must have knowledge, thorough training and 
        equivalent job experience. They must be familiar with, and 
        responsible for, implementation of the specific security 
        measures outlined in their facility/vessel security plans and 
        they must be knowledgeable in emergency preparedness, the 
        conduct of security audits, and security exercises. In 
        addition, facility security officers must have training in 
        security assessment methodologies; current security threats and 
        patterns; recognizing and detecting dangerous substances and 
        devices, recognizing characteristics and behavioral patterns of 
        persons who are likely to threaten security; and techniques 
        used to circumvent security measures.

    Increase Operational Presence. Third, we seek to better protect 
critical maritime infrastructure and improve our ability to respond to 
suspect activities by increasing our operational presence in ports, 
coastal zones and beyond,--to implement a layered security posture, a 
defense-in-depth. Our collective efforts to increase operational 
presence in ports and coastal zones focus not only on adding more 
people, boats and ships to our force structures, but making the 
employment of those resources more effective through the application of 
technology, information sharing, and intelligence support.
    Improve Response and Recovery Posture. Finally, we are improving 
our ability to respond to and aid in recovery if there were an actual 
terrorist attack. Understanding the challenge of defending 26,000 miles 
of navigable waterways and 361 ports against every conceivable threat 
at every possible time, we are also aggressively working to improve our 
response capabilities and readiness. While many of the increases in MDA 
and operational presence augment our collective response and recovery 
posture, we must also incorporate initiatives that will increase our 
ability to adequately manage operations and coordinate resources during 
maritime threat response or recovery operations.
    The Coast Guard is implementing the new National Response Plan 
across all operations. The Incident Command System is our mandated 
crisis management system, and we have years of practical experience in 
its use. At the local level, each port is ready with port-specific and 
even sub-area specific, response plans. All law enforcement agencies, 
public service providers, and port stakeholders have participated in 
the plan development process.
    The Coast Guard has confidence that if a maritime transportation 
security incident (TSI) should occur in one of our ports, the local 
responders (Coast Guard Sector Commander or Captain of the Port, other 
federal agencies, state and local authorities, and partners in 
industry) will immediately react with mitigation, response, and 
recovery activities in that port and region. At the same time, we are 
continuing to refine tools and analysis to aid senior leadership in 
their ability to rapidly respond to a crisis, minimize damage, and aid 
in recovery operations.

Conclusion
    After experiencing the most horrific act of terrorism on U.S. soil 
on 9/11, all sectors of the maritime community rallied together to 
strengthen the security of the maritime transportation system. The 
tremendous successes in this endeavor is due, in large part, to the 
cooperation and prompt measures taken by government and industry 
working together as partners. Much work remains to be done to reduce 
America's vulnerabilities to terrorism and other maritime security 
threats but with the continued support of the Congress and 
Administration, I know that we will succeed in delivering the robust 
maritime safety and security America expects and deserves well into the 
21st Century.
    Thank you for the opportunity to testify today. I will be happy to 
answer any questions you may have.

    The Chairman. Thank you.
    Mr. Skinner?

  STATEMENT OF RICHARD L. SKINNER, ACTING INSPECTOR GENERAL, 
                DEPARTMENT OF HOMELAND SECURITY

    Mr. Skinner. Thank you. Mr. Chairman, Mr. Co-Chairman, 
Members of the Committee, thank you for the opportunity to be 
here today.
    I would like to summarize three issues from my prepared 
statement that I have submitted for the record. One, the 
Department's effort to detect radioactive material in cargo 
security; challenges facing the Coast Guard; and the 
Department's Port Security Grant Program.
    Concerning the detection of radioactive materials, as this 
Committee knows, ABC News reported that twice it successfully 
smuggled depleted uranium into the country. The depleted 
uranium arrived in ocean-going cargo containers that were 
shipped from Indonesia and Turkey. In both cases, the 
containers were targeted as high risk for additional screening, 
but, nonetheless, were allowed entry without detection.
    In September of 2004, we issued a classified report. We 
cited several weaknesses that allowed this to happen. The 
Department has since enhanced its ability to screen targeted 
containers for radioactive emissions by deploying more 
sensitive technology at its seaports, revising protocols and 
procedures, and improving the training of its personnel.
    At the request of four congressional committees, we 
initiated a follow-up audit to determine whether the Department 
had implemented our recommendations and to examine other 
technologies that could increase the Department's radiation-
detection capability.
    Concerning Coast Guard challenges, in September 2004 we 
reported that the Coast Guard's willingness to work hard and 
long hours, use innovative tactics, and work closely with other 
departmental components allowed it to achieve its mission-
performance goals. However, to sustain its mission performance, 
the Coast Guard faces significant barriers; most importantly, 
the deteriorating readiness of its fleet vessels.
    The workload demands of the Coast Guard will only continue 
to increase as it implements the Maritime Transportation 
Security Act, MTSA. It must conduct risk assessments of all 
vessels and facilities on or near the water, develop national 
and area maritime transportation security plans, and improve 
port facility and vessel security plans. In addition, growing 
homeland security demands, such as added port and coastal 
security patrols, increase the Coast Guard's operating tempo. 
The Coast Guard reported that mission sustainment is at risk 
due to the cutters and aircraft that are aging, obsolete, and 
require replacement. Currently, the Coast Guard has experienced 
serious cracking in the hulls of its 110-foot cutters and the 
engine power loss on its HH-65 Dolphin helicopters. These 
problems adversely affect the Coast Guard's mission readiness 
and, ultimately, mission performance.
    Finally, concerning Port Security Grants, today the 
Transportation Security Administration, the U.S. Coast Guard, 
and the Department of Transportation's Maritime Administration 
have collaborated to award over $560 million for over 1,200 
projects. This does not include, however, the most recent round 
of grants, totaling $141 million, which the Department 
announced this past week.
    In January of this year, we reported on several important 
issues relating to strategic direction, priority-setting, and 
general administration of the program.
    First, the program's strategic effectiveness is hindered 
because it is attempting to reconcile three competing 
requirements or approaches: the competitive program mandated by 
Congress through its appropriations, MTSA's grant authority, 
which was not funded through appropriations, and risk-based 
decision-making. These competitive approaches were clouding the 
direction of the program.
    Second, the program did not have the benefit of critical 
infrastructure-protection information now being developed by 
the Department's Information Analysis and Infrastructure 
Protection Directorate. Consequently, Port Security Grants were 
awarded without basic data about our national port-security 
priorities.
    Third, grant award decisions were made with the intent of 
expending all available funding and spreading funds to as many 
applicants as possible. The Department funded projects despite 
dubious scores by its evaluators, raising questions about the 
merits of many of the projects. It appeared that headquarters 
and field reviewers did not always share a common understanding 
of program objectives or eligibility criteria. In addition, the 
program transferred 82 projects that were not funded, valued at 
$75 million, to the Department's Urban Area Security 
Initiative, despite previously determining that those projects 
did not merit funding.
    Another dilemma for the program related to the 
circumstances under which private entities might obtain grant 
funding. DHS did not have a formal policy to govern financial 
assistance to private entities, including those that own and 
operate high-risk port facilities. Some of the grants to 
private companies were within their financial means, and many 
were for basic security measures that should have been 
considered as normal cost of doing business.
    Furthermore, grant recipients had spent only a small 
portion of their awards. Of the $515 million awarded between 
June 2002 and December 2003, including the $75 million provided 
under the Department's Urban Area Security Initiative, grant 
recipients had expended only $107 million, or 21 percent of 
their awards, as of September 30th, 2004. We determined that 
many of the recipients were simply not prepared to put their 
grant funds to use. Furthermore, we determined that the 
Department did not have sufficient resources to monitor the 
progress, or lack thereof, of individual projects.
    The Department generally agreed with our recommendations to 
improve the design, management, and oversight of the program. 
The Department advised us that it intended to use a new risk-
based formula to award the $150 million budgeted for Port 
Security Grants during 2005.
    We are now studying how the Department has modified the 
program, particularly the criteria that it would use to make 
grant award decisions and whether those modifications satisfy 
our recommendations.
    Mr. Chairman, Mr. Co-Chairman, Members, this concludes my 
remarks. I'll be happy to answer any questions you may have.
    [The prepared statement of Mr. Skinner follows:]

  Prepared Statement of Richard L. Skinner, Acting Inspector General, 
                    Department of Homeland Security

    Mr. Chairman, Mr. Co-Chairman and Members of the Committee:
    Thank you for the opportunity to be here today to discuss the work 
of the Office of Inspector General (OIG) regarding port and maritime 
security. I would like to address three areas related to security: 
preventing terrorist weapons from entering the United States, maritime 
security challenges facing the U.S. Coast Guard (USCG), and the Port 
Security Grant Program. These areas involve major components of the 
Department of Homeland Security (DHS) and its wide-ranging operations. 
Each has been the subject of oversight by the OIG and my comments are 
drawn from our reports, which are available on the OIG website at 
www.dhs.gov/oig.

Preventing Terrorist Weapons From Entering the United States
    Since September 11, 2001, the Department of Homeland Security's 
Bureau of Customs and Border Protection's (CBP) priority mission is 
detecting and preventing terrorists and terrorist weapons from entering 
the United States. A major component of its priority mission is to 
ensure that oceangoing cargo containers arriving at the seaports of 
entry are not used to smuggle illegal and dangerous contraband. To test 
controls over importing weapons of mass destruction, ABC News was 
successful in two attempts at smuggling depleted uranium into the 
country. On September 11, 2002, ABC News reported that a 15-pound 
cylinder of depleted uranium was shipped from Europe to the U.S. 
undetected by CBP. On September 11, 2003, ABC News reported that the 
same cylinder was smuggled to the U.S. from Jakarta, Indonesia, again 
undetected.
    In the first smuggling event, ABC News reported that a steel pipe 
containing a 15-pound cylinder of depleted uranium, which was shielded 
with lead, was placed in a suitcase and accompanied by ABC News 
reporters by rail from Austria to Turkey. In Istanbul, Turkey, the 
suitcase was placed inside an ornamental chest that was crated and 
nailed shut. The crate containing the suitcase was then placed 
alongside crates of huge vases and Turkish horse carts in a large metal 
shipping container, and then loaded onto a ship that left Istanbul. 
Based on data contained in the Automated Targeting System, the crate 
was targeted as high-risk for screening by the U.S. Customs Service 
(Customs). ABC News broadcast on September 11, 2002, that Customs 
failed to detect the depleted uranium carried from Europe to the United 
States.
    During the second smuggling event, ABC News placed the same 
cylinder of depleted uranium into a suitcase, and then placed the 
suitcase into a teak trunk. The trunk, along with other furniture, was 
loaded into a container in Jakarta, Indonesia, and then transshipped to 
the U.S. from Tanjung Pelepas, Malaysia. This shipment was also 
targeted as high-risk for screening and subsequently inspected by CBP 
personnel, but was then allowed to proceed from the port by truck.
    In a classified September 2004 report, Effectiveness of Customs and 
Border Protection's Procedures to Detect Uranium in Two Smuggling 
Incidents, we cited several weaknesses that occurred at the time of the 
two incidents that made the container inspection process ineffective. 
The protocols and procedures that CBP personnel followed at the time of 
the two smuggling incidents were not adequate to detect the depleted 
uranium. CBP has since enhanced its ability to screen targeted 
containers for radioactive emissions by deploying more sensitive 
technology at its seaports, revising protocols and procedures, and 
improving training of CBP personnel.
    At the request of four congressional committees, we recently 
initiated a follow-up audit to determine the status of CBP's 
implementation of the recommendations made in our September 2004 
report. In addition, we will review other relevant technologies and 
implementation plans recommended by entities associated with CBP's 
efforts to increase the detection capability of the radiation portal 
monitors that are deployed domestically and internationally.

Maritime Security
    The Coast Guard's willingness to work hard and long hours, use 
innovative tactics, and work through partnerships in close inter-agency 
cooperation has allowed it to achieve mission performance results 
goals. However, to improve and sustain its mission performance in the 
future, the Coast Guard faces significant barriers, most importantly 
the deteriorating readiness of its fleet assets. The Coast Guard faces 
three major barriers to improving and sustaining its readiness to 
perform its legacy missions:

        1. The lack of a comprehensive and fully defined performance 
        management system impedes the Coast Guard's ability to gauge 
        its performance, allocate resources effectively, and target 
        areas for improved performance.

        2. The workload demands on the Coast Guard will continue to 
        increase as it implements the Maritime Transportation Security 
        Act of 2002 (MTSA). This complex work requires experienced and 
        trained personnel; however, the Coast Guard has in recent years 
        suffered from declining experience levels among its personnel.

        3. Sustaining a high operating tempo due to growing homeland 
        security demands, such as added port, waterway, and coastal 
        security patrols, will tax the Coast Guard's infrastructure 
        including its aging cutter and aircraft fleet.

    The lack of a comprehensive and fully defined performance 
management system impedes the Coast Guard's ability to gauge its 
performance, allocate resources effectively, and target areas for 
improved performance. The Coast Guard has yet to define a performance 
management system that includes all the input, output, and outcomes 
needed to gauge results and target performance improvements, balance 
its missions, and ensure the capacity and readiness to respond to 
future crises or major terrorist attacks. For example, for search and 
rescue, the number of mariners in distress saved is a good indicator of 
outcome; however, resource hours under-represent the effort put into 
this mission by omitting the many hours of watch standing at stations. 
Without more complete information, the Coast Guard has limited ability 
to identify and target cost effective improvements to mission 
performance.
    The workload demands on the Coast Guard will continue to increase 
as it implements the MSTA. Under MTSA, the Coast Guard must conduct 
risk assessments of all vessels and facilities on or near the water; 
develop national and area maritime transportation security plans; and 
approve port, facility, and vessel security plans. This complex work 
requires experienced and trained personnel, presenting a major 
challenge for the Coast Guard, which has in recent years suffered from 
declining experience levels among its personnel. Since the Coast Guard 
largely relies on experienced senior personnel to coach and train 
junior personnel and new recruits on the job, mission performance is at 
risk.
    In addition to implementing MTSA, growing homeland security 
demands, such as added port, waterway, and coastal security patrols, 
result in a continued high operating tempo. Sustaining this high 
operating tempo will be a major challenge for Coast Guard personnel and 
will tax its infrastructure, especially its aged cutter and aircraft 
fleet. The Coast Guard reported that mission sustainment is at risk due 
to cutters and aircraft that are aging, technologically obsolete, and 
require replacement and modernization. Currently, the Coast Guard is 
experiencing serious cracking in the hulls of the 110 foot cutters and 
engine power loss on the HH-65 Dolphin helicopters, resulting in 
operating restrictions. These problems adversely affect the Coast 
Guard's mission readiness and ultimately mission performance.

The Port Security Grant Program
    The Department's Port Security Grant Program is designed to reduce 
the vulnerability of American ports to potential terrorist attacks by 
enhancing facility and operational security. The Transportation 
Security Administration, the U.S. Coast Guard, and the Department of 
Transportation's Maritime Administration have collaborated to award 
over $560 million for over 1,200 projects. My office reviewed the 
design and goals of the program, the roles and responsibilities of 
participating agencies, and the grant evaluation and selection process. 
The bulk of our analysis focused on grant award decisions in rounds two 
and three. The results of our review are discussed in our January 28, 
2005 final report, Review of the Port Security Grant Program (#OIG-05-
10). We identified several important issues relating to the strategic 
direction of the program, the program's support of national 
infrastructure protection priorities, and the general administration of 
the program. I would like to briefly talk about those results.
    First, the program's strategic effectiveness is hindered mainly 
because it is attempting to reconcile three competing approaches: the 
competitive program mandated by Congress, MTSA's grant authority, and 
risk-based decision making. These competing approaches are clouding the 
direction of the program. The program is under pressure to help defray 
the costs of the MTSA security mandates that broadly affect the 
maritime industry. MTSA included a grant authority intended to 
equitably distribute funds for this purpose, but the appropriations 
legislation did not fund the MTSA port security grant program and 
required a competitive grant program focused on securing national 
critical seaports. However, the resulting program must base award 
decisions on the universe of applications submitted--which may or may 
not include the most critical needs. In addition, the evaluation and 
selection process emphasized awarding funds to as many applicants as 
possible. Hence, the program attempted to balance the competitive 
program that objectively evaluates the quality of the applications with 
the need to broadly disperse funds to assist with MTSA compliance, 
while at the same time incorporating risk-based eligibility criteria 
and evaluation tools to prioritize projects.
    Second, the program did not have the benefit of national key asset 
and critical infrastructure protection information now being developed 
by the Information Analysis and Infrastructure Protection (IAIP) 
directorate. Program administrators and IAIP, which is responsible for 
developing strategies for protecting the Nation's critical 
infrastructure, did not collaborate to integrate the program with 
broader national security initiatives. Thus, port security grant award 
decisions were made without sufficient information about our national 
priorities.
    Third, grant award decisions were made with the intent of expending 
all available funding and spreading funds to as many applicants as 
possible. The program funded projects despite dubious scores by its 
evaluators against key criteria, raising questions about the merits of 
258 projects costing $67 million. It appeared that headquarters and 
field reviewers did not share a common understanding of program 
objectives or eligibility criteria. Frequently, they did not agree 
about the eligibility or merit of projects and did not consistently 
document their rationale for recommending or not recommending funding. 
We pointed out the need for the program to look more closely at the 
first three criteria (whether the grant proposal was in an area of high 
risk, addressed a critical security need/vulnerability, and provided 
high risk reduction), which were well conceived and should have carried 
more weight.
    In addition, the program forwarded an additional 82 projects to the 
Office of Domestic Preparedness to be funded at a cost of $75 million 
under the Urban Area Security Initiative, despite previously 
determining that these projects did not merit funding.
    Another dilemma for the program is the question of where the 
private sector's responsibility for preventing terrorism ends and where 
the Federal Government's responsibility begins. At the time of our 
report, DHS did not have a formal policy to provide financial 
assistance to private entities, a group that includes those that own 
and operate high risk facilities. Even though private entities have 
applied for and received substantial funding, we did not conclude that 
the program should limit funding to the private sector per se. However, 
some of the grants to private companies were within the financial reach 
of the applicants and many were for basic security measures that should 
have been considered normal costs of doing business. For example, some 
of the projects were for anti-theft purposes and not related to 
terrorist attack prevention or deterrence.
    Furthermore, after three rounds, recipients spent only a small 
portion of the entire amount awarded. Of the $515 million awarded 
between June 2002 and December 2003, including $75 million provided 
under the Office for Domestic Preparedness' Urban Area Security 
Initiative, grant recipients had expended only $106.9 million, or 21 
percent of total program awards as of September 30, 2004. As a result, 
the majority of projects had not been completed and the program had not 
yet achieved its intended results in the form of actual improvements to 
port security.
    This brings us to the status of our recommendations. In response to 
our draft report, DHS concurred with 11 of our 12 recommendations. In 
our final report, we strongly encouraged DHS to fully implement our 
recommendations before proceeding with the next round of port security 
grants. DHS' Office of State and Local Government Coordination and 
Preparedness (SLGCP) received $150 million in the FY 2005 budget for 
round five of the Port Security Grant Program. SLGCP officials informed 
us that they were going to make substantive changes to the design of 
the program to make it more risk-based, and while it appears they have, 
we have not evaluated the effect of these changes.
    We recently received DHS' action plan, which discusses corrective 
actions taken and planned in response to our recommendations. The 
action plan generally appears to be responsive to our recommendations. 
For example:

   We identified numerous projects within ports not on the list 
        of strategic or controlled ports. The program developed and 
        implemented a funding distribution model that targeted 66 ports 
        as eligible under the program.

   We noted the lack of a policy for funding private sector 
        projects. The action plan refers to a decision by the Secretary 
        that private entities may apply for a grant, but must provide 
        matching funds of 50 percent.

   Program administrators did not collaborate with IAIP on 
        broader national security initiatives. SLGCP is taking steps to 
        improve information sharing with, and participation of, IAIP in 
        the selection and evaluation process.

    However, we are also reviewing additional information supporting 
the action plan. In addition, we have not had the opportunity to review 
guidance that will be issued for those SLGCP, USCG, TSA, CBP, IAIP, and 
MARAD personnel who will be evaluating projects. The revised grant 
application package was just released this past week. We are studying 
how DHS has modified the program--particularly the criteria program 
administrators will use and how they will apply it during the 
evaluation process--and whether those modifications satisfy our 
recommendations. We expect to communicate this information to SLGCP in 
the near future.
    Mr. Chairman, Mr. Co-Chairman, this concludes my prepared 
statement. I will be pleased to answer any questions you or the Members 
may have.

    The Chairman. Thank you very much, Mr. Skinner.
    Ms. Wrightson? Now, I know that you have some charts you 
wish to put up. What are those?
    Ms. Wrightson. Actually, I--we prepared the charts so that 
my remarks can be as short as possible so that we can leave 
time for dialogue, so, while they're putting them up, I'm just 
going to go ahead and start.
    The Chairman. Well, tell us. I can't read them. I don't 
know about the rest of----
    Ms. Wrightson. Oh, goodness. They are about as big as we 
thought we could get in the car.
    The Chairman. They are all in your testimony?
    Ms. Wrightson. Yes, they are.
    The Chairman. Yes, I think you can take them down, then. 
Thank you very much.
    [Laughter.]
    Ms. Wrightson. OK.
    The Chairman. Thank you very much.
    I am pleased to have your statement and understand your 
study.

         STATEMENT OF MARGARET T. WRIGHTSON, DIRECTOR, 
          HOMELAND SECURITY AND JUSTICE ISSUES, U.S. 
                GOVERNMENT ACCOUNTABILITY OFFICE

    Ms. Wrightson. Good morning, Mr. Chairman, Senator Inouye, 
and other distinguished Members.
    I'm pleased to be here today to discuss the Nation's 
efforts to improve maritime and seaport security.
    Since the terrorist attack of September 11th, GAO has 
responded to numerous requests for reports and testimonies on 
this issue. In fact, in the past few years we've issued more 
than 20 products, all of which contained recommendations.
    My statement today covers a wide range of that work, but, 
in the interest of time, I'm going to highlight only our major 
findings and conclusions.
    First, since September 11th, the Federal Government and 
port stakeholders have taken extensive actions to improve port 
security. Together, these actions have helped to improve 
security in three ways: identifying and reducing 
vulnerabilities of potential targets, helping to secure the 
flow of containers to port gateways, and improving maritime 
domain awareness so that stakeholders have an informed view of 
port activities through intelligence, information sharing, and 
new technologies to identify and respond to threats.
    Second, while it may have been necessary to move quickly at 
the outset, attempting so much so fast has resulted in a range 
of problems that should be corrected, and soon. These problems 
can be grouped into three main categories: concerns about 
faulty program design and implementation, concerns about 
inadequate coordination, and concerns about maintaining the 
financial support needed to continue implementing the security 
enhancements.
    Last, as it becomes clear that the price of improved port 
security will be measured in billions, we must develop better 
mechanisms for assessing progress and assuring that resources 
are focused on the most important priorities. Approaching 4 
years after the terrorist attacks, performance measures to 
define outcomes and measure progress have not been implemented, 
nor is there a robust framework for systematically managing 
risk. A sustainable strategy for maritime security requires 
both.
    Turning to our detailed findings, given the scope and 
complexity of the programs, and the speed with which they were 
rolled out, it is not surprising that we have found a host of 
problems. While some of these may be resolved with time as the 
programs mature, others are more challenging.
    The first challenge is the failure of many of these 
programs to incorporate necessary planning. For example, our 
review showed that TWIC, C-TPAT, CSI, Megaport, AIS, and the 
Port Security Assessment and Compliance Program all experienced 
major planning problems, ranging from inadequate or nonexistent 
human capital, projects, or strategic planning, to faulty 
project management, such as a lack of clear timeframes, 
milestones, and risk mitigation. Until such planning elements 
are incorporated, there will be too little assurance that 
program results will be delivered on time and on target.
    Inadequate coordination is the second area to highlight. 
Unfortunately, the list of programs with coordination problems 
is as long as the list for planning problems, yet establishing 
a viable port-security regime cannot be accomplished with 
agencies at the federal level that are working in stovepipes or 
by the Federal Government alone as Congressman Ruppersberger 
ably stated earlier.
    There is perhaps no better way to highlight what can happen 
when coordination breaks down than the delayed attempt to 
develop the Transportation Worker Identification Credential.
    TSA began TWIC in 2002, while it was part of DOT. At that 
time, TSA said the first cards would be issued in 2004. We are 
now nearly halfway through 2005, and TWIC is still in the 
prototype phase, with critical policy decisions still to be 
made that are as basic as who will be eligible to receive the 
card.
    Part of TSA's problems can be traced to breakdowns in 
coordination between TSA and DHS. Moreover, outside DHS, TSA 
has failed to sustain the support of port stakeholders who feel 
excluded. Without internal and external support and agreement, 
and, I might add, a comprehensive plan for managing this 
program, which does not now appear to be in place, the program 
is at risk of further delays, increased costs, and less-than-
satisfactory outcomes.
    Before concluding, two additional matters are worth 
mentioning. First, notwithstanding the effort and resources 
represented by these programs and the people at this table, it 
is difficult, if not impossible, to know how far we have 
progressed in making ports more secure.
    One reason is a lack of overall goals and measures. For 
example, although the Coast Guard regularly reports how well it 
is doing rescuing mariners in distress, it is still struggling 
to develop and implement a performance measure for port-
security activities.
    Second, we cannot afford to protect everything against 
every risk. More care must be taken to prioritize resources 
toward the greatest risk.
    Notwithstanding some progress, much remains to be done 
before a common framework for risk management is systematically 
applied to policy and resource allocation decisions in DHS, let 
alone the Federal Government.
    In conclusion, urgency in the wake of 9/11 may help to 
rationalize the mistakes and missteps described today; however, 
the need for quick action at the start should not be used to 
justify poor planning and management today. In the final 
analysis, the race to better security must be run as a 
marathon, not a sprint. In port security, as in homeland 
security, we're ready for midcourse corrections, including, we 
hope, the expeditious implementation of GAO's recommendations 
and a closer focus on goals, measures, and risk management. 
This is because lasting success depends less well on how 
quickly the programs were begun than on how carefully they are 
carried out.
    Mr. Chairman, that concludes my statement. I hope we engage 
in a dialogue about these really important issues.
    [The prepared statement of Ms. Wrightson follows:]

    Prepared Statement of Margaret T. Wrightson, Director, Homeland 
   Security and Justice Issues, U.S. Government Accountability Office

    Mr. Chairman and Members of the Committee:
    I am pleased to be here today to discuss the Nation's efforts to 
improve seaport security. More than 3 years after the terrorist attacks 
of September 11, 2001, seaport security continues to be a major concern 
for the Nation. For example, many seaport areas are inherently 
vulnerable, given their size, easy accessibility by water and land, 
large numbers of potential targets, and proximity to urban areas. Also, 
the large cargo volumes passing through seaports, such as containers 
destined for further shipment by other modes of transportation such as 
rail or truck, also represent a potential conduit for terrorists to 
smuggle weapons of mass destruction or other dangerous materials into 
the United States. The potential consequences of the risks created by 
these vulnerabilities are significant as the Nation's economy relies on 
an expeditious flow of goods through seaports. A successful attack on a 
seaport could result in a dramatic slowdown in the supply system, with 
consequences in the billions of dollars.
    Much has been set in motion to address these risks in the wake of 
the September 11, 2001, terrorist attacks. Both Congress and the 
Administration have been active, through legislation, presidential 
directives, and international agreements, in enhancing seaport 
security. Key agencies, such as the Coast Guard, the Customs Service, 
and the Transportation Security Administration (TSA), have been 
reorganized under the new Department of Homeland Security (DHS) and 
tasked with numerous responsibilities designed to strengthen seaport 
security. Many of these tasks were required by the Maritime 
Transportation Security Act of 2002 (MTSA).\1\
    My testimony today draws primarily on the work we have done in 
responding to congressional requests for information and analysis about 
the Nation's homeland security efforts (see app. I for a list of recent 
reports and testimonies we have issued). We conducted our work in 
accordance with generally accepted government auditing standards, and 
the scope and methodology for this work can be found in the respective 
products. Over the course of completing this work, we have made a 
number of recommendations for specific agencies, which can be found in 
appendix II. While this body of work does not cover every program or 
action that has been taken, it does encompass a wide range of these 
actions. My testimony will (1) provide an overview of the types of 
actions taken by the Federal Government and other stakeholders to 
address seaport security, (2) describe the main challenges encountered 
in taking these actions, and (3) describe what tools and approaches may 
be useful in charting a course for future actions to enhance security.

Summary
    Seaports are vulnerable on many fronts and the actions taken to 
secure them can be divided into three main categories: reducing 
vulnerabilities of specific targets within seaports, making the cargo 
flowing through these seaport gateways more secure, and developing what 
is called ``maritime domain awareness''--a sufficiently informed view 
of maritime activities by stakeholders involved in security to quickly 
identify and respond to emergencies, unusual patterns or events, and 
matters of particular interest. Within each category, several actions 
have been taken or are underway. For example, assessments of potential 
targets have been completed at 55 of the Nation's most economically and 
militarily strategic seaports, and more than 9,000 vessels and over 
3,000 facilities have developed security plans and have been reviewed 
by the Coast Guard. Customs inspectors have been placed at some 
overseas seaports and partnerships struck up with some private sector 
stakeholders to help ensure that the cargo and containers arriving at 
U.S. seaports are free of weapons of mass destruction (WMD) or a 
radiological ``dirty bomb.'' New assets are budgeted and are coming 
online, including new Coast Guard boats and cutters and communication 
systems. Finally, new information-sharing networks and command 
structures have been created to allow more coordinated responses and 
increase awareness of activities going on in the maritime domain. Some 
of these efforts have been completed and others are ongoing; overall, 
the amount of effort has been considerable.
    The efforts we have reviewed over the past 3 years, many of which 
were quickly implemented to address pressing security needs, have 
encountered challenges that could significantly affect their success. 
Some of these challenges are likely to be resolved with time, but some 
reflect greater difficulty and therefore merit more attention. The more 
complex challenges take three main forms:

   Program design and implementation: Some agencies have failed 
        to design programs and planning components, such as human 
        capital plans and performance measures, that are necessary to 
        successfully implement their programs and ensure they are 
        effective. For example, U.S. Customs and Border Protection 
        (CBP) started implementation of two key container supply-chain-
        security initiatives before taking adequate steps to develop 
        plans and strategies to effectively manage critical aspects of 
        the programs such as human capital and achievement of program 
        objectives.

   Coordinating security efforts with stakeholders: Many 
        private sector companies and governmental agencies are involved 
        in seaport security efforts, and in some cases progress has 
        been hampered because of difficulties in communication and 
        coordination between parties. For example, deadlines in the 
        development of an identification card for transportation 
        workers have been missed due in part to a lack of communication 
        and coordination between TSA and DHS.

   Funding security improvements: Economic constraints, such as 
        declining revenues and increased security costs, make it 
        difficult to provide and sustain the funding necessary to 
        continue implementing security measures and activities by 
        maritime stakeholders including the Federal Government. 
        Consequently, many stakeholders rely heavily on the Federal 
        Government for assistance, and requests for federal grant 
        funding far outstrip the funding amounts available. For 
        example, although more than $560 million in grants has been 
        awarded to seaport stakeholders since 2002 under federal grant 
        programs for implementation of security measures and 
        activities, this amount has met only a fraction of the amount 
        requested by these stakeholders.

    As actions to enhance homeland security continue, and as it becomes 
clearer that the price of these actions will be measured in the 
billions of dollars, it is likely that increasing attention will turn 
to assessing the progress made in securing seaports and determine where 
future actions and funds should be allocated to further enhance 
security. Although there is widespread agreement that actions taken so 
far have led to a heightened awareness of the need for security and an 
enhanced ability to identify and respond to many security threats, 
assessing the degree of progress in making the Nation more secure is 
difficult. Thus far, seaport security actions--and homeland security 
activities in general--lack performance measures to define what these 
activities are intended to achieve and measure progress toward these 
goals. As Congress and the Nation continue to evaluate how much 
security is enough, more attention on defining these goals and measures 
will likely be needed by stakeholders. Doing so is all the more 
important because, as groups such as the 9/11 Commission have pointed 
out, no amount of money can totally insulate seaports from attack by a 
well-funded and determined enemy. These realities suggest that the 
future focus in applying resources and efforts also needs to 
incorporate an approach to identify and manage risk--that is, on 
assessing critical infrastructure, determining what is most at risk, 
and applying sound measures designed to make cost-effective use of 
resources and funding.
Background
    The vast U.S. maritime system contains more than 300 seaports and 
3,700 cargo and passenger terminals. These seaports dot not only our 
seacoasts, but also major lakes and rivers (see fig. 1). Much of the 
Nation's commercial maritime activities, however, are concentrated in 
about a dozen major seaports, such as Los Angeles/Long Beach, New York/
New Jersey, and Houston.



    The Nation's seaports are economic engines and a key part of the 
national defense system. More than 95 percent of the Nation's non-North 
American foreign trade (and 100 percent of certain commodities, such as 
foreign oil) arrives by ship. Cargo containers, approximately 7 million 
of which entered the country in 2002, are central to an efficient 
transportation network because they can be quickly shifted from ships 
to trains and trucks and back again. Because of these efficiencies, the 
U.S. and world economies have become increasingly reliant on cargo 
containers to transport their goods. With regard to national security, 
the Departments of Defense and Transportation have designated 17 U.S. 
seaports as strategic because they are necessary for use in the event 
of a major military deployment. Thirteen of them are commercial 
seaports.
    While the terrorist attacks of September 11, 2001, did not involve 
seaports, they called attention to ways in which seaports represent an 
attractive and vulnerable terrorist target. Various studies have 
pointed out that significant disruptions could result from a seaport-
related attack. For example, the Brookings Institution has estimated 
that costs associated with U.S. seaport closures resulting from a 
detonated weapon of mass destruction could amount to $1 trillion. The 
firm of Booz, Allen, and Hamilton studied the potential cost of 
discovering an undetonated weapon of mass destruction at a U.S. seaport 
and placed the cost of a 12-day closure of seaports at approximately 
$58 billion. An actual closure of seaports along the West Coast 
occurred for 10 days in 2002 due to a labor dispute. According to one 
estimate, the cost of this closure to the national economy for the 
first 5 days was estimated at $4.7 billion and increased exponentially 
after that.\2\ Similarly, if one or more of the 17 strategic U.S. 
seaports (or the ships carrying military supplies) were successfully 
attacked, not only could massive civilian casualties be sustained and 
critical infrastructure lost, but the military could also lose precious 
cargo and time and be forced to rely heavily on already burdened 
airlift capabilities.

