U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON : 

For sale by the Superintendent of Documents, U.S. Government Printing Office

Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800

Fax: (202) 512–2250 Mail: Stop SSOP, Washington, DC 20402–0001

32–330—PDF 2006

S. HRG. 109–770

NOMINATION OF W. RALPH BASHAM

HEARING

BEFORE THE

COMMITTEE ON FINANCE

UNITED STATES SENATE

ONE HUNDRED NINTH CONGRESS

SECOND SESSION

ON THE

NOMINATION OF

W. RALPH BASHAM, TO BE COMMISSIONER OF CUSTOMS,

DEPARTMENT OF HOMELAND SECURITY

APRIL 5, 2006

(

Printed for the use of the Committee on Finance

COMMITTEE ON FINANCE

CHARLES E. GRASSLEY, Iowa, Chairman

ORRIN G. HATCH, Utah

TRENT LOTT, Mississippi

OLYMPIA J. SNOWE, Maine

JON KYL, Arizona

CRAIG THOMAS, Wyoming

RICK SANTORUM, Pennsylvania

BILL FRIST, Tennessee

GORDON SMITH, Oregon

JIM BUNNING, Kentucky

MIKE CRAPO, Idaho

MAX BAUCUS, Montana

JOHN D. ROCKEFELLER IV, West Virginia

KENT CONRAD, North Dakota

JAMES M. JEFFORDS (I), Vermont

JEFF BINGAMAN, New Mexico

JOHN F. KERRY, Massachusetts

BLANCHE L. LINCOLN, Arkansas

RON WYDEN, Oregon

CHARLES E. SCHUMER, New York

KOLAN DAVIS, Staff Director and Chief Counsel

RUSSELL SULLIVAN, Democratic Staff Director

(II)

C O N T E N T S

OPENING STATEMENTS

Page

Grassley, Hon. Charles E., a U.S. Senator from Iowa, chairman, Committee

on Finance ............................................................................................................ 1

Baucus, Hon. Max, a U.S. Senator from Montana ................................................ 2

Hatch, Hon. Orrin G., a U.S. Senator from Utah ................................................. 4

ADMINISTRATION NOMINEE

Basham, W. Ralph, nominated to be Commissioner of Customs, Department

of Homeland Security, Washington, DC ............................................................. 5

ALPHABETICAL LISTING AND APPENDIX MATERIAL

Basham, W. Ralph:

Testimony .......................................................................................................... 5

Prepared statement .......................................................................................... 21

Biographical information ................................................................................. 24

Responses to questions from committee members ......................................... 43

Baucus, Hon. Max:

Opening statement ........................................................................................... 2

Prepared statement .......................................................................................... 68

Grassley, Hon. Charles E.:

Opening statement ........................................................................................... 1

Prepared statement .......................................................................................... 71

Hatch, Hon. Orrin G.:

Opening statement ........................................................................................... 4

Snowe, Hon. Olympia J.:

Prepared statement .......................................................................................... 73

COMMUNICATION

National Association of Foreign-Trade Zones (NAFTZ) ........................................ 75

(III)

(1)

NOMINATION OF W. RALPH BASHAM, TO BE

COMMISSIONER OF CUSTOMS, DEPARTMENT OF HOMELAND SECURITY

WEDNESDAY, APRIL 5, 2006

U.S. SENATE,

COMMITTEE ON FINANCE,

Washington, DC.

The hearing was convened, pursuant to notice, at 10:10 a.m., in

room SD–215, Dirksen Senate Office Building, Hon. Charles E.

Grassley (chairman of the committee) presiding.

Also present: Senators Hatch, Thomas, Baucus, and Schumer.

OPENING STATEMENT OF HON. CHARLES E. GRASSLEY, A U.S.

SENATOR FROM IOWA, CHAIRMAN, COMMITTEE ON FINANCE

The CHAIRMAN. Good morning, everybody. It is my pleasure to

welcome Ralph Basham to the Finance Committee today. We are

here to consider the President’s nomination of this person to be

Commissioner of Customs in the Department of Homeland Security.

We congratulate the nominee. We welcome his wife, Judy, and

the rest of the family, and any friends who are present. You can

introduce those at the time you speak.

The President has nominated what we consider an outstanding

person to be Commissioner of Customs. Mr. Basham has currently

been Director of the Secret Service, and is a 29-year veteran of that

service. He also served as Chief of Staff for the Transportation Security Administration, and as Director of the Law Enforcement

Training Center in Georgia.

The breadth of his experience will be a very important asset as

he assumes his new responsibilities. Today’s hearing continues 190

years of oversight by this committee, the Finance Committee, over

U.S. Customs.

As a result of the Homeland Security Act of 2002, the Department of Homeland Security exercises certain Customs authorities

by delegation from the Department of the Treasury. This committee retains jurisdiction over the Customs revenue and commercial functions exercised by the Department of Homeland Security.

The Commissioner of Customs serves in a critical and demanding

role. The Commissioner of Customs must ensure that the dual demands of securing our borders, and also facilitating the smooth

flow of international trade, are each fully met. And, of course, those

are demands that have to be balanced.

2

We could require 100 percent physical inspection of all cargo entering the United States, but that would likely reduce trade to a

crawl and adversely affect the economy.

So, maintaining a proper balance between trade security and

trade facilitation means putting in place the most appropriate data

collection systems that we can have. Data collection lies at the

heart of the Customs commercial function. It is the currency by

which goods are allowed to enter our country.

As well, our security depends upon the output of data collection

systems. So our security is a direct function of the reliability of the

data that is being collected.

Now, I want to show some concern that, in our zeal to collect import data, we are not doing enough to ensure the integrity of the

data. I intend to explore my concerns further as this committee

prepares to reauthorize the Customs functions exercised by the Department of Homeland Security. I look forward to working together

with my colleagues and the nominee as that effort progresses.

More broadly, the Commissioner of Customs heads a bureau of

over 40,000 employees. Those government employees are on the

front line for enforcing laws of over 40 agencies. At the same time,

they process $1.7 trillion worth of imports and collect about $28 billion of duties and fees.

