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84–230 PDF 2003

IMPROVING SECURITY AND FACILITATING COMMERCE AT THE NATION’S PORTS OF ENTRY:

SEAPORTS OF LOS ANGELES AND LONG

BEACH, CA

HEARING

BEFORE THE

SUBCOMMITTEE ON CRIMINAL JUSTICE,

DRUG POLICY AND HUMAN RESOURCES

OF THE

COMMITTEE ON

GOVERNMENT REFORM

HOUSE OF REPRESENTATIVES

ONE HUNDRED SEVENTH CONGRESS

SECOND SESSION

FEBRUARY 1, 2002

Serial No. 107–143

Printed for the use of the Committee on Government Reform

(

Available via the World Wide Web: http://www.gpo.gov/congress/house

http://www.house.gov/reform

(II)

COMMITTEE ON GOVERNMENT REFORM

DAN BURTON, Indiana, Chairman

BENJAMIN A. GILMAN, New York

CONSTANCE A. MORELLA, Maryland

CHRISTOPHER SHAYS, Connecticut

ILEANA ROS-LEHTINEN, Florida

JOHN M. MCHUGH, New York

STEPHEN HORN, California

JOHN L. MICA, Florida

THOMAS M. DAVIS, Virginia

MARK E. SOUDER, Indiana

STEVEN C. LATOURETTE, Ohio

BOB BARR, Georgia

DAN MILLER, Florida

DOUG OSE, California

RON LEWIS, Kentucky

JO ANN DAVIS, Virginia

TODD RUSSELL PLATTS, Pennsylvania

DAVE WELDON, Florida

CHRIS CANNON, Utah

ADAM H. PUTNAM, Florida

C.L. ‘‘BUTCH’’ OTTER, Idaho

EDWARD L. SCHROCK, Virginia

JOHN J. DUNCAN, JR., Tennessee

——— ———

HENRY A. WAXMAN, California

TOM LANTOS, California

MAJOR R. OWENS, New York

EDOLPHUS TOWNS, New York

PAUL E. KANJORSKI, Pennsylvania

PATSY T. MINK, Hawaii

CAROLYN B. MALONEY, New York

ELEANOR HOLMES NORTON, Washington,

DC

ELIJAH E. CUMMINGS, Maryland

DENNIS J. KUCINICH, Ohio

ROD R. BLAGOJEVICH, Illinois

DANNY K. DAVIS, Illinois

JOHN F. TIERNEY, Massachusetts

JIM TURNER, Texas

THOMAS H. ALLEN, Maine

JANICE D. SCHAKOWSKY, Illinois

WM. LACY CLAY, Missouri

DIANE E. WATSON, California

STEPHEN F. LYNCH, Massachusetts

———

BERNARD SANDERS, Vermont

(Independent)

KEVIN BINGER, Staff Director

DANIEL R. MOLL, Deputy Staff Director

JAMES C. WILSON, Chief Counsel

ROBERT A. BRIGGS, Chief Clerk

PHIL SCHILIRO, Minority Staff Director

SUBCOMMITTEE ON CRIMINAL JUSTICE, DRUG POLICY AND HUMAN RESOURCES

MARK E. SOUDER, Indiana, Chairman

BENJAMIN A. GILMAN, New York

ILEANA ROS-LEHTINEN, Florida

JOHN L. MICA, Florida,

BOB BARR, Georgia

DAN MILLER, Florida

DOUG OSE, California

JO ANN DAVIS, Virginia

DAVE WELDON, Florida

ELIJAH E. CUMMINGS, Maryland

ROD R. BLAGOJEVICH, Illinois

BERNARD SANDERS, Vermont

DANNY K. DAVIS, Illinois

JIM TURNER, Texas

THOMAS H. ALLEN, Maine

JANICE D. SCHAKOWKY, Illinois

EX OFFICIO

DAN BURTON, Indiana HENRY A. WAXMAN, California

CHRISTOPHER DONESA, Staff Director and Chief Counsel

NICK COLEMAN, Professional Staff Member and Counsel

CONN CARROLL, Clerk

(III)

C O N T E N T S

Page

Hearing held on February 1, 2002 ......................................................................... 1

Statement of:

Holmes, Captain John, Operational Commander, U.S. Coast Guard, and

Captain of the Ports of Los Angeles and Long Beach; Audrey Adams,

Director of Field Operations, South Pacific Customs Management Center; and Thomas Schiltgen, Director, Los Angeles District Office, Immigration and Naturalization Service ............................................................. 8

Steinke, Richard D., executive director, the Port of Long Beach; Larry

Keller, executive director, the Port of Los Angeles; and Guy Fox, chairman of the board, Global Transportation Service ...................................... 45

Winter, Jay, executive director, Steamship Association of Southern California; Dennis Heck, corporate import compliance and purchasing manager, Yamaha Corp. of America; Captain Bill Wright, senior vice president for safety and the environment, Royal Caribbean and Celebrity

Cruise Lines; and Moises Cisneros, legislative manager, Los Angeles

Chamber of Commerce ................................................................................. 74

Letters, statements, etc., submitted for the record by:

Adams, Audrey, Director of Field Operations, South Pacific Customs

Management Center, prepared statement of .............................................. 19

Fox, Guy, chairman of the board, Global Transportation Service, prepared

statement of ................................................................................................... 61

Heck, Dennis, corporate import compliance and purchasing manager,

Yamaha Corp. of America, prepared statement of ..................................... 84

Holmes, Captain John, Operational Commander, U.S. Coast Guard, and

Captain of the Ports of Los Angeles and Long Beach, prepared statement of ........................................................................................................... 12

Keller, Larry, executive director, the Port of Los Angeles, prepared statement of ........................................................................................................... 52

Schiltgen, Thomas, Director, Los Angeles District Office, Immigration

and Naturalization Service, prepared statement of ................................... 25

Souder, Hon. Mark E., a Representative in Congress from the State

of Indiana, prepared statement of ............................................................... 4

Steinke, Richard D., executive director, the Port of Long Beach, prepared

statement of ................................................................................................... 48

Winter, Jay, executive director, Steamship Association of Southern California, prepared statement of ...................................................................... 78

Wright, Captain Bill, senior vice president for safety and the environment, Royal Caribbean and Celebrity Cruise Lines, prepared statement

of ..................................................................................................................... 89

(1)

IMPROVING SECURITY AND FACILITATING

COMMERCE AT THE NATION’S PORTS OF

ENTRY: SEAPORTS OF LOS ANGELES AND

LONG BEACH, CA

FRIDAY, FEBRUARY 1, 2002

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE ON CRIMINAL JUSTICE, DRUG POLICY AND

HUMAN RESOURCES,

COMMITTEE ON GOVERNMENT REFORM,

Long Beach, CA.

The subcommittee met, pursuant to notice, at 12:10 p.m., at Port

of Long Beach, Port Administration Building, 6th Floor, 925 Harbor Plaza, Long Beach, CA, Hon. Mark E. Souder (chairman of the

subcommittee) presiding.

Present: Representative Souder.

Also present: Representative Millender-Donald.

Staff present: Christopher Donesa, staff director and chief counsel; Nick Coleman, professional staff member and counsel; and

Conn Carroll, clerk.

Mr. SOUDER. Good afternoon. Thank you all for coming. Today

our subcommittee will explore the status of the Long Beach and

Los Angeles seaport border. Even before the terrorist attacks on

September 11, 2001, this subcommittee was considering ways to

improve both the security of our Nation’s borders and the efficient

flow of international commerce, travel and tourism.

Continuing problems with illegal immigration and smuggling of

drugs and other contraband over the Southern and Northern borders and into our seaports and the threat of terrorism have

prompted calls to hire more Federal law enforcement officers and

to expand the physical and technological infrastructure needed to

allow those officers to work effectively.

The attacks of September 11th and the heightened scrutiny of

the last 4 months emphasized the urgency in dealing with the terrorist threat as well as the problems of narcotics interdiction and

illegal immigration. Following the attacks, the Nation as a whole

came together to quickly develop and implement added security

measures at our land, air and sea borders.

The teamwork and cooperation required and displayed among

the many Federal, State and local entities throughout America was

and still is truly remarkable.

All morning long I have seen seaport activities from the water,

the land and by air. I thank everyone who has been involved for

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working so hard these past 4 months to keep these ports secure

and efficient.

Our Nation’s seaport borders today are more secure than 10 September of last year, but the job is nowhere near done. We cannot

let our guard down on vital border issues such as drugs and terrorism. We must continue to improve. We must continue to work together to work smarter and better.

Our ports and borders must remain secure and prosperous in the

years to come. Our prosperity clearly depends upon our ability to

accommodate the global trade that is predicted to double or triple

in the next 20 years. So government also needs to be attentive to

minimize the disruptions and delays caused by Federal inspections

and other requirements. There is no doubt that there have been

costs associated with heightening our Nation’s security at our borders.

Delays at some border crossings and a reduction in commercial

and commuter traffic from the increased security measures put in

place after September 11th have raised concerns about the effect

of these policies on trade, tourism and travel.

A slowing of the flow of people, cargo and vessels is a major concern at our seaports. Congress has been considering numerous proposals to deal with these problems, and our subcommittee is open

to exploring all of them. However, finding and implementing solutions is much more difficult than simply identifying problems. For

example, the House of Representatives and the Senate last year

passed anti-terrorist legislation that, among other measures, authorizes the tripling of the number of Border Patrol agents, INS inspectors and Customs inspectors along the Northern border.

President Bush just proposed much needed comprehensive increases in our support to the Coast Guard. It is unclear how quickly any of these agencies can meet these added requirements. Moreover, it is unclear what the impact of the new emphasis on antiterrorism will be on personnel decisions at each of those agencies.

In the rush to protect our Nation’s border from terrorists, we

must not hamper our ability to protect our citizens from other dangers, as well as we must not slow down the lifeblood of our Nation’s

economic well being, that of international trade and commerce.

This hearing is part of a series of field hearings which this subcommittee is holding at border crossings and ports of entry

throughout the United States. At each location, this subcommittee

is defining the problems facing the Federal agencies, local lawmakers and community and business leaders with respect to border

policy.

We will focus on what new resources are needed for the Federal

Government most effectively to administer the border crossing and

port of entry as well as what new policies could be pursued to ease

the burdens placed on commerce, travel and tourism. We will last

explore how the new emphasis on preventing terrorism may affect

the ability of these agencies to carry out their other vital mission.

These issues are all very important and extremely urgent, and I

look forward to hearing from our witnesses today about ways to address them.

We have invited representatives of the agencies primarily responsible for protecting our borders and seaports in this region;

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namely, the U.S. Coast Guard, the U.S. Customs Service, the Immigration and Naturalization Service, to testify here today. The

subcommittee is vitally interested in ensuring the effective functioning of those agencies, and we will continue to work with them

and their employees to ensure continued security and effective administration of our Nation’s borders and seaports.

We welcome Captain John Holmes of the U.S. Coast Guard, who

serves as the Operational Commander of this area, and Captain of

the Ports, Los Angeles and Long Beach; Ms. Audrey Adams, Director of Field Operations for the South Pacific Customs Management

Center; and Mr. Thomas Schiltgen, Director of the Los Angeles District Office, Immigration and Naturalization Service.

A big part of developing and implementing any seaport security

plan involves the respective port authorities. No two seaports are

alike. As such, input from the local port component and port personnel is important to evaluating changes to seaport border security policies.

Today, our second panel is the individuals that manage day-today port operations. We welcome Mr. Richard Steinke, executive director of the Port of Long Beach, and Mr. Larry Keller, executive

director of the Port of Los Angeles.

When examining seaport border policies, we must of course also

seek the input of representatives of the local community whose

livelihood is directly affected by changes to seaport security procedures. Our third panel is made up of representatives and port

users. We welcome Mr. Jay Winter, Executive Director of the

Steamship Association of Southern California; Mr. Guy Fox, chairman of the board of Global Transportation Services; Mr. Dennis

Heck, corporate import compliance and purchasing manager for

Yamaha Corp., Captain Bill Wright, senior vice president for safety

And Environment, Royal Caribbean and Celebrity Cruise Lines;

and Moises Cisneros, legislative manager of the Los Angeles Chamber of Commerce.

We thank everyone for taking time this afternoon to join us for

this important discussion. Congresswoman Millender-McDonald is

on her way here. Maybe after the first panel we will have her recognized for her opening statement if she wants to do that.

[The prepared statement of Hon. Mark E. Souder follows:]

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Mr. SOUDER. Before proceeding, I would like to take care of a

couple of procedural matters: First, ask unanimous consent that all

Members have 5 legislative days to submit written statements and

questions for the hearing record; that any answers to written questions provided by the witnesses also be included in the record.

Without objection, so ordered.

Second, I ask unanimous consent that all exhibits, documents

and other materials referred to by Members and witnesses may be

included in the hearing record, and that all Members be permitted

to revise and extend their remarks. Without objection, it is so ordered.

And, finally, I ask unanimous consent that all Members present

be able to participate in the hearing.

Now, this is an oversight committee of Congress and we always

ask that our witnesses be sworn in. So would the witnesses on the

first panel please rise. Raise your right hands, I will administer the

oath.

[Witnesses sworn.]

Mr. SOUDER. Let the record show that the witnesses have answered in the affirmative. Each of you will now be recognized for

your opening statements. We ask you to summarize your testimony

in approximately 5 minutes, because we have lots of witnesses. And

you can insert any—the full statement, any other additional materials you have.

It is my privilege to first recognize Captain Holmes. We thank

you for the courtesy of hosting us last night at the wonderful Point

Vicente Lighthouse and other stops on our visit, including rousing

me out of bed at 3:45 in the morning to go out with the sea marshals.

But we appreciate your work here, as the others, and look forward to hearing your testimony for the official record.

STATEMENTS OF CAPTAIN JOHN HOLMES, OPERATIONAL

COMMANDER, U.S. COAST GUARD, AND CAPTAIN OF THE

PORTS OF LOS ANGELES AND LONG BEACH; AUDREY

ADAMS, DIRECTOR OF FIELD OPERATIONS, SOUTH PACIFIC

CUSTOMS MANAGEMENT CENTER; AND THOMAS

SCHILTGEN, DIRECTOR, LOS ANGELES DISTRICT OFFICE,

IMMIGRATION AND NATURALIZATION SERVICE

Captain HOLMES. Thank you very much. Good afternoon, Mr.

Chairman. My name is John Holmes. I am the Coast Guard Captain of the Port for the Los Angeles-Long Beach Port Complex.

It is a pleasure to appear before you today to discuss Coast

Guard border security, particularly as it applies to the transport of

people and cargo by sea into this, the country’s largest and most

active international cargo hub. I have a written statement I have

submitted for the record, and I would like to summarize it here.

What I would like to do today is provide you with a perspective

of Coast Guard security efforts in the Los Angeles-Long Beach Port

Complex. To do this I will address several pertinent issues, including size and scope of the Port Complex, security efforts that took

place prior to the September 11th attacks, immediate actions after

the incident, current security measures in place, and long-term initiatives underway to address security challenges.

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Simply stated, the Los Angeles-Long Beach Port Complex is the

Nation’s super port. Individually, either port, Los Angeles or Long

Beach, would rank as the largest cargo port in the United States.

Cumulatively they represent the third largest cargo port in the

world, handling over 35 percent of the Nation’s containerized cargo,

over one million cruise passengers, over 500,000 vehicles, and approximately 50 percent of the oil used in the western United

States.

Over 6,000 deep-draft vessels arrive here each year. And perhaps

the most important statistic of container cargo is—predictions indicate that container cargo will grow fourfold in the next 20 years

from a figure of approximately 9 million TEUs, which is basically

a 20-foot container, to 36 million TEUs by the year 2020.

Prior to September 11th, the Port of Los Angeles-Long Beach had

one of the most active harbor safety committees in the country.

Upon review of a number of reports, including the DOT report and

assessment of the U.S. Marine Transportation System and the August 2000 report of the Interagency Commission of Crime and Security in U.S. Seaports, another committee was formed, and that

committee was the Marine Transportation System Committee.

This committee was formed to facilitate the safe, efficient and environmentally conscious flow of cargo in and out of the seaport. In

addition to this main committee, subcommittees were formed,

which included a Port Security Subcommittee, which was made up

of the port users and the Federal agencies which they interact

with, and a Law Enforcement Subcommittee, which was made up

strictly of the law enforcement agencies in the port area.

I only mention this because this figures into the actions that the

Port Complex took immediately after the September 11th tragedy.

I will talk a little bit about the Coast Guard operations before September 11th, which some people are now referring to as the old

normal, as opposed to what a lot of people refer to now as the new

normal. And under the old normal the Coast Guard was conducting

routine and—the Coast Guard and several other agencies were conducting routine water borne security patrols. Controls of vessels

were exercised via unique State, Federal, user fee-supported Vessel

Traffic Service. Shoreside security was ensured through facility inspections and roving vehicle patrols. A limited number of container

inspections were being conducted by the Coast Guard, with a particular focus on hazardous material, and a very robust Port Statecontrolled Boarding Program was in place.

As you probably are aware, the Port State-controlled Boarding

Program is the program that the Coast Guard uses to board foreign

vessels that come into U.S. waters to ensure that they meet the

International Safety Standards.

In the wake of the September 11th tragedy everything changed

of course, and we started to view things in terms of threat, and we

put those threats into three basic categories. First was the waterside threat of vessels approaching facilities or other vessels in the

port, a shoreside threat of those vessels coming into the port, either

from vehicles or trucks, and the internal threat of the vessels coming into the port that is represented by the crews, cargo and passengers on board.

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To mitigate the waterside threat posed by small vessels, additional floating resources were employed, around the clock harbor

patrols were conducted and every vessel entering the Port Complex

after September 11th was provided an escort, an armed Coast

Guard escort.