Many Actions Have Been Taken or Are Underway To Address Seaport 
        Security
    Since September 11, 2001, a number of actions have been taken or 
are underway to address seaport security by a diverse mix of agencies 
and seaport stakeholders. Federal agencies, such as the Coast Guard, 
U.S. Customs and Border Protection (CBP), and TSA, have been tasked 
with responsibilities and functions intended to make seaports more 
secure, such as monitoring vessel traffic or inspecting cargo and 
containers, and procuring new assets such as aircraft and cutters to 
conduct patrols and respond to threats. In addition to these federal 
agencies, seaport stakeholders in the private sector and at the state 
and local levels of government have taken actions to enhance the 
security of seaports, such as conducting security assessments of 
infrastructure and vessels operated within the seaports and developing 
security plans to protect against a terrorist attack. The actions taken 
by these agencies and stakeholders are primarily aimed at three types 
of protections: (1) identifying and reducing vulnerabilities of the 
facilities, infrastructure, and vessels operating in seaports, (2) 
securing the cargo and commerce flowing through seaports, and (3) 
developing greater maritime domain awareness through enhanced 
intelligence, information-sharing capabilities, and assets and 
technologies.

Identifying and Reducing the Vulnerabilities of Facilities, 
        Infrastructure, and Vessels
    Seaports facilitate the freedom of movement and flow of goods, and 
in doing so they allow people, cargo, and vessels to transit with 
relative anonymity. While seaports contain terminals and other 
facilities where goods bound for import or export are unloaded and 
loaded, or where people board and disembark cruise ships or ferries, 
seaports also often contain other infrastructure critical to the 
Nation's economy and defense, such as military installations, chemical 
factories, powerplants, and refineries. The combination of assets, 
access, and anonymity makes for potentially attractive targets. The 
facilities and vessels in seaports can be vulnerable on many fronts. 
For example, facilities where containers are transferred between ships 
and railroad cars or trucks must be able to screen vehicles entering 
the facility and routinely check cargo for evidence of tampering. 
Chemical factories and other installations where hazardous materials 
are present must be able to control access to areas containing 
dangerous goods or hazardous substances. Vessels, ranging from oil 
tankers and freighters to tugboats and passenger ferries, must be able 
to restrict access to certain areas on board the vessel, such as the 
bridge or other control stations critical to the vessel's operation.
    Given the wide range of potential targets, an effective security 
response includes identifying targets, assessing risks to them, and 
taking steps to reduce or mitigate these risks. An essential step in 
this process is to conduct a security or vulnerability assessment. This 
assessment, which is needed both for the seaport as a whole and for 
individual vessels and facilities, identifies vulnerabilities in 
physical structures, personnel protection systems, processes, and other 
areas that may lead to a security breach. For example, this assessment 
might reveal weaknesses in an organization's security systems or 
unprotected access points such as a facility's perimeter not being 
sufficiently lighted or gates not being secured or monitored after 
hours. After the vulnerabilities are identified, measures can then be 
identified that will reduce or mitigate the vulnerabilities when 
installed or implemented.
    Most actions to identify and reduce the vulnerabilities within 
seaports were specifically required by the Maritime Transportation 
Security Act of 2002 (MTSA). Passage of MTSA was a major step in 
establishing a security framework for America's seaports. This security 
framework includes assessment of risks, access controls over personnel 
and facilities, and development and implementation of security plans, 
among other activities. Table 1 shows some of the actions that have 
been taken and programs that are in the process of being implemented to 
carry out this framework.\3\

Table 1: Examples of Actions Taken and Programs Underway to Identify and
                         Reduce Vulnerabilities
------------------------------------------------------------------------
        Action or program                       Description
------------------------------------------------------------------------
Conducting security assessments    MTSA and its implementing regulations
 and developing security plans      require designated owners or
 for facilities and vessels         operators of maritime facilities or
                                    vessels to identify vulnerabilities
                                    and develop security plans for their
                                    facilities or vessels. The plans
                                    were reviewed and approved by the
                                    Coast Guard. Since July 1, 2004, the
                                    Coast Guard has been conducting
                                    inspections of these facilities and
                                    vessels to ensure the plans have
                                    been implemented. The Coast Guard
                                    completed inspections of the
                                    facilities by December 31, 2004, and
                                    is scheduled to complete inspections
                                    of the vessels by July 1, 2005.
------------------------------------------------------------------------
Conducting security assessments    To meet another MTSA requirement, the
 and developing seaport-wide        Coast Guard led efforts to conduct a
 security plans                     seaport-wide security assessment of
                                    each of the Nation's seaports and
                                    develop a security plan for the
                                    seaport zone. In carrying out these
                                    efforts, the Coast Guard worked with
                                    a wide variety of stakeholders, such
                                    as state and local governments, law
                                    enforcement, owners and operators of
                                    facilities and vessels, and trade
                                    and labor organizations.
------------------------------------------------------------------------
Development of the Transportation  TWIC is designed to respond to
 Worker Identification Credential   various statutory provisions
 (TWIC)                             relating to transportation related
                                    worker identification including
                                    MTSA, which requires a biometric
                                    identification card be issued to
                                    individuals requiring unescorted
                                    access to secure areas of seaport
                                    facilities or vessels. This
                                    credential is being designed to be a
                                    universally recognized
                                    identification card accepted across
                                    all modes of the national
                                    transportation system, including
                                    airports, railroad terminals, and
                                    seaports.
------------------------------------------------------------------------
Port Security Assessment Program   Separate from MTSA requirements, the
                                    Coast Guard established a program
                                    after September 11, 2001, to assess
                                    vulnerabilities of the Nation's 55
                                    most strategic commercial and
                                    military seaports. The program has
                                    changed considerably since its
                                    inception and now includes a
                                    geographic information system (GIS)
                                    to help identify and provide up-to-
                                    date information on threats and
                                    incidents, as well as provide
                                    accessible information to help
                                    develop security plans.
------------------------------------------------------------------------
Source: GAO analysis of Coast Guard and TSA data.

    The amount of effort involved in carrying out these actions and 
implementing these programs has been considerable. For example, after 
following an aggressive time frame to develop regulations to implement 
the requirements of MTSA, the Coast Guard reviewed and approved the 
security plans of the over 3,000 facilities and more than 9,000 vessels 
that were required to identify their vulnerabilities and take action to 
reduce them. Six months after July 1, 2004, the date by which the 
security plans were to be implemented, the Coast Guard reported that it 
completed on-site inspections of all facilities and thousands of 
vessels to ensure the plans were being implemented as approved. In 
addition to its work on the security plans and inspections, the Coast 
Guard completed security assessments of the Nation's 55 most 
economically and militarily strategic seaports.

Securing the Cargo Flowing Through Seaports
    While the facilities, vessels, and infrastructure within seaports 
have vulnerabilities to terrorist attack, the cargoes transiting 
through seaports also have vulnerabilities that terrorists could 
exploit. Containers are of particular concern because they can be 
filled overseas at so many different locations and are transported 
through complex logistics networks before reaching U.S. seaports. From 
the time the container is loaded for shipping to the time the container 
arrives at a seaport, the containers must go through several steps that 
involve many different participants and many points of transfer. Each 
of these steps in the supply chain presents its own vulnerabilities 
that terrorists could take advantage of to place a WMD into a container 
for shipment to the United States. A report prepared by the National 
Defense University's Center for Technology and National Security Policy 
stated that a container is ideally suited to deliver a WMD or a 
radiological ``dirty bomb.'' While there have been no known incidents 
yet of containers being used to transport WMDs, criminals have 
exploited containers for other illegal purposes, such as smuggling 
weapons, people, and illicit substances. Such activities demonstrate 
the vulnerability of the freight transportation industry and suggest 
opportunities for further exploitation of containers by criminals, 
including terrorist groups.
    In general, the actions taken thus far are aimed at identifying, 
tracking, and scrutinizing the container cargo shipments moving into 
the country. Most of these actions are being done by CBP, the DHS 
agency responsible for protecting the Nation's borders and official 
ports of entry. CBP uses a layered approach that attempts to focus 
resources on potentially risky cargo containers while allowing other 
cargo containers to proceed without disrupting commerce. This approach 
includes the actions and programs shown in table 2. Several of these 
actions involve a strategy of moving primary reliance for security away 
from control systems at U.S. seaports of entry and toward improved 
controls at points of origin and along the way.\4\

             Table 2: Examples of Container Security Actions
------------------------------------------------------------------------
              Action                            Description
------------------------------------------------------------------------
Automated Targeting System (ATS)   A computer model reviews
                                    documentation on all arriving
                                    containers and helps select or
                                    target containers for additional
                                    scrutiny.
------------------------------------------------------------------------
Supply Chain Stratified            Supplements ATS by randomly selecting
 Examination                        additional containers to be
                                    physically examined. The results of
                                    the random inspection program are to
                                    be compared with the results of ATS
                                    inspections to improve targeting.
------------------------------------------------------------------------
Container Security Initiative      Places staff at designated foreign
 (CSI)                              seaports to work with foreign
                                    counterparts to identify and inspect
                                    high-risk containers for weapons of
                                    mass destruction before they are
                                    shipped to the United States.
------------------------------------------------------------------------
Customs-Trade Partnership Against  Cooperative program between CBP and
 Terrorism (C-TPAT)                 members of the international trade
                                    community in which private companies
                                    agree to improve the security of
                                    their supply chains in return for a
                                    reduced likelihood that their
                                    containers will be inspected.
------------------------------------------------------------------------
Operation Safe Commerce            Begun by the private sector and now
                                    administered by DHS's Office of
                                    Domestic Preparedness, efforts
                                    center on (1) ensuring that
                                    containers are loaded in a secure
                                    environment at the point of product
                                    origin, with 100 percent
                                    verification of their contents; (2)
                                    using such technology as pressure,
                                    light, or temperature sensors to
                                    continually monitor containers
                                    throughout their overseas voyage to
                                    the point of distribution in the
                                    United States; and (3) using cargo-
                                    tracking technology to keep accurate
                                    track of containers at all points in
                                    the supply chain, including
                                    distribution to their ultimate
                                    destinations.
------------------------------------------------------------------------
Megaports Initiative               In 2003, the Department of Energy
                                    (DOE) initiated the Initiative to
                                    enable foreign government personnel
                                    at key seaports to use radiation
                                    detection equipment to screen
                                    shipping containers entering and
                                    leaving these seaports for nuclear
                                    and other radioactive material that
                                    could be used against the United
                                    States or its allies. Through the
                                    Initiative, DOE installs radiation
                                    detection equipment at foreign
                                    seaports that is then operated by
                                    foreign government officials and
                                    port personnel working at these
                                    seaports.
------------------------------------------------------------------------
Source: GAO analysis of CBP and DOE data.

    The table also shows Operation Safe Commerce, initiated by the 
private sector and now administered by DHS's Office of Domestic 
Preparedness, which employs a similar strategy. This action, in pilot-
project form that was initially funded by $58 million appropriated by 
Congress, is intended to help strengthen the security of cargo as it 
moves along the international supply chain in containers.\5\ In late 
2004, the second of two initial phases of the project was concluded. 
This phase involved identifying the security vulnerabilities of 19 
separate supply chains and trying out technologies, such as container 
seals or sensors, and their integration with governmental policies, 
logistic processes and procedures that could mitigate those 
vulnerabilities. The project has received additional funding of $17 
million that has been targeted to conduct a third phase in which the 
best technologies and practices identified in the first two phases will 
be further tested on a high number of containers for their 
effectiveness and tamper resistance on three separate supply chains. A 
report on the best practices identified in the first two phases is 
expected to be issued in June 2005, and completion of the third phase 
is expected by October 2006.
    The other actions taken to enhance the security of cargo and 
commerce have been substantial. In 2002 CBP quickly rolled out the CSI 
and C-TPAT programs shown in table 2 and enlisted the participation of 
several countries and companies. By April 2005, CSI was operational at 
35 seaports, located in 18 countries. Similarly, C-TPAT membership grew 
from about 1,700 companies in January 2003 to over 9,000 companies in 
March 2005. Given the urgency to take steps to protect against 
terrorism after the September 11, 2001, attacks, some of the actions 
were taken using an ``implement and amend'' approach. That is, CBP had 
to immediately implement the activity with the knowledge it may need to 
modify the approach later. For example, in August 2002, CBP modified 
the already developed Automatic Targeting System with new terrorism-
related criteria.

Developing Greater Maritime Domain Awareness
    The third main area of activity to enhance seaport security--
maritime domain awareness--is the understanding by stakeholders 
involved in maritime security of anything associated with the global 
maritime environment that could adversely affect the security, safety, 
economy or environment of the United States. This awareness is 
essential to identify and respond to any unusual patterns or anomalies 
that could portend a possible terrorist attack. To be effective, 
maritime domain awareness must be comprehensive and include information 
on vessels, seaport infrastructures and facilities, shipping lanes and 
transit corridors, waterways, and anchorages, among other things. It 
must also identify threats as soon as possible and far enough away from 
U.S. seaports to eliminate or mitigate the threat. By effectively 
identifying potential threats, this awareness can be used as a force 
multiplier to position resources where they are needed most to respond, 
instead of spreading out limited resources to address all threats, no 
matter how unlikely they are to occur. In addition, when shared, this 
awareness has the potential to facilitate the coordination of efforts 
of local, state, federal, and even international stakeholders in 
responding to potential threats.
    After the attacks of September 11, 2001, the Coast Guard took steps 
such as increasing the number of security patrols conducted within 
seaports and waterways that helped contribute to increased maritime 
domain awareness. Although maritime homeland security duties are not 
new to the Coast Guard, the number of hours the Coast Guard used 
resources (such as ships, boats, or aircraft) to carry out seaport, 
waterway, and coastal security activities during Fiscal Year 2003 
increased by 1,220 percent from their pre-September 11, 2001, level. 
Relative to the rest of the Coast Guard's responsibilities, this 
represented an increase from 4 percent of the Coast Guard's total 
annual resource hours being used for seaport, waterway, and coastal 
security activities before September 11, 2001, to 34 percent by 
September 30, 2003. These activities provide an important input to 
maritime domain awareness as it places Coast Guard personnel out in the 
seaports where they can observe, report, and respond to suspect 
activities or vessels. In addition, these patrols provide the Coast 
Guard with a visible presence out in the seaport that may deter a 
potential terrorist attack from being carried out.
    As the lead federal agency responsible for protecting the U.S. 
maritime domain, the Coast Guard has spearheaded an interagency 
approach for establishing maritime domain awareness. Within this 
approach are several activities and actions intended to collect 
information and intelligence, analyze the information and intelligence, 
and disseminate the analyzed information and intelligence to 
appropriate federal, state, local, or private seaport stakeholders. 
Some of these actions were required under MTSA, such as the 
establishment of an Automatic Identification System to track vessels, 
as well as creation of area maritime security committees of local 
seaport stakeholders who identify and address risks within their 
seaport. In addition to these actions, the Department of Defense and 
DHS formed a Maritime Domain Awareness Senior Steering Group in 2004 to 
coordinate national efforts to improve maritime domain awareness. Under 
Homeland Security Presidential Directive 13, issued in December 2004, 
this steering group is required to develop a national plan for maritime 
domain awareness by June 2005. According to the head of the Coast 
Guard's maritime domain awareness program, a draft of this plan is 
being reviewed before it is submitted to the President. Table 3 shows 
some of the actions currently being taken or underway to enhance 
maritime domain awareness.

  Table 3: Examples of Activities to Develop Maritime Domain Awareness
------------------------------------------------------------------------
   Maritime Domain  Awareness
            activity                        Example of activity
------------------------------------------------------------------------
Collection of information and     Automatic Identification System: AIS
 intelligence                      uses a device aboard a vessel to
                                   transmit an identifying signal to a
                                   receiver located at the seaport and
                                   other ships in the area. This signal
                                   gives seaport officials and other
                                   vessels nearly instantaneous
                                   information and awareness about a
                                   vessel's identity, position, speed,
                                   and course. The Coast Guard intends
                                   to provide AIS coverage to meet
                                   maritime domain awareness
                                   requirements in all navigable waters
                                   of the United States and further
                                   offshore. As of May 2005, the Coast
                                   Guard has AIS coverage in several
                                   seaports and coastal areas.a In
                                   addition to this system, the Coast
                                   Guard is also working with the
                                   International Maritime Organization
                                   (IMO) to develop functional and
                                   technical requirements for long-range
                                   tracking out to 2,000 nautical miles.
                                   The Coast Guard proposed an amendment
                                   to the International Convention for
                                   Safety of Life at Sea (SOLAS) for
                                   this initiative, which is currently
                                   under consideration by the
                                   international body. However,
                                   according to the Coast Guard, the
                                   issue of long-range tracking is
                                   contentious internationally and it is
                                   uncertain whether the amendment will
                                   be adopted.
------------------------------------------------------------------------
Analysis of information and       Maritime Intelligence Fusion Centers
 intelligence                      and Field Intelligence Support Teams:
                                   Centers have been established by the
                                   Coast Guard on the East and West
                                   Coasts to provide actionable
                                   intelligence to Coast Guard
                                   commanders and units. The teams also
                                   conduct initial analysis of
                                   intelligence in coordination with
                                   federal, state, and local law
                                   enforcement and intelligence
                                   agencies.
------------------------------------------------------------------------
Dissemination of information and  Area Maritime Security Committees: The
 intelligence                      committees serve as forums for local
                                   seaport stakeholders from federal
                                   agencies, state and local
                                   governments, law enforcement, and
                                   private industries to gain a
                                   comprehensive perspective of security
                                   issues at a seaport location.
                                   Information is disseminated through
                                   regularly scheduled meetings,
                                   issuance of electronic bulletins on
                                   suspicious activities around seaport
                                   facilities, and sharing key
                                   documents. The committees also serve
                                   as a link for communicating threats
                                   and security information to seaport
                                   stakeholders.
                                  Interagency Operational Centers: These
                                   centers provide information 24 hours
                                   a day about maritime activities and
                                   involve various federal and
                                   nonfederal agencies directly in
                                   operational decisions using this
                                   information. Radar, sensors, and
                                   cameras offer representations of
                                   vessels and facilities. Other data
                                   are available from intelligence
                                   sources, including data on vessels,
                                   cargo, and crew. Unlike the area
                                   maritime security committees, these
                                   centers are operational in nature
                                   with a unified or joint command
                                   structure designed to receive
                                   information and act on it.
                                   Representatives from the various
                                   agencies work side by side, each
                                   having access to databases and other
                                   sources of information from their
                                   respective agencies. These currently
                                   exist in three locations: Charleston,
                                   South Carolina; Norfolk, Virginia;
                                   and San Diego, California.
------------------------------------------------------------------------
Source: GAO analysis of Coast Guard data.
a The Coast Guard currently has AIS coverage in the following areas:
  Alaska (Anchorage, Homer, Nikiski, Seward, Valdez, and Juneau); Puget
  Sound (Seattle, Tacoma, Everett, Port Angeles, and Olympia); the
  Columbia River entrance; San Francisco Bay and approaches; Los Angeles/
  Long Beach Harbor and approaches; San Diego and approaches; Hawaii
  (Honolulu and Pearl Harbor); Gulf of Mexico (Houston/Galveston, Port
  Arthur, Berwick Bay, and Lower Mississippi River--New Orleans--Baton
  Rouge); South Florida (Key West, Miami, and Port Everglades);
  Charleston, South Carolina; Norfolk, Virginia; New York, New York;
  Long Island Sound (New Haven and New London); Boston Harbor and
  approaches; and Sault Ste. Marie, Michigan.

    While many of the activities to develop maritime domain awareness 
are still underway, some progress has already been made. One activity 
in this area that we have recently looked at concerns the process of 
information sharing between federal and non-federal seaport 
stakeholders participating on area maritime security committees.\6\ The 
Coast Guard organized 43 of these committees, covering the Nation's 361 
seaports. While a primary purpose of the committees is to develop a 
seaport-wide security plan for their respective seaports, the 
committees also provide links for communicating threats and security 
information to seaport stakeholders--links that generally did not exist 
prior to the creation of the committees. The types of information 
shared among committee members with security clearances included 
assessments of vulnerabilities at specific seaport locations, 
information about potential threats or suspicious activities, and 
strategies to use in protecting key infrastructure. Our review found 
that the committees improved information sharing among seaport security 
stakeholders, including the timeliness, completeness, and usefulness of 
information shared.
    Another aspect of improving maritime domain awareness involves 
having the assets to communicate and conduct patrols, and in this 
regard, the Coast Guard has budgeted for and is in the process of 
receiving substantial new resources. In 1996, the Coast Guard initiated 
a major recapitalization effort--known as the Integrated Deepwater 
System--to replace and modernize the agency's aging and deteriorating 
fleet of aircraft and vessel assets. The focus of the program is not 
just on new ships and aircraft, but also on newer, more capable assets, 
with improved and integrated command, control, communications and 
computers, intelligence, surveillance, and reconnaissance (C4ISR) 
capabilities. Although the program was started before the attacks of 
September 11, 2001, the Coast Guard plans to leverage these 
capabilities of the 20 year, $17 billion dollar program to enhance its 
maritime domain awareness and seaport security operations such as 
patrols and response.

Challenges for Improving Maritime Security Take Three Main Forms
    Propelled by a strong sense of urgency to secure the seaports, 
federal agencies, such as the Coast Guard, CBP, and TSA, accomplished a 
considerable amount in a short time. At the same time, these actions 
have also shown the strains that often occur when difficult tasks must 
be done quickly. We have not examined every action that has been 
started or enhanced regarding maritime security, but our work to date 
has covered a number of them. It is not surprising that we have found, 
besides the progress made, a number of missteps, false starts, and 
inefficiencies. These represent challenges to overcome.
    While some of these challenges will be resolved with time, 
analysis, and oversight, there are other challenges that bear even more 
careful watching, because they may prove to be considerably more 
difficult to overcome. I would like to highlight three of those 
challenges, providing examples from our recent work. These three 
challenges involve (1) design and implementing programs, (2) 
coordinating between different agencies and stakeholder interests, and 
(3) determining how to pay for these efforts.

Challenges in Program Design and Implementation
    I will discuss today two illustrative examples related to 
challenges in program design and implementation that we have identified 
from our work. These include the (1) lack of planning and performance 
measures for program design and (2) lack of experienced personnel for 
program implementation.

Lack of Planning and Performance Measures for Program Design
    One effect of having to design programs quickly is that they may 
lack such elements as strategic plans and performance measures needed 
to set program goals and monitor performance. The lack of such tools 
can create problems that need to be resolved as the program unfolds. 
For example, we have reviewed CBP's actions to establish a system meant 
to reliably identify potentially risky cargo containers.
    Our work has shown that a need exists for additional efforts in 
several homeland security activities, including securing cargo, in 
order to help ensure the effectiveness of the approach.\7\ As we noted 
in a July 2003 report, the former U.S. Customs Service, part of which 
is now CBP initiated the Container Security Initiative (CSI) in January 
2002 in response to security vulnerabilities created by ocean container 
trade and the concern that terrorists could exploit these 
vulnerabilities to transport or detonate WMDs in the United States.\8\ 
During the first year, program officials quickly designed and rolled 
out the initiative, modifying operations over time. The service 
achieved strong initial participation among the countries that it 
sought to enroll in the initiative, reaching agreement with 15 
governments to place U.S. personnel at 24 seaports, and placing teams 
in 5 of these seaports. However, CBP had not taken adequate steps to 
incorporate human capital planning, develop performance measures, and 
plan strategically--factors essential to the program's long-term 
success and accountability. We noted, for example, that:

   More than 1 year into the implementation of the initiative, 
        CBP had not developed a systematic human capital plan to 
        recruit, train, and assign the more than 120 program staff that 
        would be needed for long-term assignments in a wide range of 
        foreign seaports, some of which could require language 
        capabilities and diplomatic skills.

   CBP lacked performance measures for the initiative that 
        demonstrated program achievements and established 
        accountability. For example, the service lacked measures that 
        assessed the impact of collocating U.S. and foreign customs 
        officials in foreign seaports to determine which containers 
        should be targeted for inspection.

   CBP's focus on short-term operational planning in order to 
        quickly implement the program impeded its ability to 
        systematically carry out strategic planning. We noted that the 
        service did not have a strategic plan for the initiative that 
        describes how it intends to achieve program goals and 
        objectives. As a result, CBP lacked elements of strategic 
        planning that would improve the management of the program and 
        allow CBP to establish accountability for planned expenditures.

    As also reported in July 2003, another program that did not take 
adequate steps to incorporate the human capital planning and 
performance measures necessary for the program's long-term success and 
accountability is CBP's Customs-Trade Partnership Against Terrorism (C-
TPAT) program. Initiated in November 2001, C-TPAT is an initiative that 
attempts to improve the security of the international supply chain. It 
is a cooperative program between CBP and members of the international 
trade community in which private companies agree to improve the 
security of their supply chains in return for a reduced likelihood that 
their containers will be inspected.
    During the first year, more than 1,700 companies agreed to 
participate in the program, and most received the key benefit--a 
reduced likelihood of inspections for WMDs. However, we noted similar 
kinds of problems to those in the CSI program. For example, we found 
that:

   Even as it rolled out new program elements, CBP lacked a 
        human capital plan for increasing the number of C-TPAT staff 
        from 10 to more than 160.

   CBP had not developed performance measures for C-TPAT that 
        would establish accountability and measure program 
        achievements. For example, CBP had no performance measure to 
        assess the impact of C-TPAT on improving supply chain security 
        practices, possibly resulting in benefits being granted to 
        undeserving companies.

   CBP lacked strategic planning in rolling out C-TPAT, failing 
        to communicate how it planned to implement critical program 
        elements designed to verify that companies have security 
        measures in place and follow through with recommended changes.

    We are currently reviewing both the CSI and C-TPAT programs and 
will soon be issuing reports to update our earlier evaluation of these 
programs.

Lack of Experienced Personnel for Program Implementation
    One major challenge in program implementation is the lack of 
experienced personnel, which is to be expected given the rapid increase 
in newly hired personnel since September 11, 2001. Agencies such as the 
Coast Guard expect to see large increases in the number of staff over 
the next few years to help meet new and expanded responsibilities. 
Consequently, they also face a challenge in absorbing this increase and 
training them to be fully productive. We pointed out early on that this 
would be a challenge for the Coast Guard,\9\ and subsequent work has 
shown this to be the case. For example, after a Coast Guard internal 
review found that readiness of its multi-mission stations--the shore-
based units whose responsibilities include finding and rescuing 
mariners in danger--had been in decline for an extended period, the 
Coast Guard began efforts to improve the readiness of the stations. 
This effort was complicated by the new homeland security 
responsibilities the stations assumed after the terrorist attacks of 
September 11, 2001. In a recent review of staffing and readiness at 
these multi-mission stations,\10\ we found that the Coast Guard was 
still in the process of defining new standards for security activities 
and had yet to translate the impact of security-related mission 
responsibilities into specific station readiness requirements, such as 
staffing standards. Consequently, even though station staffing had 
increased 25 percent since 2001, the Coast Guard was unable to align 
staffing resources with mission activities, which resulted in a 
significant number of positions not being filled with qualified 
personnel and station personnel working significantly longer hours than 
are allowed under the Coast Guard's work standards.
    We also identified personnel or human capital challenges such as 
lack of experienced personnel related to the Coast Guard's program to 
oversee implementation of MTSA-required security plans by owners and 
operators of maritime facilities and vessels. These security plans are 
performance-based, meaning the Coast Guard has specified the outcomes 
it is seeking to achieve and has given seaport stakeholders 
responsibility for identifying and delivering the measures needed to 
achieve these outcomes. While this approach provides flexibility to 
owners and operators in designing and implementing their plans, it also 
places a premium on the skills and experience of inspectors to identify 
deficiencies and recommend corrective action. Because the Coast Guard 
had to review and assess for compliance more than 12,000 security plans 
for facilities and vessels, it had to rely heavily on reservists, which 
varied greatly in the level of their skills and experience in this 
area. For example, some reservists had graduate degrees in security 
management while others had no formal security training or experience. 
In June 2004, we recommended that the Coast Guard carefully evaluate 
its efforts during the initial surge period for inspections.\11\ The 
Coast Guard has adjusted its inspection program to make its compliance 
assessments more relevant and useful, but it has not yet determined the 
overall effectiveness of its compliance actions.

Challenges in Coordinating Actions
    Coordinating massive new homeland security actions has been an 
acknowledged challenge since the events of September 11, 2001, and 
seaport security has been no exception. On the federal side alone, we 
have for several years designated implementing and transforming the new 
DHS as a high-risk area.\12\ Since the agency's inception in March 
2003, DHS leadership has provided a foundation to maintain critical 
operations while undergoing transformation, and the agency has begun to 
put systems in place to operate more effectively and efficiently as an 
agency. In managing its transformation, however, DHS still faces such 
issues as forming effective partnerships with other governmental and 
private-sector entities.
    We have made numerous recommendations related to information 
sharing, particularly as it relates to fulfilling federal critical 
infrastructure protection responsibilities. \13\ For example, we have 
reported on the practices of organizations that successfully share 
sensitive or time-critical information, including establishing trust 
relationships, developing information-sharing standards and protocols, 
establishing secure communications mechanisms, and disseminating 
sensitive information appropriately. Federal agencies such as DHS and 
the Coast Guard have concurred with our recommendations that they 
develop appropriate strategies to address the many potential barriers 
to information sharing. However, as of January 2005, many federal 
efforts to do this remain in the planning or early implementation 
stages especially in the area of homeland security information sharing, 
including establishing clear goals, objectives, and expectations for 
the many participants in information-sharing efforts; and 
consolidating, standardizing, and enhancing federal structures, 
policies, and capabilities for the analysis and dissemination of 
information. In this regard, the issue of information-sharing across 
agency and stakeholder lines has emerged as a significant enough 
challenge that we have also designated it as a high-risk area. Here are 
three examples that illustrate the kinds of problems and challenges 
that remain related to seaport security.

Obtaining Security Clearances
    While coordination of information-sharing at the seaport level 
appears to have improved, seaports are experiencing challenges with 
regards to non-federal officials obtaining security clearances. For 
some time, state and local seaport and law enforcement personnel have 
reported problems in obtaining federally generated intelligence 
information about their jurisdictions because they did not have a 
federal security clearance. However, as of February 2005--over 4 months 
after the Coast Guard had developed a list of over 350 non-federal area 
maritime security committee participants as having a need for a 
security clearance--only 28 had submitted the necessary paperwork for 
the background check. Local Coast Guard officials told us they did not 
clearly understand their responsibility for communicating with state 
and local officials about the process for obtaining a security 
clearance. After we expressed our concerns to Coast Guard officials in 
headquarters in February 2005, officials took action and drafted 
guidelines clarifying the role that local Coast Guard officials play in 
the program.

Sharing Information about Security Exercises
    In a January 2005 report,\14\ we reported that improvement in the 
coordination of state, local, and federal entities during seaport 
exercises was needed. While it was still too early to determine how 
well entities will function in coordinating an effective response to a 
seaport-related threat or incident, we identified four operational 
issues that needed to be addressed in order to promote more effective 
coordination. We found that more than half of the seaport exercises and 
after-action reports we examined raised communication issues, including 
problems with information sharing among first responders and across 
agency lines. We also found that over half of the exercises raised 
concerns with communication and the resources available, including 
inadequate facilities or equipment, differing response procedures, and 
the need for additional training in joint agency response. To a lesser 
extent, we found concerns with participants' ability to coordinate 
effectively and know who had the proper authority to raise security 
levels, board vessels, or detain passengers.

Developing a Transportation Worker Identification Credential
    Beyond information-sharing, a host of challenges remain in 
coordinating across agency lines and in resolving issues that cut 
across a wide range of stakeholder perspectives. In this regard, there 
is perhaps no better example in our recent work than the delayed 
attempts to develop a major component of the security framework 
envisioned under MTSA--an identification card for maritime workers. The 
transportation worker identification credential (TWIC) was initially 
envisioned by TSA before it became part of DHS to be a universally 
recognized identification card accepted across all modes of the 
national transportation system, including airports, seaports, and 
railroad terminals, using biological metrics, such as fingerprints, to 
ensure individuals with such an identification card had undergone an 
assessment verifying that they do not pose a terrorism security risk. 
TSA initially projected that it would test a prototype of such a card 
system in 2003 and issue the first of the cards in August 2004. After 
TSA became part of DHS, testing of the prototype was delayed because of 
the difficulty in obtaining a response from DHS policy officials who 
also subsequently directed the agency to reexamine additional options 
for issuing the identification card. In addition to coordinating within 
DHS, TSA has had to coordinate with over 800 national level 
transportation-related stakeholders. Several stakeholders at seaports 
and seaport facilities told us that, while TSA solicited their input on 
some issues, TSA did not respond to their input or involve them in 
making decisions regarding eligibility requirements for the card.\15\ 
In particular, some stakeholders said they had not been included in 
discussions about which felony convictions should disqualify a worker 
from receiving a card, even though they had expected and requested that 
DHS and TSA involve them in these decisions. Obtaining stakeholder 
involvement is important because achieving program goals hinges on the 
Federal Government's ability to form effective partnerships among many 
public and private stakeholders. If such partnerships are not in 
place--and equally important, if they do not work effectively--TSA may 
not be able to test and deliver a program that performs as expected. 
Until TSA and DHS officials agree on a comprehensive project plan to 
guide the remainder of the project and work together to set and 
complete deadlines, and TSA can effectively manage its stakeholders' 
interests, it may not be able to successfully develop, test, and 
implement the card program. We issued a report on TWIC in December 2004 
\16\ and the Senate Committee on Homeland Security and Governmental 
Affairs has asked us to review the program again.