This trade, of course, is critical to our economy. For example, the

10-day strike at the Port of Long Beach a few years ago is estimated to have cost our economy between $1 billion and $2 billion

each day that that strike went on.

That illustrates why maintaining the proper balance between

trade security and trade facilitation is so important, and that is

why this committee’s oversight of that balance is such a priority for

all of us.

I also want to touch upon the recent transaction involving Dubai

Ports World. I remain concerned that the transaction was not properly vetted. Going forward, I want to ensure that the right questions are asked and answers given if a similar transaction is submitted for review by the Committee on Foreign Investments in the

United States.

I understand that it is the Assistant Secretary for Policy who

takes the lead in the Department of Homeland Security in those

reviews. Regardless, I think it is up to the Commissioner of Customs to ask the right questions and to insist on answers if another

transaction involving U.S. ports would come up in the future. We

will return to that point during my questioning.

So I thank you again for being here, accepting this public service,

and working with our committee.

I will call on Senator Baucus, and then I want to call on Senator

Hatch, who had a short statement that he wanted to make.

OPENING STATEMENT OF HON. MAX BAUCUS,

A U.S. SENATOR FROM MONTANA

Senator BAUCUS. Thank you, Mr. Chairman.

Welcome to the Finance Committee, Director Basham. You have

a long and distinguished career in public service. For that, we are

very grateful. I think a lot of Americans thank you for that. More

3

people should be more concerned and more interested in service,

and you certainly are one. Again, thank you very much.

If you are confirmed by the Senate to be Commissioner of Customs and Border Protection, we will be working very closely together in many respects, particularly as this committee prepares to

consider Customs reauthorization legislation.

When the Department of Homeland Security was created nearly

4 years ago, Customs’ primary focus was on trade facilitation and

on compliance. After Congress folded Customs into the new Bureau

of Customs and Border Protection, the Commissioner of CBP took

on a dual mission: facilitating legitimate trade while also securing

our borders.

Though CBP moved into the new Department of Homeland Security, the Finance Committee retained oversight over the revenue,

commercial, and trade facilitation functions. The Finance Committee has always had jurisdiction over Customs. It is a trade

issue. It has had jurisdiction ever since the first Congress authorized the collection of duties on imported goods more than 200 years

ago. In those early years, duties were the primary source of government revenue, as you will recall. A lot has changed since then, but

that was the case then.

Customs was created literally to stand at the border and collect

revenues for the U.S. Treasury. Customs was placed under the jurisdiction of the Senate committee responsible for raising money for

the government, the Finance Committee.

Over the years, we have turned to other sources of government

revenue and lowered our tariffs to an average duty of just 4 percent, but jurisdiction over international trade and Customs has remained firmly within the Finance Committee.

In response to the horrific events of 9/11, the United States has

taken a variety of measures to increase the security of the cargo

coming into our country. The responsibility for implementing many

of these measures fell to CBP.

That leaves, in the hands of the Commissioner, a difficult task.

The Commissioner must discharge Customs’ historic responsibility

to facilitate the smooth flow of international commerce which

drives our economic growth.

At the same time, the Commissioner must also ensure the safety

of the cargo that arrives on our shores. This is a difficult balancing

act. The two interests are inherently in tension.

My number-one concern, Director Basham, is that the Commissioner know how to strike that balance without sacrificing either

interest. The easiest thing to do to make certain that no dangerous

cargo arrives in our country is to ban all imports. Of course, that

would be disaster.

Fifty years ago, trade accounted for about one-tenth of our economic growth; today it accounts for about one-quarter. Trade has

pumped over $1 trillion into our economy and the equivalent of

$10,000 for every American household.

Consider also for a moment the astonishing trend in containerized trade. Last year, more than 11 million containers came into

our country. This year, we expect nearly 10 percent more. By the

year 2010, container traffic into our country is expected to double,

just a few years from now.

4

Are we prepared to manage that increase? How can we secure

the increased flow of cargo coming into our country without bringing trade to a grinding halt? Do we have the means? Do we have

the resilience to keep the trade flowing when any one box among

millions could be deadly?

I asked these questions at a forum I convened on Monday on

international trade security, and I learned that any container can

be a Trojan horse. I learned that it is impossible to know what is

inside the tens of millions of boxes arriving in ports around the

world every day without having a layered approach to cargo security.

A layered approach has to involve people, technology, intelligence, and, most critically, partnering with the private stakeholders who move the cargo.

I respect you, Director Basham. You are obviously an accomplished, intelligent man and trusted with the enormous responsibility of protecting the President of the United States. I, for one,

feel safer just being in the room with you.

But I am concerned that your long and distinguished career in

Federal law enforcement may affect your instincts in striking the

delicate balance between trade and security.

As Commissioner, your job would be to speed the tens of thousands of boxes arriving in the United States every day through to

their final destination, while assuring that no Trojan horse ever arrives. Just-in-time supply chains drive the global economy. It is

very important. It has reduced inventory by about $1 trillion a

year, the just-in-time concept. Customs must be very quick, but not

be hasty.

What I am hoping to hear from you today is why you are the

nominee who can thread this needle. We cannot afford to have a

system of global trade shut down because we were not prepared or

because we did not strike the right balance.

Thank you, Mr. Chairman.

The CHAIRMAN. Yes. Thank you.

Now, Senator Hatch?

OPENING STATEMENT OF HON. ORRIN G. HATCH,

A U.S. SENATOR FROM UTAH

Senator HATCH. I would just like to weigh in and express my regard, high regard, for Director Basham. He has been a terrific leader for the Secret Service, and has been a terrific leader throughout

his Service career. He has been a long-time public servant who has

really made a difference in this world, and I just wanted to be here

to make sure everybody knows how strongly I support you.

I do not know of a more important position than Secret Service

Director, unless it is the Director of U.S. Customs, Border Protection, and Homeland Security. A lot of people are very concerned

about how we handle these problems, and I do not know of a better

person to be able to handle those problems than you.

Mr. BASHAM. Thank you, sir.