To mitigate the shoreside threat to facilities, terminal managers

were directed to upgrade security, and around the clock, multiagency vehicle patrols were set in place. The greatest challenge,

however, posed itself in the internal threat posed by the crews, passenger and cargo on the vessels. In order to mitigate this threat,

we had to identify every vessel coming into port, exert positive control over its actions using the Vessel Traffic Service, and conduct

boardings to screen the vessels, passengers and crew.

No one agency in the port, unfortunately, has the personnel to

undertake a screening operation of this nature. So on the morning

of the 11th, a multi-agency maritime enforcement effort, consisting

of Coast Guard, Immigrations, Customs, FBI, ATF, California

Highway Patrol, Los Angeles Port Police, and the L.A.P.D. and

many others were used to screen the vessels.

To give you some idea, on the 11th and 12th, this represented

about a 4 to 6-hour delay on vessels coming into the port. After a

week this was down to a delay of about 1 to 2 hours, and presently

no delay exists. Currently, multi-agency boardings are being conducted, although most are currently using Coast Guard Reserves

and/or joint U.S. Coast Guard-Los Angeles Port Police sea marshal

security teams. Vessel, vehicle, and air patrols continue with procedures refined daily.

Multi-agency facility surveys have been conducted in conjunction

with the Port Authority to identify and alleviate shoreside security

shortfalls. Risk management procedures are used to identify and

disburse resources. And our Harbor Safety Committee and the

MTS Committee and subcommittees have been extremely active in

developing standards and procedures to use around the port.

In the long term, we are working with both ports to develop a

security manual. We have recently developed security guidelines,

minimal security guidelines for the terminals and facilities, and

these guidelines deal with physical security issues, such as perimeter security, vehicle and personnel access, and control of visiting

vessels.

The next step we are working on is a—we are working with the

DOT in a credentialing subgroup to identify the possibility of a

portwide credentialing system, and we are working on the issue—

the container inspection issue with our colleagues from Customs

and other agencies.

The security of the Los Angeles-Long Beach Port Complex has

improved significantly in the months following September 11th. I

am confident that to a large extent this is due to the phenomenal

interagency cooperation that exists.

I would like to take this opportunity to acknowledge this cooperation and thank my colleagues from the marine industry, the ports

and particularly from the other Federal, State and local agencies

for their untiring efforts.

I also believe that this crisis has been benefited significantly

from outstanding and unwavering leadership. Certainly Admiral

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Loy, Transportation Secretary Mineta, Governor Ridge and President Bush have provided superb leadership. From a field commander’s perspective, it is always tremendously gratifying to have

clear direction and unwavering support.

In conclusion, the Coast Guard has taken a leadership role in coordinating the homeland security strategy, and I know you can see

from your interaction with them today the men and women of the

Coast Guard are committed to the protection of our Nation, its citizens and the marine transportation system.

I want to thank you for your interest in enhancing homeland security and for holding this hearing. I certainly appreciate the opportunity to testify before you today. I will be happy to answer any

questions you may have.

Thank you.

[The prepared statement of Captain Holmes follows:]

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Mr. SOUDER. Thank you very much.

Ms. Adams.

Ms. ADAMS. Thank you. Chairman Souder, thank you so much

for your invitation to testify and for providing me the chance to appear before you today. I would like to discuss the efforts of the U.S.

Customs Service to address the terrorism threat and the challenges

that exist at our Nation’s airports and seaports. The specific challenges I will address today are those that U.S. Customs has encountered at the Los Angeles-Long Beach Seaport as well as at the

Los Angeles International Airport.

The issues we face at the seaport and airport here in Los Angeles

are representative of those encountered at other major international air and seaports throughout the country.

As Captain Holmes has stated, the Los Angeles-Long Beach Seaport complex is the largest seaport in the United States. We process an average of 7,400 arriving containers each and every day. Los

Angeles International Airport is the second busiest international

airport in the country, processing on average of 23,000 arriving

international passengers and cargo valued at $110 million every

day.

As a major participant in the protection of our Nation’s borders,

Customs has taken a lead role in efforts to deny entry to potential

terrorists and the implements of terrorism into the United States

from locations throughout the world. Our areas of highest risk are

these cargos and passengers arriving from or departing to high risk

countries, and those which might conceal explosives, nuclear materials and weapons of mass destruction.

The Customs Service enforces over 400 laws and regulations for

more than 40 Federal agencies. While fully enforcing our Nation’s

laws at this time of highest alert, the Customs Service also fully

recognizes the impact of our enforcement and regulatory actions on

international trade, which is so vital to our Nation’s economy.

International trade must continue to flow through our Nation’s

ports of entry. Expansion efforts which were underway prior to

September 11th continue at our air and seaports and the demand

for Customs resources is at an all time high.

To use the Los Angeles-Long Beach seaport as an example, cargo

valued at approximately $188 million arrives each and every day.

Much of the arriving cargo is destined for the shelves of mass merchandisers throughout our country. Fully assembled automobiles

and auto parts destined for further manufacturing in U.S.-based

assembly lines pass through our port as do large quantities of

wearing apparel, foodstuffs, electronics, bulk chemical and steel.

In our global economy, corporations large and small rely heavily

on imported merchandise to ensure the vitality and competitiveness of their organizations. Our security and anti-terrorism efforts

must take into account the need to ensure the smooth flow of legitimate trade and travel. Addressing the terrorist threat and security

vulnerabilities as well as narcotics and currency smuggling requires a coordinated multi-agency and multi-national approach.

The Customs Service continues to buildupon an established cooperative relationship with the Intelligence Community, the other

Federal, State and local agencies, as well as our partners in the

International Trade Committee.

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Using a collaborative approach, we are employing targeting and

risk management technologies to select people, vessels, aircraft and

cargo for increased inspection. The Customs Service was addressing security and anti-terrorism well before the attacks of September 11th. We now know that the Los Angeles International Airport

was the ultimate target of the Algerian terrorist, Ahmed Ressam,

who was arrested in December 1999 by Customs inspectors at Port

Angeles, Washington.

In response to the terrorist attacks of September 11th, the U.S.

Customs Service immediately implemented a level one alert for all

personnel and ports of entry. This is our highest state of alert, calling for sustained intensive anti-terrorist operations. We remain at

level one alert today. In order to meet the demands of maintaining

this highest state of alert, we have deployed significant numbers of

local Customs employees to other locations around the country, including the Northern border.

These officers were immediately deployed following September

11th to ensure that there is adequate staffing available along the

Northern border. In addition, we have a number of our officers detailed to various national programs to ensure a sound and cohesive

national response to the threat of terrorism.

Never has the demand for Customs resources been so great. To

help us respond to the needs of the international trade community

for expeditious release of their time sensitive cargo, we are relying

heavily on nonintrusive technology, such as the full container

gamma and x-ray devices, pallet x-rays and radiation detection

pagers.

We also rely heavily on accurate and timely advance information

from the international trade community and both our air and sea

carriers. This advance information coupled with available technology helps us screen cargo and passengers and enables us to use

the principles of risk management when determining the best investment of our scarce resources.

The vast volume of trade and traffic through our Nation’s air and

seaports as well as our land borders has put immense pressure on

our ability to enforce the Nation’s laws, while facilitating international trade even before September 11th.

After September 11th, our challenge has risen to a new level. Although we have taken many steps to address these challenges,

such as our recently announced Customs-Trade Partnership

Against Terrorism, we still face many challenges. We continue to

work and develop and deploy nonintrusive inspection technology to

detect weapons of mass destruction and the implements of terrorism.

We continue to look for the best ways to recruit, train, and retain

our Customs officers. We continue to enhance our industry partnership programs to enable the trade, transportation and business

communities to assist us in the overall security strategy envisioned

by the U.S. Customs Service.

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I want to thank you, Mr. Chairman, for this opportunity to testify. The U.S. Customs Service continues to make every effort possible working with our fellow inspection agencies, with the administration, with congressional leaders, and the international trade

and transportation community to address the concerns of the

American people.

I would be happy to answer any questions you may have.

[The prepared statement of Ms. Adams follows:]

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Mr. SOUDER. Thank you very much.

Mr. Schiltgen.

Mr. SCHILTGEN. Mr. Chairman, thank you for inviting me here

today to address you on behalf of U.S. Immigration and Naturalization Service. I am pleased to appear before you today with two of

our sister agencies in order to discuss port security issues.

The United States has a strong history of immigration that we

should be proud of. Our immigration process contains a degree of

openness that is aligned with the freedoms this country has to

offer. But in order to retain those freedoms we must be vigilant in

our effort to enforce the immigration laws and secure our borders.

INS has incredibly dedicated officers and support personnel facilitating immigration and commerce to the United States, while at

the same time enforcing our immigration laws. We remain committed to our responsibilities, And a significant part of those responsibilities is to work collaboratively with Federal, State, and local

law enforcement to secure areas of our borders like the seaport

here in Los Angeles-Long Beach.

Given the extensive nature of our operations, it is not surprising

that the Los Angeles District is the largest INS district, with nearly 1,700 government employees, and over 500 contract employees

assigned to the various facilities throughout our jurisdiction.

I know that you are familiar with the INS responsibilities, and

today I want to focus on issues relating to the seaport here. The

Los Angeles District seaport operations distinguishes itself from

our seaport operations by the number of both commercial and passenger vessels that pass through the ports here.

They are tasked with the job of inspecting over 300,000 crew

members and 500,000 passengers every year. The average daily arrival of 15 commercial vessels at the combined ports, results in

over 5,400 vessels arriving per year.

These vessels operate out of 46 different terminals at the port.

In addition to inspecting container vessels, inspectors clear approximately five passenger vessels weekly, and each of those vessels brings an average of 2,500 passengers and 800 crew members.

Now, key to our efforts to secure our borders is the development,

analysis and sharing of intelligence. Even before the tragedy of

September 11th, INS seaport inspectors and the Customs Intelligence Collection and Analysis Team shared intelligence information. And thanks to this joint effort, INS officials continued to gather significant information regarding Chinese smuggling organizations which transport migrants to the United States from Asia.

This has led to several successful prosecutions. And we have expanded our efforts to include the investigation of leads that may

involve possible terrorist activity.

We have successfully coordinated efforts between our own inspections and investigations programs, and will remain dedicated to

working with other law enforcement agencies in developing intelligence related to smuggling operations, including smuggling in

containers.

Now, since the terrorist attacks on September 11th, the INS has

operated under a threat level one security alert. This is the highest

level security alert in which ports of entry operate. In response, we

have established a 24-hour command element staffed to increase

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our responsiveness to law enforcement efforts against terrorism.

Operations at threat level one involve a more intense inspection, as

well as closer scrutiny of individuals and their documentation.

Additionally, we have moved INS personnel and resources from

our LAX operation to the seaports here. And vessels that are considered high risk are boarded by multi-agency teams, which include

INS inspectors and the Coast Guard. And the Coast Guard provides INS with crew lists to run queries on all persons arriving on

vessels prior to our boarding those vessels. And INS has also tightened documentary requirements for entry into the United States by

crew members of cargo vessels.

Now, clearly INS’s responsibility is focused on the inspection of

aliens and prevention of unauthorized entrants to the United

States. However, we must continue to work closely with Federal,

State and local agencies, particularly U.S. Customs and the Coast

Guard, in order to foster and improve security and communications

through multi-agency task forces.

Currently, the INS is participating in the Los Angeles Mayor’s

Task Force for Security and Safety. This group consists of port officials as well as both civilian and Federal agencies, which face the

challenge of ensuring that the waterfronts of both ports are provided with increased security.

Topics currently being reviewed are the issuance of ID cards to

those seeking access to port facilities, issues of potential security

risks on utilization of existing security personnel, and inspection of

empty containers. INS also attends a quarterly interagency regional meeting to aid in the prevention of human cargo smuggling

and a quarterly law enforcement manager’s meeting which is

hosted by the Long Beach Police Department.

In conclusion, the INS and the Los Angeles District are committed to securing our ports of entry against those who wish them

harm, while facilitating legitimate commerce and travel. I want to

commend the men and women of this INS district for their outstanding commitment to the INS mission in the face of increasing

demands and finite resources.

Thank you, Mr. Chairman, for allowing me to give testimony regarding the Los Angeles District Office. And as my panel members

said, I am happy to take questions that you may have. Thank you.

[The prepared statement of Mr. Schiltgen follows:]

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Mr. SOUDER. Thank you very much, each of you, for your testimony. And let me first start with Captain Holmes. One of the

things I wanted to—I am not sure I completely understood your

distinction. Could you explain how, waterside, shoreside and internal? And I understood the internal, you said was the greatest

threat, crews, items on the ships.

What would be some examples on—when you say waterside, if

something attacking, for example a cruise ship or a tanker, that

would be a waterside threat, something coming up and hitting it

while it is docked, that would be seaside?

Captain HOLMES. Anything that could be affected by a vessel,

whether it be getting in front of a vessel or coming up alongside

of a vessel, that would be what we consider a waterborne threat.

Then a shoreside threat would be a truck or large vehicle who does

not normally access the terminal, coming on the terminal with perhaps something on it or in it that you don’t want to have at the

terminal.

Mr. SOUDER. Your feeling is that programs like this, the Sea

Marshals, are going to be potentially more fruitful. Then this morning we saw one of the cutters out going across the front of the harbor, because one of the fundamental questions is it is fine to do all

of this on September 11th, but what is going to happen when the

boating season starts and there is much more pressure on your resources?

Captain HOLMES. We are also very fortunate here during the

boating season to have a number of other resources to deal with

small boat search and rescue. We have both the—Long Beach and

Los Angeles have fire departments which do search and rescue, the

bay watch people, and most of the counties around here have

search and rescue. So the boating season here is pretty well a year

round season as opposed to other places. So we depend a lot on

some of our partners in the search and rescue part of the partnership here to conduct search and rescue operations.

But, basically as—I would indicate that when you came in this

morning, you had a cutter that was alongside the cruise ship as

well. And that is part of the—that is the cutter that would, of

course, deal with any kind of waterborne threat. Once the cruise

ship tied up to the pier, I am not sure you notice it, they are provided 24-hour a day on the water boat protection by either a Coast

Guard small boat or a Port Police boat.

Mr. SOUDER. We put—as the President just said the other day—

a lot of new dollars in for the Coast Guard. But what you see, it

is not just here, in Puget Sound where they have a number of the

naval bases and in Detroit where they have lots of—whether it is

nuclear power plants north of Detroit, you are increasingly seeing

vessels parked.

Come on up. Happy to have you here. I am going to wait until

Ms. McDonald comes up. Great to be in your hometown. One of the

concerns as we—we were neighbors ’till I moved over to the other

building and spent many times walking back and forth across the

floor and talking about different challenges, including here in Los

Angeles. We were hoping to be able to—when I chaired the Empowerment Subcommittee, we had lots of discussion about urban

revitalization and a number of other issues.

33

Ms. MILLENDER-MCDONALD. You left me.

Mr. SOUDER. Yes. I wound up chairman of this subcommittee and

moved to a different office.

Because as we increase the resources, one of our—but one of our

concerns is that this is what I was trying to sort through. Are you

going to have additional pressures as the year goes on, as we see

these different boats parked, that previously the Coast Guard was

already kind of tightened for their resources. Now, how much of

your resources have been devoted, switched over to security from

what was search and rescue and other types of operations? Do you

know?

Captain HOLMES. Search and rescue operations are still the top

priority for the Coast Guard. What has had to happen, honestly,

since the 11th is resources which do other things, work with our

fishing—local fishing fleet, law enforcement patrols, those initially

were curtailed to almost zero. And then as we have been able to

get some Reserves on board, use a little bit better risk management

procedures, work with other agencies and covering some of those

patrols, we have been able to increase the patrols to a certain state.

But we certainly are not back to where we were before the 11th,

by no stretch of the imagination, and I don’t think we will be there

until we get some more resources. I think the figure was given that

prior to the 11th we spent about 1 percent of our budget on homeland security, and right now we are spending about 50 percent of

our budget on homeland security. I think the Commandant is hoping to move that down to a more realistic figure, about 25 percent.

But as you can imagine, that still represents a 25 percent additional increase in responsibilities that we are going to have to deal

with.

Mr. SOUDER. Are your most critical needs here personnel, and

what equipment needs are your most critical?

Captain HOLMES. At this port, we—at the present time, we are

fairly sustainable. But what we can’t deal with is any kind of a

surge operation. And in the homeland security arena, as you know,

there is any number of surges that will occur as time goes on. Not

too long ago we had some threats or perceived threats against the

bridges in California, and we had to surge operations to add additional coverage for those threats.

So what will happen is those surges now are basically borne on

the backs of our people and our equipment, and what you end up

doing is of course running the people more hours than they should

and the equipment more hours than they should. So our needs are

really across the board. We would need both more people and more

equipment to do the job.

Mr. SOUDER. I met a number of reserve officers in addition to

people talking about overtime. Are you nearly—can you sustain

that, or are you going to have to make some adjustments in those

areas?

Captain HOLMES. We have 70 Reserve officers on board. And I

believe about half of them are Sea Marshals, and we could not do

the mission we are doing without the reserve officers. Any base—

my baseline now really I consider it the people I have plus the 70

reserve officers that are currently on board. That is my new baseline.

34

Mr. SOUDER. Ms. Adams, one of the things I want to make sure,

Congressman Clay Shaw of Florida, who is a friend of mine, has

legislation, along with Senator Graham of Florida and Senator Hollings of South Carolina, on a—it has been moving through the Senate, it is a homeland defense—it is port security legislation.

And so in addition to our committee working on the border reports that we are doing, as pieces of these legislation move through

we wanted to look at unique needs that we might want to be able

to build into this type of law. And some of my questions may relate

to that, some may be more general that we are trying to follow

through in each hearing.

As you can see, I was asking personnel questions as well as

needs questions. But I have an—so a couple of kind of basic questions. First, it is clear, and I am sure we are going to hear in the

later panels, that this port is expanding exponentially. Is Customs—do you have a plan that increases you at 40 percent to meet

the cargo increases?

Ms. ADAMS. Unfortunately, I don’t think we are that far along.