Challenges in Providing Funding for Seaport Security Actions and 
        Initiatives
    Our reviews indicate that funding is a pressing challenge to 
putting effective seaport security measures in place and sustaining 
these measures over time. This is the view of many transportation 
security experts, industry representatives, and federal, state, and 
local government officials with whom we have spoken. While some 
security improvements are inexpensive, most require substantial and 
continuous funding. For example, a preliminary Coast Guard estimate 
placed the cost of implementing the International Maritime Organization 
security code and the security provisions in MTSA at approximately $1.5 
billion for the first year and $7.3 billion over the succeeding decade. 
This estimate should be viewed more as a rough indicator than a precise 
measure of costs, but it does show that the cost is likely to be 
substantial.\17\
    At the federal level, more than $560 million in grants has been 
made available to seaports, localities, and other stakeholders since 
2002 under the Port Security Grant Program and the Urban Area Security 
Initiative. The purpose of these programs was to reduce the 
vulnerability of seaports to potential terrorist attacks by enhancing 
facility and operation security. The programs funded several projects, 
including security assessments; physical enhancements, such as gates 
and fences; surveillance equipment, such as cameras; and the 
acquisition of security equipment, such as patrol vessels or vehicles. 
Awardees have included seaport authorities, local governments, vessel 
operators, and private companies with facilities in seaport areas. 
Interest in receiving port security grants has been strong, and, as 
figure 2 shows, applicant requests have far exceeded available funds. 
We are currently examining the Port Security Grant Program at the 
request of several Members of Congress, and we are focusing this review 
on the risk management practices used in comparing and prioritizing 
applications. Our work is under way, and we expect to issue our report 
later this year.\18\



        Note: Figure 2 does not include $75 million that was awarded to 
        14 high-risk seaport areas under the Urban Area Security 
        Initiative (UASI) by the Office of Domestic Preparedness. This 
        program is separate from its basic UASI program, which provided 
        formula grants to 50 urban areas for equipment, training, 
        planning, exercise, operational needs, and critical 
        infrastructure.

    Where the money will come from for all of the funding needs is 
unclear. In our 2002 statement on national preparedness,\19\ we 
highlighted the need to examine the sustainability of increased funding 
not only for seaport security, but for homeland security efforts in 
general. The current economic environment makes this a difficult time 
for private industry and state and local governments to make security 
investments and sustain increased security costs. According to industry 
representatives and experts we contacted, most of the transportation 
industry operates on a very thin profit margin, making it difficult to 
pay for additional security measures. Budgetary and revenue 
constraints, coupled with increasing demands on resources, makes it 
more critical that federal programs be designed carefully to match the 
priorities and needs of all partners--federal, state, local, and 
private--and provide the greatest results for the expenditure.

Setting Performance Goals and Measures and Assessing Risk Are 
        Important Next Steps
    The final purpose of my testimony today is to offer observations, 
based on the work we have done to date, about important next steps for 
decision makers in charting a course for future actions. The terrorist 
attacks of September 11, 2001, evoked with stunning clarity the face 
and intent of enemies very different from those the nation has faced 
before--terrorists such as al Qaeda, willing and able to attack us in 
our territory using tactics designed to take advantage of our 
relatively open society and individual freedoms. The amount of activity 
in response has been considerable, and although there have been no 
serious incidents in the United States in the interim, the threat of 
terrorism will likely persist well into the 21st century. Thus, it is 
important to continue to make progress in our efforts. Beyond 
addressing the kinds of challenges discussed above, however, two other 
matters stand out. One involves developing a better understanding of 
how much progress has actually been made to secure our seaports; the 
other involves developing a better strategy to manage risk and 
prioritize what areas need further progress and how resources can be 
best allocated.

Lack of Goals and Measures Makes Determining Progress Difficult
    Although there is widespread agreement that actions taken so far 
have led to a heightened awareness of the need for security and an 
enhanced ability to identify and respond to many security threats, it 
is difficult to translate these actions into a clear sense of how far 
we have progressed in making seaports more secure. One reason is that 
seaport security efforts, like homeland security efforts in general, 
lack measurable goals, as well as performance measures to measure 
progress toward those goals. As others such as the Gilmore Commission 
have stated, a continuing problem for homeland security has been the 
lack of clear strategic guidance about the definition and objectives of 
preparedness.\20\ For example, the Coast Guard has a set of performance 
indicators for each of its non-security missions. It regularly reports 
on how well it is doing in rescuing mariners at sea, interdicting 
foreign fishing boats attempting to fish in the U.S. exclusive economic 
zone, or maintaining aids to navigation on the Nation's waterways. 
However, although it has been more than 3 years since the September 11, 
2001, attacks, the Coast Guard is still in the process of developing a 
performance indicator for its seaport security activities that can be 
used to indicate what progress has been made to secure seaports. 
Completion of this indicator and careful tracking of it over the long 
term is essential to help ensure that taxpayer dollars are being spent 
wisely to make seaports more secure. Similarly, as discussed earlier in 
describing the actions taken to secure the cargo transiting through 
seaports in containers, performance measures are needed to determine 
the progress such actions are making to reduce vulnerabilities of the 
international supply chain.
    A challenge exists in measuring progress in this area, because 
seaport security, like many aspects of homeland security, relies upon 
the coordinated actions of many stakeholders and, in many cases, upon 
``layers'' of defenses. In this regard, we have pointed out that 
systems and service standards--which focus on the performance, design, 
and overall management of processes and activities--hold great 
potential to improve coordination across such dimensions and enhance 
measurement of continued preparedness.\21\ While such standards are 
already being used in many parts of the private sector, creation of 
performance and results measures for national security in general, and 
seaport security in particular, remains a work in progress.

Risk Management Is an Essential Tool for Focusing Efforts Effectively
    Even with clear goals and effective performance measures, it seems 
improbable that all risk can be eliminated, or that any security 
framework can successfully anticipate and thwart every type of 
potential terrorist threat that highly motivated, well skilled, and 
adequately funded terrorist groups could think up. This is not to 
suggest that security efforts do not matter--they clearly do. However, 
it is important to keep in mind that total security cannot be bought no 
matter how much is spent on it. We cannot afford to protect everything 
against all threats--choices must be made about security priorities. 
Thus, great care needs to be taken to assign available resources to 
address the greatest risks, along with selecting those strategies that 
make the most efficient and effective use of resources.
    One approach to help ensure that resources are assigned and 
appropriate strategies are selected to address the greatest risks is 
through risk management--that is, defining and reducing risk. A risk 
management approach is a systematic process for analyzing threats and 
vulnerabilities, together with the criticality (that is, the relative 
importance) of the assets involved. This process consists of a series 
of analytical and managerial steps, basically sequential, that can be 
used to assess vulnerabilities, determine the criticality (that is, the 
relative importance) of the assets being considered, determine the 
threats to the assets, and assess alternatives for reducing the risks. 
Once these are assessed and identified, actions to improve security and 
reduce the risks can be chosen from the alternatives for 
implementation. To be effective, however, this process must be repeated 
when threats or conditions change to incorporate any new information to 
adjust and revise the assessments and actions.
    Some elements of risk management have been incorporated into 
seaport security activities. For example, to meet the requirements of 
MTSA, security plans for seaports, facilities, and vessels have been 
developed based on assessments that identify their vulnerabilities. In 
addition, the Coast Guard is using the Port Security Risk Assessment 
Tool, which is designed to prioritize risk according to a combination 
of possible threat, consequence, and vulnerability. Under this 
approach, seaport infrastructure that is determined to be both a 
critical asset and a likely and vulnerable target would be a high 
priority for security enhancements or funding. By comparison, 
infrastructure that is vulnerable to attack but not as critical or 
infrastructure that is very critical but already well protected would 
be lower in priority. In a homeland security setting, possible uses of 
data produced from risk management efforts include informing decisions 
on where the Federal Government might spend billions of dollars within 
and between federal departments, as well as informing decisions on 
grants awarded to state and local governments.
    As the Nation moves ahead with seaport security efforts, there are 
plans to incorporate risk management as part of the Nation's larger 
homeland security strategy. Homeland Security Presidential Directive 7, 
issued in December 2003, charged DHS with integrating the use of risk 
management into homeland security activities. The directive called on 
the Department to develop policies, guidelines, criteria, and metrics 
for this effort. To meet this requirement, the Coast Guard has taken 
steps to use risk management in prioritizing the protection of key 
infrastructure within and between seaports. We are currently in the 
process of assessing the progress the Coast Guard has made in these 
efforts. In addition, we are reviewing the extent to which a risk 
management approach is being used by other DHS agencies, such as the 
Information Analysis and Infrastructure Protection Directorate, to 
evaluate the relative risk faced by key infrastructure within seaports 
and across broad sectors of national activity, such as seaports and 
aviation, to help ensure funding and resources are allocated to where 
they are needed most. Our work is still under way and not far enough 
along to discuss at this time. It is likely, however, that attention to 
risk management will be a key part of the ongoing dialogue about the 
Nation's homeland security actions in general, and its seaport security 
actions in particular.

Concluding Observations
    Managing the risks associated with securing our Nation's seaports 
involves a careful balance between the benefits of added security and 
the potential economic impacts of security enhancements. While there is 
broad support for greater security, the national economy is heavily 
dependent on keeping goods, trucks, trains, and people flowing quickly 
through seaports, and bringing commerce to a crawl in order to be 
completely safe carries its own serious economic consequences. Striking 
the right balance between increased security and protecting economic 
vitality is an important and difficult task. Considering this, three 
things stand out as important from the work we have conducted:

   Seaports are not retreating as a homeland security issue. 
        They are an attractive terrorist target and are likely to 
        remain so, because by their nature they represent a 
        vulnerability that is always open to potential exploitation.

   Seaport security has lived up to its billing as an area in 
        which security measures can be difficult to implement. The 
        range of activity in seaport areas can be extremely wide, as 
        can the range of stakeholders and the fragmentation of 
        responsibility among them. Many of the problems we have 
        identified with individual programs and efforts can likely be 
        overcome with time and effort, but success is not assured. We 
        are already seeing some efforts, such as the TWIC 
        identification card, becoming deeply mired in problems. These 
        activities will thus continue to demand close attention.

   The national dialogue on this issue is likely to focus 
        increasingly in trying to determine what we are getting for our 
        efforts and where we should invest the dollars we have. 
        Therefore, it is critical that federal programs be designed 
        carefully to try to match the priorities and needs of all 
        partners--federal, state, local, and private--and use 
        performance measures to effectively allocate funds and 
        resources. On this point, there is work to do, because agencies 
        such as the Coast Guard currently lack a systematic approach 
        for explaining the relationship between the expenditure of 
        resources and performance results in seaport security, limiting 
        its ability to critically examine its resource needs and 
        prioritize program efforts. Providing answers also requires an 
        ability to carefully assess what the key vulnerabilities are 
        and what should be done to protect them. Only by doing this 
        will we have reasonable assurance that we are doing the best 
        job with the dollars we have.

    Mr. Chairman, this concludes my prepared statement. I would be 
pleased to answer any questions that you or other Members of the 
Committee may have.

ENDNOTES
    \1\ Pub. L. 107-295, 116 Stat. 2064 (2002).
    \2\ Zeigert, Amy, et. al. ``Port Security: Improving Emergency 
Response Capabilities at the Ports of Los Angeles and Long Beach.'' 
California Policy Options 2005. University of California Los Angeles, 
School of Public Affairs (Los Angeles, Calif. 2005).
    \3\ None of the listings in this testimony is meant to be 
exhaustive of all the efforts under way. The Coast Guard has a range of 
activities underway for reducing seaport vulnerabilities that extends 
beyond the actions shown here. Such activities include, among others 
the use of armed boarding officers, formerly known as sea marshals, who 
board high-interest vessels arriving or departing U.S. seaports and 
stand guard in critical areas of the vessels; the establishment of 
Maritime Safety and Security Teams (MSST) to provide antiterrorism 
protection for strategic shipping, high-interest vessels, and critical 
infrastructure; and the underwater port security system, which uses 
trained divers and robotic cameras to check ship hulls and piers and an 
underwater intruder detection system. We have not evaluated the 
effectiveness of these activities.
    \4\ Another program to help secure the overseas supply chain 
process is the Coast Guard's International Port Security Program. In 
response to being required under MTSA to assess antiterrorism measures 
maintained at foreign seaports, the Coast Guard established this 
program in April 2004 to protect the global shipping industry by 
helping foreign nations evaluate security measures in their seaports. 
Through bilateral or multilateral discussions, the Coast Guard and the 
host nations review the implementation of security measures against 
established security standards, such as the International Maritime 
Organization's ISPS Code. To conduct the program, the Coast Guard has 
assigned officials to three regions (Asia-Pacific, Europe/Africa/Middle 
East, and Central/South America) to facilitate the discussions. In 
addition, a Coast Guard team has been established to conduct country/
port visits, discuss security measures implemented, and develop best 
practices between countries. Each year the Coast Guard seeks to visit 
approximately 45 countries that conduct maritime trade with the United 
States.
    \5\ The Nation's three largest container port regions (Los Angeles/
Long Beach, New York/New Jersey, and Seattle/Tacoma) are involved in 
the Operation Safe Commerce pilot project.
    \6\ GAO, Maritime Security: New Structures Have Improved 
Information Sharing, but Security Clearance Processing Requires Further 
Attention, GAO-05-394 (Washington, DC: April 15, 2005).
    \7\ GAO, Container Security: Expansion of Key Customs Programs Will 
Require Greater Attention to Critical Success Factors. GAO-03-770 
(Washington, DC: July 2003); and GAO, Homeland Security: Summary of 
Challenges Faced in Targeting Oceangoing Cargo Containers for 
Inspection, GAO-04-557T (Washington, DC: March 2004). In addition, we 
have additional work underway regarding the Container Security 
Initiative Program and expect to issue our report in May.
    \8\ GAO, Container Security: Expansion of Key Customs Programs Will 
Require Greater Attention to Critical Success Factors. GAO-03-770 
(Washington, DC: July 2003).
    \9\ GAO, Homeland Security: Challenges Facing the Coast Guard as It 
Transitions to the New Department, GAO-03-467T (Washington, DC: 
February 2003).
    \10\ GAO, Coast Guard: Station Readiness Improving, but Resource 
Challenges and Management Concerns Remain, GAO-05-161 (Washington, DC: 
January 31, 2005).
    \11\ GAO, Maritime Security: Substantial Work Remains to Translate 
New Planning Requirements into Effective Port Security, GAO-04-838 
(Washington, DC: June 30, 2004).
    \12\ GAO, High-Risk Series: An Update, GAO-05-207 (Washington, DC: 
January 2005).
    \13\ GAO, Homeland Security: Information Sharing Responsibilities, 
Challenges, and Key Management Issues, GAO-03-1165T (Washington, DC: 
September 17, 2003); and Homeland Security: Information-Sharing 
Responsibilities, Challenges, and Key Management Issues, GAO-03-715T 
(Washington, DC: May 8, 2003).
    \14\ GAO, Homeland Security: Process for Reporting Lessons Learned 
from Seaport Exercises Needs Further Attention, GAO-05-170 (Washington, 
DC: January 2005).
    \15\ Of the facilities testing TSA's prototype, we visited ports 
and facilities in the Delaware River Region, including Wilmington Port 
Authority, the Philadelphia Maritime Exchange, and the South Jersey 
Port. We also visited ports and facilities on the West Coast, including 
those in the Port of Seattle, Port of Los Angeles, and Port of Long 
Beach as well as ports and facilities in Florida, including Port 
Everglades and the Port of Jacksonville.
    \16\ GAO, Port Security: Better Planning Needed to Develop and 
Operate Maritime Worker Identification Card Program, GAO-05-106 
(Washington, DC: December 2004).
    \17\ GAO, Maritime Security: Substantial Work Remains to Translate 
New Planning Requirements into Effective Port Security, GAO-04-838 
(Washington, DC: June 2004).
    \18\ DHS has proposed consolidating homeland grant programs into a 
single program. Known as the Targeted Infrastructure Protection Program 
(TIPP), the program would lump together grant funding for transit, port 
security and other critical infrastructure, and eliminate specific 
grant programs for port, rail, truck, intercity bus, and non-
governmental organizations security. In its Fiscal Year 2006 budget 
request, the Administration proposed $600 million for TIPP, a $260-
million increase in overall funding from Fiscal Year 2005 for the 
specific transportation security grant programs. In Fiscal Year 2005, 
funding for port, rail, truck, intercity bus, and non-governmental 
organizations security totaled $340 million.
    \19\ GAO, National Preparedness: Integration of Federal, State, 
Local, and Private Sector Efforts Is Critical to an Effective National 
Strategy for Homeland Security, GAO-02-621T (Washington, DC: April 
2002).
    \20\ The Advisory Panel to Assess Domestic Response Capabilities 
for Terrorism Involving Weapons of Mass Destruction,  V. Forging 
America's New Normalcy (Arlington, VA: December 15, 2003).
    \21\ GAO, Homeland Security: Observations on the National 
Strategies Related to Terrorism, GAO-04-1075T (Washington, DC: 
September 22, 2004).

                    Appendix I: Related GAO Products

    Coast Guard: Preliminary Observations on the Condition of Deepwater 
Legacy Assets and Acquisition Management Challenges. GAO-05-307T. 
Washington, DC: April 20, 2005.
    Maritime Security: New Structures Have Improved Information 
Sharing, but Security Clearance Processing Requires Further Attention. 
GAO-05-394. Washington, DC: April 15, 2005.
    Preventing Nuclear Smuggling: DOE Has Made Limited Progress in 
Installing Radiation Detection Equipment at Highest Priority Foreign 
Seaports. GAO-05-375. Washington, DC: March 31, 2005.
    Coast Guard: Observations on Agency Priorities in Fiscal Year 2006 
Budget Request. GAO-05-364T. Washington, DC: March 17, 2005.
    Homeland Security: Process for Reporting Lessons Learned from 
Seaport Exercises Needs Further Attention. GAO-05-170, Washington, DC: 
January 14, 2005.
    Port Security: Planning Needed to Develop and Operate Maritime 
Worker Identification Card Program. GAO-05-106. Washington, DC: 
December 10, 2004.
    Maritime Security: Better Planning Needed to Help Ensure an 
Effective Port Security Assessment Program. GAO-04-1062. Washington, 
DC: September 30, 2004.
    Maritime Security: Partnering Could Reduce Federal Costs and 
Facilitate Implementation of Automatic Vessel Identification System. 
GAO-04-868. Washington, DC: July 23, 2004.
    Maritime Security: Substantial Work Remains to Translate New 
Planning Requirements into Effective Port Security. GAO-04-838. 
Washington, DC: June 30, 2004.
    Coast Guard: Deepwater Program Acquisition Schedule Update Needed. 
GAO-04-695. Washington, DC: June 14, 2004.
    Coast Guard: Key Management and Budget Challenges for Fiscal Year 
2005 and Beyond. GAO-04-636T. Washington, DC: April 7, 2004.
    Homeland Security: Summary of Challenges Faced in Targeting 
Oceangoing Cargo Containers for Inspection. GAO-04-557T. Washington, 
DC: March 31, 2004.
    Coast Guard Programs: Relationship Between Resources Used and 
Results Achieved Needs to Be Clearer. GAO-04-432. Washington, DC: March 
22, 2004.
    Contract Management: Coast Guard's Deepwater Program Needs 
Increased Attention to Management and Contractor Oversight. GAO-04-380. 
Washington, DC: March 9, 2004.
    Homeland Security: Preliminary Observations on Efforts to Target 
Security Inspections of Cargo Containers. GAO-04-325T. Washington, DC: 
December 16, 2003.
    Posthearing Questions Related to Aviation and Port Security. GAO-
04-315R. Washington, DC: December 12, 2003.
    Maritime Security: Progress Made in Implementing Maritime 
Transportation Security Act, but Concerns Remain. GAO-03-1155T. 
Washington, DC: September 9, 2003.
    Container Security: Expansion of Key Customs Programs Will Require 
Greater Attention to Critical Success Factors. GAO-03-770. Washington, 
DC: July 25, 2003.
    Homeland Security: Challenges Facing the Department of Homeland 
Security in Balancing Its Border Security and Trade Facilitation 
Missions. GAO-03-902T. Washington, DC: June 16, 2003.
    Coast Guard: Challenges during the Transition to the Department of 
Homeland Security. GAO-03-594T. Washington, DC: April 1, 2003.
    Transportation Security: Post-September 11th Initiatives and Long-
Term Challenges. GAO-03-616T. Washington, DC: April 1, 2003.
    Coast Guard: Comprehensive Blueprint Needed to Balance and Monitor 
Resource Use and Measure Performance for All Missions. GAO-03-544T. 
Washington, DC: March 12, 2003.
    Homeland Security: Challenges Facing the Coast Guard as It 
Transitions to the New Department. GAO-03-467T. Washington, DC: 
February 12, 2003.
    Container Security: Current Efforts to Detect Nuclear Materials, 
New Initiatives, and Challenges. GAO-03-297T. Washington, DC: November 
18, 2002.
    Coast Guard: Strategy Needed for Setting and Monitoring Levels of 
Effort for All Missions. GAO-03-155. Washington, DC: November 12, 2002.
    Port Security: Nation Faces Formidable Challenges in Making New 
Initiatives Successful. GAO-02-993T. Washington, DC: August 5, 2002.
    Combating Terrorism: Preliminary Observations on Weaknesses in 
Force Protection for DOD Deployments through Domestic Seaports. GAO-02-
955TNI. Washington, DC: July 23, 2002.


                Appendix II: Previous GAO Recommendations
------------------------------------------------------------------------
          Agency/program                     GAO recommendations
------------------------------------------------------------------------
     Coast Guard        GAO Recommendations to the U.S. Coast Guard
------------------------------------------------------------------------
Automatic Identification System     To seek and take advantage of
 (AIS)                               opportunities to partner with
                                     organizations willing to develop
                                     AIS systems at their own expense in
                                     order to help reduce federal costs
                                     and speed development of AIS
                                     nationwide. (GAO-04-868)
Deepwater acquisition               Take the necessary steps to make
                                     integrated product team (IPT)
                                     members effective, including (1)
                                     training IPTS in a timely manner,
                                     (2) chartering the sub-IPTs, and
                                     (3) making improvements to the
                                     electronic information system that
                                     would result in better information
                                     sharing among IPT members who are
                                     geographically dispersed. (GAO-04-
                                     380)
                                    Follow the procedures outlined in
                                     the human capital plan to ensure
                                     that adequate staffing is in place
                                     and turnover among Deepwater
                                     personnel is proactively addressed.
                                     (GAO-04-380)
                                    Ensure that field operators and
                                     maintenance personnel are provided
                                     with timely information and
                                     training on how the transition will
                                     occur and how maintenance
                                     responsibilities are to be divided
                                     between system integrator and Coast
                                     Guard personnel. (GAO-04-380)
                                    Develop and adhere to measurable
                                     award fee criteria consistent with
                                     the Office of Federal Procurement
                                     Policy's guidance. (GAO-04-380)
                                    Ensure that the input of contracting
                                     officer's technical representatives
                                     (COTR) is considered and set forth
                                     in a more rigorous manner. (GAO-04-
                                     380)
                                    Hold the system integrator
                                     accountable in future award fee
                                     determinations for improving the
                                     effectiveness of IPTs. (GAO-04-380)
                                    Establish a time frame for when the
                                     models and metrics will be in place
                                     with the appropriate degree of
                                     fidelity to be able to measure the
                                     contractor's progress toward
                                     improving operational
                                     effectiveness. (GAO-04-380)
                                    Establish a total ownership cost
                                     (TOC) baseline that can be used to
                                     measure whether the Deepwater
                                     acquisition approach is providing
                                     the government with increased
                                     efficiencies compared to what it
                                     would have cost without this
                                     approach. (GAO-04-380)
                                    Establish criteria to determine when
                                     the TOC baseline should be adjusted
                                     and ensure that the reasons for any
                                     changes are documented. (GAO-04-
                                     380)
                                    Develop a comprehensive plan for
                                     holding the system integrator
                                     accountable for ensuring an
                                     adequate degree of competition
                                     among second-tier suppliers in
                                     future program years. This plan
                                     should include metrics to measure
                                     outcomes and consideration of how
                                     these outcomes will be taken into
                                     account in future award fee
                                     decisions. (GAO-04-380)
                                    For subcontracts over $5 million
                                     awarded by Integrated Coast Guard
                                     Systems LLC (ICGS) to Lockheed
                                     Martin and Northrop Grumman,
                                     require Lockheed Martin and
                                     Northrop Grumman to notify the
                                     Coast Guard of a decision to
                                     perform the work themselves rather
                                     than contracting it out. (GAO-04-
                                     380)
                                    To update the original 2002
                                     Deepwater acquisition schedule in
                                     time to support the Fiscal Year
                                     2006 Deepwater budget submission to
                                     DHS and Congress and at least once
                                     a year thereafter to support each
                                     budget submission, which should
                                     include the current status of asset
                                     acquisition phases, interim phase
                                     milestones, and the critical paths
                                     linking the delivery of individual
                                     components to particular assets.
                                     (GAO-04-695)
MTSA security plans                 Conduct a formal evaluation of
                                     compliance inspection efforts taken
                                     during the initial 6-month surge
                                     period, including the adequacy of
                                     security inspection staffing,
                                     training, and guidance, and use
                                     this evaluation as a means to
                                     strengthen the compliance process
                                     for the longer term. (GAO-04-838)
                                    Clearly define the minimum
                                     qualifications for inspectors and
                                     link these qualifications to a
                                     certification process. (GAO-04-838)
                                    Consider including unscheduled and
                                     unannounced inspections and covert
                                     testing as part of its inspection
                                     strategy to provide better
                                     assurance that the security
                                     environment at the Nation's
                                     seaports meets the Nation's
                                     expectations. (GAO-04-838)
Multi-mission station readiness     Revise the Boat Forces Strategic
                                     Plan to (1) reflect the impact of
                                     homeland security requirements on
                                     station needs and (2) identify
                                     specific actions, milestones, and
                                     funding needs for meeting those
                                     needs. (GAO-05-161)
                                    Develop measurable annual goals for
                                     stations. (GAO-05-161)
                                    Revise the processes and practices
                                     for estimating and allocating
                                     station personal protection
                                     equipment (PPE) funds to reliably
                                     identify annual funding needs and
                                     use this information in making
                                     future funding decisions. (GAO-05-
                                     161)
Obtaining security clearances       Develop formal procedures so that
                                     local and headquarters officials
                                     use the Coast Guard's internal
                                     databases of state, local, and
                                     industry security clearances for
                                     area maritime committee members as
                                     a management tool to monitor who
                                     has submitted applications for a
                                     security clearance and to take
                                     appropriate action when application
                                     trends point to possible problems.
                                     (GAO-05-394)
                                    Raise awareness of state, local, and
                                     industry officials about the
                                     process of applying for security
                                     clearances. (GAO-05-394)
Port security assessment program    To define and document the
                                     geographic information system (GIS)
                                     functional requirements. (GAO-04-
                                     1062)
                                    Develop a long-term project plan for
                                     the GIS and the Port Security
                                     Assessment Program as a whole
                                     (including cost estimates,
                                     schedule, and management
                                     responsibilities). (GAO-04-1062)
Resource effectiveness              To develop a time frame for
                                     expeditiously proceeding with plans
                                     for implementing a system that will
                                     accurately account for resources
                                     expended in each of its program
                                     areas. (GAO-04-432)
                                    Ensure that the strategic planning
                                     process and its associated
                                     documents include a strategy for
                                     (1) identifying intervening factors
                                     that may affect program performance
                                     and (2) systematically assessing
                                     the relationship between these
                                     factors, resources used, and
                                     results achieved. (GAO-04-432)
Seaport exercises                   To help ensure that reports on
                                     terrorism-related exercises are
                                     submitted in a timely manner that
                                     complies with all Coast Guard
                                     requirements, the Commandant of the
                                     Coast Guard should review the Coast
                                     Guard's actions for ensuring
                                     timeliness and determine if further
                                     actions are needed. (GAO-05-170)
------------------------------------------------------------------------
   Department of Energy      GAO Recommendations to the Department of
                                 Energy
------------------------------------------------------------------------
Megaports Initiative                Develop a comprehensive long-term
                                     plan to guide the future efforts of
                                     the Initiative that includes, at a
                                     minimum, (1) performance measures
                                     that are consistent with DOE's
                                     desire to install radiation
                                     detection equipment at the highest
                                     priority foreign seaports, (2)
                                     strategies to determine how many
                                     and which lower priority ports DOE
                                     will include in the Initiative if
                                     it continues to have difficulty
                                     installing equipment at the highest
                                     priority ports, (3) projections of
                                     the anticipated funds required to
                                     meet the Initiative's objectives,
                                     and (4) specific time frames for
                                     effectively spending program funds.
                                     (GAO-05-375)
                                    Evaluate the accuracy of the current
                                     per port cost estimate of $15
                                     million, make any necessary
                                     adjustments to the Initiative's
                                     long-term cost projection, and
                                     inform Congress of any changes to
                                     the long-term cost projection for
                                     the Initiative. (GAO-05-375)
------------------------------------------------------------------------
U.S. Customs and Border          GAO recommendations to the U.S. Customs
      and Protection                              Border Protection
------------------------------------------------------------------------
Container Security Initiative       Develop human capital plans that
 (CSI) and Customs-Trade             clearly describe how CSI and C-TPAT
 Partnership Against Terrorism (C-   will recruit, train, and retain
 TPAT)                               staff to meet their growing demands
                                     as they expand to other countries
                                     and implement new program elements.
                                     These plans should include up-to-
                                     date information on CSI and C-TPAT
                                     staffing and training requirements
                                     and should be regularly used by
                                     managers to identify areas for
                                     further human capital planning,
                                     including opportunities for
                                     improving program results. (GAO-03-
                                     770)
                                    Expand efforts already initiated to
                                     develop performance measures for
                                     CSI and C-TPAT that include outcome-
                                     oriented indicators. These measures
                                     should be tangible, measurable
                                     conditions that cover key aspects
                                     of performance and should enable
                                     agencies to assess accomplishments,
                                     make decisions, realign processes,
                                     and assign accountability.
                                     Furthermore, the measures should be
                                     used to determine the future
                                     direction of these Customs'
                                     programs. (GAO-03-770)
                                    Develop strategic plans that clearly
                                     lay out CSI and C-TPAT goals,
                                     objectives, and detailed
                                     implementation strategies. These
                                     plans should not only address how
                                     the strategies and related
                                     resources, both financial and
                                     human, will enable Customs to
                                     secure ocean containers bound for
                                     the United States, but also
                                     reinforce the connections between
                                     these programs' objectives and both
                                     Customs' and the Department of
                                     Homeland Security's long-term
                                     goals. (GAO-03-770)
                                    Use its resources to maximize the
                                     effectiveness of its automated
                                     targeting strategy to reduce the
                                     uncertainty associated with
                                     identifying cargo for additional
                                     inspection. (GAO-04-557T)
                                    Institute a national inspection
                                     reporting system. (GAO-04-557T)
                                    Test and certify CBP officials that
                                     receive the targeting training.
                                     (GAO-04-557T)
                                    Resolving the safety concerns of
                                     longshoremen unions. (GAO-04-557T)
------------------------------------------------------------------------
      Transportation Security      GAO recommendations to the U.S.
       Transportation Administration                      Security
                             Administration
------------------------------------------------------------------------
Transportation worker               Develop a comprehensive project plan
 identification card (TWIC)          for managing the remaining life of
                                     the TWIC project. (GAO-05-106)
                                    Develop specific, detailed plans for
                                     risk mitigation and cost-benefit
                                     and alternatives analyses. (GAO-05-
                                     106)
------------------------------------------------------------------------
Source: GAO.