Senator HATCH. So I just wanted to come for a few minutes and

express my regard for you, and how strongly I support you, and

wish you well in this new position. Hopefully this committee will

get you up and out and confirmed on the floor as quickly as posVerDate 11-MAY-2000 15:32 Jan 25, 2007 Jkt 095484 PO 00000 Frm 00008 Fmt 6633 Sfmt 6633 32330.000 SFIN1 PsN: SFIN1
5

sible. I know these two leaders will do everything in their power

to do that.

I want to compliment you, and above all your family, for supporting you in this very, very difficult set of jobs that you have had

over the years. Just know you have a friend here, and I will be glad

to help in any way I can.

Mr. BASHAM. Thank you, Senator.

Senator HATCH. Thanks, Mr. Chairman.

The CHAIRMAN. Thank you.

Now we turn to the nominee. If you have a long statement, it

will be put in the record. We offer you an opportunity to summarize and say what you want to say to the committee now. We would

also invite you to introduce any family, friends, and supporters you

have here because that is the custom of this committee to do that.

I would also say something about a process, because sometimes

I forget to say it. A lot of the members will not be here because

of obligations elsewhere, so you may get some questions for answer

in writing.

I am sure that between you and people in the administration,

they can help you get that done very quickly, because I would like

to make sure that the members get their questions answered one

way or the other.

Then about the only thing that I ever run into when a nominee

is on the floor, is sometimes the same thing. If your nominee is

being held up because of questions not being answered, particularly

from my committee, I try to cooperate with the members of the

committee. So, I would ask you to honor those requests as well. It

is just something that should be done.

Mr. BASHAM. Yes, sir, Mr. Chairman.

The CHAIRMAN. Then, now you can introduce people and speak.

STATEMENT OF W. RALPH BASHAM, NOMINATED TO BE COMMISSIONER OF CUSTOMS, DEPARTMENT OF HOMELAND SECURITY, WASHINGTON, DC

Mr. BASHAM. Thank you, Mr. Chairman.

Chairman Grassley and Senator Baucus, I am pleased to be here

today before you as the President’s nominee to be the Commissioner of the U.S. Customs and Border Protection.

I want to begin by thanking President Bush for nominating me

as the lead to head this agency of such strategic importance to the

security of our Nation. I thank Secretary Chertoff and Deputy Secretary Jackson for their support and confidence as well.

I especially want to thank my wife, Judy, who is with me here

today, and my daughter, Paige.

The CHAIRMAN. So we know who you are, would you stand up,

or raise your hand, or something?

Mr. BASHAM. My daughter, Paige.

The CHAIRMAN. All right.

Mr. BASHAM. Dee Anderson, my special assistant.

The CHAIRMAN. All right.

Mr. BASHAM. My very good friends, Richard and Phyllis

Heideman, who I might say, Mr. Chairman, just became new

grandparents this past Friday, so they are happy to be here.

6

But I do want to thank them for all the support that they have

given me throughout my public service career, and especially over

the last few months.

Finally, Mr. Chairman, I appreciate the support and guidance

that you, the members of this committee, and your staffs have

given me during this confirmation process. It is, indeed, an honor

to be before you today.

People have asked me in this process why I would leave what

many might consider to be one of the best jobs in Washington, the

Director of the U.S. Secret Service. And, although the emotions of

the decision are complicated, my answer is simple and two-fold:

duty and a desire to contribute.

Having spent over three decades in career public service, when

the President asks you to take on an assignment, I feel there comes

a need to serve.

The second part of my answer is that I believe CBP plays a key

role in maintaining the national security, and I can help guide it

through this critical period. CBP keeps our Nation strong by guarding our borders, securing trade and our economy, collecting revenue

and enforcing trade laws, protecting our food supply, and preventing illegal drugs from reaching our streets.

I firmly believe that I can make a real and positive difference by

continuing to serve this Nation in the challenging role of CBP Commissioner.

Calling the next Commissioner’s job ‘‘challenging’’ is an understatement. But if I am fortunate enough to be given the opportunity, I firmly believe that the law enforcement experiences and

leadership roles of my career have prepared me to lead the men

and women of Customs and Border Protection.

In many ways, my experiences in government as the Director of

the Federal Law Enforcement Training Center, helping to start up

the Transportation Security Administration, and particularly my 3

decades with the Secret Service have given me the right combination of skills and background to take on this new responsibility.

CBP’s most critical mission and greatest challenge is preventing

terrorists and terrorist weapons from getting into the country, but

doing so while still allowing legitimate trade and travel to flow

freely.

It is a constant balancing act of protection and facilitation and

it is a mission that depends upon our partnerships with others.

The challenges CBP faces are not unlike what the Secret Service

encounters in protecting the President and the White House on a

daily basis.

The potential consequences of either agency being wrong on security even one time is terrible and sobering. While security is utmost

in our minds, we recognize that every day the President must conduct the people’s business.

Staff and visitors with legitimate purposes must flow in and out

of the perimeters we set. Food, supplies, and White House domestic

staff must enter and leave at all hours. And when the President

travels, we must rely upon the cooperation of other law enforcement in the private sector, and we have developed and maintained

strong partnerships with them.

7

We do so for one important reason: necessity. Both CBP and the

Secret Service must deal with the constant tension of maintaining

a balance between security and facilitation.

If the Secret Service lets security become its one and only concern, then the President and his staff could not go about their jobs.

Likewise, if CBP focuses solely on securing trade and travel at the

expense of free movement, our liberty and our economy will suffer.

I recognize that this committee, Congress, and the trade and

travel communities will be very focused on whether the next Commissioner is finding the appropriate balance. I also know that they

will be quick to advise if CBP is not.

If confirmed, I am fortunate to follow in the footsteps of former

Commissioner Rob Bonner, a visionary leader who, along with the

men and women of CBP, laid a solid foundation for Customs and

Border Protection.

The next Commissioner must be prepared to build on that legacy

and move the agency forward. As a fellow agency head within the

Department of Homeland Security, I have worked with, and closely

observed, CBP and its first and only Commissioner. The broad

course and vision that Commissioner Bonner set for the agency are,

in my view, the right ones.

While many challenges remain to implement that vision, I see no

need for a dramatic change in course for CBP. Rather, as many of

you have told me, the next Commissioner will have to stay the

course, but urgently move the agency forward, and I agree.