We do know that we have gotten some increased personnel. As you

know, our budget has been relatively stagnant in recent years. We

are adding about—I think it is 640 additional personnel this year,

and that number may be wrong. And I probably have it written

down somewhere. But I apologize for not having that nationwide

at the tip of my fingers. But we can get back to you on that.

There has been exponential growth in both the sea and the air

environment as well as along the land borders in recent years, and

Customs has had to work smarter. We employ the principles of risk

management. We try to focus our activities on those shipments,

those people of specific interest. Clearly in response to the events

of September 11th we would like to increase those efforts. We are

relying very heavily on various types of nonintrusive technology

that we continue to work with.

And every time you get a new piece of equipment it is a little

bit more sophisticated. We learn more about the different capabilities. So to answer your question, our staffing needs have not diminished, shall we say. There are clear staffing needs. There is lots of

demands on the Customs resources. But there is not a manager

within the Customs Service or anywhere else who would tell you

that they don’t need more, want more, couldn’t do better with

more. But we are just trying to work smarter.

Mr. SOUDER. Most places aren’t looking at 40 percent increases

in the demands. Now, yes, more efficient, and looking at how to become more efficient. One thing that I found a little disturbing earlier this morning was that if you—we went through the new x-ray

machines, different variations. But if something is found and they

need to do followup, my understanding, to take it apart it has to

be transported 15 miles.

Ms. ADAMS. That’s correct. We have two container exam sites located at very—two different locations in proximity to the seaport.

But the demand for warehouse space is very, very great. We have

a whole system where we establish these container exam stations.

They are—people bid for this opportunity. The location is certainly

one of the factors that we evaluate. And essentially it is the best

combination of factors: Who can provide the best turnaround time,

35

how long, how many cargo doors do they have? There is an infinite

number of factors.

But to answer your question, that is correct. We do have to take

our cargo and the containers to remote locations.

Mr. SOUDER. So if the little radiation thing, which is a great invention, goes off, and somewhere in this huge container there is

something possibly nuclear, you have got to take it through 15

miles of city and can’t take it apart. I mean, that is an extreme

case. But it argues the illogic of not having something in the port,

both for port security and the people around here do not want to

see if these things are in containers, and that there isn’t a lot of

space. Obviously if there was urgency, you would clear out.

But the truth is, is that when a device goes off, you don’t know

the level of urgency, and it is even dangerous enough if it is heroin

or cocaine or if there were other questionable things inside that

possibly—who knows what kind of weapons cache. You don’t necessarily want those going through cities. That was a rather extraordinary challenge that has to be addressed here. I think the

Federal Government is spending a lot of dollars in this harbor area

and dredging and getting it ready, and one way or another, that

is just too much separation.

In one of the border crossing up in New York, in the Montreal

to New York corridor, there was a concern that when we first spot

something in the truck, they have to go around the corner. And

when they corner it, we can’t quite see them on the machine. Here

they are going 15 miles.

It is a totally different type of challenge than I have seen at most

other places, and I think that is a concern.

One other small thing I just wanted to say for the record, because I hope we can follow this up, too. That is that one of the new

pieces of equipment for scanning was using a direct connection, and

the new machines may need to be looked at. We are working

through this kind of thing, because the computer really needs to be

built into the equipment, and that was clearly expressed as something that we need to look at.

Hopefully that is the type of thing when we look at the homeland

security. Are there any other specifics that you would like to raise

at this point in addition to the general points you have that might

relate to your challenges here at Long Beach and Los Angeles?

Ms. ADAMS. I concur with your concerns over the container exam

site delays and the distances. There is no question that we would

like to have container exam facilities at the docks, ideally at the

premises of every carrier where all of this cargo is off-loaded. As

you saw this morning, however, space is very limited. Space is very

expensive.

Up to this point, we have been somewhat unsuccessful in trying

to locate permanent Customs facilities with some of our x-ray devices on the terminal property. There is I am sure a variety of reasons for that, not the least of which would obviously be their space

limitations and the need for the waterfront space to be occupied by

the container traffic that essentially generates the revenue. So, we

would like to have those kinds of facilities much, much closer.

The remote container exam site was a compromise that we went

to a number of years ago, perhaps in the late 1980’s, when it beVerDate 11-MAY-2000 10:56 May 29, 2003 Jkt 000000 PO 00000 Frm 00039 Fmt 6633 Sfmt 6633 D:\DOCS\84230.TXT HGOVREF1 PsN: HGOVREF1
36

came very clear that we needed to look at more cargo as the

threats were increasing, and we had no place on the docks to do

it, and we therefore moved to the idea of the remote site. Again,

it is not ideal. It is the best we can do right now.

I would like to clarify a couple of things. If there is an exceptionally high risk shipment in terms of anything that would be radioactive or give any indication that it was dangerous, we would immediately take all of the necessary steps working with our partners

at the Coast Guard, the Environmental Protection Agency, the

military perhaps, whoever we needed to call to ensure that cargo,

once it was identified as a danger, was not allowed to go unattended.

When the radiation pagers go off, they do show the degree and

the intensity of the hit. So ideally when most of them go off, they

are relatively low.

Mr. SOUDER. Can I clarify something you said there? You said

you wouldn’t leave it unattended. Does that mean you would escort

it the 15 miles or that you would take it apart at the spot?

Ms. ADAMS. I think it would obviously depend on—we would obviously be talking to the carrier trying to get more accurate manifest information, trying to find out who the importer was, find out

what it was. Is there a reasonable explanation for why there is this

indication on the radiation pager, just as we would if there was any

other sort of alarming anomaly. If, for example, the threat would

be perceived to be there was narcotics built into a false wall or the

nose of the container or something like that, we would escort it to

our exam site or another suitable location as close as possible

where we could actually take the container apart, completely devan it, take all of the boxes out and do whatever we needed to do.

The whole concept of the radioactive material and the nuclear

material, it is very frightening, and we have worked closely with

the other agencies to have plans in place should something like

that occur. But, no, I don’t envision if there was any concept of any

sort of a threat or a danger that it would ever be dragged to the

exam site.

Mr. SOUDER. Thank you. Ms. Millender-McDonald.

Ms. MILLENDER-MCDONALD. Thank you, and good afternoon to

all of you. And I would like to welcome my good friend and colleague from Washington, Mark Souder, in this morning to examine

the port here in Long Beach. And given with the Port of Los Angeles makes up—both make up the largest port system in the United

States, and the third largest in the world. And so these are extremely important ports, not only to the region here, but to the

country and indeed the world.

You have some of the most important and very impressive people

who are before us here. I have had the opportunity to meet with

them on several occasions given September 11th, and know the

plight and the arduous task that they have given not only September 11th, but just the mere fact of seaports and the problems that

it employs.

I am happy to see Captain Holmes here and Ms. Adams, two of

the persons whom I have spoken with on several occasions. I am

concerned about—let me first say, this make the 90th year celebraVerDate 11-MAY-2000 10:56 May 29, 2003 Jkt 000000 PO 00000 Frm 00040 Fmt 6633 Sfmt 6633 D:\DOCS\84230.TXT HGOVREF1 PsN: HGOVREF1
37

tion for the Port of Long Beach. And so we will be certainly doing

things in grand fashion come the exact moment in time.

I do see Larry Keller out in the audience, who is the fine Executive Director to the Port of Los Angeles, as well. But, Mark, what

we have here is a system that carries over 35 percent of our interstate cargo from the Ports of Los Angeles and Long Beach across

this Nation. And certainly after we finished the dredging and the

improvements that we wanted to have done here, it will then become even a larger percentage.

Let me digress for a second to not only welcome you to Long

Beach, the city that I share with our friend Dana Rohrabacher, but

I am sure Dana in his absence welcomes you here, too.

So as we listened to Ms. Adams and this urgent need for us to

revisit this whole notion of the examination of the containers 15

miles away, I would like to perhaps entertain at another time this

conversation. And perhaps when Larry comes up, he might have

some of the same issues that we have.

But indeed I think the Federal Government has to weigh in on

this as well because of the importance of these ports to not only

this region but also to the country, and indeed the world.

We have talked about the ships that are coming into these seaports, both Long Beach and Los Angeles, most of whom are not

American ships, as we know. And so we need to look at clearing

the manifests on ships that are coming into our ports as we do now

for the manifests now that we are going to clear on the—with the

international flights that are coming in.

And so I am happy to have you here today. This is simply a revisionists of what I have been told, and I have come to know about

the ports of both Long Beach and Los Angeles.

And I welcome you and I working together, to make sure that we

continue to have the strength of these ports for the American people, not only in this region but throughout the country. So thank

you for being here this morning, and I will continue to listen, because what they are saying is what I have heard before. And I just

want to reiterate the importance of your being here so that you can

help me as I return back to Washington to tout the critical need

for port security funds.

As Captain Holmes said, they have had to divert a lot of their

resources to take care of what happened on September 11th. They

can’t continue to utilize 50 percent of their budget to do that. And

so we must have the many pieces of legislation that is now coming

forward, in the full House, full Transportation Committee. We need

to look at that and garner the support of those who are not on the

Transportation Committee, but who are in key positions to help us

move this legislation, to give them the funding that they so badly

need to secure our seaports.

Thank you.

Mr. SOUDER. Thank you.

Ms. MILLENDER-MCDONALD. I have a statement for the record,

and I would like to submit that.

Mr. SOUDER. Without objection, we will submit your full statement for the record, and any other materials that you want to put

in.

38

I wanted to ask a couple of questions of Mr. Schiltgen, and I neglected to ask Ms. Adams this question too, because you said directly in your testimony that you had—let me ask you the question

first.

Approximately how many of your people were diverted post-September 11th? And are most of them back at this point?

Ms. ADAMS. We immediately deployed 14 officers from—7 from

the Los Angeles-Long Beach seaport and 7 from the Los Angeles

International Airport to support the Northern border. We have

maintained that commitment to this day.

Mr. SOUDER. So you are down 14 basically?

Ms. ADAMS. As far as the Northern border is concerned, yes.

Mr. SOUDER. You didn’t move any to any other part of the United

States, like to New York or Boston?

Ms. ADAMS. Not necessarily in their capacity as Customs officers

involved in the inspection of people or merchandise. We do have

several officers working at our national office. We have established

a new Office of Border Security. We have two officers there that

are participating in a national targeting program. There has been

several other ongoing groups that have been put together, task

forces to look at ways that we can identify our highest threat work,

highest risk work, and somehow figure out a way to take care of

the rest of it on sort of maintenance mode.

There is a lot of risk management initiatives going on. There is

a lot of looking at ways to measure compliance using a statistically

valid random sample. Again, as I mentioned earlier, we are really

trying to work smarter.

Mr. SOUDER. So you are saying you weren’t overstaffed, you are

trying to work more efficiently, but a lot of that is at maintenance

level, which is not sustainable long term?

Ms. ADAMS. I think that is correct. Certainly we have used a lot

of overtime. We have our officers working very, very hard, very

long hours, and I worry very much about that. It is not sustainable.

I don’t care who the officer is or how good. In hour 15 of your 16-

hour shift your senses aren’t as sharp in they were in hour 1 or

hour 4.

Mr. SOUDER. This is a tough question we have to look at. We are

looking at a deficit this year. We have tremendous needs in Social

Security with more people aging, more people are out of work. That

is going to put more demands on our Medicaid and welfare systems

and support systems, unemployment insurance. So we have all

kinds of pressures on the budget. We are not trying to look at it.

But I have explained to Mr. Ziglar, to Asa Hutchison, Mr. Bonner

to Admiral Lloyd and others, that when you divert resources and

then say you are able to sustain it, it doesn’t make a big compelling

case to Congress about the need for those resources. Now, the fact

is you are also under tremendous pressure not to make a lot of requests to us and to work within the establishment. I understand

that. But that is what we are trying to hear on the balance. And,

yes, we need to all work smarter. We have had to do that in the

social service support systems. We have had to do that in many

parts of government, and all of us have a little bit of leanness.

39

On the other hand, in talking to people in the field, you can see

that they are working overtime, there are pressures on the system,

the Reservists, we are seeing it in the military as well.

In INS, had you had people transferred to the Northern border

from this region as well?

Mr. SCHILTGEN. Since September 11th we have only had two inspectors from our LAX operation that have been temporarily on detail to the Northern border. But what we have done is transferred

an additional 10 from LAX temporarily to the seaport operation

here. Very significantly understaffed here. And as we picked up

part of our operation post-September 11th, I think the fortunate

thing that we have going for us, as you may know, the user fee account placed for the first time a fee on passenger ships, on cruise

ships, which will provide additional dollars to our agency.

And that in combination with the fiscal year 2002 budget, we are

seeing additional inspections resources coming into our agency. I

don’t know at this time how many of those will be coming to Los

Angeles or the seaport. Certainly there is a focus after September

11th on the Northern border, an understanding that we have

vulnerabilities or we have certain concerns about areas of illegal

entry into the United States that haven’t necessarily been the focus

of previously.

But to some extent there is a bit of hope for us for additional resources in the near future.

Mr. SOUDER. Have you lost any staff to Sky Marshals, to other

services? Have you been able to maintain fully staffed and fill the

potential new slots?

Mr. SCHILTGEN. Yes. We have been able to keep 100 percent of

our inspectional staff here in Los Angeles. We have had a very aggressive hiring program over the last couple of years. I think unlike

other agencies we have been growing. Our budget has been increasing and we have had a very aggressive hiring situation going on.

We have lost a few folks to the Sky Marshals, not to the number

that the Border Patrol has. I know that they have lost a lot of people or are in the process of losing people, but we have lost only one

or two.

Mr. SOUDER. In the check—in the background checks like the

people on the cruise of the—the ships, and so on, let me ask you

two questions related to that. One is, are there any particular

things that we should be looking at in Congress as far as information, and do you have any stumbling blocks on information sharing?

And the second—well, let me ask that one first. Clearly things

have improved nationwide since September 11th. Where are your

greatest difficulties?

Mr. SCHILTGEN. I think the thing of maybe greatest concern is

to make sure that we get the advanced passenger lists on all incoming vessels. We are to the point now where we have for a few

years now received that on many of the incoming air flights into

the United States. We are getting from the Coast Guard copies of

lists of individuals, and we are doing our data base checks prior to

the individuals coming in. I don’t believe at this time, however,

that under at least INS regulations that advance—or Customs—

40

that advance passenger information is required for ships. I think

that is going to be critical as we——

Mr. SOUDER. That counts crew when you are saying passenger?

Mr. SCHILTGEN. Yes.

Mr. SOUDER. It was clear when we boarded this morning that

down in the engine room that none of the people spoke English and

none of them spoke Spanish. Do you have programs for language

diversity and the challenges, whether it is Sea Marshals, INS? One

of the things that we have seen in Los Angeles is a huge melting

pot of multiple Asian languages. How are you going to handle this

long term, in addition to the whole question of the Middle Eastern

languages?

Mr. SCHILTGEN. Well, first of all, we provide Spanish training to

all of the immigration officers, and we have since I can remember.

We recruit both for our inspection personnel and our special

agents, investigatory personnel, from individuals who speak a wide

variety of languages. However, as you know, there is no way one

or two inspectors are going to go on any ship and have language

capabilities. We utilize the resources on each of those vessels for

translation when we need to, and I have to say that I think that

we have got very astute officers who at whatever point in the process make determinations of the validity of information, the fairness

of the translations that are going on on the ships and interviews

with the crew. And if, in fact, we have concerns, an officer has concerns, then we have the opportunity to bring in our own translators.

Mr. SOUDER. If I could ask each of the panelists, and if you want

to add anything else, I will yield to Ms. Millender-McDonald, if you

want to add anything else that I missed in the questioning. But I

focused on this language question, in particular with Middle Eastern languages, as we look at the terrorist questions. But here you

are dealing with all sorts. Because it came up on the Quebec border

that we didn’t have anyone who was certified to speak French, we

focus so much on Spanish, legitimately because of the south border.

But one of the gentlemen told me something very interesting,

and I wonder whether more of each people in your agencies would

respond if we made this adjustment. He was born in Quebec, spoke

French as his first language, English as his second, but couldn’t

pass the State Department test because what they expect you to

do is have a formal—be willing—you know, it is a different standard than you would need to have to talk to somebody in an engine

room.

Yet, to get the bonus pay, what a number of people have told me

is to get those grade level pay increases by taking the language

courses, it requires so much intense study, immersion, that it is

just not worth the time diversion when you have a family. Have

you heard of and do you think people would respond if at certain

times, like now, on Middle Eastern languages, we had kind of

somewhere in between colloquial here of basic words, such as anthrax, you know, point of origin, where are you from, there is some

of that type of thing? But some kind of range between there and

being able to be Deputy Ambassador to Saudi Arabia.

41

Mr. SCHILTGEN. I guess I will start out. I think there is certainly

a need for additional language assistance for the INS, and I would

think for all of the agencies.

We have on our—either by contract or on staff, interpreters, language specialists that we hire at a lower graded position, that is

their job.

Certainly individuals as we go through and we are addressing

the issues of terrorism, issues of smuggling, putting together criminal cases, we need to have interpreters that we can trust. Our interpreters go through background investigations just like INS employees.

I think with regard to the language training for the officers, certainly any training is beneficial. But I would have to think that either native or proficiency in a language is really critical when you

are talking about some of the issues that we get into. And having

a working language or working capability like maybe I do in

French and Thai, sometimes it gets me in more trouble than it

aids.

So clearly we have a significant need.

Mr. SOUDER. Comment from the Captain or Ms. Adams?

Ms. ADAMS. I think there is no question that language capability

is very, very important, and it would again be a perfect world if

we had officers that were multilingual, that spoke a variety of languages. Customs does have a program where we pay a bonus to

employees, and I believe it is 10 percent, but I am not sure, who

have a level of proficiency in a particular foreign language, and

who use it more than 10 percent of the time in their work environment, and that has to be certified.

Your discussion is the first I have ever heard about the testing

being too difficult and that people don’t——

Mr. SOUDER. I heard it from Customs agents in the field at a

couple of borders.