    The Chairman. Thank you very much.
    Did you examine the Port of Los Angeles?
    Ms. Wrightson. We have been to Los Angeles numerous times 
in the course of working on various requests for this Committee 
and others. Los Angeles/Long Beach represents an incredibly 
critical seaport, and it suffers from a lot of the problems 
that are described generally in our reports--from those of TWIC 
to those of securing facilities and providing adequate patrols. 
Overall, Los Angeles, like other ports, has both security 
accomplishments and security gaps.
    The Chairman. Did you write a separate report on it?
    Ms. Wrightson. We have never issued a separate report on 
Los Angeles. And if we did, it probably would have to be 
classified. We wouldn't be able to present it publicly.
    The Chairman. All right. Are you aware of their secure zone 
versus this working zone?
    Ms. Wrightson. Absolutely.
    The Chairman. Are you critical of that?
    Ms. Wrightson. Well, we would--in order to make an informed 
judgment about it--we would need to audit it to see what risks 
are mitigated and what problems remain. And we haven't done 
that.
    The Chairman. Well, it was pointed out to me that no one 
goes into that secure zone unless they're known personally by 
about five other people.
    Ms. Wrightson. All ports--which Admiral Hereth is very able 
to tell you--have security zones around critical 
infrastructure. So, for example, there's a security zone around 
Logan Airport, there are security zones around most, and they 
are, to various extents, patrolled and protected. But the--I 
must say, in general, the efficacy--we have a lot of effort--
the efficacy of these efforts, be they for domestic security or 
internationally, still remain to be determined. I think it 
would be an excellent area for your future oversight and 
investigation if we were to look at those.
    The Chairman. Before he left, Senator Lott told me that we 
have appropriated a total of $515 million from June 2002 
through December 2003. Of that money, only $107 million had 
been spent by December 2004. Are you familiar with those 
figures, Admiral?
    Admiral Hereth. I presume you're talking about the grant--
Port Security Grant Program, sir?
    The Chairman. Right.
    Admiral Hereth. It may be because of--the constraints on 
the contracts haven't been met by the grantees. But I'm not 
specifically familiar with the details of that. I can certainly 
give you some feedback, sir.
    The Chairman. Senator Lott had to go to another meeting, 
but he's very critical of the rate of spending, in terms of the 
security aspects of the grants we've already made. Would you 
have someone contact him and see if we can get an answer for 
him of why the rate of spending for security, specifically 
appropriated for that purpose is so low?
    Senator Inouye?
    Senator Inouye. Recently, a report was issued that nearly 
$8 billion worth of security equipment and devices used by the 
airports are non-functional or don't serve the purpose, and 
will have to be thrown away. I presume you use similar 
equipment in the ports, Mr. Jacksta.
    Mr. Jacksta. Yes, sir. We have--as I indicated in my 
opening remarks, we do have large-scale X-ray systems at the 
port of entries, at the seaports, somewhere in the area of 
about 56 actually there, to do the VACIS examination--that's an 
X-ray of the container as it comes off. We also use equipment 
such as personal radiation detectors, which are carried by the 
inspectors, and indicate whether there's any type of 
radiological signature coming from any of the containers.
    We also have, and we're deploying right now, radiation 
portal monitors to the major seaports. We already have them 
installed at Newark, Jacksonville, and Boston. And this summer 
we'll be putting them at the L.A./Long Beach seaport area.
    Senator Inouye. And you will continue to employ them, 
notwithstanding the fact that the airports find them non-
functional?
    Mr. Jacksta. Well, sir, I don't know whether the equipment 
that CBP is utilizing at the airports are basically the same 
type of technology--X-ray systems. We use that equipment. And, 
from our knowledge, the equipment is working well in helping us 
examine containers and luggage, that are coming into the United 
States.
    Senator Inouye. I would suggest you check them out.
    Mr. Skinner, in your testimony you indicated that--in your 
grant program--that there are a considerable number of grantees 
who are not prepared, or don't know how, to use these funds. 
Did I hear correctly?
    Mr. Skinner. Yes, sir, you did. Although we did not go to 
each of the grantees to validate why, individually, the funds 
were not being spent in a timely manner, we did note, during 
our review, when we questioned program officials about this, 
that there was a slow rate of expenditure because there were 
considerable negotiations going on between the Department and 
the grant recipient trying to further define what the grant 
funds were to be used for. In other words, the grants were 
awarded before we were clear as to exactly what we intended to 
accomplish with those funds.
    That, coupled with the fact that, at the time we were doing 
our review, there was only one individual that had 
responsibility for providing oversight and monitoring of those 
grants, and, as a result, the slow spending rate was never 
brought to light until late 2004, early 2005.
    Senator Inouye. Over the years, I've learned that just 
about every department, bureau, and section provides some sort 
of grant program, and it's not easy to get these grants. Very 
competitive. And most of them are highly qualified. How is it 
that, in your area, you say most of them don't know how to use 
the funds or have no experience?
    Mr. Skinner. No, sir. What we were saying was that the 
grantee was not prepared to use the funds. In other words, 
their grant application was not specific enough to allow the 
Department to determine what we were going to get for our 
money. So, once the grant was then awarded, negotiations took 
place.
    Senator Inouye. And not withstanding that, the grant was 
approved?
    Mr. Skinner. That's correct, sir.
    Senator Inouye. Did someone evaluate the grant application?
    Mr. Skinner. Yes, sir. It went through a very intensive 
evaluation process, both at----
    Senator Inouye. But with that intensive----
    Mr. Skinner.--the field and headquarters level.
    Senator Inouye.--you didn't see this.
    Mr. Skinner. I beg your pardon, sir?
    Senator Inouye. You didn't see the shortcoming. With the 
intensive----
    Mr. Skinner. Evidently not. This was not universal. There 
may be other reasons why the moneys were not spent. We did not 
go down to the grantee level. What we did identify, however, 
like I said, was, the fact that there was considerable 
negotiations going on which delayed the actual expenditure of 
funds.
    Senator Inouye. Well, did you find when these funds were 
not properly used, that they were taken back? Did the agency 
seek a return----
    Mr. Skinner. It's not that they were not properly used; 
they just were not used at all. They were still available for 
use. And once the Department was satisfied how the funds would, 
in fact, be used--after the award, after the fact--then I would 
suspect that they would then apply those funds and expend them.
    Senator Inouye. Thank you very much.
    Just prior to your testimony, the Congressman testified, 
indicating that it takes over a year to get the security 
clearance, and that there are 450,000 awaiting clearance. Is 
that the situation in the ports?
    Mr. Jacksta. Well, I'd like to begin by saying that, from 
CBP's perspective, we have our officers and the supervisors 
that are engaged with the examination and making decisions on 
what to inspect. They have that type of clearance. We ensure 
that the intelligence and information that's required to get to 
the CBP officer is getting to the actual location and to the 
officers who need to have that information. So, although we 
would like to have more individuals with security clearance, 
the agency does have people available who get that information 
and look at it.
    Senator Inouye. Admiral?
    Admiral Hereth. Yes, sir. I can add a little bit to that. 
We, since 9/11, have set up our own security center. We process 
our own security clearances for all the members of the Coast 
Guard and our employees. That's going fine. We've also taken 
the step to go back to the Department and get authorization to 
get up to 800 clearances for members of industry and/or trade 
associations. And, as the Congressman pointed out, we think 
that's a key feature that needs to be implemented quickly. And 
we have distributed authorizations around the country. We have 
43 Area Maritime Security Committees, and we've asked our 
Captains of the Port to serve as the focal points to identify 
people in the Area Committees appropriate industry-segment 
representatives that we could communicate with, that could 
get--you know, get clearances, authorized security clearances, 
so we can talk to them about secret information and pass 
current information in an appropriate, timely, and transparent 
fashion. We believe that's a hugely positive step.
    We can process those clearances in a timely fashion. I 
don't think it would take anywhere near a year, but it's going 
to take a month or two to get them through the system, but the 
challenge is getting the members who want the clearance to fill 
out the--I think it's a 17-page form. We struggle on that 
front. But we're trying to push through that. We're trying to 
do that as quickly as we can, because we think that's an 
important part of the communication process that needs to 
happen between the regulatory agencies--Coast Guard, in 
particular--and the industry segments that we work with in the 
maritime.
    Senator Inouye. Ms. Wrightson?
    Ms. Wrightson. Thank you, I want to add to Admiral Hereth's 
comments that--to shed some light on this--in terms of what's 
going on at ports with Area Maritime Security Committees, 
that's the group Congressman Ruppersberger was talking about--
these were the 361 people that the Coast Guard immediately 
designated as in need of clearances. Of those 361, only 28 had 
applied, 4 months after the fact. When we went in and audited 
it, we found three things as key explanatory factors. First, 
there was an insufficient understanding of what they were 
supposed to do by--by they I mean these private parties and 
local officials. Second, there was confusion on the part of 
Coast Guard onsite, as to what their roles and responsibilities 
were. And, third--and this is very important, going forward--we 
found limitations in the management information system that the 
Coast Guard had to troubleshoot problems.
    As it always does, the Coast Guard is very nimble and has 
been very responsive to the recommendations that we've made to 
correct these problems, so one would anticipate improvements 
there. However, it appeared--correct me if I'm wrong--that the 
Coast Guard may be getting this as larger responsibility for 
DHS. Has that changed, or is there still talk of that?
    Admiral Hereth. There must be still talk of that. Our focus 
has been getting the--in the instant, getting those 800 
clearances in position so we can actually talk, at the secret 
level, with industry representatives, along with a handful of 
representatives inside the beltway. Because the trade 
associations--and I think there's 32 that we're linked with 
here inside the beltway--provide a key role in linking back to 
their members. And the credibility and the timeliness of 
getting information out hinges on getting those clearances in 
place, we think. It will be a much more effective system and a 
very--and a step forward for all of us.
    Ms. Wrightson. And if DHS piggybacks on the Coast Guard's 
better efforts in this area, it'll return us to the other 
issues I raised, which is the sustainability of the resources 
the Coast Guard has to do this work, and that is a very large 
list of requirements. And whether or not the Coast Guard has 
the resources--they always have the will--to do it is a 
different question.
    Admiral Hereth. One other add-on item, sir, if I might? We 
envisioned an Internet portal available to industry segments, 
password-protected, appropriately secure, to pass sensitive, 
but unclassified, information. That's another important link, 
to share information in a continuing basis with our industry 
representatives so that we get information quickly about 
threat--changing threats, threat advisories, threat bulletins 
that might be useful to various industry segments. And we've 
done a beta test now in eight ports, and the response has been 
very positive, so we're going to move ahead and implement such 
a system. That's part of the Homeland Security Information Net, 
but it's an Internet portal that will be accessible to 
industry.
    Senator Inouye. Well, I thank all of you for the service 
you're rendering to the Nation. Thank you very much.
    Thank you, Mr. Chairman.
    The Chairman. Senator Rockefeller?

            STATEMENT OF HON. JOHN D. ROCKEFELLER, 
                U.S. SENATOR FROM WEST VIRGINIA

    Senator Rockefeller. Thank you, Mr. Chairman.
    A couple of thoughts, questions. You have, on the--Mr. 
Skinner, you have--on the first page of your GAO highlights, 
you have this interesting statement, ``This testimony makes no 
recommendations, but cites several reports in which 
recommendations were previously made.'' In view of what I've 
been hearing this morning, I find that very worrisome.
    The--I would understand, I guess, that inspectors general 
are meant to, sort of, comment on the state of matters, but the 
state of matters strikes me, in all of this discussion, as one 
of the more depressing conditions of moving forward toward 
homeland security at the port level that I could have possibly 
imagined. And I wonder why it is that you--Ms. Wrightson, you 
referred to having made recommendations to one of the 
panelists, but you can't make recommendations to the public----
    Ms. Wrightson. Oh, no, that is an incorrect interpretation.
    Senator Rockefeller.--or to the Congress.
    Ms. Wrightson.--OK. That's a very good question. But what 
the sentence really means is that there are no recommendations 
contained in this written summary statement; however, on page 
32 of the statement, there follows three pages of detailed 
recommendations that we have provided in prior reports and are 
publicly available in the backs of each of the individual 
reports we used to prepare my statement and they are 
recommendations for improvements in all of the problem areas I 
cited.
    So, for example, in the program that the Admiral and I were 
just talking about, GAO recommended an--to take better 
advantage of the management-information system, to develop 
clearer guidance to the ports, and to facilitate--adopt DOD 
practices that might assist in facilitating stakeholders to 
fill out their applications. So----
    Senator Rockefeller. Previous----
    Ms. Wrightson.--there's a huge----
    Senator Rockefeller.--GAO recommendations----
    Ms. Wrightson.--list of recommendations, and they're 
public.
    Senator Rockefeller. Previous.
    Ms. Wrightson. Well, some of them were issued very 
recently; all are outstanding and need to be completed by the 
responsible agencies.
    Senator Rockefeller. All right.
    Ms. Wrightson. And you would consider these to be----
    Senator Rockefeller. Well, let me----
    Ms. Wrightson.--recommendations I'm making----
    Senator Rockefeller.--let me----
    Ms. Wrightson.--today.
    Senator Rockefeller.--I'm just--I'm just a little struck, 
frankly, by the sort of calmness at the table--at yours, that 
is, all of you.
    Mr. Jacksta, you started out with, kind of, a list of all 
the good things that are being done. You, sir, were very 
pleased with what the Coast Guard is doing. And you both talked 
about what you talked about. But I just----
    West Virginia is not a large state, but we have the 
seventh-largest inland port in the country, and I think that 
you're about to shift most--a lot of our workers to Louisville. 
I don't know whether that's true or not. I don't get a--I never 
have had a feeling about Homeland Security that there was any 
coordination.
    And it may have been that the President was right when he 
had--his first instinct was not to do it at all, but to somehow 
figure out another system, that the melding of 22 agencies, or 
27, or whatever it was, Mr. Chairman, just wasn't going to 
work. I--well, I know we finally did it, and then--and he 
agreed to it. But it may have been that he was right to be 
skeptical.
    I'm on the Intelligence Committee, as the Congressman was 
who testified earlier, and it's nothing but a litany of total 
lack of preparation wherever we turn. And we have this 
fascination with anything that goes wrong in Afghanistan or 
Iraq or anywhere else, and, obviously, 9/11 and things that go 
on even not of that magnitude here, but the concept of 
preparedness is a uniquely American one, where everybody waits 
on everybody else. I really believe that. That's not to be--to 
pick out--on you, in particular, but I think that, generally 
speaking, people wait for others.
    I mean, I don't--this whole question about why grants 
aren't being used and--well, maybe they're not ready to use 
them, or they're not cleared to use them, and the waiting 
lists, and all the rest of it--it just--I'm just struck by the 
calmness of all of you, and by the, sort of, satisfaction you 
have as you describe what it is you're doing, even though on 
your end you're describing some of your frustrations, and then 
you have, I guess, two pages--32 and 33--of recommendations, 
some of them being previous.
    Are you all hooked up onto the same computer system? 
``You,'' 27 agencies? Are you interoperable?
    Mr. Jacksta. There is the exchange of information, yes. CBP 
exchanges information with the Coast Guard on a regular basis. 
We have people that are working together, both at our National 
Targeting Center, as well as at the Coast Guard Intelligence 
Center, to make sure that the information is, first of all, 
getting--being looked at and making sure that it's getting out 
to our offices in the field. We have information provided by 
other agencies at our NTC. We have the FBI. We have TSA. We 
have ICE. We have a number of Coast Guard. So, there's people 
sitting there 24-by-7, working together, exchanging 
information.
    So, I think, sir, there is a sense of urgency that--here, 
in the sense that we feel that it's important for us to 
continue to work, to exchange information, to get the equipment 
out there as fast as possible so that we can do the screening 
of the cargo and containers. We have systems in place that have 
the----
    Senator Rockefeller. But you can be--but what is it? I've 
always thought it was about 5 percent of cargo that was getting 
screened. What did you say it was?
    Mr. Jacksta. Right now, in Fiscal Year 2004, sir, for the 
seaport-side-of-the-house containers, we screen approximately 
5.5 percent of the----
    Senator Rockefeller. Yes, 5 percent. I mean, how do you, 
kind of, live with that? In other words, do you have a chart in 
your mind which tells you how you get to 15, then to 50, then 
to 75 percent, then to 100 percent? I mean, do you have a clear 
idea of what has to be done? In other words, if you're all 
getting shafted by OMB or--were any of your testimonies cleared 
by OMB before you gave them?
    Ms. Wrightson. We didn't clear ours with OMB.
    Mr. Skinner. No, sir, ours was not.
    Senator Rockefeller. You understand the little problem with 
that, right? In other words, even if you had different 
thoughts, you couldn't say them, because OMB has to clear them. 
So, how do you--before you go to sleep at night, how do you 
figure out how you're going to get to 25, 50, and 100? 
Everybody knows Homeland Security is underfunded. Everybody in 
the world knows it's underfunded. Do you ever take it higher 
up? You're acting--you're Deputy Director, right?
    I'm finished. I'm just--I'm angry. I'm angry, Mr. Chairman. 
You occasionally get angry; not very often.
    The Chairman. The gentleman on your right is, too.
    Senator Rockefeller. Is he? OK.
    Senator Lautenberg. Thank you very much.
    [Laughter.]

            STATEMENT OF HON. FRANK R. LAUTENBERG, 
                  U.S. SENATOR FROM NEW JERSEY

    Senator Lautenberg. Thank you, Mr. Chairman.
    First, I ask that my opening statement be included in the 
record as if read.
    [The prepared statement of Senator Lautenberg follows:]

            Prepared Statement of Hon. Frank R. Lautenberg, 
                      U.S. Senator from New Jersey

    Mr. Chairman, thank you for holding this hearing on this important 
subject.
    I served on the Port Authority of New York and New Jersey before 
coming to the Senate in 1983. So I have long been aware of the vital 
role our ports play in our Nation's economy . . . as well as potential 
security risks at our ports.
    Obviously, the importance of port security increased exponentially 
after 9/11. The 9/11 Commission warned that we must not make the 
mistake of assuming that the next attack on our Nation will be the same 
as the last one. We have invested billions of dollars to improve the 
security of our commercial aviation system. But I worry that we have 
not done enough to secure other potential targets--especially our 
ports. To put it bluntly: we still haven't gotten serious about port 
security.
    Mr. Chairman, our Nation has more than one thousand harbor 
channels, and 25 thousand miles of waterways serving 360 ports. 
Obviously, we cannot monitor everything that happens on every one of 
these waterways 100 percent of the time. But if we were serious about 
port security, we would focus on the ports and waterways that are most 
at risk.
    Unfortunately, this hasn't been the case. According to the FBI, a 
two-mile stretch between Port Newark and the Newark Airport is the 
Number One potential target for terrorists in the entire country. 
Despite this high risk, New Jersey received only three percent of the 
port security grants distributed by the Department of Homeland Security 
last year. This was not nearly enough for a state that has two of the 
largest ports in the country.
    Mr. Chairman, I realize that every Senator always fights for 
resources for his or her state. But when it comes to Homeland Security, 
we should place the safety of the American people above pork-barrel 
politics. The Maritime Security Act that the Senate unanimously 
approved last year included my legislation adopting a strict risk-based 
standard for port security grants. Unfortunately, the House never acted 
on that bill. The DHS Inspector General has confirmed that the Port 
Security Program did NOT award previous grants on the basis of risk 
assessment.
    DHS recently announced it is accepting applications for a new round 
of port security grants totaling $140 million. I strongly urge DHS to 
follow the recommendations of its own Inspector General, and use a 
strict assessment of risk in determining which requests are granted.
    Mr. Chairman, I thank you once again for this hearing. I also thank 
our witnesses, and I look forward to hearing what they have to say 
about the urgent issue of securing our Nation's seaports.

    Senator Lautenberg. I make a note there that I was 
Commissioner of the Port Authority of New York and New Jersey 
when I came to the Senate, and I'm very much aware of what the 
significance is of our ports to our general well-being, $740 
billion a year added to our gross domestic product as a result 
of that. I'm very much aware. Also I want to commend each one 
of you for your excellent testimony. I may view things a little 
differently, because I supply the freneticism and you don't 
have to, but you do have to supply the facts, as you did, and 
they were wonderfully constructed, and I commend you.
    And one of the things that the group at this table have in 
common is that, we're all very much supportive of the Coast 
Guard, the work that you do, Admiral, and the number of 
assignments that continue to grow. Yet we heard from Mr. 
Jacksta that the fleet is aged. I'm aware of that, since I'm 
aged and I have seen a lot of these boats around for a long 
time. But the fact of the matter is that I don't think that 
we've given enough resources to this--to our needs.
    Mr. Chairman, I think that when we look at where we are, 
that we fail to recognize that the other front from the Middle 
East is right here at home, and that we have to spend according 
to our needs. And we've spent 250--we've appropriated $250 
billion so far for the war effort in Iraq--and I'm for it, all 
the way, in order to do the best we can for our troops and to 
conclude the task we've taken on there--additonally we're about 
to add $50 billion in the Defense bill to help the war in Iraq 
be pursued.
    When we look at the home front--and I am reminded--we're 
fortunate to have distinguished Chairman/Co-Chairman of this 
Committee, people who have experienced war up front and know 
what you need to protect yourself, and how you fight. This is 
the second front. And I remind the distinguished Senator from 
Hawaii, who wears the Congressional Medal of Honor, that at the 
time of Pearl Harbor, who lost, I think it is, Senator Inouye, 
2,400 people, and on 9/11, almost 3,000 people. This tells us 
something about where the risk is. It's at home too.
    So when we look at what the Coast Guard recommended, Mr. 
Chairman, for our security needs, we talked about something 
over $7 billion for the decade. And we're talking about $140 
million to be distributed, of which my State of New Jersey, 
with one of the busiest ports in the country, will likely get 3 
percent, $4 million. It just isn't enough money to do the job. 
And I think Senator Rockefeller indicated that it isn't. We 
don't recognize the significance. We don't recognize the risk.
    As a matter of fact, if you look out here and you see the 
railroad tracks, and you know that some of those cars carry 
toxic chemicals; enough, it's said, to endanger thousands of 
people here; an attack on a plant, a chemical plant in New 
Jersey, could endanger 12 million people. What if chlorine gas 
was involved? If chlorine's involved, that's going to be the 
effect.
    And so, Admiral, I ask you, What's the status of your 
personnel levels now?
    Admiral Hereth. We've been about--since 2001, focused on 
MTSA implementation--port-security work, specifically. We've 
increased our numbers by about 800.
    Senator Lautenberg. That's from where? What was the base?
    Admiral Hereth. I can't quote you the specific base, but, 
at our Marine Safety Offices, we probably had 2,500 people; in 
our group offices, we had another 2,500 people. So, we're now 
in the process of homogenizing those to gain some synergy in 
terms of performance. So, we have a number of folks in the 
Coast Guard focused specifically on those missions area.
    Senator Lautenberg. Right. But on the total personnel in 
Coast Guard, are you familiar with that figure--the total 
requirement that are being met now by Coast Guard, fully, with 
its navigation, pollution control, refugee interception, et 
cetera, et cetera? What----
    Admiral Hereth. I can't quote you a figure, sir----
    Senator Lautenberg. OK.
    Admiral Hereth.--we'll get----
    Senator Lautenberg. I know that you're short, and I know 
that you've got these old vessels. And I see the guys on the 
Hudson River patrolling in rubber boats--in rigid-hull boats 
out there in all kinds of weather.
    Mr. Chairman, it's just--we're not doing enough to protect 
our people in this second front, as I call it, at home, where 
we see the possibility of disaster all across our country. But 
we look at it particularly in places that are most obvious. 
Aviation, we spend a ton of money, and don't do it quite as 
good as we ought to. And that's part of growing pains. And if 
one doesn't understand what the transition is from a relatively 
peacetime structure into the kind of security needs we have, 
then one is kidding oneself. And we ought to be finding ways to 
finance the war at home in sufficient terms.
    $7.2 billion recommended by the Coast Guard for port 
security over the next 10 years, and we don't come anywhere 
near it with $140 million proposed for this year. And we 
spend--and we're spending over--will have spent at least $300 
billion defending Iraq, trying to help them get their 
institutions, their infrastructure together. Over $300 billion. 
And what about the ports of New York and Louisiana and across 
the ocean in Hawaii and Alaska?
    Mr. Chairman, we have to look at these problems. These 
witnesses were excellent. I appreciate your presentations. I 
thank you, Mr. Chairman, for having this hearing.
    The Chairman. Senator Inouye, any further comments?
    Senator Inouye. No, sir.
    The Chairman. Gentlemen, we thank you all very much, and 
appreciate your--as Senator Inouye said, appreciate your 
service. I think you're doing a marvelous job with what you 
have. I didn't agree with Homeland Security, but we have to pay 
for what is there now, and the gentlemen are right about that. 
But it's one of those things. Thank you very much.
    We'll now turn to panel two: Ms. Jean Godwin, Vice 
President, American Association of Port Authorities; and Mr. 
Christopher Koch, President and Chief Executive Officer of the 
World Shipping Council.
    All of the statements that were filed this morning will 
appear in the record as though read. And, as a matter of fact, 
I forgot, I would put my opening statement in the record, as 
well as Senator Inouye's.
    [The prepared statements of Senators Stevens and Inouye 
follow:]

    Prepared Statement of Hon. Ted Stevens, U.S. Senator from Alaska

    Thank you, Senator Inouye, for requesting to chair this important 
hearing and for your commitment to the security of our Nation's ports.
    I welcome the witnesses who are here today and I thank you for your 
willingness to appear to discuss the security of our Nation's maritime 
system. Today's hearing is one in a series of hearings that the 
Committee has held and will hold to fulfill its oversight 
responsibilities with respect to port security. The Committee will 
continue to exercise its jurisdiction over these matters as we work to 
develop ways to further improve the security of all modes of 
transportation, including the security of our ports.
    While the Coast Guard and TSA have made progress since September 
11th to bolster port security, including this Committee's work on the 
Maritime Transportation Security Act, much more remains to be done. To 
date, the Department of Homeland Security still has not yet fully 
implemented the requirements of the Act, and some programs have lagged 
behind for a variety of reasons. The challenge that we face in securing 
our ports is assessing vulnerabilities and allocating limited resources 
in an effective and efficient manner to mitigate those vulnerabilities. 
We must also do a better job of developing and utilizing technologies 
to reduce labor costs and to improve our ability to detect cargo that 
threatens our national security.
    Senator Inouye.
                                 ______
                                 
 Prepared Statement of Hon. Daniel K. Inouye, U.S. Senator from Hawaii

    I would like to thank my friend, Chairman Ted Stevens, for calling 
this hearing today and for allowing the Committee to exercise one of 
its most essential duties: oversight of the nation's seaport security 
system.
    Port security is of particular importance to us because our states 
are entirely dependent upon the uninterrupted flow of maritime 
commerce. Many still do not realize that the entire Nation's economic 
livelihood depends on the continuous flow of cargo as well.
    Maritime commerce is the lifeblood of international trade, and the 
United States is the world's leading maritime trading nation, 
accounting for 20 percent of global trade. Ninety-five percent of our 
Nation's cargo comes through the ports. Our economy is dependent on our 
seaports, and whether you live on the coasts or in the heartland, 
maritime commerce affects the daily lives of every American.
    I commend the U.S. Coast Guard, the Transportation Security 
Administration and the Bureau of Customs and Border Protection, on 
their progress over the past 3 years in implementing the Maritime 
Transportation Security Act to make seaports more secure both here and 
abroad. There is much more that needs to be done, and we must move 
ahead. We cannot become complacent. We have built a foundation, and now 
it is time to build the house.
    The terrorists that seek to do us harm are cunning, dynamic, and 
most of all, patient. While they have not successfully struck our 
homeland since September 11, 2001, it does not mean that they are not 
preparing to do so. They work 24 hours a day, studying what we do and 
how we do it. It is imperative that we stay ahead of them. That means 
we must constantly anticipate, innovate, and plan.
    We must continually research and implement the most effective 
technologies. We must recruit, train and deploy the most skilled 
security force.
    Later today, Senators Stevens, Rockefeller, and I will be 
introducing the Transportation Security Improvement Act of 2005, and 
port and cargo security improvements are central elements of this 
legislation.
    Among its port security provisions, our legislation seeks to 
improve interagency cooperation with the further development of joint 
operation command centers. It clarifies the roles and responsibilities 
for cargo security programs, while establishing criteria for 
contingency response plans to resume the flow of Commerce in the event 
of a seaport attack.
    By setting a minimum floor for research and development funding 
related to maritime and land security, the bill further encourages the 
development of effective technologies that detect terrorist threats. 
Finally, we make the port security grant program more risk-based and 
allow for multi-year funding of port security projects.
    Today's hearing on port security will be the first in a series of 
hearings on transportation security broadly, as we evaluate ways to 
further strengthen the security of our ports, our aviation and rail 
systems, our economy, and our Nation.
    I look forward to hearing from our witnesses today on how we can 
continue to strengthen our maritime security system.

    The Chairman. We'll proceed first with you, Ms. Godwin.
    And we're pleased to hear your testimony. Thank you.

  STATEMENT OF JEAN GODWIN, EXECUTIVE VICE PRESIDENT/GENERAL 
             COUNSEL, AMERICAN ASSOCIATION OF PORT 
                          AUTHORITIES

    Ms. Godwin. Thank you. Chairman Stevens and Members of the 
Committee, we appreciate the invitation. And, more importantly, 
we very much appreciate the leadership and the support that 
this Committee has shown for security needs and the Port 
Security Grant Program.
    I noticed a lot of passion in your questions. I appreciate 
Senator Inouye's note at the beginning about the funding 
disparities, the amount that's going to airports versus 
seaports. And we know that the Members of this Committee have 
our interests in mind and are always out looking to try to help 
us.
    As you know, the Port Security Grant Program was 
established to provide financial assistance to protect our 
vital ports of entry from terrorism. Since 9/11, ports have 
invested hundreds of millions of their own dollars to increase 
their security. While the grant program has provided much-
needed support to reimburse ports for some of their security 
costs, in the first four rounds, as you've heard, federal 
funding has amounted to only $565 million, which was a sixth of 
what was requested. The fifth round, announced last week, will 
provide $141 million, but actually limits eligibility to only 
66 designated port areas. I encourage you all to look at the 
most recent round. I know some of that was done in response to 
the report criticizing the way that the program was funded. 
But, essentially, what they have done is decided to say some 
port areas are not even eligible to try to compete, not even to 
try to make their case that they deserve funding; and only 
those who are eligible to even submit applications will be 
judged.
    Through the first four rounds of grants, funds have been 
provided to coastal states, including Alaska and Hawaii, but 
the value of the program, of course, is not just to coastal 
states. With 95 percent of our overseas trade flowing through 
our ports, all states and all citizens would be negatively 
affected by a shutdown of our seaports.
    This program's been bounced around among various agencies. 
It started at MarAd. It was moved to TSA. And then, actually, 
exactly 1 year ago today, May 17th, it officially became part 
of the DHS Office of State and Local Government Coordination 
Preparedness. I know that Members of this Committee joined AAPA 
in raising concerns in the context of that move, to make sure 
that the Port Security Grant Program would remain a separate 
line item. And we were all assured at the time that it would. 
Unfortunately, fast-forward months later, and we've seen the 
Administration's 2006 budget proposal, which would eliminate 
our grant program and combine us into a critical infrastructure 
program, along with trucks, trains, buses, public transit, and 
energy facilities. This is a proposal that we strongly oppose. 
We think it's contrary to what this Committee intended last 
year in the Coast Guard reauthorization bill, which authorized 
a separate grant program for port security based on MTSA. Just 
last week, the House Appropriations Committee voted to reject 
lumping these together and said that they want to see the Port 
Security Grant Program remain a separate line item. And we 
certainly would ask for your support in making sure that that 
is a Senate decision, as well.
    Our economy, our safety, and our national defense depend 
largely on how we can protect our seaports. According to the 9/
11 Commission report, opportunities to do harm are as great, or 
greater, in maritime as they are at airports. And I've heard 
several of you reiterate that this morning. We must focus on 
protection at all seaports, since ports serve as an 
international border, and an incident at one would surely 
impact all. Rather than limiting the eligibility, to certain 
geographic areas--we urge DHS to refocus the program on MTSA 
while including a cross-check to the critical infrastructure 
plan.
    We also urge this Committee to take a leadership role in 
advocating for stronger funding for the current Port Security 
Grant Program in the 2006 appropriations process. The Coast 
Guard did originally estimate we'd have to spend about $5.4 
billion over a 10-year period to comply with MTSA for facility 
security, and we have urged a funding level of $400 million for 
FY06.
    With cargo volumes expected to double over the next 15 
years, seaports across the country are expanding to meet the 
growing demand for their services, necessitating huge 
expenditures in infrastructure, equipment, and personnel that 
top $3 billion a year. Unfortunately, in order to pay for 
security enhancements, ports may have to divert funds needed to 
make capital investments to handle this future trade growth. We 
need the Federal Government to provide its share of security 
costs--this is a partnership--to make sure that our ports are 
secure today and will be able to meet the challenges and 
opportunities of accommodating the world trade needs of 
tomorrow.
    Finally, we'd also like to voice our support for the TWIC 
program, which you've discussed earlier. We urge increased 
funding for the program, and also encourage DHS to enact the 
program quickly. We share some of the frustrations you heard 
earlier.
    We appreciate your leadership. We stand ready to do our 
part in protecting America. And, again, we urge you to voice 
your support for a stronger appropriation in 2006 and a 
separate line item for the Port Security Grant Program.
    Thank you.
    [The prepared statement of Ms. Godwin follows:]

  Prepared Statement of Jean Godwin, Executive Vice President/General 
           Counsel, American Association of Port Authorities