If confirmed, I hope I can bring the steady and experienced leadership and the ability to foster relationships within the Department and the administration to guide CBP beyond its formative

years.

If confirmed, I also look forward to working closely with this

committee and the Congress so we can meet these present and future challenges together. In this century threatened by terrorism,

we are called upon to confront the challenges head on and to accept

the responsibility of one of the most important jobs in America

today: securing and protecting our homeland and the American

people.

The next few years will be monumentally important to the future

of CBP and to our Nation. What we do or what we fail to do to

secure our Nation and protect our economy will make a profound

difference to future generations.

Years from now when we look back on the opportunities we had

to build and grow something as important as American’s front-line

agency, we want to look back with pride and not regret on the

choices we made.

Thank you again, Mr. Chairman, for scheduling this hearing

today. I would be pleased to try to answer your questions or those

of the committee.

The CHAIRMAN. Yes. There are three questions that we ask every

nominee, and I would ask you to answer them separately.

The first question. Is there anything that you are aware of in

your background that might present a conflict of interest with the

duties of the office to which you have been nominated?

Mr. BASHAM. No.

8

The CHAIRMAN. Do you know of any reason, personal or otherwise, that would in any way prevent you from fully and honorably

discharging the responsibilities of the office to which you have been

nominated?

Mr. BASHAM. No.

The CHAIRMAN. And, last, do you agree, without reservation, to

respond to any reasonable summons to appear and testify before

any duly constituted committee of Congress, if you are confirmed?

Mr. BASHAM. I will.

The CHAIRMAN. Yes. And in regard to the last point, you do not

have to comment on this, but I make this point to almost every

nominee. Whenever we send letters to any agency—not just yours,

any agency—it seems like we never get timely answers.

It seems like we always have to follow up with additional letters.

Just getting information is like pulling teeth. We cannot do our job

of Congressional oversight if we do not get the information we

need.

Since everything that goes on in the executive branch of government, except maybe national security, ought to be the public’s business, the public’s business ought to be public. And some of the

ways of making the public’s business public is when we do our

oversight work.

I will go to my first question. In my opening statement, I indicated that I think it is up to the Commissioner of Customs to ask

the right questions and insist on answers if another transaction involving U.S. ports is submitted for review by the Committee on

Foreign Investments in the United States.

Do you agree with that statement? If not, you can say you do not

agree, and why. But if you do agree, how will you make sure that

that happens, if you are confirmed?

Mr. BASHAM. Mr. Chairman, I do agree that the Commissioner

of Customs has a responsibility to address those issues that may

impact upon the security of those ports. I feel strongly that, in the

particular case that you are referring to, that I believe CBP did,

in fact, participate in that. I am not familiar with all of the facts

or issues there, but I believe that they did, and I would continue

to support them.

The CHAIRMAN. And probably one of the major problems is, if

Congress had been informed and it had been more public in the initial stage, there may have been a lot of problems that arose that

would not have otherwise arisen. So, there is another case to be

made for the public’s business being made public.

On the issue that I brought up in my opening comment about

trade security versus trade facilitation, I would like to make clear

that I view data collection and the clearance of imports for entry

into the United States as being an inherently commercial function.

I say so, not withstanding the fact that the output of data collection programs may be used for security purposes. That includes

programs such as the Container Security Initiative and the Customs Trade Partnership Against Terrorism.

I want to secure a commitment from you that, if confirmed, you

will work with this committee to develop these and other similar

programs to meet the commercial needs of the U.S. trading community, as well as our collective security needs.

9

Mr. BASHAM. Mr. Chairman, as I said in my statement, I feel

that the layered approach that former Commissioner Bonner put

into place, whether it is the advanced information, whether it is

the Container Security initiative, or the Customs and Trade Partnership Against Terrorism, it is the proper approach. Also, including technology, both in foreign and in our own ports.

But I do believe that the key, as you say, is collecting the data

that is necessary to determine whether or not those containers

present a risk to this country. But it has to be the right data. I

feel strongly that just to request data, without a purpose, becomes

onerous on the trade community. So, I want to make sure that the

data we collect is the proper data.

The CHAIRMAN. All right.

Tell the committee how you intend to ensure an appropriate balance between the trade security functions performed by the Bureau

of Customs and Border Protection versus trade facilitation functions. That includes ensuring an appropriate allocation of resources

between these two functions.

Mr. BASHAM. I am clearly familiar with this committee’s concern

about the allocation of resources and balancing trade facilitation

enforcement and revenue collection over security.

I cannot say that I am familiar with the exact level of resource

commitment in each of those areas, but I do recognize that it is extremely important that it be a balanced approach.

One of the first things that I intend to do, if I am confirmed, is

to look at those resource allocations and make sure that they are,

in fact, being applied in an equitable, balanced way.

The CHAIRMAN. In my opening statement, I said that our security

depends on the quality of import data. I am concerned that we may

not be doing enough to ensure the validity of data. I think we need

to apply the auditing expertise within the agency, including forensic accounting, to the import data we collect.

Would you agree with that statement? If so, what steps would

you take to ensure that the data we collect is properly audited?

Mr. BASHAM. Mr. Chairman, I cannot say that I am totally conversant on the type of data that is, in fact, being collected and then

what it is being used for, but I do certainly recognize that it does

have to be validated in order for it to be beneficial for the purpose

of risk assessment.

So that is an issue that I think is the cornerstone to the entire

Customs and Trade Partnership Against Terrorism for it to be an

effective means of ensuring that we are not allowing either weapons or products that should not be getting into the country illegally.

The CHAIRMAN. Senator Baucus? Then after Senator Baucus, I

will call on Senator Thomas.

Senator BAUCUS. Thank you, Mr. Chairman.

Mr. Basham, this may be personal here, but it just kind of struck

me, this next question. Why were you selected? Why you? You do

not have a deep background in trade or commerce.

Mr. BASHAM. I do not.

Senator BAUCUS. It is more law enforcement. So why were you

selected?

10

Mr. BASHAM. Well, I would have to refer you to Secretary

Chertoff or Deputy Secretary Jackson, perhaps, on that issue. But

I do feel strongly that I do bring a background of leadership, of

leading large agencies, understanding the requirements for a balanced approach to security and facilitation.