Ms. ADAMS. It is the first time I have ever heard of it. I have

certainly spent a lot of my career on the Southern border, a lot

here, and I have never heard that. I do know that the demand for

Farsi and some of the different dialects in the Asian languages has

been very, very pronounced as in terms of we see announcements

coming out on a regular basis. Do we have anybody who speaks

this particular dialect or speaks Mandarin Chinese or whatever

language they need. And it is—frequently we do those canvasses on

a national level.

But I wanted to pick up on something that Mr. Schiltgen just

said. We work very, very hard to ensure that we have a diverse

work force. By having a diverse work force, they do bring those

basic language skills, if not the ability to communicate perfectly in

writing or have the best grammar, at least they have some skills

that enable them to survive in their communities. So I just—I happen to have a chart that talks about the work force diversity of our

South Pacific Customs Management Center area, which includes

the Los Angeles-Long Beach seaport as well as the Los Angeles

International Airport. Essentially 19 percent of our employees are

of Hispanic origin, and another 14 percent of Asian and Pacific Islander. We try very, very hard to ensure that we have the demoVerDate 11-MAY-2000 10:56 May 29, 2003 Jkt 000000 PO 00000 Frm 00045 Fmt 6633 Sfmt 6633 D:\DOCS\84230.TXT HGOVREF1 PsN: HGOVREF1
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graphics of our organization resemble the demographics of the community at large, and that has served us well.

Similarly to the experience that INS has, though, we rely very

heavily on interpreters perhaps from the airlines, from the steamship companies, if we have to get someone from the State Department or from a consulate perhaps. We don’t stop because we can’t

speak the language. Unfortunately, that person or that cargo would

have to be delayed until we could get the appropriate information.

Ms. MILLENDER-MCDONALD. Ms. Adams, what percentage of

Latinos do you have in the U.S. Customs?

Ms. ADAMS. I don’t have Customs-wide figures. I am sure that

our people——

Ms. MILLENDER-MCDONALD. You just mentioned a percentage of

Latinos, I think.

Ms. ADAMS. Here in our area, it would be Los Angeles Seaport

and Los Angeles International Airport, 19 percent of our work force

is Hispanic.

Ms. MILLENDER-MCDONALD. And of that 19 percent, do they

come fully skilled for the work to be done given the multilanguage

expertise that they have?

Ms. ADAMS. Oh, no. This is just the demographics of our work

force. If they bring the language expertise to the job, so much the

better, and they are compensated for it if they work 10 percent of

their time at work in that language.

Ms. MILLENDER-MCDONALD. But do you utilize some of that 19

percent to train for any security measures that you might need?

Ms. ADAMS. Not specifically. It wouldn’t be limited to those 19

percent that are of Hispanic origin. We may have outstanding

Spanish speakers or French speakers or people with other language

skills that are Anglo or have other backgrounds. My point in raising the diversity issue is it is just one way that we are able to help

ourselves in terms of for——

Ms. MILLENDER-MCDONALD. Well, it is good business too, of

course.

Ms. ADAMS. It helps us interact effectively with the people that

we interact with in the committee.

Ms. MILLENDER-MCDONALD. That’s correct. I hope I pronounced

your name correctly, sir, Mr. Schiltgen.

Sir, given that when I was here right after the September 11th,

I was gathering information and data on the type of cargo that

comes into this seaport and both seaports, Long Beach and Los Angeles, and I was told that there is a lot of human cargo that comes

in here. What percentage of illegal immigrants comes through the

seaports? Can you give me that?

Mr. SCHILTGEN. Well, I really cannot give you any real hard and

fast information on that, partially because to some extent we don’t

know. Over the last 2 years, we have, I believe, had 18—I believe

it is 18 containers where we have found—here in this area where

we have found that were used for human smuggling.

And each of those is—I am sure you very well know—are just

horrific conditions inside of those containers after people have been

on very long voyages. But, again, given the volume of the containers coming in here, I don’t know that we have got a good indication

of really what the volume is.

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Ms. MILLENDER-MCDONALD. Is that something that we should be

looking at? And perhaps if not, why not?

Mr. SCHILTGEN. Well, it is something that we look at on a daily

basis. We have got a portion of our seaport unit here that is focused on gathering intelligence and targeting containers for human

smuggling. And, again, I think where we need to continue on with

this is the interagency coordination and the development and the

analysis of intelligence to try to determine which of those millions

and millions of containers are coming in potentially carry human

cargo.

And, again the stakes are different with regard to human cargo.

And I think it is something that we need to be very sensitive to.

Ms. MILLENDER-MCDONALD. I must say, and I would like to get

with you, to perhaps see how we can best—I serve too on the

Homeland Security Task Force, and we need to see how we can

best integrate all of this intelligence so that you can be better

equipped, if you will, to try to get those persons who are smuggling

others and those who are coming in in those containers to get them

and arrest them.

We also need to look at what nationalities they are, because I am

told that they are coming from far away, and to be able to sustain

themselves inside of a container is a question in and of itself.

Mr. SCHILTGEN. It is a remarkable process. If one should see the

containers and the kind of the aftermath when individuals arrive

here, somewhat primitive, somewhat sophisticated methods to keep

the people alive through the very long process: The air ventilation,

the water and the food systems that they have, batteries in the

containers to run fans to circulate air, the waste material. You

know, you can hardly stand close to one of those containers because

of the stench after we find individuals in those containers.

Just a horrific means by which, you know, the smuggling organizations, and the majority of the individuals that we see coming in

here are Chinese, but just horrific conditions that those criminal

organizations are benefiting by human cargo.

Ms. MILLENDER-MCDONALD. Absolutely. My question again to

you, sir, is does the INS use your INSPASS card system at the port

here, and if not, why not?

Mr. SCHILTGEN. We don’t use it here at the port. To the best of

my knowledge, we do have one at LAX at the airport, and we use

it quite extensively. I haven’t heard of a use at the seaport of the

INSPASS process. I don’t know that I can answer why.

Ms. MILLENDER-MCDONALD. Would it not be at this heightened

security environment that we find ourselves in, would this not be

an appropriate time to revisit that?

Mr. SCHILTGEN. It may. I am thinking back at the implementation of INSPASS, and the fact that it was directed toward frequent

business—primarily business travelers, frequent travelers into the

United States. I would have to give some thought as to the frequency of which individuals return to the United States through

the seaport here. I know that we have crews that come back on a

regular basis, but I don’t know that the volume of individuals traveling would be sufficient to warrant the use of INSPASS here. It

may be, but it is certainly something that we can look at.

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Ms. MILLENDER-MCDONALD. Captain Holmes, during your time—

both you and Ms. Adams can answer this. Given the heightened security awareness that you are now and we are all in, and even the

pronouncements of the Secretary of Defense Rumsfeld on yesterday

saying that we must continue to keep this, and actually California

is a very high target State, what is the impact when you have a

diversion of your attention taken from your regular duties to perform duties at the border or whatever? Are we prepared to intercept any terrorist attempts given the position that I have now demonstrated that you might be in?

You might be doing something—your diversion, as you said to me

once when I spoke with you, that sometimes you have to take—you

have go up to the Northern border to try to protect that region

given the heightened security that we are now trying to seek in the

ports.

While you are one way or the other, do we have enough personnel in the event that interception of a terrorist right in the middle

of the ports here? Do we have enough personnel to combat that?

Captain HOLMES. Yes, I would say that we do. What would suffer, as I said earlier, would be the other mission areas. I mean, we

would—if we had to protect several areas at once, which we are

doing right now, what happens is those resources are solely functioning as homeland security resources, and they don’t do law enforcement patrols and some of the other things that we do.

Ms. MILLENDER-MCDONALD. Drug trafficking and those types of

things, you will not be able to do some of that because you are having to go to try to protect the terrorists?

Captain HOLMES. That has been the case since the 11th. Our

mission areas have shifted, and homeland security went from a No.

5 on the scale to No. 2, right behind search and rescue. So we have

never been in a situation where we don’t respond to oil spills or

chemical spills, but there are a lot of other missions that the Coast

Guard does, which is working with the fisherman, working with

the State Fish and Game, anti-drug patrols down in the San Diego

area, which we have had to curtail to put the resources up here in

L.A. Harbor, Port Hueneme, which we also cover, and then we also

cover near Morro Bay as well, the El Diablo area.

Ms. MILLENDER-MCDONALD. This is why in the committee I kept

stressing the need for personnel enhancement and increased personnel at these ports, because of the diversion that especially you

have had to do and the U.S. Customs, and yet we are so threatened

right here that we need more personnel.

Ms. Adams, did you want to comment on that?

Ms. ADAMS. Certainly. We know that in our recent allocation of

personnel for fiscal year 2002, a large number of those allocated officers will go to the Northern border. And we are hoping that when

they complete their training at Federal Law Enforcement Training

Center in Glynco, Georgia, and go through their on-the-job training

that we will be able to return our 14 officers back to our area.

The second highest area of priority, though, in terms of additional staffing, we understand, after the Northern border we understand will be the Nation’s seaports.

And we are certainly looking forward to having the availability

of additional personnel.

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Ms. MILLENDER-MCDONALD. Thank you.

Mr. SOUDER. Well, I want to thank each of you for participating

in our hearing. If you could also convey again our thanks to your

personnel that basically have been working overtime and at high

stress levels, I personally do not think, nor does our leadership or

our President think this is going to end shortly. They have been

coming at us about every 6 months for 5 years on bases overseas.

They have now had success on our domestic soil and are likely to

continue to do so. And we have to become smarter and better and

stay ahead rather than behind.

We thank you for your work and thank your people for their

work, and thank you for testifying today.

Ms. MILLENDER-MCDONALD. I would like to add to that, too.

Thank you all for what you are doing to make this region and seaports more secure with your limited resources. Thanks.

Mr. SOUDER. If the second panel could now come forward. Mr.

Richard Steinke, Mr. Larry Keller, and Mr. Guy Fox.

If you could remain standing, I will do the oath.

[Witnesses sworn.]

Mr. SOUDER. Let the record show that the witnesses have each

answered in the affirmative.

Mr. Steinke, you are recognized for 5 minutes.

STATEMENTS OF RICHARD D. STEINKE, EXECUTIVE DIRECTOR, THE PORT OF LONG BEACH; LARRY KELLER, EXECUTIVE DIRECTOR, THE PORT OF LOS ANGELES; AND GUY FOX,

CHAIRMAN OF THE BOARD, GLOBAL TRANSPORTATION

SERVICE

Mr. STEINKE. Mr. Chairman, Member Millender-McDonald,

thank you for this opportunity to address you on port security, one

of the most important issues of the day.

Security has always been a paramount concern to the Port of

Long Beach. Prior to the events of September 11, 2001, our focus

was primarily crime prevention with an emphasis on cargo theft.

Following the tragic terrorist attacks on the World Trade Center

and the Pentagon, the focus of our efforts to protect the port and

facilitate commerce and travel has been broadened to include prevention and response to acts of terrorism.

Long before the events of September 11th we realized the need

for maintaining the highest levels of security possible in the port.

To that end the Port of Long Beach has proactively developed a

port security plan to create and maintain a level of security that

might serve as a model for the maritime industry.

Over the last decade, the Port of Long Beach created a Port

Crime and Security Committee, made up of industry stakeholders,

terminal operators, Federal, State and local law enforcement agency representatives, terminal security officials. And we meet on an

ongoing basis to discuss issues related to crime, safety and security.

These meetings shape the infrastructure and open lines of communications among industry and law enforcement responsible for

the safety of the people who work in the ports and the security of

the cargo that moves through it.

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Since September 11th, we have been operating at a heightened

security level, as has been mentioned before by other people who

have testified. We have increased the number of committees and

task forces to address the greater needs and the new charge for

greater protection of our port.

Greater security is not limited simply to the movement of cargo

through the port. Every capital project that we undertake now has

a new element built into it. Our plans for a new bridge or a pier,

widening of a channel, erecting a crane all must now include considerations for security enhancements.

We have recently completed a detailed security assessment of our

waterfront facilities with the Long Beach Police Department and

the U.S. Coast Guard and expect that the assessment will suggest

further improvements and upgrades. Those refinements will require funding not heretofore anticipated.

Basically what I am saying is that the new demands for security

will require new sources of funds. Funding considerations also

should be given to supplement the manpower needs of the participating Federal and local law enforcement agencies. We especially

would like to emphasize our support for increased funding for the

U.S. Coast Guard and the Customs Service.

Approximately 35 percent of all waterborne cargo that comes into

the United States comes through this port complex. So the workload of these two agencies is many times above the level expected

of them in other ports throughout the country, once again an expense to be reviewed in reconsidering the status of our efforts to

prevent and suppress acts of terrorism against shipping and to improve maritime security.

It is my honor to serve as chairman of the American Association

of Port Authorities this year, and we are on record in full support

of greater security at all ports. Because each port has unique characteristics, however, control for security should be determined and

maintained by the captain of the individual ports.

The Association is aware of the funding challenges of any new

legislation, but stresses that grant funds need to be adequate to

allow for mandated security enhancements. According to the Report

on Crime and Security in U.S. Seaports, the estimated cost of security for a model port, of which I would think the Port of Los Angeles and Long Beach are, ranges anywhere between 10 million to 38

million per port. That would include physical security, cargo-crew

security, military mobilization, and contraband detection.

Military load-out capabilities in port is a key to our national security, and must be kept in the forefront in any security decision.

There are a number of other initiatives that could be examined in

a review of seaport security issues as they relate to international

maritime traffic into and out of the Port of Long Beach. Automatic

identification systems that provide a ship’s identity, position,

course and speed; seafarer identification and background check;

port of origin container examinations, a means of ship alerting may

be items that reach beyond the scope of this committee.

I would be remiss if I did not make special note of the exemplary

job done by the Coast Guard and U.S. Customs following the tragic

events of September 11th. They deserve recognition for taking the

lead in exerting positive control over the port at a time when conVerDate 11-MAY-2000 10:56 May 29, 2003 Jkt 000000 PO 00000 Frm 00050 Fmt 6633 Sfmt 6633 D:\DOCS\84230.TXT HGOVREF1 PsN: HGOVREF1
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fidence and assurance were needed. The Coast Guard and Customs

continue to play an instrumental role in our efforts to keep our people and the Port of Long Beach safe.

In closing, I thank you, Mr. Chairman, and all of the members

of the subcommittee for your interest and concern in seaport security issues and for choosing the Port of Long Beach to hold this

hearing. Thank you.

[The prepared statement of Mr. Steinke follows:]

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Mr. SOUDER. Thank you very much.

Mr. Keller.

Mr. KELLER. Thank you, Mr. Chairman, Congresswoman

Millender-McDonald, ladies and gentlemen.

Thank you for the opportunity to discuss the Port of Los Angeles

and the subject of seaport security, as it relates to international

maritime trafficking into and out of the San Pedro Bay ports of

entry. This hearing’s goal is extremely important to improve security, facilitate commerce and travel between the United States and

other foreign countries of paramount importance to our port.

The Port of Los Angeles is a remarkable story. In 1984, after the

main channel was deepened, the Port of Los Angeles was ranked

8th in the Nation. With the help and cooperation and partnership

of our customers, the Port of Los Angeles today in an environmentally responsible way handles more than 5 million containers

in a year while creating hundreds of thousands of jobs.

Last year’s total of more than 5 million TEUs marked a national

record. This growth has been particularly important because the

rest of the Nation and the State of California experienced a dramatic economic downturn several times during that developing period.

We are in the midst of an incredible construction activity as we

prepare for the challenges and opportunities of the future. The Alameda Corridor will open in April; the first phase of an almost 500-

acre terminal for America Sealand. As has been said before, 35 percent of the U.S. ocean commerce is moved through the two ports.

However, the events of September 11, 2001 have shifted our

focus from efficiency to security, while at the same time continuing

in the throughput, which is important to our Nation’s economy. Led

by the Coast Guard and our Port Police force, our response was immediate as we teamed with various law enforcement agencies, as

well as the INS, U.S. Customs and other Federal agencies to safeguard cargo, people, and property.

Our national crisis has mandated security precautions and permanent changes in how we do our business. This is a new day with

enhanced security standards for our maritime community. We have

experienced only slight delays caused by understandable security

measures, but commerce has continued unabated. As Dick said, we

can’t thank our Federal agencies, particularly the Coast Guard,

INS and U.S. Customs enough for their assistance in making this

thing happen.

Since September 11th, the Port of Los Angeles has had in place

12-hour shifts for our Port Police with two patrol vessels on duty

at any given time, increased fixed port security at the cruise passenger terminal, the addition of two explosives trained canine dogs,

increased liaison with the Federal, State and local law enforcement

officials, regular dive inspections of the passenger terminal and

other sensitive areas of the port, establishment of the Joint Port

Police, U.S. Coast Guard, Sea Marshal Program to board incoming

and outgoing vessels, increased inspections of truck traffic, placement of security barriers around the perimeter of our Harbor Administration Building, with increased security offered to the port

offices and support to various legislative, industrial and neighborhood communities on port security matters.

51

I have provided you with an assessment of the costs related to

additional Port Police, operations and equipment. The city of Los

Angeles Major James Hahn has taken the lead in establishing a

Port Security Task Force to look at the San Pedro Bay Port and

evaluate new challenges and opportunities for providing much

more secure ports. In our open society the challenge is to provide

security yet effectively facilitate commerce and travel.

Our future security needs call for increased cooperation and support from Federal, State and local governmental bodies and agencies. Mayor Hahn’s Port Security Task Force is looking into how we

can more closely monitor who and what enters our country through

its seaports. Securing our borders and our seaports is vital to the

protection of the United States.

Some other areas of port security we would like to put in place

include a portwide identification system to control access and positively identify users of the port, increased Port Police personnel

and equipment to adequately deploy and maintain increased operation security and policing functions, development of systems and

legislation to support the sharing of the passenger information, development of data bases and legislation to support acquisition and

analysis of information about persons and products arriving by sea,

development of improved public relations programs to communicate

credible terrorist threat information to the public and to dispel unsubstantiated rumors, development of new technologies to adequately inspect more shipping containers, funding for improved

audio and video surveillance and monitoring systems, creation of a

secure Internet Web site for law enforcement agencies to act as a

terrorism warning clearing house, and establishing a data base and

central repository for intelligence that is currently being collected

by several separate Federal and State agencies.