    Good morning. I am Jean Godwin, Executive Vice President and 
General Counsel for the American Association of Port Authorities 
(AAPA). I thank you for inviting us to testify before your Committee on 
the implementation of the Maritime Transportation Security Act and 
vulnerabilities that remain in the maritime transportation sector. AAPA 
is an alliance of the leading public ports in the Western Hemisphere 
and our testimony today reflects the views of our U.S. members.
    Prior to 9/11, security was not a top concern for most ports. 9/11 
changed that and Congress and the Administration took quick action to 
help focus ports on this new risk. Enhancing maritime security and 
protecting America's seaports from acts of terrorism and other federal 
crimes is now a top priority for AAPA and U.S. port authorities. Much 
has been done since 9/11, but more is needed. Protecting America's 
ports is critical to our Nation's economic growth and vitality, and is 
an integral part of homeland defense. Ports handle 95 percent of our 
overseas cargo by volume, enable the deployment of our military, and 
serve as departure points for millions of cruise passengers.
    Protecting our international seaport borders is a responsibility 
shared by the federal, state, and local governments, seaports and 
private industry. The Department of Homeland Security takes the lead in 
protecting America's ports. This includes programs of the U.S. Coast 
Guard, the Border and Transportation Security Administration, Customs 
and Border Protection Service, Immigration and Customs Enforcement, and 
plant and animal inspection. Ports, for their part, focus on protecting 
the facilities where this international cargo enters and exits the 
country. The security blueprint for these facilities is the MTSA and 
its regulations.
    AAPA commends the U.S. Coast Guard for its excellent job in 
developing regulations and reviewing all facility and vessel plans 
within a very short timeline. All port facilities were required to have 
operational port security plans by the end of 2004. These plans 
established a baseline to protect ports from terrorist threats. As we 
learn more and start to look at the vulnerabilities identified by the 
area maritime committees and DHS's intelligence programs, we understand 
more what needs to be done and make improvements to plans. More 
sophisticated technology can also help us harden these facilities and 
enhance communications with first responders. Ports also hope 
technology will provide a mechanism to decrease the number of personnel 
required to secure our ports, and enhance productivity in the movement 
of cargo.
    Key to enhancing physical security of ports is the Port Security 
Grant Program. It was established after 9/11 through the Appropriations 
process and provides much-needed help to port facilities to harden 
security to protect these vital ports of entry from acts of terrorism. 
The program has been authorized in several bills--MTSA and Coast Guard 
reauthorization--although the program, as implemented, is a bit 
different from the current authorization bills.
    Since its inception, the program has provided $565 million in 
grants for 1,200 projects, with Congress providing an additional $150 
million in FY05. Overall, only one-sixth of all projects have been 
funded. With 95 percent of our overseas trade flowing through our 
ports, all states and all citizens would be impacted by a shutdown of 
our seaports. Agriculture as well as oil are two commodities that are 
heavily dependent on ports to ensure these products get to market. 
Imagine the impact of a shutdown of the ports in South Louisiana that 
handle much of the oil imports and grain exports for this Nation.
    The level of funding and policy decisions from DHS have made this 
program less effective than it could be. The need is great, and in the 
last round, especially, DHS gave small amounts to numerous projects. 
Some ports had to wait to finish projects because they did not have the 
necessary funds to fully complete the project. The Port of New Orleans, 
for example, got partial funding for four gates rather than full 
funding for one. The MTSA states that the funds will be distributed in 
a fair and equitable way. However, DHS is also trying to balance risks 
and protect critical national seaports (as noted in the Appropriations 
bill). DHS faced a dilemma--if it funds only the top risks, it leaves a 
soft underbelly of smaller ports. If it gives a little to everyone, 
little gets done. The problem seems to be one of historic underfunding. 
We must have funds to do both--provide the needed resources for big and 
small ports alike.
    These complaints were also echoed by DHS's Inspector General and 
others. In an attempt to make the grants more risk-based, in the fifth 
round ODP is expected to focus more on high-risk and vulnerable ports. 
But the funding level, and partial funding of projects, continues to be 
a huge constraint to progress.
    There is also an inconsistency over what the grants pay for. The 
MTSA stated grants can pay for salaries, operation and maintenance of 
security equipment, and the cost of physical improvements and 
vulnerability assessments. But the program allowed only reimbursement 
of the last two items. This is due to the low level of funding. The 
Coast Guard estimated the cost of facility compliance with the MTSA 
regulations would be $5.4 billion over 10 years. AAPA supports a 
funding level of $400 million a year, which is significantly higher 
than the current budget.
    And there is a new threat to this vital program. In the proposed 
FY06 budget, the Administration recommended eliminating the Port 
Security Grant Program and merging ports into a broad targeted 
infrastructure protection grant program. This runs counter to the 
intent of this Committee. Last year, this Committee included a 
provision in the Coast Guard Reauthorization bill to update the 
authorization of the program. The Act maintained that there would be a 
separate program specifically for port security to be based on the 
MTSA.
    The new Targeted Infrastructure Protection Program would lump port 
security into a program with trains, trucks, buses and other public 
transit, and chemical companies and ties these grants to the goal of 
protecting critical infrastructure based on relative risk, 
vulnerability and needs. This move would pit an underfunded border 
protection program (port security) against underfunded domestic 
protection programs. AAPA has great concerns, and encourages your 
Committee to voice opposition to this new structure.
    Our economy, our safety and our national defense depend largely on 
how well we can protect our seaports. According to the 9/11 Commission 
Report, opportunities to do harm are as great, or greater, in maritime 
as they are at airports. Ports are also the only industry within this 
new Targeted Infrastructure Protection Program that has a statutory 
mandate to comply with--the MTSA--and the only one for which there is a 
congressionally authorized grant program, which was also created by 
this Committee. A separate line item is essential to ensure that ports 
continue to be a targeted priority in our country's war again 
terrorism. Cargo doesn't vote and it is often not fully recognized for 
the value it provides to this country in state and federal 
infrastructure plans. While critical infrastructure protection is 
important, using it as the sole criteria for making decisions on 
funding for port security is a bad idea. DHS proposes to do this so it 
doesn't have so many separate grant programs. We don't oppose merging 
other programs together, just the lumping of ports into this program. 
Seaports, like airports, are key targets and deserve a separate 
program.
    We must focus on protection at all seaports since ports serve as an 
international border, and an incident at one would surely impact all 
ports. The MTSA has a system established to identify risks and 
vulnerabilities, and while some may question some of the DHS decisions 
on certain grants, the overall move to tying the grants to the MTSA is 
one that AAPA supports. This was not done in the first few rounds 
because the MTSA was not in effect yet. We urge DHS to refocus the 
program on the MTSA, while including a cross-check to the critical 
infrastructure plan and to keep this as a separate program, like the 
firefighter grants.
    We also urge this Committee to take a leadership role in advocating 
for stronger funding for the current port security grant program in the 
FY06 appropriations process. As noted above, the Coast Guard has 
estimated that ports would have to spend $5.4 billion over a 10-year 
period to comply with the new MTSA. AAPA urges a funding level of $400 
million in FY06. Recently, the House Appropriations Committee approved 
only $150 million, which is level funding. There is still much to be 
done to continue our progress in securing America's ports.
    Ports are currently planning for a huge increase in trade in the 
future. Adequate federal funds will help us avoid an infrastructure 
crisis in the future. Industry analysts predict that within the next 15 
years the approximately two billion tons of cargo that U.S. ports 
handle today will double. But ports are also challenged by the new 
security mandates of the MTSA and the need to continue to make 
improvements. Therefore, ports are using current dollars to pay for 
security, rather than capital investments needed to handle the future 
growth in international trade. We need the federal government to 
provide its share of these improvements now, so that our ports are 
secure today and will be able to meet the challenges and opportunities 
of accommodating the world trade needs of tomorrow.
    Finally, AAPA would like to voice its strong support for the 
Transportation Worker Identification Credentialing (TWIC) program, 
which was authorized in the MTSA. We urge increased funding for this 
program and encourage DHS to make the necessary policy decisions to 
implement this program quickly. The MTSA required all ports to control 
access to their facilities, but our U.S. member ports are still waiting 
for the TWIC requirements before installing new technologies.
    Thank you for inviting us to testify on this critical 
transportation security issue. Ports stand ready to do their part in 
protecting America. We urge your Committee to voice your support for a 
strong appropriation in FY06 for a separate line item for the Port 
Security Grant Program.
    Thank you. I would be happy to answer any questions.

    The Chairman. Mr. Koch?

STATEMENT OF CHRISTOPHER L. KOCH, PRESIDENT/CEO, WORLD SHIPPING 
                            COUNCIL

    Mr. Koch. Mr. Chairman, Senator Inouye, thank you for the 
opportunity to be here.
    As we look at the question of maritime security, we find it 
helpful to break it out into its different components. There's 
ship security. There's port-facility security. There's people--
personnel security. And there's cargo security.
    The Coast Guard's really done a very good job in dealing 
with the ships, and with the port facilities. On the people 
piece, there's been certain restrictions applied. All seafarers 
coming into the U.S. now have to have their own individual 
visas.
    Mr. Chairman, you started this hearing by asking, ``Well, 
what is it we should do, going forward, that we're not doing 
today,'' and I'd like to offer a couple of suggestions.
    First is the Transportation Worker Identification Card 
(TWIC). It's been legislated as a requirement for the maritime 
sector. Coast Guard and TSA are working on that right now. We 
understand from the Coast Guard that they expect to have a 
rulemaking out in July of this year. And this is a necessary 
element to move forward.
    The last piece of the puzzle really is cargo, cargo 
security, and it's a multifaceted strategy the government has, 
as you heard from Mr. Jacksta. But the starting strategy here 
is risk assessment. Customs today screens 100 percent of all 
containers before they're loaded in a foreign port, before 
they're put on a ship to be brought to the U.S. That is the 
strategy we've used, 100 percent screening. They then inspect 
100 percent of all boxes they have questions about. As you 
heard, that's slightly over 5 percent. So, if the core strategy 
we're using is risk assessment, we have to look at what data is 
being used to make those risk judgments.
    Today what we're using is what's been mandated under the 
``24-hour rule,'' the ocean carriers' bill-of-lading 
information, our manifest. It was a good start. Commissioner 
Bonner was right to do that. We support that strategy 100 
percent. Our observation would be that the ocean carriers' bill 
of lading is a limited source of information for undertaking 
effective risk assessment.
    Today the foreign exporter or the U.S. importer is not 
required to give the government any information about the goods 
they are bringing into the U.S. until after the goods are here. 
It's our belief that what really ought to be done is, for risk-
assessment purposes, the importer should provide its data to 
Customs before vessel loading, just like the ocean carrier 
does, so that the National Targeting Center in Northern 
Virginia that screens all these shipments has the benefit of 
better, more robust, and more accurate information on those 
shipments.
    Also, as you heard today, the strategy is to inspect 100 
percent of all containers coming in, with radiation-inspection 
equipment. The goal for Customs is to have that done by the end 
of this year, and they're making very good progress on getting 
that done. There are some problems in some ports with on-dock 
rail, as you would have seen in L.A., but, overall, they're 
making very good progress on that.
    Finally, there's the in-transit security piece of the 
issue. The biggest security vulnerability for containers is 
when they're stuffed at the foreign origin, but we also have to 
recognize that we need some measure in place to verify whether 
containers coming through the system have been tampered with in 
transit. We have proposed that the government establish a 
rulemaking to require seal verification on inbound containers, 
and DHS and Customs are working on that. We expect that to be 
out as a rulemaking sometime during the course of this summer. 
It'll be complicated. It'll be very expensive. But we think 
it's an appropriate measure, moving forward.
    When that's in place, it'll also stimulate and advance 
technology. We're spending a lot of time looking at technology 
issues for containers. It's quite complicated. But we do 
believe that when there's a seal verification requirement, it 
will, in fact, accelerate technology development, particularly 
RFID technology, that would or could make some significant 
improvements, going forward.
    So, in terms of answering your question, Mr. Chairman, the 
three things that we would offer for your consideration that 
ought to be done: first, get better data for risk assessment 
for the screening process of the cargo coming in; second, 
support DHS as it moves forward with the TWIC initiative; and, 
third, recognize that a seal-verification rule will be in place 
in the near future, which is also going to be a big step 
forward.
    Thank you.
    [The prepared statement of Mr. Koch follows:]

    Prepared Statement of Christopher L. Koch, President/CEO, World 
                            Shipping Council

Introduction
    Mr. Chairman and Members of the Committee, thank you for the 
opportunity to testify before you today. My name is Christopher Koch. I 
am President and CEO of the World Shipping Council, a non-profit trade 
association of over 40 international ocean carriers, established to 
address public policy issues of interest and importance to the 
international liner shipping industry. The Council's members include 
the full spectrum of ocean common carriers, from large global operators 
to trade-specific niche carriers, offering container, roll-on roll-off, 
car carrier and other international transportation services. They carry 
roughly 93 percent of the United States' imports and exports 
transported by the international liner shipping industry, or more than 
$500 billion worth of American foreign commerce per year. \1\
---------------------------------------------------------------------------
    \1\ A list of the Council's members can be found on the Council's 
website at www.worldshipping.org.
---------------------------------------------------------------------------
    I also serve as Chairman of the Department of Homelands Security's 
National Maritime Security Advisory Committee, as a member of the 
Departmental Advisory Committee on Commercial Operations of Customs and 
Border Protection (COAC), and on the Department of Transportation's 
Marine Transportation System National Advisory Committee. It is a 
pleasure to be here today.
    In 2004, American businesses imported 10 million loaded cargo 
containers into the United States. The liner shipping industry 
transports on average about $1.5 billion worth of containerized goods 
through U.S. ports each day. In 2005, a projected 11 percent growth 
rate means that the industry will handle more than 11 million U.S. 
import container loads. In 2006, containerized trade growth is 
forecasted to increase another 10 percent, and we will need to be ready 
to handle more than twelve million import containers. And these trade 
growth trends are not expected to stop after 2006.
    Consider the requirements of one customer of our industry. Wal-Mart 
will import roughly 360,000 FEUs (forty foot containers) this year. If 
you were to place that volume on trucks bumper-to-bumper in a single 
line, it would stretch 3,750 miles. And those volumes have to be moved 
efficiently at the same time as L.L. Bean's, Target's, Home Depot's, 
Ford's, K Mart's, Procter & Gamble's, McDonald's, Hewlett Packard's, 
General Motors', General Electric's, Whirlpool's, Nike's, Becks Beer, 
Joe's Hardware Store, and thousands of other shippers.
    The demands on all parties in the transportation sector to handle 
these large cargo volumes efficiently is both a major challenge and 
very important to the American economy.
    At the same time that the industry is addressing the issues 
involved in efficiently moving over 11 million U.S. import containers 
this year, we also must continue to address the unfinished task of 
enhancing maritime security, and do so in a way that doesn't 
unreasonably hamper commerce.
    The Department of Homeland Security (DHS) has stated that there are 
no known credible threats that indicate terrorists are planning to 
infiltrate or attack the United States via maritime shipping 
containers. At the same time, America's supply chains extend to tens of 
thousands of different points around the world, and the potential 
vulnerability of containerized transportation requires the development 
and implementation of prudent security measures. Like many parts of our 
society, we thus confront an unknown threat, but a known vulnerability.
    What is the appropriate collection of measures to address this 
challenge?
    The Department of Homeland Security's maritime security efforts 
involve many different, but complementary pieces, including 
implementing the directives of the Maritime Transportation Security Act 
(MTSA).
    It includes the establishment of vessel security plans for all 
arriving vessels pursuant to the International Ship & Port Facility 
Security Code (ISPS Code) and Maritime Transportation Security Act 
(MTSA).
    It includes the establishment of U.S. port facility security plans 
and area maritime security plans pursuant to the ISPS Code and MTSA, 
and the establishment by the Coast Guard of the International Port 
Security Program (IPSP) pursuant to which the Coast Guard visits 
foreign ports and terminals to share and align security practices and 
assess compliance with the ISPS Code.
    The Coast Guard's efforts to implement these initiatives are well 
developed.
    It includes the Maritime Domain Awareness program, under which DHS 
acquires enhanced information about vessel movements and deploys 
various technologies for better maritime surveillance. The challenge of 
effectively patrolling all the coasts and waters of the United States 
is obviously a large one.
    The MTSA directives and DHS efforts also include enhanced security 
for personnel working in the maritime area, from the requirement that 
all foreign seafarers have individual visas if they are to get off a 
ship in the U.S., to the imminent promulgation of proposed rules on the 
Transportation Worker Identification Credential (TWIC). Regarding the 
TWIC, DHS officials have indicated their intent to issue a proposed 
rulemaking on this issue this summer. At the request of DHS, the 
National Maritime Security Advisory Committee, after intensive, open 
and constructive dialogue amongst diverse industry and government 
officials, approved last Friday a detailed set of recommendations to 
the Department for their consideration in the development of this 
ambitious initiative.
    And last, but certainly not least, MTSA directives and DHS efforts 
include an array of initiatives to enhance cargo security, which the 
Committee staff has requested that I discuss. There are several 
elements and programs that comprise the government's cargo security 
strategy, and each has a role. This morning I'd like to briefly address 
the following cargo security issues:

   Cargo Security Risk Assessment Screening
   Radiation Inspection of all Containers
   Enhancing In-Transit Container Security
   The Container Security Initiative
   The C-TPAT Program
   The World Customs Organization
   Container Security Technology

1. Cargo Security Risk Assessment and the National Targeting Center
    The stated and statutorily mandated strategy of the U.S. Government 
is to conduct a security screening of containerized cargo shipments 
before they are loaded on a U.S. bound vessel in a foreign port. The 
World Shipping Council fully supports this strategy. The correct time 
and place for the cargo security screening is before the containers are 
loaded on a ship. Most cargo interests also appreciate the importance 
of this strategy, because they don't want their shipments aboard a 
vessel delayed because of a security concern that could arise regarding 
another cargo shipment aboard the ship.
    In order to be able to perform this advance security screening, 
Customs and Border Protection (Customs or CBP) implemented the ``24 
Hour Rule'' in early 2003, under which ocean carriers are required to 
provide Customs with their cargo manifest information regarding all 
containerized cargo shipments at least 24 hours before those containers 
are loaded onto the vessel in a foreign port. The Council supports this 
rule. Customs, at its National Targeting Center in Northern Virginia, 
then screens every shipment using its Automated Targeting System (ATS), 
which also uses various sources of intelligence information, to 
determine which containers should not be loaded aboard the vessel at 
the foreign port, which containers need to be inspected at either the 
foreign port or the U.S. discharge port, and which containers are 
considered low-risk and able to be transported expeditiously and 
without further review. Every container shipment loaded on a vessel for 
the U.S. is screened through this system before vessel loading at the 
foreign load port.
    The Department of Homeland Security's strategy is thus based on its 
performance of a security screening of relevant cargo shipment data for 
100 percent of all containerized cargo shipments before vessel loading, 
and subsequent inspections of 100 percent of those containers that 
raise security issues after initial screening. Today, we understand 
that CBP inspects roughly 5.5-6 percent of all inbound containers (over 
500,000 containers/year), using either X-ray or gamma ray technology 
(or both) or by physical devanning of the container.
    We all have a strong interest in the government performing as 
effective a security screening as possible before vessel loading. 
Experience also shows that substantial disruptions to commerce can be 
avoided if security questions relating to a cargo shipment have been 
addressed prior to a vessel being loaded and sailing. Not only is 
credible advance cargo security screening necessary to the effort to 
try to prevent a cargo security incident, but it is necessary for any 
reasonable contingency planning or incident recovery strategy.
    Today, while the ATS uses various sources of data, the only data 
that the commercial sector is required to provide to Customs for each 
shipment for the before-vessel-loading security screening is the ocean 
carrier's bill of lading/manifest data filed under the 24 Hour Rule. 
This was a good start, but carriers' manifest data has limitations.
    Cargo manifest data should be supplemented in order to provide 
better security risk assessment capabilities. \2\ Currently, there is 
no data that is required to be filed into ATS by the U.S. importer or 
the foreign exporter that can be used in the pre-vessel loading 
security screening process, even though these parties possess shipment 
data that CBP officials believe would have security risk assessment 
relevance that is not available in the carriers' manifest filings, and 
notwithstanding the fact that the law requires the cargo security 
screening and evaluation system to be conducted ``prior to loading in a 
foreign port.'' \3\ Today, cargo entry data is required to be filed 
with CBP by the importer, but is not required to be filed until after 
the cargo shipment is in the United States, often at its inland 
destination--too late to be used for security screening purposes.
---------------------------------------------------------------------------
    \2\ See also, ``Homeland Security: Summary of Challenges Faced in 
Targeting Oceangoing Cargo Containers for Inspection,'' General 
Accounting Office Report and Testimony, March 31, 2004 (GAO-04-557T).
    \3\ 46 U.S.C. section 70116(b)(1). Section 343(a) of the Trade Act 
also requires that cargo information be provided by the party with the 
most direct knowledge of the information.
---------------------------------------------------------------------------
    Last fall, the COAC Maritime Transportation Security Act Advisory 
Subcommittee submitted to DHS a recommendation that importers should 
provide Customs with the following data before vessel loading:

        1. Better cargo description (carriers' manifest data is not 
        always specific or precise)
        2. Party that is selling the goods to the importer
        3. Party that is purchasing the goods
        4. Point of origin of the goods
        5. Country from which the goods are exported
        6. Ultimate consignee
        7. Exporter representative
        8. Name of broker (would seem relevant for security check)
        9. Origin of container shipment--the name and address of the 
        business where the container was stuffed

    The Council agrees with this recommendation. The government's 
strategy today is to inspect containerized cargo on a risk-assessment 
basis. Accordingly, the government should improve the cargo shipment 
data it currently uses for its risk assessment. An ocean carrier's bill 
of lading by itself is not sufficient for cargo security screening. 
These cargo entry shipment data elements would improve cargo security 
screening capabilities. If a risk assessment strategy is to remain the 
core of the government's cargo security system, the government needs to 
decide what additional advance cargo shipment information it needs to 
do the job well, and it must require cargo interests, and not just 
carriers, to provide the relevant data in time to do the advance 
security screening. While this is not a simple task, a next step 
forward requiring shipper interests to provide more data on their cargo 
shipments before vessel loading is appropriate. CBP and DHS officials 
are currently reviewing this issue.

2. Radiation Screening
    A particular security concern is the potential use of a container 
to transport a nuclear or radiological device. While there is no 
evidence that terrorists have nuclear weapons or devices, or that a 
shipping container would be a likely means to deliver such a device, 
the consequences of the potential threat--including those from a low 
tech ``dirty bomb''--are sufficiently great that, in addition to the 
targeted inspection of containers discussed above, CBP is deploying 
radiation scanning equipment at all major U.S container ports, with the 
objective of being able to check every container entering the U.S. for 
radiation by the end of this year. CBP and the Department of Energy are 
also working with foreign ports to encourage the installation of 
radiation scanning technology abroad as well.
    We understand that the Government Accountability Office is 
currently reviewing the effectiveness of the radiation detection 
equipment being used, which is clearly an important issue.

3. Enhancing In-Transit Container Security
    While the most important and challenging container security issue 
is ensuring that containers are loaded with cargo securely in the first 
place, it is also important to have a system that can help determine 
whether a container may have been tampered with while in-transit. In 
September 2003, the Council, together with the National Industrial 
Transportation League and the Retail Industry Leaders Association, 
recommended to DHS that the government promulgate a container seal 
verification rule as the most practical way to address this issue in 
the near term. The Maritime Transportation Security Act Advisory 
Subcommittee of COAC made the same recommendation to DHS last fall. CBP 
and DHS are currently in the process of drafting proposed regulations 
on this issue. This will be a costly and challenging rule to implement, 
but we recognize the need to address this issue and the need for a 
container seal verification rulemaking.
    Some of the more important issues that will need to be addressed in 
this rulemaking will be: the reporting process to CBP when a seal 
anomaly is identified, the consequences to the shipment when a seal 
anomaly is identified, where the seal verification is to take place, 
and a reasonable implementation time frame that will allow port 
facilities around the world to develop implementation measures.

4. Container Security Initiative
    No nation by itself can protect international trade. International 
cooperation is essential. For ships and port facilities, the 
International Maritime Organization (IMO), a U.N. regulatory agency 
with international requirement setting authority, has responded to U.S. 
leadership and created the International Ship and Port Security Code 
(ISPS). These IMO rules are internationally applicable and are strictly 
enforced by the U.S. Coast Guard. There is no comparable international 
regulatory institution with rule writing authority for international 
supply chain security. For a variety of reasons, the World Customs 
Organization (WCO) has not acquired such an authority.
    At the WCO, CBP is working diligently with other governments on a 
supply chain security framework that can be used by all trading 
nations. This framework will be useful, but will remain at a fairly 
high level and will be implemented on a voluntary basis by interested 
governments. Consequently, U.S. and foreign customs authorities must 
also create a network of bilateral cooperative relationships to share 
information and to enhance trade security. This is the Container 
Security Initiative. The Council supports this program and the strategy 
behind it.
    In March, Dubai became an operational CSI port, and Shanghai and 
Yantian are expected to become operational soon. When they are, more 
than 60 percent of U.S. containerized imports will be passing through 
operational CSI ports, with further program growth expected. The liner 
shipping industry is fully supportive of these efforts by Customs 
authorities and hopes the program will continue to expand as 
expeditiously as possible. \4\ A listing of operational, and soon to be 
operational, CSI ports follows:
---------------------------------------------------------------------------
    \4\ On May 9, the Argentine government signed a declaration of 
principles to become involved in CSI. The expansion of CSI to Buenos 
Aires will be the first CSI cooperative agreement in Latin America.

------------------------------------------------------------------------
                             Total CY 2003  U.S.    Total CY 2004  U.S.
        Port Name             Import TEUs (000)      Imports TEUs (000)
------------------------------------------------------------------------
Hong Kong                  1,885.41                1,866.32
Yantian (Shenzhen)         1,603.83                1,982.79
Shanghai                   937.34                  1,278.50
Busan                      891.38                  971.49
Singapore                  478.73                  494.30
Rotterdam                  420.90                  427.75
Bremerhaven                415.99                  392.18
Antwerp                    262.21                  304.60
Tokyo                      250.77                  267.53
Laem Chabang               186.68                  201.06
Nagoya                     169.04                  174.94
Le Havre                   154.93                  139.67
Genoa                      153.92                  144.57
Le Spezia                  143.69                  159.67
Kobe                       111.13                  119.97
Hamburg                    110.93                  150.01
Algeciras                  109.09                  81.75
Gioia Tauro                103.96                  104.48
Yokohama                   82.781                  109.02
Livorno (Leghorn)          80.15                   92.33
Felixstowe                 69.54                   69.51
Tanjung Pelepas            64.71                   45.96
Durban                     41.57                   43.94
Port Kelang                41.10                   39.26
Naples                     40.34                   29.88
Southampton                40.28                   38.62
Liverpool                  38.85                   39.37
Thamesport                 31.49                   32.34
Halifax                    26.39                   24.38
Gothenberg                 17.46                   18.81
Piraeus                    10.92                   11.58
Vancouver                  5.74                    13.59
Tilbury                    5.23                    2.56
Marseille                  4.40                    1.07
Dubai                      1.20                    1.11
Montreal                   0.27                    0.72
Zeebrugge                  0.08                    0.02
------------------------------------------------------------------------
37 CSI Ports listed: 9,875.63 TEUs (thousands) to the U.S. in 2004
Total U.S. Imports: 15,805.48 TEUs (thousands) in 2004
37 CSI Ports = 62.48 percent of total U.S. imports


    One of the issues that the recent Government Accountability Office 
(GAO) report on CSI identified was that foreign Customs authorities are 
not inspecting at the foreign load port all of the containers that CBP 
has identified for security inspection. There are a number of relevant 
issues with respect to this finding, but I would note a couple of 
points.
    First, understanding why these containers were not inspected at the 
foreign ports is very important. For example if it was because local 
Customs intelligence had good reasons to determine there was not a 
significant security risk, that fact would be obviously relevant.
    Second, building cooperative Customs relationships requires time, 
commitment and mutual trust. In order for the CBP officials stationed 
in CSI ports to build trust and relationships with foreign customs 
authorities, the CBP program must be supported with professional 
personnel that have long-term assignments to these positions. Foreign 
customs authorities would have a difficult time building cooperative 
relationships if the CBP personnel must rotate out of their CSI 
positions after a short period of time. We understand that this has 
been an issue in the early phases of the CSI program, and hope that any 
difficulties CBP may have had in getting qualified, full time people 
stationed to these positions is being or has been resolved. CBP will 
need the full support of DHS and the Department of State to ensure an 
effective and robust CSI program.
    Third, we note that the supply-chain-security framework that is 
being developed by the World Customs Organization (WCO) and is expected 
to be approved next month, provides an important reinforcing principle 
that should help the CSI program, namely that the Customs 
administrations of exporting nations should conduct outbound security 
inspection of high-risk containers at the reasonable request of the 
importing country. This is an international affirmation of the CSI 
program's principles.
    Finally, if CBP ever encounters a foreign customs authority that is 
unwilling to inspect a container that CBP believes is high risk, it can 
and should issue the ocean carrier a ``Do Not Load'' message and that 
container will not be loaded aboard a vessel destined for the U.S. 
There is no reason why any container that CBP has identified as ``high 
risk'' can't and shouldn't be stopped and inspected before it is loaded 
aboard a vessel bound for the U.S. If the container is not high risk 
but still one that CBP wishes to inspect, it can use its discretion to 
inspect it at the U.S. discharge port.

5. C-TPAT
    C-TPAT is an initiative intended to increase supply-chain-security 
through voluntary, non-regulatory agreements with various industry 
sectors. Its primary focus is on the participation of U.S. importers, 
who are in turn urged to have their suppliers implement security 
measures all the way down their supply chains to the origin of the 
goods. This approach has an obvious attraction in the fact that the 
importer's suppliers in foreign countries are beyond the reach of U.S. 
regulatory jurisdiction. In return for participating in the program, 
importers are given a benefit of reduced cargo inspection. The C-TPAT 
program invites participation from other parties involved in the supply 
chain as well, including carriers, customs brokers, freight forwarders, 
U.S. port facilities, and a limited application to foreign 
manufacturers.
    C-TPAT has improved the security of importers' supply chains. How 
much it has improved security is difficult to determine or measure. GAO 
has produced a critical study of C-TPAT, entitled ``Partnership Program 
Grants Importers Reduced Scrutiny with Limited Assurance of Improved 
Security.'' The program is currently under scrutiny by both Congress 
and DHS. It is facing both fair and unrealistic criticism.
    C-TPAT needs to be understood for what it is and what it is not. C-
TPAT is a set of voluntary partnerships between CBP and willing 
industry members. C-TPAT is not a regulatory program. It should not be 
confused as being one. Nor should it be a substitute for regulations 
when the government has clear, specific things it wants industry to do 
to enhance security. The difficulty is that the program is in some 
respects ambiguous, and perhaps unavoidably so.
    It is not a regulatory program, yet critics want specificity, 
strict enforcement, and penalties for non-compliance--features that 
characterize regulatory programs.
    Its costs can be significant, but its benefits are necessarily 
limited; parties that are not importers receive no direct benefit from 
the program.
    Its principal purpose is to try to affect the conduct of parties 
outside U.S. regulatory jurisdiction, yet some expect it to have an 
effect similar to what would occur if these parties were subject to 
U.S. regulatory jurisdiction.
    It is a program that relies on participants' own risk assessment 
and allows participant's discretion and flexibility in application of 
the security standards. At the same time, the program tries to promote 
uniform and common standards of behavior through generalized ``minimum 
standards.''
    When COAC posed questions that, in essence, asked what importers 
should do when some of their suppliers are compliant with C-TPAT 
standards and some are not, CBP responded in their Frequently Asked 
Questions that all of an importer's suppliers should be compliant or 
that the importer must demonstrate an ongoing commitment to get all 
suppliers compliant. Importers will face situations where they cannot 
require or ensure that all their suppliers are compliant. On the one 
hand, one can sympathize with the way the issue is being addressed, 
because CBP wants to keep pushing for full compliance, and because the 
program would become much more complicated if each importer's supply 
chain had to become divided into various levels of compliance or non-
compliance. On the other hand, by not differentiating within importers' 
supply chains, one must either accept or not accept the proposition 
that each container shipment of a C-TPAT importer is likely to obtain 
an equivalent lowering of its risk assessment.
    C-TPAT is a program that other nations' customs authorities and the 
WCO are examining and find conceptually attractive, yet its definition, 
its application and the extent of its utility are still in development 
and not yet settled here in the U.S. A common, global C-TPAT, ``trusted 
shipper'' type system might be a very good idea. At the same time, if 
many trading nations were to implement C-TPAT type programs in ways 
that significantly differ from each other, very significant 
complexities for international commerce could emerge, including the 
possibility of redundant and duplicative, or even inconsistent, 
efforts.
    These are difficult issues, and one should temper criticism of the 
program with an appreciation for the fact that CBP has been trying very 
hard to make the program effectively address significant concerns in 
supply-chain-security in areas where it has no regulatory jurisdiction. 
The program is a voluntary, non-regulatory, evolving initiative.
    Voluntary Partnerships: C-TPAT tries to provide general guidance 
for enhancing security with respect to some, but not all, aspects of 
supply-chain-security. It recognizes that flexibility in application is 
unavoidable when applied to the tens of thousands of different supply 
chains around the globe. For example, the new C-TPAT Importer Security 
Criteria have standards for fencing, facility lighting, and employee 
background checks and credential checking. C-TPAT importers can agree 
to communicate this to all their foreign suppliers and to urge their 
suppliers' compliance, but obviously not every business in the world 
involved in shipping goods to a U.S. C-TPAT importer is going to have 
compliant fencing, lighting, etc. This doesn't mean C-TPAT is a 
failure, or that a C-TPAT importer is a failure if one or more of its 
suppliers don't conform to the standard, and it doesn't mean that C-
TPAT doesn't provide security enhancement. It means that there is an 
unavoidable degree of variability, imprecision and ambiguity in the 
program when it comes to its implementation.
    Not a Regulatory Program: Many maritime and supply-chains-security 
issues can be, should be, and are addressed through regulatory 
requirements, not C-TPAT. For example, vessel security plans and port 
security plans are regulated by Coast Guard regulations implementing 
the ISPS Code and MTSA. The data that must be filed with CBP to 
facilitate cargo security screening must be addressed through uniformly 
applied regulations. Seafarer credentials and the Transportation Worker 
Identification Card must be addressed through uniformly applied 
requirements. Requirements to verify seals on import containers need to 
be addressed through regulations.
    C-TPAT is a program that can try to address matters that are not or 
cannot be addressed by regulations, such as supply chain enhancements 
beyond U.S. regulatory jurisdiction, or matters that aren't covered by 
regulations, such as cooperating with CBP in providing access to 
information in support of investigative inquiries. C-TPAT may also be a 
platform from which CBP and program participants can analyze security 
vulnerabilities and problems and jointly develop plans that could more 
effectively try to address such situations. C-TPAT, however, should not 
be used in lieu of regulations when regulations are the more 
appropriate method to enhance security.
    Validation: CBP has a C-TPAT validation program to confirm that 
participants are doing what they have said they would do, during which 
identified shortcomings can and should be discussed and remedial 
measures developed. However, the GAO report has criticized the program 
for conferring benefits to importers before validation has occurred and 
noted that the agency does not have adequate trained personnel to 
validate all C-TPAT participants in a timely manner.
    This criticism is certainly welcomed by the private commercial 
security consulting business, which sees a substantial business 
opportunity if they can become government sanctioned security 
validators for C-TPAT type programs in the U.S. and around the world. 
Whether C-TPAT participants or the government would accept this role, 
how such a role would be defined and overseen, what the standards would 
be, whether validation by commercial parties would be required or 
voluntary--are all issues that are undetermined at this time.
    Compliance: C-TPAT is not a regulatory regime, with specific 
criteria that must be applied to everyone at all times. Some of the 
program criteria are very general, and its criteria do not cover all 
aspects of security. Further, a security failure in a specific case may 
not involve a lack of due care and may not involve a breach of the 
terms of the participant's C-TPAT Agreement.
    Nevertheless, CBP has recently taken the position that it can 
suspend a C-TPAT participant from the program--

        a. Without advance notice, without discussion, and without an 
        opportunity to cure the problem.

        b. For matters that are not covered by the terms of the C-TPAT 
        Agreement signed by CBP and the carrier (i.e., you can be 
        kicked out of the C-TPAT program even if you have complied with 
        the C-TPAT Agreement's terms).

        c. For any violation of law or significant security breach 
        (e.g., drugs in a container, stowaways in a container).

        d. For an undefined duration.