Whether it was with the Secret Service, or when I was with the

Transportation Security Administration, I certainly was exposed to

the need to apply a balanced approach. So I feel that I have the

background to lead this agency and make a contribution. I only

hope that I am accurate in that assessment.

Senator BAUCUS. All right.

What are some of the impediments today to U.S. commerce going

through our ports?

Mr. BASHAM. What are the impediments?

Senator BAUCUS. Yes. In terms of commerce, putting security

aside for a moment.

Mr. BASHAM. Putting the security aside?

Senator BAUCUS. Yes.

Mr. BASHAM. Well, obviously I think there is a need to improve

the facilities in order to facilitate flow of commerce.

Senator BAUCUS. Where is the greatest need?

Mr. BASHAM. The greatest need?

Senator BAUCUS. Yes.

Mr. BASHAM. I think the greatest need—again, from my limited

knowledge, as you have already expressed, in this area—is an approach that is layered in terms of technology and infrastructure,

and the proper level of human resources. I think you have to strike

a balance there. One of those is not the total solution to ensuring

the proper flow of commerce.

Senator BAUCUS. I ask, in part, because the world is getting

more competitive, more globalized, as you know as well as anybody.

Other countries are spending enormous sums of money to improve

their infrastructure and their port facilities.

Have you been to Shanghai?

Mr. BASHAM. I have not, no.

Senator BAUCUS. I encourage you, go to Shanghai. Just to divert

here a little bit, Mr. Chairman, I am very concerned about our

country’s competitiveness. Other countries are doing so much. We

are a great, strong country, but other countries are going like

gangbusters.

I have often, myself, tried to find some concept to kind of galvanize America into rallying, getting more scientists and students

and start building more products in the United States, as we did

when Sputnik went up. We went to the moon. Sputnik galvanized

America. We all know where we were when Sputnik was first sent

up. That galvanized us to put a man on the moon. It was a great

rallying cry.

I have talked to several businessmen. What concept do we have

in America? What can our rallying cry be? Where is our Sputnik?

Because it is hard to find something like Sputnik. The current

challenge is more of a stealth challenge, not like Sputnik. So I have

been trying to figure all this out.

I was talking to some businessmen. One of the fellows said, ‘‘Senator, I have seen Sputnik.’’ I said, ‘‘What do you mean?’’ ‘‘It is

11

Shanghai Harbor.’’ He is the CEO of a major U.S. railroad, and he

is stunned at the Shanghai Harbor. I am, too. I have been there.

And it is not just Shanghai, it is many other countries that are

doing the same.

India. Right now, India’s main goal is to develop its infrastructure, their ports. You know Hong Kong has a very advanced port

structure.

If the United States is going to do very well in facilitating commerce, we have to have major forward-looking plans to develop our

ports, our infrastructure so that we can facilitate commerce dramatically. Commerce is increasing at such a rapid rate.

So that is why I ask the question, what are our needs, what are

the impediments, what do we have to do here? I would hope that,

as Commissioner, you would be a real advocate in the administration and get tough.

I do not know this, I do not know your personality at all, but you

strike me as being a nice, reasonable guy. You cannot be nice and

reasonable on this subject. You have to pound the tables.

You have to just be very insistent to fight for Customs and a very

efficient Customs operation. You know as well as I, this country is

run by, the squeaky wheel gets the grease, in many respects, in

this town. I would just encourage you to be very, very tough in that

respect.

I have more questions. I will wait until my next round. But my

time has expired.

The CHAIRMAN. Senator Thomas? Then I will go to Senator Schumer.

Senator THOMAS. Thank you. Thank you very much. It is nice to

have you here. I do not discourage you from being nice, by the way.

[Laughter.]

Senator BAUCUS. That is because he is a real nice guy. [Laughter.]

Senator THOMAS. Well, it is very important, certainly. Customs

is something that has a lot to do with our economy. It is not only

ports. We do not have any ports in Wyoming, as a matter of fact.

[Laughter.] But we do have Customs interests. I want to mention

that, last year, I successfully designated Natrona County International Airport as a permanent port of entry.

As a matter of fact, it is the only entry point in the State of Wyoming. It has a great deal to do with our economy. There is, for instance, a great deal of activity from Canada in the energy business.

They come through that airport.

I am concerned that, though it has been designated an entry

point, we have not been able to move very much on getting the office implemented. It is still a part-time office, even though we have

pretty heavy traffic. It is a local issue but important.

We need to understand that these kinds of places have more to

do than just with the major ports, and Customs and that sort of

thing is very important.

So I appreciate your willingness to take on this task. Your background in law enforcement, and so on, will be useful. I really urge

you to take a look at making sure that there are facilities available

in Casper. I realize you cannot have them everywhere, but certainly there ought to be at least one entry point in every State to

12

go through the Customs process, and that is one of the problems

that we have. I would just urge you to take a look at that, please.

So, good luck.

Mr. BASHAM. Thank you, Senator.

Senator THOMAS. Thank you very much, Mr. Chairman.

The CHAIRMAN. Thank you.

Now, Senator Schumer?

Senator SCHUMER. Thank you, Mr. Chairman.

First, Director, congratulations on your nomination. You are

going to have a huge impact on a job that, after 9/11, has become

much, much more important. As a New Yorker, representing both

the northern border with Canada, including the second-busiest

transfer point between Buffalo and Ontario, as well as New York

City, we are going to be talking a lot, as I did talk to your predecessor over the last while. I am glad you have a strong background

in security. I think that is very important.

But, of course, as Customs chief you have to balance security and

commerce. It is one of the big discussions around here, the Dubai

Ports World, for instance.

I saw the ports just 2 weeks ago that Senator Baucus mentioned

in Shanghai and Hong Kong, and they are amazing. They have

both security and commerce. Max is right, we have to get with it

here. They tower above anything we have done in the United

States.

I have four questions, all New York-related, for you, and I would

like to get your views. They are important. I have let your folks

know in advance that I was going to ask these so you might be able

to become a little familiar with them.

The first is the Customs House. As you know, downtown Manhattan has been a center of Customs House, I think, since the days

of Herman Melville, who I think—I might have this wrong—was

the Customs Commissioner.