Because of all of those factors and the new vulnerability, it is imperative that we must concentrate on maintaining and enhancing

security awareness of our maritime environment. We also strive to

encourage a more open information sharing base among local, State

and Federal law enforcement agencies in order to be better prepared, to fight the new terrorism.

Thank you very much.

[The prepared statement of Mr. Keller follows:]

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Mr. SOUDER. Thank you.

Mr. Fox.

Mr. FOX. Thank you, Mr. Souder and Representative McDonald,

ladies and gentlemen. I am honored to have been invited to testify

here at your investigative hearing concerning the seaport border

issues as it relates to maritime logistics that is being held at the

Port of Long Beach on behalf of the international business community in southern California.

Global Transportation Services, Inc. and Global Container is a

company that is involved in international transportation, both by

sea freight and air freight. We are also licensed customshouse brokers as well as licensed international freightholders. We act on behalf of commercial companies to move cargo from door to door to

and from any point in the world.

Security has always been an issue in the movement of international freight due to pilferage, and lately due to stowaways of

human beings in containers. Our company has always taken a firm

stand on the security of all cargo for our customers.

However, we fully understand that under today’s circumstances

this is not business as usual. It is virtually impossible to inspect

each and every container that moves in international trade. If that

would happen, international commerce would face severe injury

with delays in the supply chain.

Global handles shipments from door to door, including placing

containers at the vendor’s door in China for loading, picking up the

container, processing the export documentation, loading on the vessel, and shipping to the United States where we perform the Customs clearance and the delivery to the customer’s door.

In doing this, we have agent partnerships throughout Asia with

individuals and firms that we have known and have had experience

with over the past several years. These are reputable firms that

are fully licensed and committed to the highest quality performance and ethical practices.

Global receives a purchase order from our customers. This information is sent electronically to our agents for arranging shipment.

They will call the factory; that is, the shipper, to coordinate the

movement. If this is an unknown factory and has not had any shipping experience, they will visit this factory to make sure that everything is in order and to make sure that they are a legitimate

supplier for commercial goods. If everything checks out, then shipping will be arranged.

When a container is placed at the factory for loading, the loading

is supervised by the management of the factory. As the container

is loaded, the container is sealed with a specific container seal with

a unique number on that seal. The number of the seal is placed on

the bill of lading that is used in the movement of the container.

Our partners are always on the lookout for any anomalies that may

exist. If and when those anomalies do occur, the authorities would

be notified immediately to check them out.

You also have to understand that our partners are knowledgeable people and thoroughly understand the process, and anything

out of the ordinary would be readily identified. Anything that does

not look right is investigated.

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Global also has the other scenario of consolidating containers,

which is freight that is less than a container load from various suppliers to various consignees in the United States. We again deal

with known suppliers, and I have to emphasize that, known suppliers, factories and known consignees in the United States.

Less than container loads are picked up from the factory and

transported by truck to a container freight station where the goods

are received and checked in. If the goods are from a factory that

is not known, then our partners will visit the factory to make sure

that they are a legitimate supplier. They again will look for any

anomalies and report such anomalies to the authorities for investigation. They do not take any chances.

The LCL cargo is then loaded into a consolidated container

where a load plan of cargo is made. Each LCL cargo is given a subbill of lading number and is manifested on a cargo manifest that

will go forward with a master bill of lading and the export documentation to the Global office in the United States.

When those documents are received, they are immediately processed the same day, and our people also look for any anomalies.

The documents are broken down by LCL shipment and each consignee is notified of the arrival of these goods, and a copy of the

shipping manifest is given to U.S. Customs for their review. Manifests will have the name of the consignee, a full description of the

cargo, weight, size, name of the shipper, and port of origin. We do

this as a matter of course.

There are some consolidators that do not follow this practice, and

it is usually the Asian-based consolidators who do not understand

our laws and regulations, yet we license them to do business in the

United States and we do not have the same privilege in their country.

In cases such as these, security can be compromised as they will

take freight from any shipper to any consignee in the United

States. I only bring this up as it is not a level playing field for

consolidators that are an American-based firm.

When the goods arrive in the United States, the consolidated

container is moved to a CFS, which is the container freight station,

and the CFS is a Customs-bonded warehouse. So the goods are

under Customs custody until they have been cleared for delivery to

the consignee. This is another opportunity to look for anomalies.

Due to the security steps we have taken, we have not run into any

anomalies, but we are ever vigilant for such anomalies if they exist.

If any are discovered or if there is implicit feeling about any shipment, we would immediately notify the authorities.

If the proper procedures are followed, this will minimize the possibility of any breaches in security. Nothing is perfect, and a certain amount of risk has to be taken in order to move cargo to keep

trade goods flowing. Due to Customs procedures, Global is able to

pre-file Customs entries 5 days prior to the arrival. All information

concerning any given shipment is given to Customs. We understand that they have the resources of checking out the shippers,

consignees and the cargo itself.

We make sure they have all of the information in order to process the Customs clearance. This also gives Customs a chance to review everything and anything that has to do with any individual

60

shipment. Security will perhaps become tighter and importers will

still want to and need to use the just-in-time concept. However, we

will see importers while still using JIT will also use a just-in-case

concept.

Importers will start warehousing more goods to have on hand,

which will increase the cost of goods and will ultimately be passed

on to consumers. Importers refer to this as an operational buffer.

Security in today’s environment is based on the knowledge of

who you are dealing with and the faith that you have in the factory

or individuals. Reputation of ethical practice also plays a large part

and a role in this process. Due diligence on the part of the importer

in the United States is absolutely necessary to be able to spot any

inconsistencies that may exist.

In southern California the international business community is

working together very closely. This includes all of the international

trade associations, the U.S. Coast Guard, U.S. Customs, Immigration, the Marine Exchange, the Vessel Tracking System, and many

of us are or have been officers at the International Trade Association and are on the cutting edge of what is going on in our ports.

We also have the opportunity to participate in getting the word out

on security measures, and I would like to compliment Captain John

Holmes of the U.S. Coast Guard, the Marine Exchange and Vessel

Tracking System, and also Larry Keller and Dick Steinke of the

Ports of Los Angeles and Long Beach.

I hope this report will give you some insight on the process, because I think it is very important in understanding where security

measures must take place. If you understand the process, then we

know where to focus.

But we need to make sure that security is absolute as much as

it can be. If you have any further information you require or if

there is any questions that I may answer, I will be available to do

so.

Thank you.

[The prepared statement of Mr. Fox follows:]

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Mr. SOUDER. Thank you, Mr. Fox. On the licensing question that

you mentioned, some of the Asian-based consolidators, is that a license that goes through Customs, through the Commerce Department, through Transportation? Who issues the license?

Mr. FOX. There are licenses to become a Customs broker. There

are also licenses to become an FMC, which is a Federal Maritime

Commission. And we issue these licenses to foreign companies.

They may have a U.S. citizen that is the qualifying party. But then

in many cases those individuals don’t have much of a say.

Mr. SOUDER. Mr. Steinke or Mr. Keller, are you familiar with

what he was raising there, and is that a—how much of a problem

is this that we may have different standards on overseas shippers

compared to American shippers?

Mr. KELLER. Frankly, Mr. Chairman, this isn’t an issue that

rises to our level. This is something that Mr. Fox can address. I

am not even sure that is——

Mr. STEINKE. I would agree.

Mr. SOUDER. I wanted to say, too, Mr. Fox, I appreciated your

comment about the just-in-case concept. I think that reflects what

is happening across the board in the business community, not just

in shipping, but in trucking and airport type of things. Businessmen are going to make an adjustment. There are hidden costs as

well as overt costs to the American people of security.

I don’t think that changes their attitude that they want more security. But I don’t think there has been quite a realistic risk assessment, cost assessment in the public mind. But in fact it is

going on, and it is important that we get out in front of us so that

we can really do wise risk assessment, what the real costs are. And

I appreciate that concept, because in fact there are going to be

slowdowns here and there. And that means that if your whole factory is going to shut down, or your store is not going to have things

on the shelf if it got slowed down at a given point for whatever reason, you have to have some sort of an emergency thing.

I have an MBA, and just-in-time inventory—I am old, that was

kind of new coming in then, the critical path method and all of that

kind of stuff. There is going to be those adjustments, and those

margins are tight. So I appreciate that. That is the first time I ever

heard a kind of public record acknowledgment of that, but it is a

very logical change that is likely to occur. And obviously we are all

trying to keep that down as a percentage.

That, I think the next panel, I am going to focus a little more

on the manifest question, on the goods. But could Mr. Fox—I am

not sure whether the two port directors may have a comment on

this too. You heard us raise it at the beginning. One is a people

manifest for INS checking and for security, whether it be crew or

a cruise ship passengers, but there are difficulties that I saw today,

in just the few cases that I saw of manifests with specific goods

being mentioned by item to be matched up. We require that in the

trucking area. I have seen it on multiple borders. They match up

item by item. And anything that looks like an anomaly is caught.

But if the manifest is too general, then what you have is a much

longer, much more expensive to the taxpayer, which means that we

are either paying more to process it, which means the American

taxpayer is paying for it, or it means that fewer points are being

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checked, or the backlog goes up, all of which are expenses that are

borne by different parts of the public.

Do you see that as a problem in your business and the people

you work with as being able to provide detailed manifests? I would

assume that, for example, I grew up in the furniture business. We

didn’t want a truck coming in that says you got a bunch of bedroom

furniture coming in. We wanted to know how much dressers, how

many chests, how many three-drawer chests and how many fivedrawer chests so we could match up—as a kid, I helped unload the

trucks. It was a family business. My dad said learn every part.

Clean the restrooms, unload the truck, ride the service truck, do

every part of it. Then we had to check off when we got each twodrawer chest and each three-drawer chest.

Why are we having a problem with that here?

Mr. FOX. I think it all starts at the point of origin. You have to

have complete descriptions of the cargo that you are shipping. We

make sure that we have complete descriptions on the bills of lading. We need to have that on the manifests, because when we are

submitting those manifests to Customs, they have to have complete

descriptions. If there is anything out of the ordinary, they are going

to spot it and designate those shipments for examination.

While there might not be anything wrong with that shipment, if

there is not a proper explanation, they are going to pull it aside

to examine it, because something isn’t right there. So it is up to

our people on the other end to make sure that we have complete

descriptions.

Further, you know, when you are talking about description of

goods and having to do a lot of extra work, we receive a lot of inbound cargo here in the Port of Los Angeles, sent inbound to inland

points. And I think if you have just more of an editorial description

on those cargos, and I think there is a bill before Congress now to

put harmonized tariff numbers against those, that would just

cause—it is really of no use. If you have a verbal description of

that, you have got a ship’s manifest, you certainly don’t need to go

to all of the trouble and expense to put those harmonized tariff

numbers on a Customs inbound form.

And I think it is up to again the people that are handling the

door-to-door shipping to see—when we take responsibility, we take

responsibility from the supplier’s door, including the transportation, the Customs clearance, and delivery to the customer’s door,

whether it be here or in Chicago or Minneapolis, or what have you.

So these are just some of the things that—this is why I say, if

you understand the process of shipping and the supply chain, then

you can understand the areas to focus on as far as security is concerned.

Ms. MILLENDER-MCDONALD. Mr. Fox, this is a concern that I

have always had. When the containers are loaded at the point of

origin, that doesn’t mean that you will not have others being

boarded at different intervals before it gets to this seaport; am I

correct on that or once it is boarded at the point of origin, nothing

else is disturbed, either on or off before it gets to the Ports of Los

Angeles and Long Beach?

Mr. FOX. When it is loaded at the supplier’s door, then it is

trucked to the port that—it is accepted and received there under

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a bill of lading number. It is on book that they know what they are

receiving. The seal is put on the container at the factory. If any of

those seals are busted or what have you, they won’t put those containers on board. So nobody else is touching that.

Ms. MILLENDER-MCDONALD. No one else is touching it, nor—will

there be any more cargo put on that ship at any other point outside

of the initial point of origin?

Mr. FOX. If it is a feeder vessel, say going from China to Hong

Kong, then it would be off-loaded there and put on a mother ship

coming to the United States.

Ms. MILLENDER-MCDONALD. I suppose this is a concern that we

have as to how much security is given to those various points?

Mr. FOX. Well, that again is—the seaport security of those particular countries, you know, like here in the United States, when

you have a shipment that is the transient, it is in bond, so it remains within the custodial area. It is not moved. And then when

it goes on rail, it is going on the carrier’s bond. They accept full

responsibility for it.

Ms. MILLENDER-MCDONALD. Thank you. Well, yes, thank you,

Mr. Chairman.

Richard, you spoke of these new devices. I tell you, they are just

great.

You spoke of the fact in your statement that because of the

heightened security now, it is a possibility you might have to do

new bridges or piers, widening of a channel, erecting cranes. Did

I hear you correctly in saying that these will be added types of—

increased types of things you will have to do to secure the region,

or would these be things that you would just ordinarily do in the

improvement of the port?

Mr. STEINKE. Congresswoman, my statement was that as we are

doing improvements to the infrastructure here at the Port of Long

Beach, and I am sure at the Port of Los Angeles too, security has

taken on a whole other meaning with respect to contracting and

the construction contracts that we let.

Contractors are being informed about security measures, you

know, having a better sense of what they are doing, looking for unauthorized vehicles that might be coming to the work site, those

types of things, which was not of paramount importance in previous years.

So we have broadened our net with respect to security concerns,

not only as far as cargo goes, but also the other work that takes

place on a day-to-day basis here in this harbor complex.

Ms. MILLENDER-MCDONALD. Given all of those scenarios that you

are talking about and the increase given the improvement as well

as the heightened security, and your having to inform the many entities that are directly involved in that, be it the contractors or construction folks, are you also keeping in touch with your Chambers

of Commerce in the region to let them know, because a lot of this

might spill out over a cost factor to them, given the increase in

what you will have to do to secure the ports?

Mr. STEINKE. Congresswoman, as Mr. Keller said, there is a public relations element to the whole security issues, making sure that

the public is informed. I know that we have been working very

closely with the Long Beach Police, and they have been working

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with the Chamber of Commerce so that they can inform business

members and the community in general about measures that they

may see or that may be taking place. Added security in certain locations, as was testified earlier, there were some concerns about

the safety of bridges in California. And that needs to be communicated to the general public and businesses around the port as to

what is taking place so that there is not any undue concern when

they see a heightened security presence.

Ms. MILLENDER-MCDONALD. Speaking of bridges, Larry, let me

first thank all of you for being here. I suppose I just wanted to go

right into the questions here. But let me thank you for the work

that you do in providing our Nation as well as the people who work

at and around this place, close to our maritime centers, the type

of, I guess, satisfaction that they have. They really do depend upon

you guys, your expertise, your ability to move quickly at the sight

of any problems. And so I really want to personally thank all of you

for the work that you do here while some of us are back in Washington trying to bring the bacon in to you.

But the information sharing, Larry, that has been a concern that

we have had since September 11th, that a lot of the agencies were

not integrating their intelligence whereby one did not particularly

know what the other was doing. Given the September 11th, how

much information sharing are you now getting from the Federal

agencies, you know, the CIA, FBI and others?

Mr. KELLER. We believe that as a part of the task force there has

been vast improvement. As Captain Holmes said, when the Port

Security Task Force came out about a year and a half ago, many

things were pointed out. At that time, this port community, which

is a particularly active one, a real partnership with the ports, the

shipping companies, the freight forwarders, the security agencies

began looking at those things. And what we found is we didn’t

know too much.

And leading up to September 11th——

Ms. MILLENDER-MCDONALD. Neither did we.

Mr. KELLER. But leading up to September 11th there was a lot

of work that was done, particularly between the Coast Guard, INS,

Customs, and then with FBI and some other more arcane Federal

agencies where this information sharing began taking place. Starting on September 11th, as a result of the work that has been done

before, all of the parties came together. And as Captain Holmes

said, the initial response was to stop each ship and anchor it outside of the port, go on board, check the documents, make sure that

in fact the captain and the crew were who they said that they

were, and that they were in fact in charge of this ship.

And we had those delays in the first week or so. And those

delays are something that frankly, while they made sense from a

security point of view, aren’t something that we can sustain as a

trading society. We have grown prosperous over the efficiency that

we have built in, the logistics efficiency that we have built in.

Following that, however, as this information sharing got better

and better, what then happened was that INS, Customs, Coast

Guard were feeding information back and forth. And Coast Guard

was, for instance, requiring earlier and earlier notification calls in

from the ships as to who was on board, what the manifests were,

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and that information was then shared out to the agencies and came

back essentially a clearance to allow a vessel in without anchoring,

or to anchor the vessel out far enough where it could do no harm

until such time as the individuals and the cargo manifests were

checked.

So information has made this whole thing work. I am going to

guess that we can always do a better job. One of the things that

I have said, and it is a little out of my purview, but I don’t think

so, is that I would like to see the Congress and the Senate fully

fund the ACE computer system, that is the Automated Customs

Environment system, which has been requested to be replaced for

about the last 5 years. And while our Legislature and the President

have put in 100 million and 200 million here and there, this is

about a $1.2 billion project. And the type of information that it affords in profiling, if not in specific, and these were some of the

things that you were discussing with Mr. Fox, allows Customs and

the other agencies to make a decision as to whether they are dealing with a reputable known party who has patterns of integrity or

someone who is just trying to slip something through. And those

type of enhancements frankly are—and this information sharing

that you have referred to, Congresswoman, are what allowed Congress to move.

When we speak to our railroad brethren, they talk about velocity.