    Ocean carriers, which receive no direct benefits from CBP for 
participation in the program but have written their C-TPAT 
participation into many of their transportation contracts with 
shippers, have found this to be a surprising and troubling development 
at best. Carriers had believed that under a ``voluntary partnership'' 
program with CBP, specific security concerns would be jointly assessed 
to determine what measures could reasonably be taken to address any 
specific security shortcomings. To face no-notice suspension from a 
voluntary program that provides no direct benefits for events that may 
be highly unpredictable and under the control of third parties will 
significantly change the program and how it is perceived.
    Evolving Initiative: C-TPAT is an evolving initiative, and industry 
and government will learn and adapt as it matures. For example, when 
the Sea Carrier portion of C-TPAT was formulated, there was no ISPS 
Code or Coast Guard MTSA regulation regarding vessel and port facility 
security plans, so C-TPAT carriers recognized the regulatory void and 
agreed to undertake a number of voluntary measures in this regard. 
Today, there are comprehensive Coast Guard regulations on these issues, 
and it is no longer appropriate for CBP to use C-TPAT to address the 
issues that the Coast Guard is addressing through its regulations. 
Similarly, carriers agreed in C-TPAT to participate in the electronic 
Automated Manifest System (AMS) for transmitting manifest information 
to CBP; at the time, paper manifest filings were possible. Now, 
electronic filing in AMS is required by regulation.
    The future role of ocean carriers in C-TPAT will require further 
consideration and analysis. Carriers, unlike importer's foreign 
suppliers, are regulated parties, and CBP and the Coast Guard can and 
have established clear, uniformly applicable rules for them to follow. 
Furthermore, C-TPAT program benefits, which are basically less frequent 
cargo inspections, are importer benefits. Ocean carriers do not receive 
direct benefits from CBP for C-TPAT participation. How and where ocean 
carriers may fit in the program going forward remains to be seen.
    As regulated entities, ocean carriers have a preference for clear, 
uniformly applied security regulations when an issue can be addressed 
through regulations. At the same time, we wish to continue to work with 
CBP and other DHS agencies to determine if there are appropriate ways 
to supplement the regulatory security regime. This will continue to 
require a partnership approach, clear communications, and mutual 
benefits.
    Looking Ahead: C-TPAT is not the supply-chain-security strategy for 
the government--it is one layer and one piece of the evolving strategy. 
At the same time, the program's critics have points that won't be 
ignored. For example, it is difficult to believe that C-TPAT is 
presently sufficiently developed to actually be used as a determining 
criteria for what cargo would be allowed to be transported if the 
government had to respond to a terrorist incident involving a 
containerized cargo shipment, because, among other things, there is 
uncertainty about whether all the suppliers in an importer's supply 
chain comply with adequate standards that warrant such confidence.
    However, it is conceivable that the program may be able to attain 
this kind of result if the foreign suppliers that actually stuff the 
containers were included in the program. The fact that foreign 
manufacturers (except some Mexican manufacturers) and the parties 
stuffing the containers are not in the program means that the most 
important parties in container security aren't C-TPAT program 
participants. Could this be addressed by adding foreign manufacturers 
to the program?
    Perhaps so, if C-TPAT were to be able to evolve from a program that 
gives benefits to U.S. importers if they undertake certain actions, to 
a program that would give those benefits to shipments where both the 
U.S. importer and a foreign manufacturer or container stuffer were 
certified as compliant with the appropriate standards. Is there a way 
for a program that is constrained by resources to achieve this 
additional extension? Perhaps yes.
    CBP, under Commissioner Bonner's leadership, has been diligently 
developing international supply chain security standards at the World 
Customs Organization, and has undertaken discussions with the European 
Commission and various national governments. There is a possibility to 
develop these efforts into a more advanced, agreed internationalization 
of supply-chain-security improvements

6. The World Customs Organization
    In some respects, the issues surrounding the C-TPAT program are 
similar to those that the World Customs Organization (WCO) has been 
grappling with since it established a special Task Force on Security 
and Trade Facilitation in 2002.
    Currently, the WCO is finalizing a Framework of Standards to Secure 
and Facilitate Global Trade that is expected to be approved at the WCO 
Council next month. This initiative intends to establish international 
standards for Customs-to-Customs cooperation concerning cargo risk 
assessment, advance cargo information filing and common risk criteria, 
and for Customs-to-business partnership programs, like C-TPAT.
    The establishment of international security standards and criteria 
for international supply chains and international cargo shipments is a 
sound and logical objective. The challenge, however, continues to be 
how to obtain implementation of such agreed-upon standards and criteria 
in the absence of a binding international instrument. The framework and 
its supporting documents are expected to be approved by the WCO Council 
through a recommendation that invites WCO members to implement it in 
accordance with individually established timeframes and each member 
country's capabilities. Thus, rather than early international 
acceptance and implementation of the framework, we could see the 
framework serve as a inducement for the establishment of bi- and 
multilateral Customs agreements where individual Customs authorities 
agree to cooperate on the establishment of joint risk assessment 
programs, the advance filing of common cargo information and perhaps 
also on the mutual recognition of each other's partnership programs. To 
the extent such individual Customs agreements were to cover a 
``critical mass'' of global trade, they could eventually establish the 
minimum standards that all trading nations would have to implement or 
risk seeing their export opportunities being curtailed.
    Such a development would not happen over night. Nor would the 
attendant benefits for business in terms of mutual recognition and 
simplified and uniform filing requirements. But absent an international 
regulatory mechanism for supply chain and cargo security, it appears to 
be the only currently available option internationally for creating 
uniformity and commonality.
    As noted earlier, however, it may also be a way for the C-TPAT type 
system to be extended to foreign manufacturers in those nations that 
make a serious commitment to establish and oversee C-TPAT type 
programs. Today, a U.S. importer is expected to ``ensure'' that a 
foreign supplier is following C-TPAT criteria--a pretty tough 
challenge. If reliable foreign authorities were to certify foreign 
manufacturers according to standards and procedures equivalent to CBP's 
certification of importers, confidence in enhanced security and shipper 
compliance could be greatly enhanced. This may not work in all nations, 
but it is certainly not inconceivable to see the U.S. accepting other 
responsible government program certifications of their manufacturers, 
and foreign governments' accepting U.S. certification of theirs. This 
model works for ships, where foreign government certifications are 
accepted (but also buttressed by strong U.S. port state enforcement), 
and it could be considered for supply-chain-security.

7. Technology and ``Smart'' Containers
    Technology clearly has a role in increasing the efficiency and 
security of containerized cargo shipments. X-ray and gamma ray non-
intrusive container inspection equipment is being deployed at U.S. and 
foreign ports, as are radiation portal monitors and radiation 
detectors.
    In addition to these developments, there is a discussion of 
``smart'' containers. What makes a container ``smart,'' however, and 
what the appropriate technologies may be for such an objective remain 
unclear.
    The Council and its member lines have been working within the 
International Standards Organization RFID container technology working 
group on standards for electronic container seals, container tags and 
shipment tags. We expect that, once a seal verification requirement is 
imposed by U.S. regulation, these technologies will be seriously 
considered as an automated, efficient way to determine if containers 
have been tampered with while in transit.
    There is also a discussion about the possibility of the application 
of shipper-applied ``container security devices'' (CSDs). The CSDs 
currently being tested by CBP only indicate whether one of the 
container doors has been opened. A properly applied e-seal may provide 
equivalent functionality. Explanations of what a CSD should accomplish 
vary, and a clear definition has not yet emerged. Furthermore, other 
issues about CSDs that have not been adequately addressed, including 
the radio frequency to be used and whether it would be compatible with 
the emerging ISO standard's frequency for e-seals, who would read the 
devices, how would they know which boxes have CSDs to be read, where 
they would be read, who would be expected to build and operate the 
reading infrastructure, what would be done with the information, the 
devices' reliability and accuracy, and what would be done with 
exception reporting.
    There is also discussion of a ``next generation'' or ``Advanced 
CSD'' with more sophisticated sensors that DHS is researching, which 
will also need to address a number of issues, including what 
specifically is it that needs to be ``sensed,'' the accuracy and 
reliability of the device, its cost, who applies the device, the 
reading infrastructure that would be needed, who would read it when and 
where, and the protocols for how different readings would be addressed 
by whom and when.
    The idea of transforming containers into ``smart,'' impregnable 
fortresses clearly has an appeal. Reality, however, requires addressing 
issues of: technology definition and standards; false positives from 
sensor technologies and their consequences; questions about device 
reliability; maintenance complexity; device failures and equipment out 
of service time; power needs and failures, including battery life 
issues; device costs; and labor issues and costs. In addition, 
technology can bring new security vulnerabilities that have to be 
considered. For example, permanent or reusable container security 
technology devices would require a capability to ``write'' new 
information into the device or amend existing information in the 
device. Such a capability would require a wide range of parties around 
the world to be given the capability of writing new information into 
container security devices, which would create troubling security 
vulnerabilities of third parties becoming capable of ``hacking'' into 
the devices. It is for this very reason that the ISO electronic seal 
standard will require that e-seals be one time use seals without the 
capability to write or change the information in the seal.
    As different technology vendors jockey for position, some things 
are becoming clearer:

        1. Industry and government need to cooperate and agree on what 
        the security requirements are, and what the respective 
        implementation roles of industry and government would be.

        2. Cost does matter. A decision to invest in a particular 
        technology applicable to the global container industry will be 
        expensive and will require assurance that government is not 
        likely to abruptly change requirements.

        3. Whatever technology is chosen for application to 
        international containerized cargo shipments, it will need to be 
        a common, universally deployable technology.

        4. Proprietary solutions that require a particular 
        manufacturer's product or reading system will not be 
        acceptable.

        5. Technology vendors who push products that involve the vendor 
        capturing, managing, and profiting from all the data generated 
        from the device--and there are a number of these--are likely to 
        encounter hard questions, if not strong resistance, from 
        industry.

        Cargo shipment data is the data of the carrier and the shipper, 
        and with consent, their agents. It is appropriate for the 
        importing and exporting nations' governments to have access to 
        this data, but it is not appropriate for third parties to try 
        to use technology to capture it and resell it to other 
        commercial interests. Vendors who try to do this will need to 
        address a number of policy and legal issues.

Summary
    When addressing the issue of international supply-chain-security, 
we find ourselves dealing with the consequences of two of the more 
profound dynamics affecting the world today. One is the 
internationalization of the world economy, the remarkable growth of 
world trade, and the U.S. economy's appetite for imports--a demand that 
fills our ships, our ports, and our inland transportation 
infrastructure, a demand that will result in more than 11 million U.S. 
import containers this year, and more than 12 million next year, and a 
demand that will increasingly test our ability to move America's 
commerce as efficiently as we have in the past.
    The other dynamic is the threat to our way of life from terrorists 
and the challenge of addressing the vulnerabilities that exist in the 
free flow of international trade, even when the specific risk is 
elusive or impossible to identify.
    Finding the correct, reasonable balance between prudent security 
measures and overreacting in a way that impairs commerce is a tough 
challenge.
    We are making real progress in addressing these challenges, but 
that the effort to address them more effectively must continue. In 
particular, it would be helpful to develop a blueprint or framework 
that identifies the specific security gaps and security requirements in 
the supply-chain-security system, so that government and industry can 
all understand, target and prioritize the development of appropriate 
solutions needed to address the appropriate, correct, and agreed 
requirements.
    DHS continues to refine and extend its maritime and cargo security 
regime. This year we expect to see major rulemakings dealing with 
container seal verification requirements and with the issuance of 
Transportation Worker Identification Cards, a Departmental 
determination of what additional cargo shipment data needs to be given 
to CBP to enhance the cargos security screening system, and a continued 
review of the C-TPAT program.
    Mr. Chairman, the World Shipping Council and our member companies 
believe that there is no task more important than helping the 
government develop effective maritime and cargo security initiatives 
that do not unduly impair the flow of commerce. We are pleased to offer 
the Committee our views and assistance in this effort.

    The Chairman. Well, thank you very much.
    One of the things that was of interest to me when I went to 
Los Angeles was the enormous growth of waterborne imports into 
the U.S. I understand the economic analysis of that, it's about 
$40.5 billion a year coming into our ports. But, contrary to 
the passengers on airlines, and contrary to any other system 
that we've got, that is entirely free from any contribution to 
the security aspects we're talking about. I'm told that a 4.3 
percent fee, similar to one this Committee has imposed upon 
airline passengers, of twice that much, would bring in at least 
$1.7 billion annually.
    Now, what do you say about that? Why shouldn't these 
imports contribute to the cost of this security? Why should we 
constantly take it from tax money? That's what we're talking 
about, these additions, these amounts that each witness has 
asked for this morning, in effect, more money. But why not get 
it from the fees on these imports, like we tax the American 
passengers as they fly on the airlines?
    Ms. Godwin. There are fees assessed at--by ports at the 
local level. You're correct, there is no national or federal 
fee imposed on cargo that's specifically dedicated to security. 
There are a lot of other federal fees and taxes, obviously, on 
maritime----
    The Chairman. Those fees that----
    Ms. Godwin.--cargo that go into the general treasury, and 
Customs duties attributable to maritime commerce. But a number 
of ports have assessed fees individually at the port for 
security enhancements at that particular location. And----
    The Chairman. Yes, I understand they're starting that in 
L.A., but I don't think they've reached that magnitude, and I 
don't think many of the costs involved, even in the Los Angeles 
port, are federal costs. Having the local areas increase their 
revenue does not help us meet the demands that we've heard here 
today.
    Ms. Godwin. That's true. But when the port is collecting 
fees they are using it to reimburse their own costs, in terms 
of operations and maintenance and personnel costs, which aren't 
even eligible for the Port Security Grants at this point. But 
there are a number--as I said, a number of other federal fees 
and taxes attributable to maritime commerce. No amount of that 
funding is dedicated to security. It's just not set aside for 
security. I know there have been proposals discussed to take a 
portion of Customs duties, for example, that's collected on 
maritime commerce, and to set that aside to pay for security 
enhancements.
    The Chairman. The Customs inspection fee on a cruise ship 
is $2 per passenger. I know of no similar fee paid to the 
Federal Government from imports coming into the United States.
    Mr. Koch?
    Mr. Koch. Mr. Chairman, it's a fair question, but I think, 
really, here's where I would propose you start the analysis. 
The Coast Guard's analysis of what its vessel and port-facility 
regulations were going to cost the industry was $8 billion over 
10 years, so industry will be spending $8 billion to comply 
with the MTSA regulations. That cost estimate does not include 
the cost of the foreign flag vessels' compliance with the Coast 
Guard regulations. It does not include foreign ports' 
compliance with the ISPS Code regulations. So, there are many 
billions of dollars already being spent.
    When looking at what additional federal funding needs to be 
done, I think there really needs to be some clarity as to: What 
would we be spending the money for? And that has been a debate 
that has been vaguer than it should be. It's easy to talk about 
how much money should be given to ports. The real question, as 
you heard from GAO earlier today, is, What is the money 
actually needed for? All port facilities today are compliant 
with the ISPS Code the MTSA regs. So if we're going to go ahead 
and look to tax commerce an additional amount, I think there 
really needs to be clarity given to specifically what is it 
that the money is going to be spent for and is there a way to 
make sure that the money that would be collected actually is 
spent on those things?
    The Chairman. Well, as you know, the money that comes from 
air cargo, domestically, is taxed at 6.25 percent. And that 
goes into the FAA trust fund. We could very easily, on this 
Committee, create a similar trust fund. These aren't taxes, 
these are fees paid on cargo, and it goes into the FAA trust 
fund created by this Committee. I'm seriously thinking about 
asking this Committee to create a trust fund for port security. 
That would be augmented, I'm sure, by federal expenditures, 
augmented by other expenditures made by the ports themselves. 
But I--there's no question that the system needs more money, 
but when we faced that problem with air commerce, the 
passengers and the cargo paid the fee, a substantial part of 
it.
    Senator Inouye?
    Senator Inouye. Mr. Chairman, you are absolutely correct. 
Right now the Administration is requesting a huge sum of money 
based upon passenger security fees.
    My question is a very broad one. You have given us some of 
your problems and some of your suggestions. You have now been 
working on this since September 11th. Are we in better shape 
today, or no change at all, or worse?
    Mr. Koch. I think we're clearly in better shape. Are we 
where we want to be? No. I think the programs Customs has 
launched, in terms of the risk assessment, CSI, C-TPAT, have 
all enhanced security. The Coast Guard's missions in dealing 
with vessel security and port-facility security clearly have 
enhanced security. Access control is much better.
    Our improvements must also recognize the volumes of 
containers we are moving. Last year it was 10 million import 
containers; this year, it'll it be over 11 million; next year, 
it'll be over 12 million. So, we see this enormous expansion of 
world trade and all the cargo moving, and we have to figure out 
how to improve security efficiently.
    We're trying to deal with this tension between efficiently 
handling huge volumes of cargo and dealing with the terrorist 
risk to free trade and free societies. It's a very interesting 
cross-section of conflict.
    I think we're doing well. I think we clearly need to do 
better. I think both AAPA and ourselves have offered 
suggestions to the government on how to do that, and it's going 
to be an ongoing effort. But improving risk assessment, 
improving CSI, improving overseas inspections, further 
deployment of the radiation inspection equipment, not only 
here, but abroad, all are things that will be helpful. It's 
going to take a little time to get there, but we are making 
clear progress.
    Senator Inouye. Following up on the Chairman's questioning, 
when we improve our security, and when we improve our process 
and expedite movement, a major beneficiary would be those 
foreign shippers. Don't you think they should pay a little fee 
that could bring this about?
    Mr. Koch. Well, my observation is, they are paying more 
today for security. A number of ports are charging security 
fees. Carriers are trying to pass on their costs to shippers 
through higher rates. The terminal operators are passing on 
their higher costs. So the market already is building in 
increased costs that are being passed on to shippers.
    And, as the discussion we've had with Senator Stevens, if 
there are specific things that the government needs to assess a 
fee on for enhanced security, I think shippers would look at 
that. I think the frustration that has existed in this debate, 
up to this point, has been a generalized discussion of, ``Let's 
spend more money,'' without tying it clearly to, ``Spend it for 
what?'' And it's the ``spending it for what'' that is the 
harder question, because everybody understands we need to 
enhance security, but the question is--let's not just create a 
trust fund that's a generalized trust fund that doesn't have 
specific needs that there's a consensus should be funded 
through that kind of mechanism.
    Senator Inouye. I believe it would be very helpful to the 
Committee if you could provide us with a report on what sort of 
fees that these others are paying. Because I have no idea. And 
what the load is like. If we did, we might think differently. 
That would be extremely helpful.
    And, Ms. Godwin, what did you think of the Inspector 
General's report, the fact that it takes so long for security 
clearance and that some of the grantees were really not 
prepared to receive grant funds?
    Ms. Godwin. I think there are some very legitimate points 
that came out in the report. Our members have been concerned 
about the security-clearance issue, as well. In terms of the 
time lag for the grant money to be spent, I know one of the 
issues is that when you fill out an application to receive a 
grant, it's essentially an outline of what you might propose to 
do. You type it in on the computer. There's a limited amount of 
space. It's not a very detailed proposal. Once you are approved 
to receive a grant, there's a period of time, over months, 
where the sponsor--the Port Authority, in this case--might be 
negotiating with the Department of Homeland Security to refine 
that proposal, to get some specific amounts, how the money 
would be allocated, to really get a more definitive grant 
proposal approved. And once that is approved, they start the 
process of bidding out contracts. So, there is a fairly long 
time lag before the money is actually spent.
    Senator Inouye. Have you been called upon to provide an 
input on the process itself?
    Ms. Godwin. We've been consulted by DHS off and on in a 
number of different areas. I can't say that we are at the table 
when these decisions are being made, but they have reached out 
to us.
    Senator Inouye. Thank you very much.
    The Chairman. Senator Vitter?

                STATEMENT OF HON. DAVID VITTER, 
                  U.S. SENATOR FROM LOUISIANA

    Senator Vitter. Thank you, Mr. Chairman.
    Ms. Godwin, I have some concerns about the process and how 
those funds are distributed. Am I following things right and 
under-standing under that new program 66 ports are eligible and 
there for small ports are pretty much excluded.
    Ms. Godwin. Sixty-six port areas are eligible. It depends. 
There may be more than one port that's within a mile of a 
navigation channel. But, yes, it is a limited universe of 
potential applicants. Their initial starting point for creating 
that list was based on volume, they started with the largest, 
in terms of volume, 129 ports in the country, based on the 
Corps of Engineers' data. There are a lot of ports that have 
less volume that are left off that list. That's correct.
    Senator Vitter. From a Louisiana perspective, what I'm 
particularly concerned about is this focus on volume, which 
leaves out a lot of oil-and-gas service-related ports--for 
instance, in south Louisiana. Now, one of those ports that I 
can think of--literally one, Port Fourchon, accounts for 
servicing 20 percent of the Nation's oil and gas production.
    Ms. Godwin. Right.
    Senator Vitter. Do you think that's a little skewed, the 
fact that there is this focus on volume that doesn't take into 
account the significance of the port activity, like that 
related to energy production?
    Ms. Godwin. I think that would be a good example, that 
would illustrate why cutting off those who can even apply in 
the first place is probably not the best way to look at risk--
you know, risk-based decision-making. People ought to be able 
to come in and file an application and make their case on why 
they should be eligible for funding, and explain the risk-based 
factors about that port. Looking strictly at volume, as a 
starting point, and then applying a formula to that, you may 
see some ports left off the list that don't make any sense if 
you actually had the specific facts about that port.
    Senator Vitter. Well, I would agree with you. And I think 
Fourchon, in Louisiana, is a great example, because it will 
never be ranked high in volume, because it's not a cargo, sort 
of, volume-based port; it's a port that services the oil and 
gas sector. And if it were shut down tomorrow, we would feel it 
the next day, in terms of energy availability and prices.
    More broadly, could you comment on the FY05 application 
process as it relates to the Inspector General's findings and 
the 9/11 Commission Report?
    Ms. Godwin. I think they've tried to make an effort to 
address some of the issues that came up in the Inspector 
General's report. I know one of the criticisms was having more 
clearly-defined criteria of how the local Captain of the Port 
would assess a project versus how the National Review Team 
would assess a project, and trying to resolve some of those 
areas of confusion. But we were, to be honest, caught by 
surprise at the idea of limiting the applicant pool in the 
first place.
    Senator Vitter. OK. And that fundamental limitation, would 
you consider that basically an unfunded mandate for everybody's 
who's off the list?
    Ms. Godwin. It's definitely an unfunded mandate. And I 
remember, when I was here for the hearing that this Committee 
had in February, a number of Senators spoke very eloquently 
about the need to protect all airports in this country, not 
just the largest airports. And certainly the same case could be 
said for ports. We do not want to leave a soft underbelly 
somewhere in this country by a kind of arbitrary ranking. That 
doesn't mean that risk-based decision-making isn't perfectly 
appropriate, but you have to look at it in the entire context, 
and not prevent people from being able to at least compete for 
the funding and make a case.
    Senator Vitter. OK. And the last question for both of you, 
What are your comments about the proposed consolidation of the 
port-security program into an overall infrastructure-security 
grant program?
    Ms. Godwin. As I'm sure you heard in my statement, we are 
adamantly opposed to it. We are thrilled that the House 
Appropriations Committee has taken a stand, and we strongly 
encourage the Senate to do the same.
    Senator Vitter. Right.
    Mr. Koch. Sir, we don't really have any comments on that.
    Senator Vitter. OK.
    All right. Thank you, Mr. Chairman.
    The Chairman. Thank you very much, Senator. Glad to see 
you.
    Senator Rockefeller?
    Senator Bill Nelson. Oh, he's not here.
    The Chairman. Pardon me.
    Senator Bill Nelson?

                STATEMENT OF HON. BILL NELSON, 
                   U.S. SENATOR FROM FLORIDA

    Senator Bill Nelson. For me to be mixed up with Senator 
Rockefeller is, indeed, a privilege, Mr. Chairman.
    [Laughter.]
    Senator Bill Nelson. Mr. Chairman, having grown up in 
Florida on the tales and the stories of the swashbuckling days 
of pirates of the Caribbean, unfortunately we're starting to 
see a reoccurrence of those pirates of the Caribbean. We're 
seeing several instances that have happened off of Brazil, off 
of Venezuela, and off of Colombia.
    And Jane's Defence Weekly, is indicating to us that new 
evidence shows that terrorist organizations are entering the 
fray with terrorists and insurgents using the sea as a 
launchpad for brutal acts to move operatives and to smuggle 
drugs and counterfeit goods to fund their operations. And it 
goes on to say international terrorists are now operating in 
piracy areas, adopting the techniques and acts of pirates or 
franchising their cause to local insurgent groups.
    The Caribbean's an area that I have considerable concern 
about port security, from the standpoint of several of the 
ports that I've visited in the Caribbean, and that they are 
supposed to be secure ports, and, in fact, they are not.
    Now, with the added dimension of piracy adding to our 
question of defense of the homeland, I'd like to have your 
comments.
    Mr. Koch. Senator, I don't have direct information that 
would be terribly insightful on specific countries. I do know 
the Coast Guard has established the International Port Security 
Assessment Program, whose purpose is to go to these foreign 
countries, do assessments of the foreign port facilities, 
determine if they're complying with the international rules and 
the Coast Guard's expectations, and trying then to help them if 
they are not meeting them. You might want to ask the Coast 
Guard what their assessments have been throughout the Caribbean 
and at their particular places there.
    I know, from the liner-industry perspective, I'm not aware 
of particular acts of piracy that our members have encountered 
in the Caribbean. There are certainly the drug cartels and 
cargo theft in some parts of Central America, which has clearly 
been a problem in the past, and it's one we're always vigilant 
about. But in terms of the port-security piracy issues, I 
suspect the Coast Guard may be able to give you some data that 
would not be something I could.
    Senator Bill Nelson. Well, I'm interested in the answer 
from your standpoint. How about the port authorities, Ms. 
Godwin?
    Ms. Godwin. The ports in the Caribbean? I mean, they're 
supposed to all be in compliance with the ISPS Code. I am not 
aware of any that have been found not to be in compliance.
    Senator Bill Nelson. OK. I can tell you they're not. And if 
the American Association of Port Authorities doesn't know that, 
then I'm concerned about it. And if the World Shipping Council 
doesn't know that, I'm concerned about it. Because with as 
little that we inspect the inbound cargo containers, and if 
these foreign ports are not in compliance, it seems like we've 
got a big hole right there.
    Mr. Koch. The Coast Guard, at the present time, has 
identified five jurisdictions that do not have adequate port 
security. I believe they're African ports. To the best of my 
knowledge, they have not identified any in the Caribbean, at 
this point. If they are not compliant, then the Coast Guard 
needs to put them on the list saying that they are not 
compliant, and that needs to be put into the Customs Targeting 
System so that cargo coming through those ports is targeted 
appropriately, as well as the vessels.
    Senator Bill Nelson. OK. And then, on the basis of your 
answer, Mr. Chairman, what I'm going to do is proffer a number 
of questions to the Department of Homeland Security on this 
issue, because of the lack of compliance, why they're saying 
that these ports have complied, when, in fact, there's a huge 
hole in the safety net that we're supposed to be extending out 
beyond.
    All right, let's talk about tamper-resistant containers. 
You know we're trying to put seals on containers. Why don't you 
give me the value of your opinion there?
    Mr. Koch. We have advocated a seal-verification rule. One 
is being drafted at the present time by Customs and the 
Department of Homeland Security. Our expectation is that that 
rule would require that, before a container is loaded in a 
foreign port for the U.S., that we will have to go verify the 
seal on that box. We support that, support the elements that 
will have to go into that rulemaking, including defining the 
standard of the seal and the various responsibilities of the 
parties to do all that. It's a big challenge, but we think it 
does make a lot of sense.
    When that is in place--that obligation is in place--we will 
expect technology to be coming forward rather rapidly to help 
us implement that. We have been spending a lot of time 
investigating RFID electronic seals for containers. We don't 
have, yet, a standard for that technology in place that can 
identify the frequency and the various parameters to make it 
work, but we expect, by the end of this year, that that 
standard should be in place, and, with a seal-verification 
rulemaking, we'd start seeing electronic seals being put on 
boxes sometime in the foreseeable future.
    Senator Bill Nelson. Ms. Godwin?
    Ms. Godwin. I'm not sure I can add anything to that. That's 
certainly an important component of cargo security, and we're 
hoping to see progress in that area.
    Senator Bill Nelson. OK. And I will send those questions to 
the Department of Homeland Security, as well as questions with 
regard to their progress under a new law on cruise ships, that 
they would have to check the manifest before the cruise ship 
leaves the port. They had 180 days in which to implement this 
new law that I had a little bit to do with. We are now at day 
151 of the 180 days, and I will--would like to have a written 
response on how they are progressing, since it's getting near 
the time for implementation.
    Thank you, Mr. Chairman.
    Senator Inouye [presiding]. Thank you very much.
    Before I call this adjournment, I'd like to announce that 
the record will be kept open for 2 weeks. If any of the 
witnesses wish to provide addendum or corrections, please feel 
free to do so. Some of the Committee Members are not here, but 
they have submitted questions, which we will forward to you, 
and we hope that you will be able to respond to them.
    Our next hearing will be held tomorrow morning at 10 
o'clock. At that time, we will receive testimony on the 
nomination of senior officials of the Department of Commerce.
    Thank you very much.
    [Whereupon, at 11:45 a.m., the hearing was adjourned.]


                            A P P E N D I X

                                     World Shipping Council
                                      Washington, DC, June 14, 2005
Hon. Ted Stevens,
Chairman,
Senate Committee on Commerce, Science, and Transportation,
Washington, DC.

Dear Mr. Chairman:

    I would like to thank you for the opportunity to testify before the 
Commerce Committee on May 17th regarding port, maritime and cargo 
security issues. The World Shipping Council, which represents the 
international liner shipping industry serving America's international 
trade, appreciates your continued oversight and leadership regarding 
enhancing maritime and cargo security while facilitating the free flow 
of legitimate commerce into and out of the United States.
    One of the issues that was briefly discussed during the hearing was 
port security funding. As you know, during the last Congress, Senator 
Hollings proposed a port security container tax as an amendment to the 
2004 Maritime Transportation Security Act (S. 2279). This amendment was 
opposed by 76 organizations, including the World Shipping Council. 
representing virtually every facet of U.S. maritime commerce, and the 
amendment was rejected during committee markup of the bill. We very 
much appreciated your support in opposing that amendment.
    During the May 17th hearing, you asked the industry panelists, 
namely myself and Ms. Jean Godwin of the American Association of Port 
Authorities, to comment on the concept of establishing a new tax or fee 
on import cargo containers to pay for port security expenses. While I 
commented briefly on this issue during the hearing, I would like to 
offer the following additional comments, for inclusion in the hearing 
record, which I hope will assist the Committee in considering this 
issue.
    In my oral response to your question during the hearing, I noted 
that, although some interests have advocated for increases in the total 
amount of annual Port Security Grant monies dispersed by the Federal 
Government, no one has yet clearly or specifically defined what it is 
that additional federal port security funds should appropriately pay 
for.
    U.S. port facilities and the vessels that call on them are in 
compliance with the International Ship & Port Facility Security Code 
(ISPS Code) and the Maritime Transportation Security Act (MTSA) 
security regulations promulgated by the U.S. Coast Guard. Port 
facilities and vessels have developed and implemented approved security 
plans. In fact, we are not aware of a single, major U.S. port or port 
facility that is not currently in compliance with the Coast Guard's 
maritime security requirements.
    The costs of implementing these security requirements have been 
significant. The Coast Guard has estimated that it will cost U.S. port 
facilities and flag vessels $8.8 billion over 10 years; however, these 
compliance costs are already being borne by the industry. There is no 
need for a new tax and a new federal funding program to address these 
costs.
    The Coast Guard's cost estimates are the costs that would be borne 
by the industry to comply with its maritime security requirements, not 
the cost the Federal Government would bear. These cost estimates were 
actually on the low side. as they did not include the costs incurred by 
the thousands of foreign-flag vessels that were required by the Coast 
Guard's regulations to become certified under the International Ship 
and Port Facility Security (ISPS) Code or the costs incurred by foreign 
ports and port facilities in becoming compliant with the ISPS Code.
    In addition to the costs to comply with required vessel and port 
facility security requirements, the maritime industry and its customers 
have expended substantial sums to comply with the requirements of the 
U.S. Government's cargo security programs. U.S. Customs and Border 
Protection (CBP) estimated that the cost to industry to comply with the 
Trade Act advance cargo information filing requirements would amount to 
over $4.7 billion. Those estimates did not, however, include the 
millions of dollars of costs incurred by ocean carriers to implement 
the agency's 24 Hour Rule advance manifest filing requirements. Second, 
U.S. importers, ocean carriers, truckers, railroads, air carriers, 
brokers, and freight forwarders, among others, have expended millions 
of dollars each year to voluntarily implement the security requirements 
of the Customs-Trade Partnership Against Terrorism (C-TPAT) program. 
And third, later this year, the maritime industry will face another 
very expensive security requirement when CBP issues rules requiring 
installation and verification of high-security seals on all import 
cargo containers.
    The purpose of stating this is not that the liner shipping industry 
is complaining about these costs. We understand the need to develop and 
implement prudent, enhanced maritime security measures in the fight 
against terrorist threats. It is important to recognize, however, that 
substantial costs are already being borne by the maritime industry to 
address and improve maritime security, and we see no basis for imposing 
a new, additional federal security tax on the industry.
    Today, Federal agencies levy 127 taxes and fees on the maritime 
industry, collecting roughly $22 billion per year. Approximately $20 
billion of this amount is collected in Customs fees that are not 
earmarked for specific purposes and are deposited in the General Fund 
of the Treasury. We believe that creation of an additional federal tax 
or fee on maritime cargo containers would be unjustifiable given the 
substantial revenue generated through existing taxes and fees and given 
the substantial expenditures the industry is already incurring to 
comply with new security rules.
    In short, port, vessel and cargo security requirements, are 
currently being met and their costs borne by the maritime industry. We 
have seen no explanation of what unmet port security costs would 
justify a new federal tax. Furthermore, we note that ports have the 
authority, and are using their authority, to impose additional charges 
at the local level when such measures are needed to cover additional 
security costs. For example, the ports of Charleston, Savannah, 
Portland (Oregon), Hampton Roads, New Orleans, Houston, Mobile, Los 
Angeles and Long Beach have increased the fees on commerce in their 
port to raise additional revenues for security measures. There is no 
need or justification for a new federal tax to cover costs already 
being paid for by the industry.
    Thank you for the opportunity to comment further on this important 
issue.
        Sincerely yours,
                                       Christopher L. Koch,
                                                     President/CEO.
                                 ______
                                 
  Response to Written Questions Submitted by Hon. Daniel K. Inouye to 
                           Richard L. Skinner

    Question 1. I understand you are currently conducting work on CBP's 
Automated Targeting System (ATS). When do you expect to have that 
report completed? Would you be able to testify before this Committee on 
that report when it is completed?
    Answer. Our report, ``Audit of Targeting Oceangoing Cargo 
Containers'' (OIG-05-26), which is designated FOUO, will be released to 
the Congress on July 26, 2005. A public summary will be released on 
August 2, 2005. We would be happy to testify on our work.