Senator BAUCUS. He was. That is right.

Senator SCHUMER. All right.

After 9/11, obviously, the building was destroyed. I have been

working for a very long time to get a commitment from Customs

to come back in full force to downtown. Now Customs is scattered.

Some is in Newark, Port Newark, some is in mid-town. I have

talked to your predecessor.

Customs has expressed a desire to do it, but it has not been very

specific. So I now understand GSA and Customs are in serious

talks with the Port Authority as to how that return would take

place, and how much of it would take place.

I would like to see all of it back downtown where it was before.

You had Customs brokers. You had a whole little industry there

that, when we want to rebuild lower Manhattan, is very, very important, both financially, but also symbolically.

So I would like to ask for your commitment to do everything you

can as Customs Commissioner to bring back the lion’s share of

Customs offices. In fact, I would like to see all of them that were

there before go back to lower Manhattan, hopefully to the Freedom

Tower, which would make a great deal of sense in many ways.

So could you comment on what you will do to help achieve this

goal?

13

Mr. BASHAM. First of all, Senator, I do appreciate the significance and the symbolism of the Customs House and its 200 years

of history in New York. I am in receipt of your letter on this subject, and I sent it on to CBP to ask them for a response to you on

that.

I do not know exactly where all of the resources are currently

and where they were dispersed to following 9/11, but I do intend,

if I am confirmed, to take a look at exactly where they are and,

from an operational perspective, where they should be.

Senator SCHUMER. Do you agree, though, that it would be ideal

to bring as much as possible back to downtown?

Mr. BASHAM. I agree, it would be an ideal situation. Again, looking at the operational requirements of CBP, yes, I agree with that.

Senator SCHUMER. Good. And even if it cost a little money to do,

do you think that would be worth it? I am not saying tens of billions of dollars, or anything like that.

Mr. BASHAM. I know how important this issue is to you.

Senator SCHUMER. And to all of New York. Yes.

Mr. BASHAM. And I will look forward to working with you and

your staff to see what we can do.

Senator SCHUMER. Great.

The next question. Mr. Chairman, I have three more questions.

The CHAIRMAN. Go ahead. We only have Senator Baucus to ask

more questions.

Senator SCHUMER. All right.

The CHAIRMAN. Then we will adjourn. But go ahead.

Senator SCHUMER. Thank you, Mr. Chairman.

The second is on shared border management. Here, we have had

a really great deal of success with Customs. It took a while to get

Customs to understand the importance of this. This is at the other

end of my State, in Buffalo. We need to build a new bridge, a Peace

Bridge.

One of the problems we have had is that the only real way to

build a bridge is to have the Customs facilities located on the Canadian side of the bridge. There is just no room on the American

side. A treaty would take us through countless different kinds of

problems.

Our government, led by Customs—Ms. Elaine Duzinsky has been

very helpful under Secretary Chertoff’s watch—and the Canadian

government have really made progress on this. We need to do it.

We just have no choice. We just cannot delay any longer.

Frankly, shared border management is the last hold-up. The

money is there for the bridge, the plans are being voted for the

bridge, but we have to get this done. There was a slow-down because of the new Canadian elections that were about to be held.

But now I have met with some of the representatives of the new

government, and they are just as committed to making this happen.

We reached an agreement to do a pilot project under the reciprocity model, which we think meets the constitutional needs of

both countries, and a second bridge, which is the Thousand Islands

Bridge at Alexandria Bay, probably about 350 miles to the northeast, maybe 300, has been selected where the Canadian operations

would move to the U.S. side.

14

So it makes sense there to have them on our side, and it makes

sense in Buffalo to have them on the other side. The President announced it as a pilot project, as part of the joint U.S.-Canadian Security and Prosperity Partnership. So we have made progress, but

there are still significant issues to work out.

It is going to take a lot of hard work, determination, and focus

to work out the agreement with the Canadians. If we do not, it is

really going to put a crimp on the economy in Buffalo and western

New York, which have had their difficult times.

I have met with your staff at Customs and, as I said, the new

Canadian government. Both sides believe they can get a deal done

and have shown me a willingness to work out the differences.

I would like to ask you how you would approach this issue, and

would you be willing to commit staff, resources, and your own time

to getting this critical project done?

Mr. BASHAM. I am familiar, on a surface level, with the issue. It

is my understanding that there is work under way to try to cut

through all of the issues that are impeding the progress on this.

I can assure you that, if I am confirmed, it will be an issue that

I will personally get involved in.

Senator SCHUMER. Great.

Mr. BASHAM. I will try to help as much as I can to cut through

whatever those lingering issues are that need to be dealt with.

Senator SCHUMER. Good. And you understand the importance of

this to both countries. We have MPs from the Canadian side every

bit as eager as we are on the U.S. side. Good. All right.

Next one. This is a checkpoint on I–87. It is a small issue,

maybe. It seems like a small issue, but it is important to the people

in the north country, which is our northern region in the Adirondacks.

Customs is currently discussing plans to discuss a permanent

second checkpoint on I–87, which is the main road that goes from

New York City up to Montreal and goes through Albany.

The second checkpoint would be 90 miles south of the big, huge

checkpoint we are building. The money has been allocated for that.

It has been a high priority of everyone. The trucks would back up

for five hours at Champlain-LaColle, which is right north of Plattsburgh.

We are spending $100 million to construct a new Port of Excellence. It is going to have nine dedicated truck lanes, two dedicated

bus lanes in addition to the cars, so everyone gets sort of put in

their right place and things move quickly.

Now, this second checkpoint is going to have many fewer lanes,

and there are two concerns. One is, it is going to slow commerce.

Two, is safety. Traffic tie-ups will cause accidents. When they did

it temporarily, there were real problems. That is going to far outweigh the efficiencies that we are spending $100 million to gain in

the new Port of Excellence.

There are alternatives. You do not have to put the checkpoint

right on I–87. So I guess what I would like to know is how you will

approach that issue, and would you be willing to look at alternative

locations for the checkpoint? One of the main reasons they say they

need it down there is there is an Indian reservation, I would say,

about 30, 40 miles—I may have the number wrong—to the west on

15

the northern border, and there is a road that cuts down there and

they want the checkpoint below where the road meets I–87. But

they could easily put a checkpoint right on that road as opposed

to I–87, which is a much less-traveled road, causing less back-up.