When that velocity slows and you are moving 9 million containers

as we through these two ports, someone is going to hurt. Some factory is going to slow down. Some retail store is going to run out

of materials. And while the buffer stocks are probably something

that should be better considered, the fact is that our standard of

living and the efficiencies at which transportation and retailing

and manufacturing are done have delivered a remarkable economy

in the way we do business, and it has given a remarkable economy

to our citizens.

Ms. MILLENDER-MCDONALD. You are absolutely right. This is

why it is critical for folks to recognize the importance of those ports

and how they do transport cargo and if, in fact, it has to be held

in abeyance because of some manifest and we cannot get the goods

in here and sent across the Nation, then it is absolutely a—it will

be a hinderance and a disaster in my view.

Let my say a couple of things. I see the—I hate to see this device.

I thought we only saw it in committee in Washington. But let me

see that permanent change costs. I need to get some assessment of

that, a list of that. I think you spoke about a cost that will now

be permanent given the heightened security that you have.

The portwide identification system and the control access and

positive identification, if you can speak on that perhaps at the time

maybe the chairman comes back in to raise questions. But I will

say that we understand that there is going to be a cost because of

the heightened security. Now permanent things that you are going

to have to put in place. I need to know this for one of the Congress

folks who represent you down here, along with the one who really

actually represents the port; that is, Congressman Rohrabacher.

We would like to have that so we can best understand what we are

going after as we go back to fight on your behalf.

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I would like to have you look at the bill that I have, and you too,

my friend, Mr. Chairman, the threat assessment bill that I have

that looks at the clear—the threat assessment of all transportation

so that we can get a better understanding of what we need, the

type of funding that is needed, and the critical aspects of those

threats. And so I have that bill pending. I have talked with the

Secretary, and I have talked with some of the administration folks

about it. And so that will help us in really getting some idea of the

costs that will be imposed, permanent costs, given the heightened

security that we are asking for.

Mr. FOX. I would like to, if I may, emphatically second what

Larry Keller had to say about the Customs, so that is it on the

record, because it is really a critical part of our new environment.

Ms. MILLENDER-MCDONALD. Thank you.

Mr. SOUDER. Currently intelligence and the ability to share information is going to be the critical component, because we can’t

chase everything.

I, too, want to thank the port directors for your—I mean it is

amazing to see the size and scale of what you are doing here and

the expansion with it. It is clearly important to our trade. I was

intrigued by one of statements from Mr. Steinke, and I—just because I am not familiar enough with ports.

You said because each port has unique characteristics, control for

security should be determined and maintained by the captain of

the individual ports. As opposed to what we are doing now?

Mr. STEINKE. Mr. Chairman, I think it is important to note that

unlike airports, individual ports have multiple points of entry. As

you go through an airport, you have an individual concourse that

can be controlled at a certain point. I think Captain Holmes and

other people in the profession would agree with me when they say

that here in the Port Complex of L.A.-Long Beach, you can probably get in landside 15 or 20 different ways, and waterside, you

know, multiple ways. We have 46 terminals that was mentioned

before. And so I think the security plan that would be endorsed

and approved should be done on a localized basis as opposed to a

cookie cutter approach that would say that Port Hueneme in Ventura County should be looked at the same way that the Port of

Long Beach-Los Angeles should be looked at, the same way that

San Diego should be looked at.

Each has a unique need. Each has a different control point, and

the captain of the port should be working with the port authorities

on a local basis to approve a plan that fits the right size of the individual port.

Mr. SOUDER. Do you and your association sense that this isn’t

happening?

Mr. STEINKE. No. I think it was one of the concerns expressed

by the association early on as to some pending legislation that said

there would be mandated requirements for each and every port,

and those mandated requirements may not apply to a bulk dock

that is dealing with coal or petroleum coke or some kind of aggregate versus a container terminal that has very specific requirements and controls on those types of things.

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So we wanted to make sure that those differences were recognized in any legislation that was passed. I think that the Hollings

bill reflects that.

Ms. MILLENDER-MCDONALD. The Hollings bill is the bill that reflects that?

Mr. STEINKE. The Senate bill was revised to reflect that.

Ms. MILLENDER-MCDONALD. The companion bill is—Representative Brown out of Florida has the companion bill to that in the

House.

Mr. SOUDER. You also made a reference to the AIS—I think that

is the Shaw. Since we are in the majority, it will move in the

House under a Republican name. But Ms. Brown is certainly a key

player.

The AIS system, in your statement you described some of what

that is. Is there anything else you want to add to that? One of the

things you said is it may be beyond the scope of this committee.

One of the things that frustrates this committee is hardly anything

is beyond our scope, because we have commerce and the others. I

just wanted to make sure because some of this we are backing into

areas to get at what we are doing here. We are saying, oh, well,

just like on INS, when we go to the embassies overseas, what we

are learning is a lot of the preclearances who we are clearing at

the embassies or who we are rejecting at the embassies, garbage

in, garbage out, in the sense of background checks. And often it is

Congressmen beating on them to clear somebody, and they clear

somebody and then we have got them in our system and they are

cleared. They are not even illegal, they are legal because some constituent called us and we said, hey, we have got someone who is

a friend of someone who lives in my district in Pakistan, who is

from Pakistan. Similar on some of the trade things, as we move to

the points of origin, not only on our close borders but elsewhere.

Did you have anything that you wanted to add to that comment?

Mr. STEINKE. Well, Mr. Chairman, I think the AIS system, as I

understand, it is basically for cruise mariners, and I think it is

something that the Maritime Administration is working on. I would

see that would be a stepping stone toward a broader identification

system. And I know there has been some talk about advocating a

national transportation identification system, where all transportation workers would have some kind of a system. So the AIS is

a stepping stone toward that process.

Mr. SOUDER. For individuals, basically much like a variation of

this Fast Pass stuff that you have on workers.

You heard me commenting in the last panel regarding the inability of Customs to do more detailed taking apart of—kind of the second tier of investigation at the actual ports. That is a subject in

both of your ports. I know the arguments can go both directions;

in other words, what comes in here goes all over the country, we

all have a stake, and the money comes from Los Angeles to Washington. In the first place it is not Washington’s money, it is money

that stays here. But we are putting a lot of Federal dollars in here

as well.

And do you think this can be worked out? I mean, it is inconceivable to me that it is 15 miles. It is even inconceivable that it would

be several miles. As I said, at most places we are concerned about

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it going—vehicles going around a corner from the site once they

have been identified as a potential risk.

What do we need to do to make this happen?

Mr. KELLER. Perhaps I could answer that. We are in a new reality. I mean, years ago each of our terminals had warehouses onsite because we were handling non-containerized cargo. So this

would have been easy. As we have redeveloped our facilities, those

have disappeared, and you only have to look at the old photos and

the new photos to see how much that has been the case.

But for efficiency’s sake, as I think Customs has stated, you

know, they have chosen sites for their physical characteristics to

handle a mass of containers, both for storage and for individual inspection for a variety of reasons.

It is not unreasonable to assume that there probably are some

facilities that are closer. That is not going to be on each terminal,

I don’t imagine. Some terminals do have what we call tailgate facilities where they can actually examine the tailgate of the container. While they may not have space to unload the whole container at that site if there were something suspect inside it, it

would give the ability to do that.

The other thing that comes to mind, just as I was listening to

the conversation is that Customs recently moved, and GSA has put

up their property for sale, which is right on Terminal Island, and

that is very, very central to both ports and could possibly give a

site, in a limited space environment, where this might be possible.

But again, I can’t help but agree with you. 15 miles is clearly too

far if you have a container threat of some kind, particularly if there

is a public health threat of any kind involved. The last thing you

would want to do is drag it through neighborhoods.

Ms. MILLENDER-MCDONALD. Given the quadrupling of containers

coming after the dredging has taken place, the spot that you have

just identified as an interim place for the container inspection

would not be adequate at all. Then is there anything else that we

would have on a larger scale for the container ships—for the containers that we will have given the large volume that we are expecting?

Mr. KELLER. Well, we certainly have a large volume of containers. There has to be a differentiation, Congresswoman, between the

inspection of suspect containers which probably at this point is best

done by some of the portable equipment that Customs has acquired, the gamma ray equipment as opposed to the solid almost

bunker type equipment that works at the border, because the

trucks are streamed through, and at any given time you can—you

have power to take them through a fixed facility.

But in an identified threat, after that has been done, I am going

to guess that you are probably talking a very, very small number

of containers. Not 15 or 20, but say one container that sets off a

geiger counter or some other sniffing devices that would show that

there is a biologic or something inside that would be threatening.

In that case I think a small central facility probably would suffice.

Ms. MILLENDER-MCDONALD. We are speaking about—while there

will be quadrupling of the containers, We are speaking about a

small percent of those that really will need to be further examined

in this place?

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Mr. KELLER. I think so. The quadrupling or the doubling over the

next 20 years from our 9 to 20 million is going to be occasioned by

the growth in trade and manufacturing and consumption. The bad

guys only have to send one in to give us a really bad day.

Mr. SOUDER. It is going to take more than an acre. I am not arguing that site—in fact I have similar questions about that site.

But it is going to take multiple acres. Secondary is the most critical. Secondary is where the stakes really go up. It isn’t the first

part where they go through on the border where they are scanning

them, it is when they send them over to secondary to take it apart,

to send guys in. That is when all of the danger occurs. If there is

a shooting, that is where it is going to be. If there is bribery, that

is when it is going to be. If there is an explosion, that is when it

is going to be. If there are people who are going to flee, that is

when it is going to be, because it means that we have identified

them beyond the first part, and that part of the cooperation is the

Federal Government is going to invest more, but there is going to

have to be investments by the local ports, the local city, the local

business people.

And let me—I know we need to get to the third panel, and I

want to raise this, this point which I am going to reiterate on the

third panel. They can hear it on this one, too.

One of the things my home city does is a lot of reinsurance. We

have lots of major companies there in reinsurance. And security

and terrorism have become a huge question in the insurance industry as to whether anybody is going to be able to afford insurance

any more. One of the things is that those who don’t, who have additional vulnerabilities, are going to either pay premium rates on

insurance or get no insurance, and that is just the bottom line.

Most of these companies right now are opting out of any terrorism insurance and asking the Federal Government to pick it up.

Some are looking at the risk and the cost to business, much like

what happened to doctors, when they couldn’t get catastrophic coverage, individuals, it is incredible. We have to figure out how to do

this. And the businesses that—whether they are cruise lines or

ports or whoever who become more difficult targets are going to

have a competitive edge. It isn’t just that there is a cost of security,

it is going to become a competitive edge, in your rates and insurance, in whether people take your cruise or not your cruise, your

airlines or not your airlines, because for the business side, you will

be able to get insurance probably at a cheaper rate and people

haven’t done it, and from the advertising side, for clients who want

to use you, it is a different market.

Instead of security being a liability, all of a sudden having better

secondary facilities, being able to say—it is almost like a Good

Housekeeping Seal that what is coming through here has an advantage over other ports, and a bad housekeeping seal if you don’t

have it. It is a different commercial reality that is just kind of

dawning on everybody in the business area, and insurance is going

to be one of our huge first tests that can just bust the bank, like

it is happening in medicine, if we are not careful where you are

going if you get hit and don’t have insurance.

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So those are new dynamics, and I wanted to make sure I raised

that because these issues are important. Anything any of you want

to add before we conclude, or do you have any additional?

Ms. MILLENDER-MCDONALD. No. I just want to thank them and

want to continue to work with them so that we can make sure that

you have what you need for the safety of our folks and the work

that you are doing and the businesses here. Please, stick with me,

and of course Dana Rohrabacher and I will be working together

with you.

Mr. SOUDER. I wanted to make one final plug that is security,

but also a historic landmark. You have got some great lift bridges.

I know the Coast Guard was arguing that they are part of their

secondary emergency route, but I hope you can preserve those. I

know there is a push to be efficient, and we are doing that all over

America. But as somebody who really appreciates historic landmark opportunities, it is a vital part of your community if you can

figure out how to make it work commercially.

Ms. MILLENDER-MCDONALD. Funding from the Federal Government, Mr. Chairman.

Mr. SOUDER. You can tell which party she is from.

Can the third panel please come forward? Mr. Winter, Mr. Heck,

Captain Wright, Mr. Cisneros.

[Witnesses sworn.]

Mr. SOUDER. Let the record show that each of the witnesses responded in the affirmative.

And Mr. Winter, you are first. Thank you for coming.

STATEMENTS OF JAY WINTER, EXECUTIVE DIRECTOR, STEAMSHIP ASSOCIATION OF SOUTHERN CALIFORNIA; DENNIS

HECK, CORPORATE IMPORT COMPLIANCE AND PURCHASING MANAGER, YAMAHA CORPORATION OF AMERICA; CAPTAIN BILL WRIGHT, SENIOR VICE PRESIDENT FOR SAFETY

AND THE ENVIRONMENT, ROYAL CARIBBEAN AND CELEBRITY CRUISE LINES; AND MOISES CISNEROS, LEGISLATIVE

MANAGER, LOS ANGELES CHAMBER OF COMMERCE

Mr. WINTER. Good afternoon. Chairman Souder, Congresswoman

Millender, it is always wonderful to have you back in the district.

Chairman Souder, we are honored to have you spend the time

and take the time and the interest to look at our seaports, which

we feel very strongly are a very unique part of southern California,

and frankly a very important part, I think as you are learning, of

not only California as a whole, but the Nation.

The Steamship Association is made up of the shipowners, operators that provide deep sea ocean transport service to southern California’s ports in San Pedro Bay. Our members also include the pier

operators and stevedoring companies that provide service in this

harbor.

Primarily, the focus of our membership is the liner-container

trades that serve us here. I want to say every one of the major container carriers that comes into Los Angeles-Long Beach is a member of our organization. Frankly, we are rather small. There is only

about 45, and of those, the container carriers, the major container

carriers run probably 25. So the industry, frankly, in terms of numbers isn’t quite as large as people often think.

75

I always like to mention, and I think I did when I spoke with

Mr. Rendon on the telephone, frequently people, when talking

about our industry, tend to confuse the vocabulary and refer to us

as shippers. We are not the shippers, we are the ocean carriers.

The shippers are our customers, the people who tender freight and

merchandise to us to transport.

Since September 11th, our members have had quite a revelation

here, and I think it is appropriate Larry Keller and Dick Steinke

certainly and Guy Fox mentioned that the role of the Coast Guard

and the Customs in particular and the other agencies played. They

stepped right up and provided the leadership necessary, frankly, to

keep our members and this port and the community and the economy moving on a very smooth basis.

You mentioned the delays we had right at the beginning. I think

those were worked out very quickly, and we have found ways to operate. Because of the global nature of the ship operating business,

we have seen security all over the world.

In the United States, it is frankly somewhat new to us. In other

parts of the world we have to deal with pirates, we have to deal

with gangs that come aboard the ships and steal and murder crew,

and so forth. So we have always thought of the United States, I

think like the rest of us, as a safe haven. Today of course these

things have changed.

In our business here in Los Angeles-Long Beach, and I think

throughout the United States, and I don’t want to speak for the

United States, but primarily here, what happens on the line side

of our operations I think is our primary concern.

The shipowners that have just mammoth investments today are

very responsible, conscious business people. But we come into seaports, and particularly I think here, West Coast and California in

particular, we have always had a rather open feeling about our

ports and anybody who wanted to could basically come in. As a result, we think it is very important, other people have mentioned

also, that there be developed a standardized ID system for all port

laborers, truck drivers, what have you, that want access to our facilities.

Those IDs and standardized system of checking the people should

include a reasonable background check. We don’t have to go back

to their childhood, and so forth, but I think we need to have a good

idea who the people are that are having access to these vital assets

that we have here in the harbor.

We think also that random drug testing should become an important part for people who provide service in the harbor, whether it

is truck drivers—most of the truck drivers already do. Some of our

other port workers today don’t. Most parts of the transportation industry require some type of random drug testing, and I think that

would be appropriate given today’s circumstances that be included.

The trucks that pick up the containers and deliver them in the

harbor. The system that we should be working with them, because

it is a constant flow, needs to be a real-time system. By that, we

don’t want to have systems where the information is put in, it

stays in there 5 years and nobody ever updates it. You have to

have a system that ties into the other law enforcement agencies.

So if, say, an outside person that’s coming into the harbor has creVerDate 11-MAY-2000 10:56 May 29, 2003 Jkt 000000 PO 00000 Frm 00079 Fmt 6633 Sfmt 6633 D:\DOCS\84230.TXT HGOVREF1 PsN: HGOVREF1
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ated a felony since their identification went into the system, they

are flagged, they get a new no-entry type of process.

Above all, we think that we have to be sure that we come up

with essentially one system that is going to work. As you know,

there has been a lot of concern, different agencies, levels of government, everybody is pushing for it. Let’s not—let’s put all of our energies into one system and make sure that we get one that works.

Cargo security and the flow of commerce here. I think Customs

has certainly touched on it, everybody has touched on it. It is very

important with the volumes that we deal with here to use sound

risk management approaches to security.

An absolutely crucial item that Larry Keller mentioned was updating of the computers that the Customs Service uses. As good as

they are, and I think the people that work with the port will tell

you that Customs has better information than most people give

them credit for today. But those systems are still outmoded. The

Customs folks that are here, Eileen, you can correct me if I’m

wrong, I wanted to say the system that is still in place, the old

ACS system, does not connect directly with the ocean manifest that

we are using. We provide Customs with electronic manifest information, and that information has to be essentially hand input to

the rest of the system.

That is where the Automated Commercial Environment System

that we started to get funding is very crucial. We have to have a

system that ties it all together.

I think now on the Customs issue, I think Audrey Adams was

being kind. We are terribly understaffed here. If you look at our

manpower relative to the Port of New York, which is less than half

of our size, New York has more people than we do in the Customs

Service. I mean it is appalling. As you know, the East Coast of

course is where this country was born, and I think a lot of manning

and staffing of the government agencies still reflect that mentality.

We have never moved west where the growth is. It is very important that Customs and probably Coast Guard—frankly, I don’t

know the Coast Guard numbers compared to those others areas,

but I would guess that we are lower.