    Question 2. I appreciate the work your Department did on the Port 
Security Grant Program as it provided many insights into some of the 
program's problem areas that we continue to conduct oversight of and 
are working in consultation with the Department to rectify. I realize 
the guidance for this year's round of port security grants was just 
released last week. Have you had an opportunity to review the 
Department's guidelines and assess if your recommendations are being 
implemented?
    Answer. We are reviewing the Department's FY 2005 Port Security 
Grant Program Guidelines and Application Kit, and evaluating the 
complex funding allocation model for the program, which we received 
earlier this month. We are encouraged by the substantive changes to the 
design of the program reflected in these documents. However, while it 
appears that substantive changes are imminent, we have not evaluated 
the effect of these changes--the criteria program administrators will 
use and how they will apply it during the evaluation process--and 
whether those modifications satisfy our recommendations.
    We are awaiting additional details from the Department supporting 
its action plan in response to our recommendations. The Department has 
not yet provided its internal guidance that SLGCP, USCG, TSA, CBP, 
IAIP, and MARAD representatives will use to evaluate projects, namely, 
the field evaluation criteria and the National Review Process guidance. 
We intend to discuss the revised port security grant application review 
process with program officials after reviewing this information. Upon 
completing our analysis, we will communicate the status of the 
recommendations to SLGCP.
                                 ______
                                 
Response to Written Questions Submitted by Hon. Frank R. Lautenberg to 
                           Richard L. Skinner

    Question. Your office found major problems with the port security 
grant program, mainly that funds are not being distributed on the basis 
of security risk. Have you performed any follow-up to ensure that the 
$140 million DHS will distribute this year won't have the same 
problems?
    Answer. In our final report transmittal, we requested that DHS 
advise our office within 90 days of its progress in implementing our 
recommendations. In its action plan, DHS outlined steps already taken 
and other significant changes planned for the next round of port 
security grants. In addition to the Department's action plan, we are 
reviewing the FY 2005 Port Security Grant Program Guidelines and 
Application Kit, and complex funding allocation model for the program. 
We are encouraged by the substantive changes to the design of the 
program reflected in these documents. However, while it appears that 
substantive changes are imminent, we have not evaluated the effect of 
these changes--the criteria program administrators will use and how 
they will apply it during the evaluation process--and whether those 
modifications satisfy our recommendations.
    We requested additional documentation in order to better understand 
how DHS is modifying the port security grant application review 
process. The Department has not yet provided its internal guidance that 
SLGCP, USCG, TSA, CBP, IAIP, and MARAD representatives will use to 
evaluate projects, i.e., the field evaluation criteria and the National 
Review Process guidance. We intend to discuss the revised port security 
grant application review process with program officials after reviewing 
this information. Upon completing our analysis, we will communicate the 
status of the recommendations to SLGCP.
                                 ______
                                 
  Response to Written Questions Submitted by Hon. Daniel K. Inouye to 
                              Jean Godwin

    Question. Do you have any concerns with the recent guidance 
announced by DHS to award this year's appropriations of port security 
grant funds?
    Answer. Yes, AAPA is very concerned over the recent changes in the 
program. Of most concern is the change to limit eligibility to the 
largest risk ports. DHS pre-selected 66 ports which are eligible for 
this 5th round. Nearly half of the U.S. port authorities that AAPA 
represents are no longer eligible for this program. The Port Security 
Grant (PSG) Program was established to help ports harden their 
infrastructure and to comply with the improvements required under the 
Maritime Transportation Security Act (MTSA). The language in the law 
call for a ``fair and equitable allocation'' of funds. AAPA believes 
that limiting eligibility is in conflict with this provision of the 
law. All port authorities must comply with the MTSA, and continual 
improvements at some ports will stop without federal help. All should 
be eligible.
    While AAPA agrees that the program should be risk-based, we believe 
the definition of risk must be broadened from what we see this last 
round. A group of underprotected ports is also a risk to this Nation, 
especially in terms of importing weapons of mass destruction or 
smuggling in terrorists. These facilities are all international 
borders. The program should take into account national economic, 
strategic defense, regional transportation systems, availability of 
alternative systems to deliver critical cargos, the importance of a 
port's mission to federal agencies such as the Department of Defense 
and Department of Energy, the proximity to other terrorist targets and 
loss of life. The grants should go to fund security improvements to 
implement Area Maritime Transportation Security plans and to make 
improvements to facility security plans, and should not limit 
eligibility.
                                 ______
                                 
Response to Written Questions Submitted by Hon. Frank R. Lautenberg to 
                              Jean Godwin

    Question. Given the President's budget cuts and fiscal restraints, 
how are we going to effectively protect our ports, particularly with 
respect to the port security grant program?
    Answer. Each year only a small part of the homeland security 
federal spending is devoted to help port facilities increase security. 
In FY05, Congress appropriated only $150 million for the Port Security 
Grant Program. AAPA recommends a funding level of $400 million. In 
terms of priorities, maritime security is a very high priority, but far 
more funds go to state and local program for response and training 
programs. While these are important programs, prevention should be this 
country's first job. And maritime security, because of the economic 
impact of ports, their cruise and ferry passengers, and national 
defense assistance, should be a high funding priority. A re-allocation 
of priorities within the budget is the best way to address this issue. 
Some have proposed a fee on maritime commerce. However, the maritime 
industry already pays billions of dollars in user fees and taxes to the 
Federal Government, including $17.5 billion Customs duties collected in 
fiscal 2003. If a dedicated source of funding is required, AAPA 
believes that Customs duties should be used as a source.
                                 ______
                                 
  Response to Written Questions Submitted by Hon. Daniel K. Inouye to 
                           Margaret Wrightson

    Question. In your report on the Transportation Worker 
Identification Credentialing Program, you found several problems with 
implementation to the program, not the least of which was the lack of a 
comprehensive project management plan. Do you know if TSA has satisfied 
this recommendation?
    Answer. In July 2005 DHS provided us with an update on the actions 
that had been taken to implement the recommendations contained in our 
December 2004 report on TSA's efforts to develop the Transportation 
Worker Identification Credential (TWIC). In this update, DHS stated 
that TSA had ``significant program management controls in place for the 
prototype program'' including a Program Management Plan, a Project 
Quality Assurance Plan, and Risk Assessment and Mitigation Planning 
among other things. However, DHS did not provide any supporting 
documentation for us to determine whether these controls and plans 
collectively constitute what could be considered a comprehensive 
project plan for managing the remaining life of the project.
                                 ______
                                 
    Response to Written Questions Submitted by Hon. Bill Nelson to 
                             Robert Jacksta

    Question 1. Last year, I successfully got included a provision in 
the Intelligence Reform bill that applies to cruise ships the same 
standards that we apply to airlines with respect to terror watch lists. 
My provision requires that the Department of Homeland Security check 
all passengers and crew manifests against the consolidated passenger 
watch list before they board the ship. This is vital to the security of 
our cruise passengers as well as to the security of our ports and the 
surrounding areas. It will take only one incident to cripple the cruise 
industry. Similarly one incident, no matter how small, can severely 
interrupt international commerce. I would like to know how the 
implementation of this cruise ship watch list requirement is 
progressing. The law gave DHS 180 days to implement this program. We 
are going on 151 days as of today. Will DHS comply with this deadline? 
When can I expect a briefing on the full implementation of this law?
    Answer. The Advanced Passenger Information System (APIS) Final Rule 
(70 FR 17820 April 7, 2005) requires vessel operators to provide 
passenger APIS. Under the Rule, operators must submit passenger 
information according to the following criteria: 96 hours prior to 
arrival at a U.S. port for voyages over 96 hours; 24 hours prior to 
arrival at a U.S. port for voyages less than 96 hours; prior to 
departure from foreign for voyages less than 24 hours; and 15 minutes 
prior to departure for vessels departing the U.S.
    Vessel Crew and Passenger APIS manifests are vetted against law 
enforcement databases maintained within the TECS/IBIS mainframe and 
against the anti-terror watch list, which is exported to the TECS/IBIS 
mainframe from the Terrorist Screening Center. In lieu of an automated 
notification mechanism, the CBP National Targeting Center (NTC) 
actively vets APIS lists to identify passengers or crew who are 
arriving or departing aboard commercial sea vessels. The NTC 
coordinates the identification, interception and examination of 
targeted passengers with the U.S. Coast Guard.
    The vessel time requirements within APIS reflect Coast Guard 
regulations and were written to establish continuity between agency 
reporting requirements. Commercial cargo and passenger vessels board 
passengers and crew several hours in advance of departure. Due to the 
extended time needed to board a passenger vessel or prepare the vessel 
to sail, CBP has determined the time requirements published within the 
Coast Guard regulations serve the purpose for targeting suspect high-
risk passengers and crew.
    CBP would welcome the opportunity to discuss the implementation of 
this program in greater detail. Please have your staff contact Thaddeus 
Bingel, Assistant Commissioner for Congressional Affairs at (202) 344-
1760 to arrange a briefing on the implementation of APIS for passenger 
vessels.

    Question 2. It is crucial that we stop dangerous cargo from 
reaching our shores at all. Once the cargo gets here our chances of 
stopping a catastrophic event are greatly reduced. We need to push our 
borders out and catch dangerous cargo before it leaves the home ports. 
However, odds are high that we will not catch everything. So we need to 
be able to track cargo and know as quickly and efficiently as possible 
if the containers have been tampered with en route. What technology is 
DHS looking into to maintain and ensure the integrity of the seals on 
the containers?
    Answer. DHS is currently exploring technology designed to enhance 
the integrity and security of oceangoing containers, rather than the 
seals that are affixed to such containers. The majority of seals 
currently used by shippers and importers are mechanical and are not 
able to interface electronically with the verification process. As the 
technology incorporated into electronic seals (e-seals) is developed 
and matured, it is anticipated that such e-seal capability could be 
used to maintain the integrity of not only the seals but also the 
containers to which they are affixed. The International Organization 
for Standardization (ISO) is in the process of developing the accepted 
standards for e-seals and their use.

    Question 2a. Are GPS tracking systems part of the technology?
    Answer. DHS Science and Technology Directorate (S&T) is working 
with Customs and Border Protection (CBP) to identify and evaluate 
technology designed to enhance the security of ocean going containers. 
Such Advanced Container Security Devices (ACSDs) shall be designed to 
integrate with the Marine Asset Tag and Tracking System (MATTS), a 
tracking and communication system that would provide container-tracking 
capability. This technology has application to assist CBP in tracking 
in-bond shipments and is extensible to rail and truck transport.

    Question 2b. What are the expected costs to the private industry to 
employ any new technologies?
    Answer. Based upon current technical capabilities and rate of 
maturation, the cost to private industry to employ new technology that 
is presently under evaluation is, on an average, no greater than 50 
dollars per trip over the projected 10-year average life of the 
container. As technology continues to develop and mature, however, it 
is anticipated that such costs would decrease significantly.

    Question 2c. What is the time frame for deploying the next 
generation of container seals?
    Answer. CBP is working in conjunction with DHS/S&T on the 
development of next generation container security technology. S&T 
recently issued a Broad Agency Announcement for its Advanced Container 
Security Device Program. This effort will result in the issuance of 
DHS-wide standards for next-generation Container Security Devices that 
provide:

   six-sided intrusion detection and alerting,
   a means for increased visibility of stuffing and transit 
        history,
   enhanced data and information for the CBP's National 
        Targeting Center (NTC) and the port of arrival, and
   timely reporting and communications.

    Additionally, as a part of the ACSD Program, S&T has a parallel 
Research and Development effort for capability integration into the 
container, to optimally push container security development to the 
container manufacturers.
    In managing this process, S&T has established an Integrated Process 
and Product Team (IPPT), which includes representatives from DHS, 
Department of Defense, and the Department of Transportation, to ensure 
a wide voice among federal agency stakeholders and to prevent 
development of a solely S&T solution.
    A development period of approximately 3 to 5 years may be required 
to produce an operationally suitable and technically robust ACSD 
solution fulfilling the above objectives. As an immediate step, CBP has 
launched the ``Smart Box'' initiative to evaluate the logistical and 
operational aspects of using container security devices for intrusion 
detection. The Initiative's near term goal is to approve a device that 
would monitor and log door activity for inclusion in CBP cargo security 
programs. The Smart Box focuses on the testing of ``off the shelf'' 
Container Security Devices (CSD) to help address the current threat of 
container tampering en-route.

    Question 3. I am very concerned about the Caribbean Basin area and 
port security. The safety and security of ports in the Caribbean Basin 
have a direct impact on Florida and the rest of the Nation. A 
significant amount of trade goes back and forth between ports in 
Florida and Latin America and this trade is only expected to increase 
in the coming years. It is crucial that the seaports that are closest 
to our own borders are secured. This is a particular challenge in this 
area because of the well-established drug trafficking routes throughout 
Latin America. We need to do something to address this issue and we 
need to do it now. We need to ensure that goods originating from these 
ports are safe and secure and do not pose a threat to the U.S. One way 
to do this, as you all at DHS have shown, is through programs like the 
Container Security Initiative. Many don't think about the Caribbean 
basin as a real security risk. In this week's Jane's Defense Weekly, 
however, there is an article about piracy and it maps the number of 
acts of piracy by region. In 2004, there were 14 reported acts of 
piracy just off the shores of Columbia, Venezuela, and Brazil. That is 
a significant number of incidents. Piracy not only poses an immense 
threat to the safety of the crew aboard these cargo vessels but can be 
an avenue for terrorists to get to our shores with deadly weapons 
without being detected and without having to go through the normal 
Customs channels. We cannot forget about the Caribbean Basin ports--
these ports that are so close to our own shores. How many and which 
Caribbean Basin ports are currently out of compliance with the MTSA 
regulations or the ISPS Code?
    Answer. Federal regulations to ensure the security of domestic 
seaports is governed by the Maritime Transportation Security Act (MTSA) 
and the International Ship and Port Facility Security (ISPS) Code 
addresses the security of international seaports. Information regarding 
specific port compliance with MTSA and ISPS regulations is the 
responsibility of the U.S. Coast Guard (USCG). It is the practice of 
USCG to advise CBP regarding MTSA non-compliant ports. CBP incorporates 
this information into the Advanced Targeting System (ATS); the ATS 
evaluates the risk associated with all U.S.-bound shipments to 
determine appropriate screening and inspection responses.
    CBP has long-standing institutionalized relationships with U.S. 
trade operations, such as the Port and Terminal Operators through the 
Business Anti-Smuggling Coalition (BASC), in the Caribbean Basin. BASC 
is endorsed by the World Customs Organization (WCO) and is active with 
the Organization of American States (OAS) on Port Security and Supply-
Chain-Security Initiatives. Although BASC initially had an anti-
narcotics focus, terrorism has now been incorporated into their profile 
and security standards. At present, BASC has expanded to include: 
Mexico; Guatemala; Jamaica; Ecuador; Panama; Venezuela; Peru; Uruguay; 
the Dominican Republic; Costa Rica; Haiti and El Salvador. In each of 
these countries, Port and Terminal Operations remain vital segments of 
the supply chain that actively participate in BASC.
    CBP is exploring further expansion of the Container Security 
Initiative (CSI) with Latin America and the Caribbean, namely in 
Argentina and in Brazil, with plans to conduct assessments in the 
Bahamas, Colombia, Jamaica. Honduras, and Panama.

    Question 3a. What is DHS doing to ensure the integrity of goods and 
containers coming into the U.S. via the Caribbean Basin ports other 
than just penalizing shippers who do not comply with our regulations?
    Answer. Customs and Border Protection (CBP) is looking at expanding 
the Container Security Initiative to Central America and South America. 
In South America, CBP has signed Declarations of Principle with 
Argentina (May 9, 2005) and Brazil (May 24, 2005) to become the first 
two South American ports to participate in CSI. CBP has scheduled a 
capacity assessment for Cartagena, Colombia for the first week in 
August 2005. In Central America and the Caribbean Basin, CBP has 
completed capacity assessments in Puerto Cortes, Honduras; Kingston, 
Jamaica; and Freeport, Bahamas to determine their viability in being 
able to support CSI. CBP will be scheduling a capacity assessment of 
Colon and Balboa, Panama in the near future. CBP will determine by 
these capacity assessments if any of these ports would be able to 
support a CSI program.
    As part of DHS's multi-layer cargo security approach, the Science 
and Technology Directorate (S&T), in coordination with Customs and 
Border Protection (CBP), is developing technologies the ensure the 
security of intermodal shipping containers, such as the Advanced 
Container Security Device (ACSD) and the Marine Asset Tag and Tracking 
System (MATTS), which will actively monitor the integrity and track 
containers globally.
                                 ______
                                 
   Response to Written Questions Submitted by Hon. Maria Cantwell to 
                       Rear Admiral Larry Hereth

    Question 1. The Port of Seattle in my state is one of the Nation's 
largest and most diverse port complexes. It is a major container and 
cruise ship port, home to the Alaska fishing fleet, supports tens of 
thousands of ferry riders each day and the city is one of the most 
sought-after tourist destinations in the world. The port is also 
located only blocks away from a bustling downtown. Do you believe the 
Coast Guard has enough resources to adequately protect a thriving port 
city like Seattle?
    Answer. The Coast Guard does not individually possess the resources 
to protect an entire port such as Seattle, but works in concert with 
other federal, state and local authorities, as well as the port 
community, to protect the port. Even so, risks to any port cannot be 
completely eliminated. The Coast Guard is working with the port 
community to focus resources on reducing the greatest risks to the 
port.
    The Coast Guard has built a strong foundation of effectively 
working with the maritime industry through our historical enforcement 
of safety and environmental protection regulations. Our Captain of the 
Port activities and local enforcement of regulations resulted in many 
well established relationships in the port community, and many venues 
in which to engage local stakeholders such as Port Security Committees, 
Port Readiness Committees, Harbor Safety Committees and OPA 90 Area 
Committees.
    The Coast Guard also implemented regulations from the Maritime 
Transportation Security Act (MTSA) of 2002 on July 1, 2004. These 
regulations require, among other things that industry have in place 
vessel and facility security plans, which are tested and approved in 
accordance with established Coast Guard standards. These efforts have 
been enhanced through Congress's funding of 791 FTP in the 2005 budget 
for nationwide MTSA implementation.
    Since 9/11, the Coast Guard has also created or acquired new or 
enhanced Maritime Homeland Security Capabilities including:

   12 Maritime Safety and Security Teams.
   15 Additional Coastal Patrol Boats.
   80+ new Response Boats.

   The Navy has agreed to transfer five Patrol Coastal boats 
        (PC-170s) to the Coast Guard this FY05. The Navy has agreed to 
        continue most maintenance responsibilities on these Patrol 
        Coastal boats for four years (through FY08).

   8 Canine teams trained for explosive detection.

   30+ Field Intelligence Support Teams (FIST) deployed to 
        better collect and disseminate maritime threat information.

   Before 9/11 we had no mandatory ship-tracking requirement; 
        we have recently forged an international agreement to 
        accelerate the requirement for Automatic Identification System 
        (AIS) capability. Simultaneously, we have initiated a major 
        acquisition project for AIS. This project will allow us to 
        deploy immediate capability, including AIS shore stations in 
        VTS ports and aboard Coast Guard Cutters, outfitting NOAA buoys 
        offshore and testing AIS receiving capability from a low-flying 
        satellite. The Coast Guard has also fielded AIS at nine U.S. 
        VTS ports and persuaded the world maritime community to 
        accelerate AIS installation on ships.

    Specifically, in Washington State

   MSST 91101 was stood up, consisting of 74 active duty and 33 
        reserve personnel.

   9 Additional billets were added to conduct Port State 
        Control and MTSA Implementation.

   4 Additional Coastal Patrol Boats (4 of the additional 15 
        acquired) were homeported in the Puget Sound area.

   Deployed FIST.

    Question 1a. What has the Coast Guard done since 9/11 to ensure its 
homeland security and other missions are accomplished in this bustling 
hub of commerce for the Pacific NW and the Nation?
    Answer. Since 9/11, we have made great progress in securing 
America's waterways, while continuing to facilitate the flow of 
commerce. The improvements in Ports, Waterways and Coastal Security 
(PWCS) that are currently evident are, in large part, attributable to 
the passing of the watershed Maritime Transportation Security Act of 
2002 (MTSA) legislation and its swift implementation by private 
industry and the Department of Homeland Security (DHS). This has vastly 
changed the security posture of the Nation's maritime critical 
infrastructure and key assets (MCI/KA) and the overall preparedness of 
federal, state, local and private security forces. The Coast Guard is 
committed to a course that improves our maritime security with the 
ultimate goal of preventing the exploitation of, or terrorist attacks 
within, the U.S. Maritime Domain. Doing so requires a threat-based, 
risk-managed approach to identify and intercept threats before they 
reach U.S. shores. The Coast Guard accomplishes this by conducting 
layered, multi-agency security operations while strengthening the 
security posture and reducing the vulnerability of MCI/KA, with an 
increased focus on the Nation's most militarily and economically 
critical ports. As the Coast Guard seeks to reduce maritime risk, it 
must strive to balance its PWCS mission requirements with other Coast 
Guard non-security missions to ensure no degradation in those missions. 
The Coast Guard must exercise its full suite of authorities, 
capabilities, competencies, and partnerships to accomplish its full 
spectrum of missions in the post-9/11 world.
    The Coast Guard is continuing to meet the challenges of our legacy 
missions in the Puget Sound region, as well as meeting the new 
challenges presented by our integration into the Department of Homeland 
Security and new homeland security mandates. Implementation of expanded 
security responsibilities is being built on the foundation provided by 
our existing marine safety, port security and maritime law enforcement 
missions, and broadens our efforts to reduce risks in the U.S. Marine 
Transportation System and to enforce laws and treaties. Although much 
work remains, we are progressively improving maritime homeland 
security.
    The diversity of Puget Sound's maritime industry presents unique 
challenges that require daily cooperation between industry and 
government to balance the needs of commerce with those of homeland 
security. The security net vital to limiting vulnerabilities in Puget 
Sound ports consists of layered security measures that rely on the 
successful implementation of the MTSA and the International Ship and 
Port Facility Security (ISPS) Code. Implementation of MTSA and the ISPS 
Code were major activities during 2004. Security measures are in place 
for domestic and foreign vessels, domestic waterfront facilities and 
Puget Sound as a whole. We also maintain a Maritime Safety and Security 
Team (MSST) in Seattle. It was the first MSST established, and provides 
an expanded capability for port safety and security operations.
    One of the foundations for improving maritime security is the Area 
Maritime Security Committee (AMSC) required by MTSA regulations. 
Facilitated by the U.S. Coast Guard, the Puget Sound AMSC consolidated 
existing port security committees and a committee that had been formed 
to represent Washington State Ferries and their unique concerns. The 
AMSC has established communications links across law enforcement and 
emergency response entities, identified public and private sector 
capabilities and responsibilities, and established a regular schedule 
of meetings, training and exercises to foster maintenance and 
continuous improvement of security measures in place to protect the 
port.
    The AMSC is coordinating all federal, state, local and private 
sector maritime security efforts in Puget Sound. The 25-person AMSC 
encompasses a wealth of maritime knowledge, and draws talents from all 
aspects of industry, police and fire departments and from components of 
the Department of Homeland Security. Collectively, they advise the 
Federal Maritime Security Coordinator on security concerns and critical 
commercial interests unique to Puget Sound. We continue to build upon 
these efforts to provide rigorous maritime security for the Puget Sound 
region.

    Question 2. There is talk about imposing fees on imports to cover 
the cost of port security. My concern is that some import ports are 
located near Canada or Mexico where infrastructure is either developed 
or being developed to compete with the U.S. ports for import goods. I 
am concerned that any fee will simply drive import goods to these other 
countries, especially Canada, which has a well-developed shipping and 
rail infrastructure. Once the cargo is diverted, it will enter the 
U.S., possibly by rail, and not receive all the protections it may have 
been subject to had it come through a U.S. gateway. This obviously 
undermines our security and our economic mission. In addition, as our 
economy in the Pacific Northwest finally is overcoming years of 
recession, this is not the time to cause important port business to be 
diverted to Canada. How do you purpose to address a scenario where U.S. 
security fees might send U.S.-bound import goods to these other 
countries causing them to receive less security scrutiny?
    Answer. CBP does not propose to add any additional fees for 
security or regular cargo exams.

    Question 3. There has been talk since shortly after 9/11 about 
requiring shipping containers from overseas to be equipped with 
mechanisms that verify that they were securely loaded and not tampered 
with before reaching U.S. shores. My colleague and friend, Senator 
Murray has implemented pilot programs to determine the best technology 
to accomplish this. What needs to be done to ensure these containers 
are safe before entering the U.S.?
    Answer. Container security is multi layered and cross-functional 
and requires the commitment and resources of not only the U.S. 
Government but also the importing community. The addition of technology 
designed to ensure the integrity of containers bound for U.S. shores is 
but one facet in securing containers. Such technology must work in 
conjunction with mechanical seals and sealing processes to be utilized 
at the point of stuffing through trusted, vetted partners such as the 
C-TPAT members.
    Manifest data provided by the shippers and importers are a critical 
component to this layered approach in order to conduct targeting of 
potentially high-risk containers. The Container Security Initiative 
(CSI) provides an additional layer as such targeting is conducted at 
overseas locations prior to containers being laden aboard U.S. bound 
vessels.
    The use of Non-Intrusive Inspectional (NII) equipment, such as 
large-scale non-intrusive inspection imaging technology and radiation 
portal monitors is also critical to both ensuring the integrity of 
containers as well as in expediting the inspection and movement of 
legitimate freight.

    Question 3a. What more can be done in this regard and what 
specifically does the CG, or other branches of the Department of 
Homeland Security, have planned in this regard?
    Answer. The Coast Guard is an active participant in Operation Safe 
Commerce. which is a DHS grant program testing a host of technology 
solutions for intermodal container security in the international supply 
chain. The Coast Guard is a member of the Executive Steering Committee 
for that project. The results of Operation Safe Commerce will help 
determine which technologies are mature enough to be considered for 
mandatory use on containers bound for the United States.
    The Coast Guard is also working closely with Customs and Border 
Protection on the development of a proposed rule that would require the 
mandatory use of high security mechanical seals on containers bound for 
the United States. The rule is being drafted to allow the introduction 
of advanced technology to be incorporated with the mechanical seals as 
those technologies develop.
    The Coast Guard is a member of the Container Security Integrated 
Product and Process Team (IPPT), co-led by the Science & Technology 
Directorate (S&T) and the Border and Transportation Security (BTS) 
Policy & Planning Office, which provides oversight to the development 
and evaluation of advanced technologies for intermodal shipping 
containers, such as the Advanced Container Security Device (ACSD), and 
for the development of the Container Security Systems Architecture.

    Question 4. In your testimony to the House Transportation 
Subcommittee on Coast Guard and Marine Transportation on June 4, 2004, 
you had stated that all Area Maritime Security Plans were approved by 
June 1, 2004 and they would be fully implemented on or before July 1, 
2004. Has this happened? If not, what is the current status of 
implementation and how many plans have yet to be approved?
    Answer. Yes, all of the Area Maritime Security Plans have been 
completed, approved and implemented.

    Question 5. At the time of the testimony you provided to the House 
Transportation Subcommittee on Coast Guard and Maritime Transportation 
on June 4, 2004, the Coast Guard had completed Port Security 
Assessments at 19 of the 55 most significant military and economic 
ports in the U.S. Today you state that all 55 have been completed. Can 
you please provide a list of any Washington State ports that were 
included in this figure and any other information as it relates to 
their respective assessments?
    Answer. Port Security Assessments (PSAs) have been conducted in 
Seattle, Tacoma and Vancouver, Washington. These PSAs included waterway 
assessments of Puget Sound, Elliott Bay, Blair Waterway, Rich Passage, 
Budd Inlet and the Columbia River. In these areas 16 facilities and 
vessels were assessed from a Terrorist Operations Perspective, 
identifying vulnerabilities and recommending mitigating strategies. The 
assets visited included cruise ships, passenger ferry terminals and 
vessels, oil terminals, chemical terminals, bulk cargo terminals, locks 
and bridges. The results of the assessment are categorized as Sensitive 
Security Information and not public record information. However, the 
information is appropriately shared with those that have a need to know 
in law enforcement agencies, select members of the port's Area Maritime 
Security Committee and each individual owner/operator of the facility 
or vessel.

    Question 6. In your testimony to the House Transportation 
Subcommittee on Coast Guard and Maritime Transportation on June 4, 
2004, you state that, ``In implementing the Maritime Transportation 
Security Act (MTSA), the Coast Guard identified approximately 3,200 
marine facilities that could be involved in a Transportation Security 
Incident. Nearly all of these facilities have since conducted a self-
assessment and submitted a facility security plan to the Coast Guard 
for approval.'' Has the Coast Guard completed review of the remaining 
facility security plans? If not, how many have yet to submit a facility 
security plan to the Coast Guard for approval?
    Answer. All required facility security plans were approved by the 
target date of December 31, 2004. After a detailed review for content 
at the National Facility Security Plan Review Center (NFSPRC), local 
Coast Guard Captains of the Port (COTPs) approved the plans 
individually following compliance verification examinations of each 
applicable facility. In all, approximately 3,200 facility security 
plans were reviewed and coordinated by the Coast Guard's NFSPRC.

    Question 7. What is the status of the Coast Guard's schedule to 
have Automatic Identification System (AIS) capabilities at each Vessel 
Traffic Service and when do you think that this long-term goal of 
nationwide AIS coverage will be completed?
    Answer. The Coast Guard has installed the Automatic Identification 
System (AIS) in all Coast Guard Vessel Traffic Services (VTS) as of 
November 2004. This capability provides AIS coverage within each VTS' 
area of responsibility. The Coast Guard has also a chartered Major 
Systems Acquisition project to establish a nationwide AIS surveillance 
network to support all Coast Guard missions. Eventually, the entire 
coastline, the Great Lakes and the Western Rivers will be covered by 
AIS under this project. The current schedule calls for nationwide AIS 
coverage to be fully complete in 2010.

    Question 8. As you know, ensuring the security of our Maritime 
domain is a critically important component of our economy. Securing the 
Maritime domain is an effort that must be orchestrated with each and 
every one of our Nation's trading partners. We must be assured of the 
contents and security of shipments as they leave foreign ports destined 
for the U.S. In your testimony, you state that the Coast Guard 
continues to assess the effectiveness of antiterrorism measures and 
implementation of the International Ship and Port Facility Security 
code requirements. You state that ``10 countries are scheduled for 
visits by June 2005 with the goal of visiting all of our approximately 
140 maritime trading partners.'' Which countries are included in the 
list of 10 to be visited by June 2005? When does the Coast Guard 
estimate that an assessment will be conducted on all 140 maritime 
trading partners?
    Answer. As of July 2005 the Coast Guard has visited 29 countries 
including: Algeria, Argentina, Australia, Bahamas, Chile, Columbia, 
Dominican Republic, Ecuador, Equatorial Guinea, Gabon, Guatemala, 
Honduras, Hong Kong, India, Jamaica, Japan, Mexico, New Zealand, 
Panama, Peru, Philippines, Singapore, South Korea, Thailand, Trinidad 
and Tobago, Tunisia, Turkey, Uruguay and Venezuela.
    The Coast Guard estimates that an assessment will have been 
conducted on all 140 maritime trading partners by December 2007.

    Question 9. As you know, the Transportation Workers Identification 
Card has played an important role in port security by enhancing 
identity verification. In your testimony you state that the Coast Guard 
is working with the Transportation Security Administration (TSA) to 
develop new credentialing for Merchant Mariners. What is the current 
status of this effort?
    Answer. The Coast Guard continues to update the merchant mariner 
credentialing statutes, which include provisions that will allow the 
future harmonization of mariners' credentials and TWIC. The Coast Guard 
is not developing entirely new credentials for mariners, but will 
continue to build upon existing security features that have already 
been incorporated into mariners' credentials until full integration 
with the TWIC is achieved. The Coast Guard is currently in the final 
stages of drafting a Legislative Change Proposal (LCP) that will 
accomplish many of the needed updates to its merchant mariner document 
statutes and is also working closely with TSA to ensure the efficient 
and effective integration of the TWIC and mariners' credentials. The 
two efforts, though related, are progressing under different timelines. 
The LCP is solely a Coast Guard effort and expected to be published in 
early 2006. TSA is the lead agency on the TWIC effort, with the Coast 
Guard providing assistance.