Would you be willing to explore alternative locations for the

checkpoint, including some along the main feeder roads?

Mr. BASHAM. Senator, I have been studying issues at CBP, but

I have to admit, this is not one that I am familiar with. Obviously

it is one that is of great importance to you. I will fully commit to

you that if it is feasible and practical and it makes sense, then I

am for it.

Senator SCHUMER. Good.

Mr. BASHAM. But I do not know all the complications that may

be involved here. But, yes, I will certainly direct——

Senator SCHUMER. I mean, it is sort of, people scratch their

heads about the government when they say you are spending $100

million to speed up the traffic right at the Canadian-U.S. border by

Plattsburgh 30 miles south of Montreal, and then you are going to

undo all those efficiencies by putting a checkpoint 90 miles to the

south. Nobody quite gets it. So, good. I am glad you will look at

that.

A final one. This one, I think other members of the committee

might share with me, I know North Dakota, Senator Conrad, some

of the other folks along the Canadian border.

This is the Western Hemisphere Travel Initiative. That is of

great concern to border communities from Washington State to

Maine, and certainly of great concern to our border with Canada.

As I said, commerce with Canada, and particularly that Ontario

region, which is sort of the heart of Canadian industrial strength,

is very important to us. So as head of Customs, you, probably more

than anyone else at the Department, need to have a strong sense

of balance on issues, as I said, where security and Commerce intersect.

The initial proposal for passports created an outcry from one end

of the 3,000 mile border with Canada to the other. The reason is

very simple. This is not like traveling from Chicago to Munich,

which is how they seem to look at it. We have people who go across

this border daily, and some of them do it on a whim.

Someone in Canada may decide to go to a Buffalo Sabers game.

It is a hockey team. It is doing a little better. They were doing

great, now they are doing a little better, so there may be even more

Canadians who want to come. People in the United States go to

dinner on the Canadian shore, people in the Buffalo region, Lake

Ontario.

Same thing further east in the north country. And to say you

need a passport, first to tell a family of four that they each have

to get a passport, takes weeks in advance, is going to chill commerce and have a real problem. It is hard to believe that we cannot

find a better solution than that that both preserves our security

and keeps commerce going.

So I guess my general question is, how are you going to approach

this issue as Customs chief? I have had talks with Secretary

Chertoff on this, and so have many other members of the New

York and other delegations.

16

Specifically, are you open to the idea of a day pass for visitors

who do not have a passport, who just want to get in, particularly

if they are American or Canadian citizens, with no problems?

Do you think children should have a passport in addition to the

parents having a passport? That is an expensive document to get.

And as someone with a strong security background and less of a

background in commerce—that is what Senator Baucus was mentioning—would you be willing to travel to some of these border

communities yourself so you can first-hand see?

Crossing the Niagara River, which is an international border, is

not much different than crossing the Hudson River in terms of how

often people do it, where they do it, and all of that.

Give me some of your thoughts on this. Would you be willing to

come up to Buffalo, to Plattsburgh, to Watertown, or places like

this that are very much affected and take a look?

Mr. BASHAM. In answer to your last question, yes. In fact, I intend to visit a number of those communities on the northern border.

Senator SCHUMER. Good.

Mr. BASHAM. I am familiar with the Western Hemisphere Travel

Initiative. I recognize that there is a balance that must be struck

here between the ability for travel, as well as security. I recognize

it has to be practical and has to be applicable to the circumstances.

So, recognizing that it is a huge, important issue across that expansive border, yes, I am clearly going to——

Senator SCHUMER. And you understand that just saying ‘‘passports’’ the way we do it when you travel to Munich or to Shanghai

or somewhere does not quite work in these situations, whether it

is Vancouver, Seattle, Winnipeg.

The CHAIRMAN. Senator Schumer, Senator Baucus has to ask his

questions because he has another commitment.

Senator BAUCUS. I am sure he was about through.

Senator SCHUMER. I was.

The CHAIRMAN. All right.

Senator SCHUMER. So do you understand that passports would

not quite work? That will be my last question.

Mr. BASHAM. Again, Senator, it is an issue of balance, proper balance, facilitation of travel and security, recognizing we must obviously deal with both of those issues. But it has to be on a practical

level. So, that is something that I know the entire Department, and

in particular CBP, is very aware of and very interested in.

Senator SCHUMER. Thank you, Mr. Chairman.

The CHAIRMAN. Thank you.

Senator Baucus?

Senator SCHUMER. Thank you, Senator Baucus, for waiting.

Senator BAUCUS. Thank you.

The CHAIRMAN. I am going to submit my questions. I had a couple more for answer in writing. Then so when Senator Baucus is

done, we will adjourn then.

[The questions appear in the appendix.]

Senator BAUCUS. Mr. Basham, I have just a couple of questions

about inspecting containers. I understand that Hong Kong has a

100-percent scanning system. It is gamma rays, radioactivity, everything under the sun.

17

I have a couple of questions in that regard. One, does that make

sense with respect to the security of containers coming into the

United States, and also facilitating commerce into the United

States?

Mr. BASHAM. Inspecting all the containers coming in?

Senator BAUCUS. Not all hand-inspected, but all scanned.

Mr. BASHAM. Scanned?

Senator BAUCUS. Scanned.

Mr. BASHAM. X-ray, gamma ray and radiation.

Senator BAUCUS. All that. Correct.

Mr. BASHAM. Ideally, it would be the way to move forward. I am

not sure practically right now, from my understanding, that it

could be accomplished. But it is certainly something that——

Senator BAUCUS. I am just curious why not. Hong Kong is doing

it. Why can we not encourage other countries? The goal, clearly, is

to have containers scanned before they come to the United States.

Mr. BASHAM. I think perhaps your reference earlier to the infrastructure of the ports may be at issue in terms of trying to facilitate that. Again, I am not familiar enough at this point with all

of the challenges of the 316 ports around the country that we receive cargo from, which I intend to get a lot smarter about.