Another item I always like to touch on, too, is TEUs, 20-foot

equivalent units. My apologies to Mr. Steinke and Mr. Keller. They

like to talk in TEUs because those are big numbers. It is like we

like to say in oil pollution, people like to talk in gallons rather than

barrels and tons because they are a bigger numbers. When we talk

TEUs, bear in mind that approximately 75 percent of the containers that come into this area are 40-foot containers. So if you translate it back, we are handling really total container volume somewhere in the neighborhood of 51⁄2 to 6 million containers that come

through this port, import and export.

On the import side alone, it is somewhere in the neighborhoods

of 3.2 million containers. And again nobody, I don’t think we have

a hard number, but a good working figure is that 75 percent of our

containers are 40-footers.

This means though when we hear people talking about increasing the examination of containers here, that is still on the import

side over 31,000 containers someone has to look at. There’s seaports in the United States that aren’t handling that many in a

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year. The volumes here are significant. That is where risk management and new technology becomes critical. We just cannot start to

do the job of looking at the risk cargo, not the everyday cargo, not

the Mattell, the Barbie dolls, not the Nikes, the Dell computers,

the Toyota components. We have got to do a better job of identifying the people we don’t know and that pose the risk.

As you may have seen on the border down at Otay Mesa and San

Ysidro, they worked down there with the manufacturers and the

maquiladoras to develop essentially a Good Housekeeping Seal of

Approval for those manufacturers that have good procedures in

place. We think with effort, the same type of procedures and recognition can be adopted for the overseas cargo that comes into this

area.

You have mentioned the price tag. And some day it is—we are

all going to have to reckon up to it and figure out what this is costing, And this is where good management and good risk management is going to play a role.

I wanted to thank you for the opportunity to address you. In addition, I would like to leave with you, if you haven’t seen by chance

the World Shipping Council, which is really our master organization for container and liner trades in the United States, their position and their position paper that they have used in the Senate

with the Hollings bill. I will leave copies of that here.

Thank you again.

[The prepared statement of Mr. Winter follows:]

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Mr. SOUDER. Thank you. We will look to at least take the summary recommendation and put that in the record if we can.

Mr. Heck.

Mr. HECK. Yes, Representative McDonald and Mr. Souder, I really appreciate this opportunity to address your committee about seaport security from the perspective of a medium size importer. Now

I am maybe one of the smaller fish in the supply chain, but I want

to just give you some perspective from a company that imports

maybe 3,300 of these 40-foot containers.

My name is Dennis Heck, and I am the corporate manager for

purchasing and compliance for Yamaha Corp. My primary responsibilities are purchasing inbound logistics, Customs clearance and

compliance for our shipments out of Asia and Europe and Canada.

Each year, Yamaha imports approximately 3,300 of those 40-foot

containers containing our pianos, musical instruments, components

and things like that to our corporate headquarters here in the Los

Angeles area, and the parts to our factory, our musical instrument

factory in Grand Rapids, Michigan, and our piano and speaker factory in Thomaston, Georgia. Some of these parts also end up at an

OEM musical case factory in Elkhart, Indiana.

You can see that our shipments are not only important for our

U.S. sales efforts, but for the continuation of our assembly lines

and for the safety and employment of our valued U.S. factory workers and support staff.

I am glad to report that since September 11th Yamaha has not

experienced any appreciable delays in clearing Customs or in picking up and delivering these containers to our warehouses. Part of

that I feel is due to my close working relationship with U.S. Customs.

Virtually all of Yamaha’s purchases and shipments are related

party transactions from our parent company in Japan or from

Yamaha factories throughout Asia. Since the majority of the containers for these shipments are stuffed and sealed at our factory

door, we feel reasonably comfortable as to the security and safety

of these shipments from the foreign origin to U.S. destinations.

The few unrelated transactions that we purchase from nonYamaha suppliers are further controlled by requiring the use of our

U.S. Customs broker’s freight forwarding divisions in the foreign

ports of departure. Since September 11th we have implemented a

procedure that, as a condition of purchase, our purchase orders to

unrelated foreign suppliers state they must surrender their shipments and documents to our selected freight forwarder in the foreign countries. Our U.S.-based freight forwarder and his foreign office will then be responsible for coordinating the export to the

United States.

This process, we feel, increases the security of our shipments and

dramatically reduces the chance of introducing unwanted problems

into our supply chain.

I have several proposals that I would like to discuss. Since September 11th there has been a flurry of activity by many Federal

agencies to address the security of our Nation. We are concerned

that, unlike Customs, most other Federal agencies may be preparing their respective initiatives without input from the trade and

without a coordinating lead agency.

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It would seem appropriate for U.S. Customs to be given this task

since they have the expertise in handling and inspecting passengers and cargo. In addition, Customs should be given priority

funding to ensure expedited implementation of their new ACE system to assist them in their enforcement functions and to ensure

faster clearance of imported products in the future.

In an effort to tighten security at the ports, I am hopeful that

background checks and identification be required of all employees

in and around our air and seaports. This should at least include

crew members, dock workers and trucking companies.

Since almost half of my 25 years in the international trade arena

was spent with U.S. Customs, I must admit that I am a bit biased

in my support of their endeavors. However, Customs recently has

linked—proposed linking commercial compliance to supply chain

security. These are two separate issues of international trade that

I feel should not be linked.

For example, the related party aspect of commercial compliance

is one issue that must be overcome by an importer to qualify as a

low-risk importer. But, on the other hand, supply chain security in

a related party shipment should be considered a low risk importation. Consequently, I urge Customs not to link commercial compliance and supply chain security, since I feel it would be very difficult for more importers to qualify as a low risk importer under

these two buckets.

Thank you again for giving me this opportunity to speak with

you.

[The prepared statement of Mr. Heck follows:]

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Mr. SOUDER. You still have a little bit of time on your 5 minutes.

Because I am not familiar with the term, could you explain what

exactly you mean by the related party? You mean, like a parent

company, a co-shipper?

Mr. HECK. Exactly. Related party transaction in Customs lingo

means that there is a relationship between the parent and the subsidiary. That is what the transaction is.

Mr. SOUDER. Captain Wright.

Captain WRIGHT. Good afternoon, Mr. Chairman, and Representative Millender-McDonald. My name is Captain Bill Wright. I am

the Senior Vice President for Safety and Environment for Royal

Caribbean Cruises, Ltd., comprised of two brands, Royal Caribbean

International and Celebrity Cruises.

An additional responsibility of my position requires that I continue to sail regularly as a Master on Royal Caribbean ships.

I am pleased to appear before you today regarding security at

our Nation’s seaports, particularly in the Port of Los Angeles and

Long Beach. I am here not only to testify on behalf of my company,

but also our industry, our trade association, the International

Council of Cruise Lines.

Mr. Chairman, I have written testimony that with your permission I would like to submit for the record and summarize in an oral

statement. The International Council of Cruise Lines is a North

American industry trade association representing 16 of the largest

cruise vessel operators.

Last year ICCL members carried over 7 million passenger on

over 90 ships calling at ports around the world. The majority of

those passengers were carried out of U.S. ports, and the majority

of those from the Port of Miami and Port Everglades and Ft. Lauderdale.

Mr. Chairman, before September 11th, passenger ships calling on

U.S. ports and U.S. terminals were required to maintain comprehensive security plans that are acceptable to the U.S. Coast

Guard.

ICCL worked closely with the Coast Guard a number of years

ago to provide a security plan template for use by our members to

assure that each of these plans contains the required information

in a similar format to ensure consistency and thoroughness.

Because these plans and the industry’s existing security posture,

this industry was able to immediately increase its security measures to the highest level immediately after the tragic attack on our

country on September 11th.

In addition, ICCL initiated daily telephone conference calls between cruise companies’ security and operations managers and government agencies. Participants included the Coast Guard Atlantic

Area Command, Coast Guard Pacific Area Command, Coast Guard

Headquarters, Coast Guard Marine Safety Offices, Department of

Transportation, U.S. Immigration and Naturalization Service and

other agency representatives as needed.

Again the purpose was to harmonize actions around the country,

facilitate the ship relocations when the Port of New York was

closed to cruise ships, identify best practices for use by everyone,

to share information, control rumors, and to standardize requirements and procedures.

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Each ICCL member line has officers at my level who are at the

front line of these conference calls and who are the front line

facilitators responsible for stepping up security, relocating ships to

alternative ports and ensuring the consistent safety and security of

our passengers, not only here but around the world.

Mr. Chairman, I have mentioned harmonization and consistency

several times now. These elements are absolutely critical to the

success of all efforts addressing terminal, ship, passenger and

cruise security.

We are currently working with the Coast Guard at several levels

to identify and implement a long-term security posture that is not

only high but also sustainable, one that is flexible enough to meet

the demands of each of the unique ports that we visit, either as

turn-around ports or as ports of call.

Because our members trade worldwide, it is important to assure

that appropriate and adequate security is provided at each port of

call in whichever country we visit. To assist in obtaining consistency around the world, ICCL has recently sent to all Caribbean

states urging a review and a timely upgrade of security at these

ports.

We have and will continue to participate fully in the U.S. Coast

Guard initiative at the International Maritime Organization to develop worldwide security regulations and guidelines.

Mr. Chairman, ICCL members continue to operate at the highest

level of security. The visible measures that passengers will see actually exceed those at airports. Not only are passengers and handheld items screened by x-ray and magnetometers, all baggage, 100

percent, is screened by x-ray, hand searches, explosive sniffing dogs

or other methods.

All stores coming on board are screened and all personnel passengers, crew and visitors are thoroughly identified and vetted before boarding. Passenger lists with pertinent information are provided to the Coast Guard, Customs and INS at least 96 hours in

advance of sailing for their screening.

Key side terminal and waterside security, where necessary, is coordinated with the Coast Guard and other Federal, State, and local

authorities. At this time I would like to applaud the support and

close cooperation that our industry has received form the three

Federal agencies represented here today. The benefits derived from

our longstanding relationships with these agencies in responding to

the events of September 11th is one of the real success stories of

the last 5 months.

Mr. Chairman, a lot has been accomplished since September

11th. However, our task is by no means over. Let us assure you

that ICCL and its cruise line members will be at the forefront of

these activities, development and implementation of technology and

striving in partnership with responsible agencies to assure that

cruising remains a safe and secure vacation option.

Thank you, Mr. Chairman. I would be pleased to answer any

questions you may have.

[The prepared statement of Captain Wright follows:]

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Mr. SOUDER. Thank you very much. Mr. Cisneros, you get to bat

clean-up.

Mr. CISNEROS. Good afternoon, Chairman Souder, Representative

Millender-McDonald. It is a pleasure for me to be here and speak

on behalf of the Los Angeles Area Chamber of Commerce, where

I serve as the International Trade Manager. We are the largest

Chamber in the Los Angeles region, speaking for companies who

employ over 750,000 individuals.

First off, I would like to mention that we are in awe and admiration of the diligence and hard work that we have witnessed in the

southern California international trade community. They have

strived to efficiently balance two very important issues, which is

the timely delivery of goods and the heightened security risks.

And as some several speakers mentioned before me, one-third of

all containers entering the United States passes through the Ports

of Los Angeles-Long Beach complex. Any outgoing hub in the transportation shake here would adversely affect local economies

throughout the United States.

We are keenly aware that international commerce has played a

dramatic role in the shaping of Los Angeles’ business landscape. In

fact, one out of seven jobs in California is directly related to international trade.

International trade affects so many different industries in southern California that any impediment to international commerce

would have a detrimental effect on all of our economies.

September 11th has made all of us reevaluate everything that we

do. Security and vigilance has increased. The U.S. Coast Guard

took immediate action when they improved the way that they identified vessels, cargo, how they identified the ports from where these

vessels are coming from, and where they are going to.

Now the Coast Guard, Customs, Immigration or the FDA board

all incoming ships before they actually reach their berth. The idea

of all crew and passenger lists aboard cruise ships are closely scrutinized. The shipping industry has also agreed to deliver manifest

and crew information 96 hours in advance to U.S. Coast Guard officials, and since September 11th, many procedures like smart examinations have been implemented rapidly and effectively, thanks

to the cooperation of the Federal agencies, the steamship industry,

the Marine Exchange and the harbor commissioners of both the

Port of Los Angeles and Long Beach.

We would like to especially acknowledge the leadership of the

Captain of the Port, John Holmes, of the U.S. Coast Guard and

Captain Mannie Ashmeyer of the Marine Exchange, their crew and

colleagues for their fine work under these new and extreme circumstances. We are confident that they will continue to do everything humanly possible to protect us from security risks without

plugging the flow of our economy.

However, we must understand that these increased security risks

must also be met with applied new technologies. Unless we implement new technology solutions, we will be forced to use manual

processes and techniques that will delay shipment and cause a negative ripple effect in our economy.

We need to purchase smart technology like the gamma machines

that use X-rays to examine the hull of vessels and help pinpoint

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suspicious cargo efficiently. Currently we only have two such machines. And at the cost of $1 million each, we urge Congress to help

offset the increased cost of securing our Nation’s busiest seaport as

we use technology to protect our home front.

We believe this is a national problem with national solutions.

Much like the government has developed rapid response to the

risks at airports, so too must it focus on sea-based transportation.

The risk that security breaches pose both to human life, cargo security and potential environmental consequences require that we be

diligent in all three of these areas.

The fact that we are holding these hearings today is a reflection

of your interest in this, and we welcome your commitment to continue to work with our local community to find sustainable solutions to these new challenges. I am available for questions.

Mr. SOUDER. Thank you very much. If I could start with Mr.

Winter with just a—first a comment. Your comment was very interesting. I’m not arguing. New York does make sure that they get

covered on their fair share. But every single State will make the

argument they are underfunded. And in fact, California is not underfunded compared to the dollars that are coming in.

I think much of the numbers are—in some areas you are up, and

some areas you are under. I am not arguing the port question. I

think you diverted a lot of yours to water. And different States

are—everybody—one of the funny things that we have dealt with

as Republicans, as we got in the highway bill, for example, California gets I think 89 cents on the dollar and argued that they weren’t

getting their full dollar. But that is like fourth. Everybody else was

below 89. The problem is the Federal Government takes off of everybody. That is why some of us believe that we ought to take less

in at the Federal level and leave it at the State.

But there is no question that you made an interesting point

about historic use of resources not adjusting to contemporary conditions; in other words, when there is movement and growth in one

area and there are certain categories where is it very difficult. My

bet is, and I wanted to ask you this question, that it isn’t the business community that is necessarily resisting the background

checks.

Mr. WINTER. No, I don’t think it is the business community. The

business——

Mr. SOUDER. So why isn’t it being done? Is it because of the

unions oppose it?

Mr. WINTER. Historical baggage there, should we say, and that

goes back to some of the waterfront practices during the McCarthy

era and some resistance by laborers on the West Coast and some

of the ports in general back—there were some witch hunts and

there were some concerns that they were just unnecessary intrusions into the background of people.

Mr. SOUDER. Because the illustration that I was going to use, because clearly this is a California political problem, it makes eminent sense that—particularly as—one of the people when I was a

staffer in the Senate who drove the drug testing for transportation,

I carried the workplace bill that helped fund small businesses, in

particular, how to set up drug testing, which also would have to inVerDate 11-MAY-2000 10:56 May 29, 2003 Jkt 000000 PO 00000 Frm 00103 Fmt 6633 Sfmt 6633 D:\DOCS\84230.TXT HGOVREF1 PsN: HGOVREF1
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clude some treatment type of proposals or it would never be held

up in court, for one thing, and equality of management and labor.

But those type of things seem very logical. I also don’t believe

that either of the ports or any official organization of any type here

is prohibited from doing it. What seems to be being asked is for the

Federal Government to mandate it because there is not the ability

to execute it here at the local level.

And the corollary I wanted to make is, it is a similar political

problem in how to downsize the Port of Philadelphia or Connecticut

or New York, or places because you have the same difficulty in the

historic structure that views it as a job threat. It is one of the difficulties of when things become consolidated in government of the

ability to move, or when there are large institutions.

So hopefully we can gradually over time catch up some of those

balances. Maybe if there is additional security threats we can move

toward more background checks, but my bet is that politically both

of those things, while good sounding ideas, are difficult to move

ahead. And I wanted to comment on some of the complexity and

some of the numbers that you hear thrown around.

In fact, often one State gets one thing and one State gets another. In Indiana we lose in a lot of other categories, but we do OK

on agriculture. There are some countervailing things.

I also really appreciated your comments on risk assessment. You

know, I already heard both of us talk some about that. And this

has been an emotional reaction. But one message, in talking with

Mr. Bonner yesterday, because apparently he is going to be giving

a speech here Monday to many in the community, and I urge each

of you to take this back to the business community, we are in a

political environment that is different than anything that we have

been in in my lifetime, arguably Pearl Harbor was but I wasn’t

here yet. And that is at this point there is a zero tolerance expectation out of the general public, which is nearly impossible to execute. And with that zero tolerance, it requires us to think more and

more in our budget sense of risk assessment, and you all have

given us some good suggestions about how to do that.

You have had to do it in your businesses already, and we have

to do that. But you need to understand a fundamental thing, that

this is different than what you would do in the private sector, in

the public arena, because you would make a more logical dollar

risk assessment and figure there is going to be a certain number

of losses. We are in a zero tolerance situation. If anything happens

in any port in the United States, it will be automatic almost shutdown of the commerce because—same thing at the airports. Same

thing if they hit an amusement park.

OK. We gave you guys in government 6 months and you still

didn’t protect us. And that is why there is going to be kind of—

hopefully we can be logical and then ramp up one notch post logical.

Because this isn’t logical at the grass roots level. If we successfully kind of fend off some of these attacks for a period of time, perhaps we can have a more realistic discussion. But I can feel in

town meetings here in January as I went through, they believe

there is the one unifying legitimate function of government, and

that is to protect them from external and internal attack. And a

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clear nonparty differentiation, nonpolitical. It has put us, when you

are trying to figure out how to do your businesses in a logical way,

your costs in a logical way, all of a sudden, as I mentioned, last

panel, insurance rates, the companies are going to be asking you

now proactively what are you doing to make yourself less of a hard

target? What are you doing? It is changing our phenomena, at least

in the short-term and probably somewhat over the long-term.