    Question 9a. In what capacity is the Coast Guard assisting the TSA 
to develop a new identification system for merchant mariners?
    Answer. The Coast Guard has partnered with TSA to develop and 
implement the Transportation Worker Identification Credential (TWIC) in 
the maritime mode, which will satisfy the mandate of 46 U.S.C. 70105, 
requiring that certain mariners carry a biometrically enhanced 
``transportation security card.'' The TWIC will build upon and 
integrate with the current mariners credentialing system rather than 
implement an entirely new identification system. The National Maritime 
Center (NMC) is fully involved in advising TSA of mariner credentialing 
requirements and existing Coast Guard processes, and is leading the 
effort to ensure that the MMD process is integrated into the TWIC 
process to the fullest appropriate degree.

    Question 9b. What role can this Committee play to assist in this 
endeavor?
    Answer. The Committee's oversight will continue to be very 
important. The task of creating a uniform, biometrically enabled 
credential that is to be implemented across all transportation modes is 
a hugely complex endeavor that requires considered, careful planning to 
effectively implement. While the Coast Guard is involved in 
implementation of the Transportation Worker Identification Credential 
(TWIC) within the maritime mode only, almost every mode of 
transportation other than the airlines, will be impacted to some degree 
in its rulemaking. To ensure that the rule which results is intelligent 
and effective, the Coast Guard is careful to rely upon experts in the 
field who fully understand the intricacies of implementing for the 
first time this type of technology at the proposed scale. While 
thoughtful, measured regulations will achieve significant improvements 
in the security of our ports, a rushed implementation is unlikely to 
achieve any significant security enhancements, and could potentially 
wreak havoc with the Nation's economy while placing unfounded burdens 
upon workers, employers and the Federal Government.

    Question 9c. What timeline, if any, has been established for 
completion of a new identification system for merchant mariners?
    Answer. The merchant mariner identification system and supporting 
statutes were designed in a far different threat environment than 
today. As such, the Coast Guard is examining the full scope of 
necessary changes to the identification documents and requirements in 
order to modernize the system, as well as to put in place appropriate 
safeguards. Some of these changes will no doubt require legislative 
proposals. The Coast Guard is in the final stages of examining those 
needs now and any needed legislative changes will be proposed by the 
Administration in the course of the 2007 authorization cycle.

    Question 10. In your testimony, you state that the Coast Guard is 
continually looking for ways to improve its ability to respond to 
suspect activities by increasing Coast Guard operational presence in 
our maritime domain and improving the Coast Guard's capacities for 
response and recovery. The Coast Guard's responsibility to defend and 
secure 26,000 miles of navigable waterways and 361ports is a 
challenging task. What are some initiatives that the Coast Guard is 
considering to expand its operation presence and enhance its ability to 
respond to a terrorist incident?
    Answer. Coast Guard efforts to increase operational presence in 
ports and coastal zones focus not only on adding more people, boats and 
ships to force structures, but also on making the employment of those 
resources more effective through the application of technology, 
information sharing and intelligence support. Since 9/11, we have:

   Established 13 new Maritime Safety and Security Teams,
   Deployed over 100 new small boats and boat crews,
   Provided radiation detection capabilities to many of our 
        boarding teams,

   Deployed field intelligence support teams to better collect 
        and disseminate maritime threat information,

   Acquired fifteen 87-foot Coastal Patrol boats and four 179-
        foot coastal patrol craft to increase operational presence in 
        our ports.

    The FY 2006 budget focuses resources toward increasing both the 
quantity and quality of Coast Guard operational presence by providing 
funding for:

   Integrated Deepwater System--Continued investment in 
        Deepwater will greatly improve the Coast Guard's maritime 
        presence starting at America's ports, waterways, and coasts and 
        extending seaward to wherever the Coast Guard needs to be 
        present or to take appropriate maritime action. Deepwater 
        provides the capability to identify, interdict, board and, 
        where warranted, seize vessels or people engaged in illegal or 
        terrorist activity at sea or on the ports, waterways or coast 
        of America.

   Airborne Use of Force (AUF) capability--deploys organic AUF 
        capability to five Coast Guard Air Stations, increasing the 
        ability to respond to maritime security threats.

   Enhanced Cutter Boat Capability--replaces existing obsolete 
        and unstable cutter boats throughout the entire WHEC/WMEC fleet 
        with the more capable Cutter Boat--Over the Horizon and 
        replaces aging, unsafe boat davit systems on 210-foot WMECs.

   Increase Port Presence and Liquefied Natural Gas (LNG) 
        Transport Security--provides additional Response Boat-Smalls 
        and associated crews to increase presence to patrol critical 
        infrastructure areas, enforce security zones, and perform high 
        interest vessel escorts in strategic ports throughout the 
        Nation. Provides additional boat crews and screening personnel 
        at key LNG hubs such as Cove Point, MD and Providence, RI to 
        enhance LNG tanker and waterside security.

   Enhanced Maritime Safety and Security Team (E-MSST)--
        Reallocates existing Coast Guard resources to immediately fill 
        an existing gap in national maritime Law Enforcement and 
        Counter-Terrorism (LE/CT) capability. Full operation of E-MSST 
        Chesapeake, VA will provide an offensive DHS force able to 
        execute across the full spectrum of LE and CT response in 
        support of homeland security and homeland defense objectives, 
        including CT response capability for scheduled security events 
        out to 50 nautical miles from shore and augments to interagency 
        assets in high visibility venues such as National Special 
        Security Events (NSSEs).

    Question 10a. Has Congress provided the Coast Guard with the 
resources it needs to meet its current mandates, including those set 
forth in the MTSA?
    Answer. The FY 2005 Budget provided approximately $101 million and 
791 personnel to support the implementation of MTSA. This support has 
been instrumental to executing the implementation of MTSA requirements 
and sustaining its ongoing enforcement. Much has been done to enhance 
port security and while more clearly remains to be done, the Coast 
Guard will continue to work with the Administration and Congress to 
pursue additional resources as needed to mitigate the highest maritime 
risks.

    Question 10b. What additional resources can Congress provide that 
are necessary to allow for the enhancements that you reference?
    Answer. The FY 2006 budget request, now before the Congress, 
represents the highest priority needs of the Coast Guard. Fully 
supporting the President's request for FY 2006 will make significant 
enhancements to Coast Guard capability and readiness. As for additional 
resources, the next highest unfunded priorities are represented in our 
FY 2006 Unfunded Priorities list that was provided to Congress on 
February 25, 2005, and a copy of which is attached.

    Question 11. As you state in your testimony. ``Cargo security 
encompasses the process of ensuring that all cargo bound for the U.S. 
is legitimate and was properly supervised from the point of origin, 
through its sea transit, and during its arrival at the final 
destination in the U.S.'' However, it is clear that the supervision and 
checking of cargo arriving at U.S. ports is woefully inadequate. I 
understand that as little as 5 percent of cargo arriving at our ports 
is checked. While the Coast Guard works with Customs and Border 
Protection (CBP) to provide oversight and check cargo arriving at our 
ports, can you provide this Committee an update on the varying levels 
of screening being conducted to ensure the safety of these cargos as 
well as an update on current efforts to increase screening of cargo?
    Answer. CBP meets its goal of inspecting 100 percent of high-risk 
people and cargo, while allowing legitimate commerce and passengers to 
proceed unimpeded, through effective risk management and its Cargo 
Security Strategy. Approximately 10 million sea containers and 11 
million trucks arrive in the United States annually; inspection of 
every vehicle would likely damage the U.S. economy and would be 
counterproductive to CBP's dual mission of securing the borders while 
facilitating trade. Because the vast majority of shipments are low-
risk, CBP must use risk management techniques to identify and screen 
the relatively few high-risk shipments.
    Rather than simply increasing the percentage of random inspections, 
CBP employs a layered cargo security strategy that is built on five 
interrelated initiatives. First, under the 24-Hour Rule, all containers 
bound for the U.S. are required to submit manifest data to CBP 24 hours 
before lading at the foreign port. Next, the National Targeting Center 
(NTC) provides CBP with tactical targeting capability for all 
oceangoing cargo and cargo shipped by all other transportation modes 24 
hours a day, seven days a week. The NTC uses manifest information 
provided by the 24-Hour Rule and will eventually include data from 
Advanced Container Security Devices to perform its targeting functions. 
Additionally, screening with Non-Intrusive Inspection (NII) technology, 
including some physical exams, is required for all high-risk sea 
containers and other cargo conveyances arriving in the U.S. NII 
technology is a critical component of CBP's Cargo Security Strategy 
aimed at preventing terrorist groups from smuggling a Weapon of Mass 
Effect or its components into the United States. Under the Container 
Security Initiative (CSI), cargo security is pushed beyond the borders 
of the United States. Currently, there are 38 operational CSI ports 
that are staffed with specially trained CBP targeting teams. CSI ports 
utilize NII and radiation detection technology to facilitate 
examinations performed on high-risk containers. While examinations are 
conducted by CBP's host nation counterparts, the CBP teams have the 
ability to observe these exams.
    Additionally, Automated Targeting Systems (ATS) at CSI ports are 
linked to the NTC to immediately identify any high-risk containers 
bound for the United States. Finally, under the Customs-Trade 
Partnership Against Terrorism (C-TPAT), CBP has established 
partnerships with the private sector to implement minimum standardized 
security requirements and concepts throughout the entire supply chain, 
back to and including the foreign manufacturer's loading docks.
                                 ______
                                 
  Response to Written Questions Submitted by Hon. Daniel K. Inouye to 
                          Rear Admiral Hereth

    Question 1. In the Coast Guard's report to the Commerce Committee 
on implementation of Joint Operation Command Centers, you failed to 
discuss any common standards, best practices or lessons learned from 
any of the existing command centers and how those standards can be used 
to develop additional units throughout the country in strategic ports. 
Rather, the report discussed the Coast Guard's current development of 
Sector Command Centers that are part of the Departmental directive to 
co-locate the regulatory and operational assets into one location for 
all of the Coast Guard's missions with the capability to expand and 
work with other agencies should an incident occur. I would contest 
approaching port security from a reactionary perspective is not in the 
best interests of national security. And further, in meetings I have 
had with the Commandant. he has described a very different vision than 
what is contained in this report. What does the Coast Guard hope to 
achieve with the further development of Joint Operation Command 
Centers?
    Answer. Our primary goal is to enable our federal, state and local 
forces to be more proactive. The limited sensor and coordination 
capability present in most ports must be improved to make that happen.
    We will greatly enhance the ability to be proactive by:

   Developing a robust Common Operational Picture that will be 
        fed by sensors (cameras, radars, etc.) placed according to a 
        risk-based methodology that ensures surveillance of critical 
        infrastructure and waterways.

   Sharing the Common Operational Picture with port partners by 
        providing them a view via a web client service or, if they 
        wish, by including their personnel as a permanent or ad hoc 
        part of the command center staff.

   Coordinating federal, state and local enforcement efforts by 
        developing and implementing technologies to track all assets, 
        providing 724 monitored maritime communications 
        capability and leading regular, collaborative planning and 
        execution efforts.

    Question 2. MTSA required the Coast Guard to develop a National 
Maritime Transportation Security Plan (46 U.S.C. 70103) to assign 
duties and responsibilities among federal agencies, establish 
procedures to prevent an incident from occurring, and plan for ensuring 
the flow of commerce is resumed as quickly as possible in the event of 
an attack. When will the National Plan be completed and made available 
for comment for our maritime stakeholders?
    Answer. The review draft of the National Plan is being edited to 
prepare for distribution for initial review by federal agency 
stakeholders, which is expected to begin in mid-August. The Commandant 
intends to use the National Maritime Security Advisory Committee as one 
of the primary forums for comment on the plan by stakeholders in the 
maritime industry. The schedule of availability for other maritime 
stakeholders must be established in consultation with cognizant 
authorities in the office of the Secretary of Homeland Security.

    Question 2a. Will this serve as the basis for the President's 
National Maritime Security Strategy requirement in HSPD 13, due to be 
released in June of this year?
    Answer. No, but the National Plan has linkages to certain plans 
developed under HSPD-13.
    In accordance with the MTSA, the National Plan is focused on 
ensuring the security of assets and infrastructure in the Maritime 
Homeland domain of the United States. In addition to fulfilling the 
requirements of MTSA, the National Plan will also serve as the sub-
sector plan for national maritime transportation security, within the 
family of 17 sector security plans established under HSPD-7, including 
the Transportation Sector Security Plan (TSSP).
    In contrast to the MTSA and HSPD-7, HSPD-13 is universal in scope, 
extending completely across both the international and homeland 
maritime domains. The National Plan under MTSA has natural linkages and 
relationships with certain plans developed under the President's 
National Maritime Security Strategy requirement in HSPD 13, such as the 
Maritime Infrastructure recovery Plan (MIRP).
                                 ______
                                 
  Response to Written Questions Submitted by Hon. Daniel K. Inouye to 
                             Robert Jacksta

    Question 1. What are the ``minimum-security standards'' the bureau 
has put into place for the C-TPAT program?
    Answer. The minimum-security criteria for C-TPAT Importers, 
promulgated in March 2005 is based on a program assessment of the 
processes, procedures and best practices extrapolated from CBP's review 
of security profile submissions and C-TPAT validation visits. The 
security criteria provide an effective benchmark for C-TPAT companies 
to continue to build upon their security processes and procedures and 
focus on foreign manufacturers and container point of stuffing, through 
the CBP clearance process. The security criteria provide a meaningful 
expectation of what is required to enroll in the C-TPAT program.

    Question 2. How many RPM's have been deployed at seaports?
    Answer. As of July 27, 2005, CBP has deployed 88 radiation portal 
monitors to our Nation's seaports.

    Question 3. I understand you are proposing regulations on cargo 
locks and seals this summer to satisfy the requirements of MTSA. What 
requirements are you proposing in your regulations for the domestic and 
international verification of cargo seals?
    Answer. At the request of the Department of Homeland Security, the 
Departmental Advisory Committee on Commercial Operations of Customs and 
Border Protection and Related Activities (COAC) established a 
subcommittee to provide advice on this issue. Specifically, DHS 
requested recommendation in three areas: standards for physical 
security for inter-modal containers; secure system of transportation; 
and quantitative performance metrics to measure the success of specific 
DHS cargo security programs and to guide future efforts. In response to 
this request, COAC recommended a regulatory requirement for the sealing 
of loaded containers.
    DHS has reviewed the COAC recommendations and agreed that there is 
a need for a seal regulation. CBP has drafted the Notice of Proposed 
Rule Making (NPRM) which will require the sealing of loaded containers 
being transported by vessel to the United States. At a minimum ISO-
compliant high security seals (ISO/PAS 17712) must be affixed to the 
container at the last point where the container is loaded. 
Electronically readable mechanical seals and seals that perform other 
functions, such as electronic seals (e-seals), may also be used if they 
meet or exceed the high security specifications in ISO/PAS 17712 or are 
accompanied by a mechanical seal meeting or exceeding the ISO/PAS 17712 
high security seal specifications. Verification of this sealing 
requirement must be performed by the carrier or their agent prior to 
lading on a vessel departing for the United States. The Department is 
currently reviewing the draft NPRM.

    Question 3a. Aren't you aware that Coast Guard regulations require 
facilities to routinely check seals for evidence of tampering? (CFR 
105.265) How is this being enforced?
    Answer. Coast Guard enforces 33 CFR 105.265 during periodic and 
random cargo facility exams. As noted, 33 CFR 105.265(b)(1) requires 
facilities to routinely check cargo, cargo transport units and cargo 
storage areas within the facility prior to, and during, cargo handling 
operations for evidence of tampering. 33 CFR 105.265(b)(4) requires 
facilities to check seals and other methods used to prevent tampering 
of cargo entering the facility and during storage within the facility.
    Operational MTSA facilities are required to hold Coast Guard 
approved Facility Security Plans. Each facility's plan explains the 
measures and procedures that the company uses to comply with the 
specific MTSA regulations. In general, facilities check cargo, 
transport units and loaded containers with a combination of random 
visual and physical examinations, employment of scanning/detection 
equipment, mechanical devices and dogs. Per the regulations, the 
security measures are scalable, and they must increase in frequency and 
intensity when the Maritime Security (MARSEC) Condition is raised.
    Coast Guard facility inspectors verify that each facility is 
conducting the security measures as specified in its Facility Security 
Plan. This is especially important when the MARSEC Condition is raised, 
and Coast Guard inspectors perform spot-checks to verify the enhanced 
measures are in place.

    Question 4. What percentage of entry data is received 24 hours 
prior to loading in a foreign port for evaluation and screening by the 
Automated Targeting System?
    Answer. Currently, CBP receives trade data via manifest and entry 
filings. This data is essential for basic risk management and trade 
facilitation. However, a significant amount of additional information 
can be gathered during other phases of supply chain operations. New 
sources and types of data can be used to enhance and strengthen the 
effectiveness of CBP screening and targeting efforts. Some of these 
points in supply chain operations where data can be gathered include 
the purchase order process, staging and shipment, and cargo 
transportation. By collecting more and different information throughout 
the supply chain, greater visibility and transparency can be achieved 
and true risk better understood within the international supply chain.
    The CBP Advance Trade Data Initiative (ATDI) is currently a 
prototype program researching and analyzing data available in today's 
global supply chains. ATDI seeks to enhance CBP's risk management 
practices through earlier collection and analysis of business-to-
business information used by commercial supply chain participants. This 
information is available in advance of and in addition to the manifest 
and entry data currently collected by CBP. ATDI is a fact-finding 
prototype that seeks to gain greater visibility into supply-chain-
security.
    The ATDI prototype has been developed with significant 
participation from members of the trade community. A supply-chain-
security committee has been set up within the Trade Support Network as 
a forum that works with the trade community to identify and leverage 
advance information early in the supply chain. This advance information 
will build upon existing CBP security measures to add value to ongoing 
targeting initiatives in order to secure our Nations borders, as well 
as our efforts to facilitate legitimate trade. The committee's goal is 
to identify, discuss, document, and submit the trade communities' 
supply-chain-security requirement recommendations for CBP's Automated 
Commercial Environment--ACE, which in partnership with CBP should 
result in an information requirement plan for the best dataset 
available to CBP.
    Through partnering with the carriers, portals, importers, shippers 
and terminal operators, CBP is gathering supply chain data, studying 
what it means, discovering where it can be most effectively obtained in 
the supply chain, who has it, how the pieces fit together and 
determining how it can improve our targeting programs. All of this data 
will assist us to zero in on suspect movements and perform any 
necessary security inspections at the earliest point possible in the 
supply chain.

    Question 5. Is the Bureau in the process of working with the 
Department of State on developing human resources that are trained, not 
only on cargo handling and inspection processes, but that are language 
and culturally proficient in the host country? If not, how are you 
addressing the shortfalls in your human capitol for managing existing 
programs?
    Answer. CBP coordinates with Department of State and other 
applicable parties to train CBP officers who are detailed to overseas 
locations in support of The Container Security Initiative. These 
officers assist host countries in the examination of containerized 
cargo. As part of their training officers are instructed in cultural 
awareness, security awareness, living overseas, pre-deployment and 
continued, post-deployment foreign language training, and specific job-
related skills.

    Question 6. How do ocean-going carriers fit into the C-TPAT 
program?
    Answer. Under the C-TPAT program, ocean-going carriers must not 
only analyze and increase security practices in their own operations, 
but also verify the security of their service providers and business 
partners. Because ocean carriers transport high volumes of ocean going 
containerized cargo, C-TPAT plays a vital role in ensuring the 
effective implementation of security during the ocean transportation 
phase. In fact, C-TPAT ocean-going carriers transport approximately 95 
percent of all the U.S.-bound maritime container carrier traffic. While 
CBP has had partnerships with ocean-going carriers since 1984 through 
the Carrier Initiative Program, C-TPAT has enabled ocean-going carriers 
to significantly impact and improve their security practices.

    Question 7. GAO's statement refers to two programs to improve 
supply-chain-security, the Container Security Initiative (CSI) and 
Customs-Trade Partnership Against Terrorism (C-TPAT). GAO's July 2003 
report said that these start-up programs were not designed with a 
longer term strategic focus and recommended that both programs needed 
to have strategic plans, human capital plans, and performance measures. 
CBP agreed to implement these recommendations. Since GAO's July 2003 
report, what progress has been made in implementing GAO's 
recommendations related to strategic plans, human capital plans, and 
performance measures?
    Answer. CSI has developed a series of strategic and human capital 
plans to measure the Initiative's outcome, information and efficiency. 
Outcome is evaluated by the percent of worldwide U.S. destined 
containers processed through CSI ports and the number of foreign 
mitigated examinations. Information is measured by the number of: 
intelligence reports based on CSI foreign sources; operational CSI 
ports; positive findings; and investigative cases initiated due to CSI 
activity. Finally, efficiency is appraised by the average cost per CSI 
port to achieve operational status.
    The C-TPAT Strategic Plan was completed and distributed in December 
2004 and the Human Capital Plan was developed in February 2005. CBP has 
recognized the need for outside assistance in the development of 
performance measures beyond general workload measures and has 
contracted with an outside firm to assist in the collection and 
development of performance measures. The development of these 
performance measures is expected to be completed in 8 to 10 months.

    Question 7a. Whether these recommendations have been implemented or 
not, what other problems or challenges is CBP facing with the CSI and 
C-TPAT efforts to improve the supply chain?
    Answer. As the C-TPAT program has grown, CBP has taken steps to 
more clearly define minimum security criteria, or baseline security 
standards, for membership in this voluntary, incentives based program. 
Additional personnel resources have been added so that members can be 
more timely validated against these security criteria. Validations are 
routinely taking place in countries throughout the world, with the 
exception of China, which has not allowed CBP C-TPAT Supply-Chain-
Security Specialists entry into the country. CSI has not been 
confronted with any problems or challenges in implementing the GAO 
recommendations.
                                 ______
                                 
     U.S. Department of Homeland Security, U.S. Coast Guard
                                  Washington, DC, February 25, 2005
Hon. Harold Rogers,
Chairman,
House Subcommittee on Homeland Security,
Committee on Appropriations,
Washington, DC.

Dear Mr. Chairman:

    Pursuant to your request, attached is the Coast Guard's Unfunded 
Priorities List (UPL). The Fiscal Year 2006 budget currently before 
Congress represents my highest priorities.
    As mentioned in the President's signing statement on H.R. 4567, the 
Department of Homeland Security Appropriations Act, 2005, to the extent 
that provisions of the Act (Public Law 108-334), including section 514, 
call for submission of legislative recommendations to the Congress, the 
executive branch shall construe such provisions in a manner consistent 
with the President's constitutional authority to supervise the unitary 
executive branch and to recommend for the consideration of the Congress 
such measures as the President shall judge necessary and expedient. 
However, I am providing this list to you as a matter of comity.
    The Coast Guard is extremely grateful for and has benefited from 
the increased resources provided by the President and Congress over the 
past several years. Since September 11, 2001, the Coast Guard has 
enjoyed a substantial increase in funding. Specifically, the Coast 
Guard's FY 2006 discretionary budget would provide nearly $3.2 billion 
more than the comparable FY 2001 level, growing the Coast Guard's 
annual appropriation by 85 percent since the attacks of September 11, 
2001. These additional resources have enabled the Coast Guard to 
establish 13 Maritime Safety and Security Teams across the Nation, 
deploy over 80 new small boats and accompanying crews, expand our 
intelligence capabilities. and implement the 2002 Maritime 
Transportation Security Act (MTSA). Each of these initiatives, among 
many others, have been critical to allowing the Coast Guard to meet 
post 9/11 mission demands, while ensuring no degradation in other 
performance areas.
    The President's FY 2006 budget request also represents an 11 
percent increase over the comparable FY 2005 discretionary funding 
levels, and demonstrates extremely strong commitment by the 
Administration to ensure the Coast Guard is adequately funded. The 
resources contained in the budget continue to implement the core 
elements of the Department's Maritime Strategy for Homeland Security. 
For example, robust implementation of organic Airborne Use of Force 
(AUF) capability and additional Response Boat-Small allowances will 
greatly increase operational presence and response posture. The 
President's budget also includes several Maritime Domain Awareness 
(MDA) initiatives; such as implementing the Coast Guard Common 
Operational Picture (COP), continuing the nationwide Automatic 
Identification System (AIS), and augmenting maritime patrol aircraft. 
These capabilities are of foremost importance to early detection, 
identification. and interception of threats; and reducing America's 
homeland security risk, including terrorist attacks, migrant smuggling, 
or drug trafficking.
    An identical letter has been sent to Chairman Cochran. Senator 
Byrd, and Representative Sabo.
    Thank you for your interest in the Coast Guard. I am happy to 
answer any further question you may have, or your staff may contact my 
House Liaison Office at (202) 225-4775.
        Sincerely,
                                         Thomas H. Collins,
                                          Admiral, U.S. Coast Guard
                                 ______
                                 

                                 U.S. Coast Guard FY06 Unfunded Priorities List
----------------------------------------------------------------------------------------------------------------
                                                             Amount
 Priority             Program/Project             Approp      ($K)      FTP    Recurring        Requirement
----------------------------------------------------------------------------------------------------------------
1           Deepwater                            AC&I      637,300       --   No           Funding required to
                                                                                            complete design/
                                                                                            production of the
                                                                                            first FRC,
                                                                                            production of first
                                                                                            WMSM, six MPA,
                                                                                            continued recap of
                                                                                            HH-60 radar/FLIR
                                                                                            systems and HC-130
                                                                                            avionics and radar
                                                                                            systems, and
                                                                                            continued
                                                                                            development of the
                                                                                            COP and C4ISR
                                                                                            upgrades.
              FRC Design and Development         AC&I      57,500        --   No
              Maritime Security Cutter-Medium    AC&I      217,000       --   No
             (formerly OPC)
              Maritime Patrol Aircraft           AC&I      225,000       --   No
              HH-60 & HC-130 Legacy Sustainment  AC&I      47,500        --   No
              C4ISR Upgrades                     AC&I      70,300        --   No
              Systems Engineering and            AC&I      20,000        --   No
             Government Program Mgmt
----------------------------------------------------------------------------------------------------------------
2           Cutter and Aircraft Legacy           AC&I      62,669        --   No           USCG operational
             Sustainment                                                                    requirement as
                                                                                            identified in the
                                                                                            Coast Guard's
                                                                                            Integrated Near Term
                                                                                            Support Strategy.
              110/123 WPB Mission Effectiveness  AC&I      35,417        --   No
             Project (MEP)
              378 Mission Effectiveness Project  AC&I      9,452         --   No
             (MEP)
              HH-65 Sliding Cabin Door           AC&I      5,800         --   No
             Replacement
              HH-65 Landing Gear Replacement     AC&I      2,884         --   No
              HH-65 Tail Rotor Blade/Tail        AC&I      2,936         --   No
             Gearbox Replacement
              HH-60J T700 Engine Upgrade         AC&I      6,180         --   No
----------------------------------------------------------------------------------------------------------------
3           Additional Maritime Patrol Aircraft  OE        4,000          8   Yes          Reduces USIC MPA
             (MPA) Hours                                                                    program flight hour
                                                                                            gap consistent with
                                                                                            National Strategy
                                                                                            for Homeland
                                                                                            Security, National
                                                                                            Security Strategy,
                                                                                            National Drug
                                                                                            Control Strategy,
                                                                                            and HSPD 7--Critical
                                                                                            Infrastructure
                                                                                            Protection. Provides
                                                                                            500 C-130H flight
                                                                                            hours, which will
                                                                                            primarily be used in
                                                                                            support of Joint
                                                                                            Interagency Task
                                                                                            Force South/West
                                                                                            operations.
----------------------------------------------------------------------------------------------------------------
4           Airborne Use of Force                AC&I      8,600         --   No           Capability required
                                                                                            to implement guiding
                                                                                            security strategies
                                                                                            including the
                                                                                            National Strategy
                                                                                            for Homeland
                                                                                            Security, National
                                                                                            Security Strategy
                                                                                            and HSPD 7--Critical
                                                                                            Infrastructure
                                                                                            Protection. Outfits
                                                                                            approximately 12
                                                                                            aircraft @ up to
                                                                                            three air stations
                                                                                            for AUF in addition
                                                                                            to the capabilities
                                                                                            already provided in
                                                                                            the FY 2006 budget
                                                                                            for approximately 34
                                                                                            aircraft at 5 air
                                                                                            stations.
----------------------------------------------------------------------------------------------------------------
5           Maritime Domain Awareness (MDA)      OE/AC&I   31,000        11   Partial--Se  Further implements
                                                                               e Below      MDA consistent with
                                                                                            National Strategy
                                                                                            for Homeland
                                                                                            Security, National
                                                                                            Security Strategy,
                                                                                            and Maritime
                                                                                            Strategy for
                                                                                            Homeland Security.
                                                                                            Specific system
                                                                                            requirements
                                                                                            provided below.
              Ports & Waterways Safety System    AC&I      17,000        --   No           Completes recap of
             (PAWSS)                                                                        Vessel Traffic
                                                                                            Services in San
                                                                                            Francisco, CA and
                                                                                            Puget Sound, WA
                                                                                            consistent with the
                                                                                            Coast Guard's
                                                                                            statutory
                                                                                            responsibility under
                                                                                            the Ports and
                                                                                            Waterways Safety Act
                                                                                            of 1972 (PWSA),
                                                                                            Title 33 U.S.C. Sec.
                                                                                             1221 to ensure the
                                                                                            safety and
                                                                                            environmental
                                                                                            protection of U.S.
                                                                                            ports and waterways.
              High Frequency Communications      AC&I      10,500        --   No           Completes HF
             System Recap                                                                   recapitalization
                                                                                            faster than proposed
                                                                                            in the FY 2006
                                                                                            budget. Operation of
                                                                                            the HF comms system
                                                                                            is required to meet
                                                                                            International Safety
                                                                                            of Life at Sea
                                                                                            (SOLAS) treaty
                                                                                            requirements.
              Inland Rivers Vessel Movement      OE        3,500         11   Yes          Permanently
             Center (IRVMC)                                                                 establishes IRVMC--
                                                                                            improving the
                                                                                            ability to track
                                                                                            Certain Dangerous
                                                                                            Cargoes per 33 CFR
                                                                                            Part 165.
----------------------------------------------------------------------------------------------------------------
6           Enhanced Maritime Safety and         OE/AC&I   70,000       245   Yes          E-MSST Chesapeake on
             Security Team (E-MSST)                                                         call capability.
----------------------------------------------------------------------------------------------------------------
7           Merchant Mariner Licensing and       OE        26,700       118   Yes          Improves merchant
             Documentation Centralization                                                   mariner
                                                                                            credentialing
                                                                                            consistent with
                                                                                            Sections 102
                                                                                            (Chapter 70105) and
                                                                                            324 of the Maritime
                                                                                            Transportation
                                                                                            Security Act of 2002
                                                                                            (Pub. L. 107-295)
                                                                                            through
                                                                                            centralization
                                                                                            screening/evaluation
                                                                                            of applicants,
                                                                                            production of
                                                                                            credentials and
                                                                                            records.
----------------------------------------------------------------------------------------------------------------
8           Sector North Carolina                AC&I      4,000         --   No           Beach erosion forcing
                                                                                            re-location of Group
                                                                                            Cape Hatteras. Funds
                                                                                            re-location.
----------------------------------------------------------------------------------------------------------------
9           Shore Facility Recapitalization      AC&I      59,370        --   No           Coast Guard shore
                                                                                            facility readiness
                                                                                            requirements.
              Group Seattle--Construct Admin/    AC&I      3,000         --   No
             Ops Sector Building
              Station Galveston--Rebuild         AC&I      6,600         --   No
             Waterfront
              Sector San Francisco--Establish    AC&I      12,200        --   No
             Command Center
              AIRSTA Elizabeth City--Recap       AC&I      8,700         --   No
             Aquatics Training Facility
              AIRSTA Elizabeth City--            AC&I      5,300         --   No
             Consolidate Facilities
              Group Port Angeles--Construct      AC&I      1,400         --   No
             Supply Building
              Station Coos Bay--Renovate         AC&I      1,400         --   No
             Covered Mooring
              Station Fire Island--Rehab         AC&I      1,400         --   No
             Waterfront
              TISCOM--Construct Building         AC&I      1,450         --   No
             Addition
              Station Cordova--Replace Housing   AC&I      15,000        --   No
              Base San Juan--Renovate Support    AC&I      1,450         --   No
             Building
              Station Ocracoke--Replace Station  AC&I      750           --   No
             Facilities
              ISC Alameda--Construct New WPB     AC&I      720           --   No
             Mooring
----------------------------------------------------------------------------------------------------------------
10          Towing Vessel Inspection Program     OE        13,750       203   Yes          Section 415 of The
                                                                                            Coast Guard and
                                                                                            Maritime
                                                                                            Transportation Act
                                                                                            of 2004 (Pub. L. 108-
                                                                                            617) authorizes the
                                                                                            Secretary of DHS to
                                                                                            implement mandatory
                                                                                            inspection
                                                                                            requirements and a
                                                                                            safety management
                                                                                            system for towing
                                                                                            vessels to reduce
                                                                                            casualties/mishaps.
                                                                                            This line item
                                                                                            reflects the annual
                                                                                            resource requirement
                                                                                            to implement this
                                                                                            program.
----------------------------------------------------------------------------------------------------------------
11          Response Plan for Non-Tank Vessels   OE        1,845          4   Yes          Section 701 of The
                                                                                            Coast Guard and
                                                                                            Maritime
                                                                                            Transportation Act
                                                                                            of 2004 (Pub. L. 108-
                                                                                            617) requires owners
                                                                                            and operators of non-
                                                                                            tank vessels to
                                                                                            submit spill
                                                                                            response plans to
                                                                                            the Coast Guard for
                                                                                            review. This line-
                                                                                            item reflects the
                                                                                            annual resources
                                                                                            required to
                                                                                            establish this
                                                                                            program.
----------------------------------------------------------------------------------------------------------------
              Total Unfunded Priorities                    919,234      589
----------------------------------------------------------------------------------------------------------------

                                  
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