But I think the layered approach that is being worked on now

with respect to container security, the CSI initiative, CT PAT, is

a way of approaching inspection or identification of, based on a

risk-based analysis, those containers that need to be looked at.

Senator BAUCUS. Right. I would just encourage you to get out

and look at this very closely and be very aggressive. That really

gets to the point of facilitating commerce in the United States, too.

The more secure it is, the more efficient commerce will be in coming into the United States.

I also hear from people who I think know that a lot of that information is canned, then it goes into a data bank and nobody looks

at it. For example, it certainly does not come to the United States.

I mean, satellites could send that information on a random basis

or on a risk basis to key people in the United States, but that is

not being done, as I understand. Is that correct?

Mr. BASHAM. I do not know whether that is exactly accurate. I

understand that 100 percent of those are not being perhaps reviewed. But I know that the Department has an initiative under

way, the Secure Freight Initiative, which I think is trying to deal

with that issue and to be able to capture that information.

Senator BAUCUS. I get my information from port directors, U.S.

port directors. That is what they tell me, and they are very concerned that nothing is being done. I know from previous government experience with Federal agencies, often most of the information that they got, it went into a file, nobody looked at it, no one

knew it was there.

Mr. BASHAM. Senator, I am absolutely in total agreement with

you to request data and put requirements on the private sector, on

the trade community for information, or request them to provide

details, and then have it not be used in a manner that is going to

facilitate not only security, but also trade——

Senator BAUCUS. Again, I encourage you to just really dig into

that question.

18

Mr. BASHAM. I will. I absolutely will.

Senator BAUCUS. I also understand there is virtually no resilience in the U.S. plan. That is, if a container were to arrive, say,

in Arizona or in different parts of the country with some bad stuff

in it, the basic plan is, the whole system, worldwide, would be shut

down because we do not know where that container came from, we

do not know what happened, which would be devastating, underlining ‘‘obviously,’’ to this country.

I mean, there is no effort to say, oh, gee, it came from this part

of the world or from that part of the world, because we just do not

know. Just think what a terrorist could do. I mean, 9/11 was bad

enough, with thousands of lives lost, just incalculable destruction

and loss.

But economic damage if a lot of ports were shut down, commerce

shut down, ships diverted other places in the world because we do

not have a triage system, we do not have a resilience system, we

do not have systems that can decide what we allow and do not

allow.

Mr. BASHAM. Well, I believe, going back to the Chairman’s comments earlier about the collection of data and verification of that

data and making sure that we understand where that container is

coming from, who stuffed it, who shipped it, who has had security

over it, and whatever information we can obtain that tells us what

is in that——

Senator BAUCUS. I am just sending a warning shot across your

bow. You are the guy who is going to be fixing all that. You are

in on the team to fix it.

Mr. BASHAM. I am familiar with it.

Senator BAUCUS. I am also concerned about the reduction, frankly, in personnel with respect to our trade and commerce duties. For

example, Section 412(b) of the Homeland Security Act basically

states that the Secretary may not consolidate, discontinue, or diminish CBP’s trade functions, reduce staffing level, or reduce the

resources attributable to trade enforcement functions performed by

the former Customs Service, now Customs and Border Protection.

Well, there has been a decline. In a 2005 letter to Congress, Commissioner Bonner stated that the government is not being compliant. For example, CBP employed 1,000 non-supervisor Import Specialists in fiscal 2001, but only 948, a reduction of over 100, in

March of 2005. The most recent data shows that there are only 892

full-time, plus 200 part-time. So, again, it is a reduction, contrary

to what the statute says. Obviously, I am just concerned that we

are not getting enough Trade Specialists or Customs Specialists.

Mr. BASHAM. I am familiar with the Homeland Security Act requirements on staffing levels. I do not know at this point exactly

what those levels are. But clearly, if I am confirmed as the Commissioner, one of the first issues that will have to be addressed is

meeting the requirements of the Homeland Security Act and making sure that we are, in fact, providing the resources to the trade

facilitation, revenue collection, and those other areas that are addressed in that act, and I will work to try to get those numbers to

the appropriate level.

Senator BAUCUS. I appreciate that. I appreciate that.

19

Finally, I am just concerned that, with all the obvious and proper

attention and resources to security, particularly in the wake of

9/11, that States like mine, Montana, are given short shrift in the

sense that we do not have the personnel, the Customs personnel.

They tend to go to other parts of the country, along the southern

border, to our ports, the coasts, and so forth. There is a lot of commerce between the United States and Canada, but the fact of the

matter is, it is our largest trading partner.

Canada is our largest trading partner. I hear complaints often

from people at home doing business in Canada and the United

States, particularly Canada and Montana, who have a hard time

finding Customs officials, finding it very hard to clear Customs at

the various airports in Montana. I just urge you to look at that

very, very closely. I will be sending you some information on that,

because we need help, frankly, very much.

Mr. BASHAM. I will.

Senator BAUCUS. That is all I have, Mr. Chairman. I might also

say, however, I guess, one more item here. If you could, Mr.

Basham, look to ensure that we have enough staff on what we call

the highline, that is northern Montana, and that we also stand up

an air base we are trying to get in terms of enforcement along the

border. I’m looking at that for Montana as well.

Mr. BASHAM. Again, I am familiar with that, and I will be looking at that and making sure that we are deploying the proper resources.

Senator BAUCUS. Thank you very much. I appreciate it.

The CHAIRMAN. Yes. We thank you. I said all the caveats I have

to about moving your nomination along, and most of them are responding to questions that members ask. Thank you very much.

Mr. BASHAM. Mr. Chairman, thank you.

The CHAIRMAN. And congratulations, too.

Mr. BASHAM. Thank you, Mr. Chairman.

[Whereupon, at 11:12 a.m., the hearing was concluded.]

(21)

A P P E N D I X

ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD

22

23

24

25

26

27

28

29

30

31

32

33

34

35

36

37

38

39

40

41

42

43

44

45

46

47

48

49

50

51

52

53

54

55

56

57

58

59

60

61

62

63

64

65

66

67

68

69

70

71

72

73

74

(75)

COMMUNICATION

76

Æ