I wanted to make some of those comments. You have given a lot

of good information, and if I could ask one more specific thing of

Mr. Heck following up my other question to you. When you said

that if these are parent or related companies, and you said it we

would be very difficult to get preclearance for any—I forget your—

you said it would be—there would be problems in the supply—the

related party to get a low risk importation. Are you saying that

most people who ship have some affiliation somewhere with somebody who wouldn’t be cooperative or it would be considered somewhat of a risk somewhere?

Mr. HECK. No. I was trying to make the point that in related

party transactions, the supply chain security aspect of that would

noticeably be less of a risk, because in a related party transaction

your parent has gotten the container and it is sealed and it is

shipped to the subsidiary. So a lot lower risk than dealing with an

unknown shipper shipping to someone else in this side where the

U.S. import has no control.

Mr. SOUDER. It would be almost like a regional Wal-Mart store

compared to the parent Wal-Mart, maybe a little more independence, depending on the company.

Well, I yield to you, Ms. Millender-McDonald, for questions. Then

we will get closing.

Ms. MILLENDER-MCDONALD. Thank you so much, Mr. Chairman.

Please, Mr. Winter, don’t delay those Barbie dolls, for heaven’s

sake.

Mr. WINTER. That goes back to the related transactions.

Ms. MILLENDER-MCDONALD. My grandchildren will be a little

floored.

The first thing that I suppose—I am trying to get to the notes

that I wrote here. You spoke of sound risk management approach.

And I suppose you said that so that we would not have the propensity to try to examine every cargo, but those that are potential

threats. Or may I ask you to expound on what you mean by sound

risk management approach?

Mr. WINTER. I think you interpreted exactly what I meant. But

I think sometimes today there is—you will see in the media and

the press concerns that Customs is only looking at 1 or 2 percent

of all of the containers that come in.

Ms. MILLENDER-MCDONALD. That is what is reflected back in

Washington.

Mr. WINTER. Exactly, yes, and I think Customs officials will say

that the 1 or 2 percent that they are looking at, they are looking

at for a very good reason.

Now, maybe they can go up a little higher, but then it becomes

redundant. You start looking at the Barbie dolls and the Toyotas,

and the things that—those are manufacturers and business people

who have spent millions of dollars developing the integrity of their

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brand names and so forth. They are not going to allow bad things

to happen, and I think the example we used like down in the

maquiladoras when Senator Feinstein had some concerns, and they

developed some programs there that—where they went to these

major manufacturers. They surveyed, you know, their shipping systems and watched the logistics chain from the plant to the border,

and they saw that those were good sound practices that they were

putting in, and there is no need then for the examination.

Ms. MILLENDER-MCDONALD. Irrespective of a new heightened

awareness that we have now with the security, you still think that

what they have is sound enough where we will not need to go

through all of them?

Mr. WINTER. We just can’t look at—the numbers are just too

large.

Ms. MILLENDER-MCDONALD. Indeed, you are right that we cannot slow up commerce either, because people are waiting for whatever it is on the other side of this.

Mr. WINTER. You combine that with practicality. And I think one

of the points that Dennis is trying to make, when you have

Yamaha shipping to Yamaha, that is probably a poor use of resources to open up every Yamaha container and start looking at it.

Ms. MILLENDER-MCDONALD. Very well put and duly noted.

Background checks. I will say to the chairman, we have grappled

over this given the fact that there are some persons, unions who

are concerned about background checks, not necessarily to have

background checks, but to not use that adversely against them if

in fact—if there was an arrest, this arrest was not a criminal one.

And so this is what the whole notion is of the background checks

and the concerns.

Mr. WINTER. I think you have some ideas. The word is reasonableness. That is exactly that. Our industry has kind of come to a

quasi-understanding that you don’t have to go back to a person’s

childhood, or if they had a juvenile or something arrested for smoking marijuana, say you can’t have a job. Today they have a family

they are raising, they are responsible citizens. That person’s background is going to get cleared.

Ms. MILLENDER-MCDONALD. Absolutely. That is the sentiments

of those whom I have spoken with.

Mr. SOUDER. What I wonder is, clearly people change, and so one

way to deal with this is the period of time, depending on when it

is. But other transportation workers do in fact have drug and alcohol background checks. That is part of it.

Ms. MILLENDER-MCDONALD. By no means are we on the Transportation Committee stating not to have background checks, but we

have got to have some reasonable provisions that we impose. I

think that is what it is.

Mr. Winter, the general feeling among shippers regarding the 96-

hour notification requiring the Coast Guard to come aboard the

ship, do you have any feelings on that whatsoever?

Mr. WINTER. I think it is—on the whole, most of the information

our industry today provides both Customs and Coast Guard is electronic, and it is—other than a few unusual exceptions where the

distance say from a foreign port to the U.S. port is very short, less

than 96 hours, it is—then it gets difficult of course.

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But I think your ocean transits across the Pacific, for instance,

providing that type of information I don’t think has been a major

challenge. They have it. They are used to providing it. It is just a

matter of maybe sending it a few days earlier. I wouldn’t be surprised if the vast majority of the companies were already sending

it that early.

You have to watch in that 96 hours as the ships get faster. What

used to be a 15-day trip from Japan to the West Coast is now a

9 and sometimes 8-day trip.

Ms. MILLENDER-MCDONALD. Again, duly noted. I want Mr.

Chairman to know as he returns back and certainly speaks on our

behalf, that he does recognize—he recognizes that the growth here

is in California. And therefore California needs more resources

given that growth and given the request that is imposed here on

these two ports to move cargo is just enormous. And so we have

got to make sure that you recognize the necessity of California calling upon this Congress for more financial resources, Mr. Chairman.

Thank you so much.

Now, Mr. Royal Caribbean. You spoke of your security plan, and

indeed it seems like you really do have something rather ironclad.

But given the heightened security, would you be opposed to having

either sea marshals, and what would be your public reaction to

that, or undercover law enforcement on these cruise lines? And did

you have any fewer people going aboard the cruise lines after September 11th?

Captain WRIGHT. Well, I will answer the last question first. You

are speaking in terms of guests? The industry has been dramatically impacted. Our business I think was affected very much in the

same way that the airline industry was affected, and partially the

relationship is because of all of our guests or majority are coming

through the airlines to us.

But the good side of that story is it seems to be recovering nicely.

We are not where we would have been had September 11th not occurred, but we are on our way.

In terms of the sea marshals, we are very appreciative for the

Coast Guard’s efforts and their concerns in trying to provide that

type of security.

I would question, looking at the current loads that are on Coast

Guard resources, the need to necessarily direct those sea marshals

toward cruise vessels. Our crews we feel that we have—given the

background checks that are in place, all of our crew members are

in possession of U.S. visas issued prior to becoming crew members

or boarding our ships.

The controlled environment of a cruise ship, the access control

that we have on and off the vessel. All of our vessels, for example,

crew members and passengers alike have access cards that have

electronically embedded photographs, facial photographs of the

crew members and the guests, which are checked every time the

crew member or guest leaves or boards the ship.

So there is a whole slew of efforts that are going into maintaining a highly structured security organization on board the ship.

So, again, I am stating this based on the known and limited resources that the Coast Guard is working with, that perhaps there

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are other merchant traders that don’t have similar types of controls

over their crews, that effort might be more appropriate.

Ms. MILLENDER-MCDONALD. And last, Mr. Chamber of Commerce. I have not—Mr. Cisneros, thank you for being here.

What impact has September 11th had on tourism and travel?

And what impact has it had on our local businesses?

Mr. CISNEROS. It has been pretty devastating. The southern California area travel and tourism industry, hotels, the convention bureaus, the trade conferences, some other—the L.A. Convention Center and others areas have suffered dramatically. I know for a fact

that the hotels all over the Los Angeles area have declined at one

point down to 60 percent. And those numbers, although they are

getting better, it is still—it hasn’t changed back to where it was at

all.

And so we have been very concerned. There is a lot of people

being laid off. And trying to get back into a work force is a concern

for the Department of Commerce.

Ms. MILLENDER-MCDONALD. I have a resolution that is going in,

as I return back, asking people to revisit your State and all of the

great things that are in your State and do the due diligence of

going to hotels, staying over the weekend, and doing some things

that we think that we Californians can do to help us during this

time of getting back on our feet, if you will, in terms of tourism.

And then we are inviting folks to come in and not be concerned

about the air travel or the bus travel or rail, whatever it is coming

into California, or to any other State. This is not just endemic to

California, it is talking about to revisit your own State, meaning

your respective State.

I was late coming in because I had the great opportunity to be

with a company in my district that has done breakthrough through

providing a type of container now that will be in the hull of the

aircraft, that will circumvent any explosive devices that would be

in luggage to dismantle the plane. This is just great breakthrough.

They will be coming to Washington next week, and hopefully you

will come and meet with them, as I will be inviting Members of

Congress to come.

But this is what we are trying to do to get that type of satisfaction and the fear taken from that flying passenger as well as the

ship passenger, to try to see what we can do in terms of technology.

So that is a new breakthrough that is coming in. It will be for aircraft. And certainly the amount of passenger travel and tourism

that we have had has come from aircraft as opposed to sea, in my

opinion. I might be wrong, sir.

But, nevertheless, we are trying our desperate best to get people

back on planes, on ships. Mr. Royal Caribbean, my husband wants

to take a cruise, and so I am going to see whether we can do this

to help you out.

But let me again thank this chairman for his sensitivity. I have

known him to be this way. He goes outside of his State to come in

to see just what can be done to help us. While he is not a Californian, he is a committed Congressperson for trying to find the answer. So thank you for being here today.

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Mr. SOUDER. Thank you. I have to make sure those Yamaha

parts gets to Elkhart, which is in my district, and for my son’s keyboard.

I wanted to ask two more brief things, one on the cruise lines,

on your background checks. Would you agree that an INS background check has access to information that you in the private sector do not have in a background check, and that really the Federal

Government would not want to share?

Captain WRIGHT. I would assume so, yes. I would almost want

to say I would hope so.

Mr. SOUDER. Because one of the—the reason is right now in this

heightened security times, while I tend to kind of superficially

agree that you are not a prime target, in actuality you have—I will

just say this—what I saw this morning was a higher degree of security, and probably better clearance than at any airport. What we

are striving for is to get to that level in an airport. With the one

exception that we are trying to do at the airports as well, and quite

frankly as a conservative Republican I have some concern that the

information we are collecting on people could actually leak out and

really isn’t the business of the general public and needs to be kept

in the Federal realm.

In the area of background checks, because a lot of it is basically—I mean, the fundamental problem we are trying to deal with

in the United States right now, there isn’t any other way to say

it, with latent cells. And what in the world is a latent cell? In other

words, we are not just chasing—in the 19, 2 of those guys on September 11th had done something before. But others were interconnected. This isn’t the type of information that all can find out

in your background checks, only the Federal Government will have

it.

That is why at least for a period of time it actually gives your

cruise people additional support that we are running those lists of

your crew members and others with those background checks, because you wouldn’t have it. It is not a lack of, well, in fact, your

willingness to work with ports. Is it unfortunate that you got

caught up in your weakness in our airlines system, because from

what I can see here, you are way ahead. With the sea marshals you

are double that. By having people watching, probably unnecessarily

because you already had security on board as you come into a port,

you are able to do the background checks. If they can’t penetrate

that, they are basically going to look for a softer target.

But that is one thing that I wanted to point out, because of your

ability to do a background check is different than the government’s

ability to do a background check.

Captain WRIGHT. We are fortunate that the government is doing

it though. I think the way that it is being processed now is that

all that is happening, if there should be a hit, that the government

is simply indicating that is an individual that they would like to

look more closely at. The reasons for that are not communicated.

Mr. SOUDER. And then the other thing is I think that the 1 to

2 percent figure is more of a national figure from what I can tell.

And believe me, just learning a little about ports is almost worse

in some cases than learning nothing, because whether it is counted

one container or two containers, and how to convert the 31,000 that

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they are going through or trying to move up to 40,000 into the

units looks to me more like a third of a percent that is being

checked. But what the bad guys need to know is they never know

which parts are likely to get the highest risk. We are moving that

up. The question is how to move that up from that even to the 1

to 2 percent level or higher. I am one who believes that—I don’t

know whether it is 1 percent, 2 percent. It is certainly higher than

probably where it is at in Los Angeles and Long Beach.

You have so much stuff going through here that you have to have

a higher load than 31,000 even to get it up to the national average.

But how to do that is really the question with the system, with the

new radiation devices, with the equipment that people can drive

through faster. We can probably look at a higher percent with more

accuracy without compromising a lot of that if we do a logical

ramp-up. Because our supposition in the government is—and I

have been working on the terrorism issue for about 5 years in this

oversight committee and around the world, and Larry Johnson and

others have been in front of our committee both in closed session

and open session for years looking at that—is they are going to increasingly get more sophisticated, but we are, too.

And that now that we have new tools to be able to identify, it

isn’t necessarily a win-lose situation here if we work it, because

what I call the kind of the—everything seems to a baby boomer

like another repeat of Vietnam, where we are always not quite

doing enough to get over the hump. In this case we may be slightly

ahead of the curve if we stay at it and work together, with hopefully the least impact on commerce.

Do any of you want to make a final statement before we adjourn?

Mr. HECK. I would like to make one comment about this 2 percent figure. It is really important to understand that importers

transmit data to Customs on virtually every line on every invoice

that we ship through Customs, and that along with the manufacturer ID number of the factory, the IRS number of the importer,

the country of origin of the product of every line on every invoice,

that is all transmitted to Customs. That data, with the help of

business analysts at Customs and their computer, that is why this

ACE system is so important to make it even more efficient. That

is where they come up with this 2 percent.

So people may think that this 2 percent, they just throw darts

at a board and they pick 2 percent and the other 98 percent go

through. That is really not true.

Mr. SOUDER. Our political problem is that system didn’t work on

September 11th, that we thought we did a better job of identifying

risk factors, and what we found is that we didn’t know them. They

were moving back and forth across our border, some of them three

and four times. We have been up meeting in Ottawa to try to address their questions. This has gotten beyond where we had an

ability to identify the risk, And this is not unusual in international

trade.

The biggest narcotics—well, one of the biggest narcotics busts in

Detroit were narcotics inside a load of worms. In the reporting,

what looked like was going through looked like worms, not narcotics. In Vermont—that was the kind of the worm story. And the

other one in Vermont, there they are looking for cheese, because

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that is important to their people. In other places they are looking

for fish. This isn’t just terrorists, but the fact is that—and then the

last point is because all of the information is coming in doesn’t

mean that the Federal Government—that this is typically coming

from the business side, this is typically what you think anyway,

but that all of information coming in doesn’t mean that we actually

have the ability to sort it.

When we are looking at those college kids who came in and—illegally sometimes, and we don’t know what university they are going

to, yet the university sent it in to the INS, it doesn’t get looked at

because we haven’t had the ability to have enough agents to go

through it to track it. So the universities say, well, I don’t know

about all this paperwork, and some of the business goes well, so

what if I kind of don’t make it real clear on this manifest, because

who knows whether they are going to check it anyway. And we

have kind of bred that system, which all now is kind of getting a

little tightened up, and we have to figure out how to tighten that

up without putting you out of business.

I think your fundamental point is correct. Probably we have a lot

of this paperwork already in the system. By managing it better, by

doing what the private sector does, this is a government that at the

Social Security System we have regional computers that couldn’t

talk to each other and we had a company stealing us blind in four

regions and we didn’t know it. That was a government that still reenlists servicemen who have been—I mean, I remember working on

this a number of years ago. We reenlisted rapists who were busted

in one zone, and then they reenlisted in another branch of the military because we weren’t sharing family information.

It is expensive to get everything up to speed. We are working on

terrorism. We are behind the business sector. But we are trying to

catch up. We have a mandate from the American people: Stop the

terrorists. We are trying to do it because they also want a good job

and a good paying job. If we don’t have international trade, we

aren’t going to have that either. And your message is today help

us sort that through.

You were also very specific in a number of things that are just

very helpful too, and helping me understand, and as I say, it comes

out in the committee print and the report, too.

Anything else you want to add?

Captain WRIGHT. On behalf of the ICCL, I would like to say that

we fully support the need for the nationwide ID, and to what degree that requires background checks or what type of background

checks that can be done, that can be discussed, but that we have

a consistent way of identifying port workers is of critical importance.

An investigation was done not so many years ago in Miami, the

Port of Miami. I cannot quote you the exact statistics of that investigation, but it showed a shockingly high percentage of port workers who were actually convicted. That raised great concern.

Mr. SOUDER. It is scary.

Captain WRIGHT. These workers are at times being given access

to all areas of our vessels due to loading.

Ms. MILLENDER-MCDONALD. Mr. Chairman, the one thing that I

would like to ask Mr. Winter and Mr. Heck to do for me is to give

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me some type of a white paper, if you will, on those percentages

that we talked about, because those of us who are on the Homeland

Security tend to think, and I, until I have heard from some of you

over the times I have been here, that the 1 percent is just atrocious

in terms of investigating.

But, when you speak of it in the realm that you have today, and

others have in recent meetings I have had, it is efficiency, and efficiency is what is going to help us to identify a small percentage as

opposed to those of us who thought it should be a 10 percent, 15

percent. You always think in large numbers, but not necessarily

does that always cash in to efficiency and also security protection.

Mr. WINTER. If is it any comfort, I was speaking to the Century

Plaza this week and they were sold out. So they were very optimistic. They wouldn’t renegotiate some rates for May.

Mr. SOUDER. One of things you can tell politicians too, and we

complain about the 1 or 2 percent, that we often make decisions

based on a national sample of 600 people. Good target sampling is

a principle in marketing research. The only question here is, are

we getting the right mix? That is what we are struggling with right

now, because we have had our confidence shattered.

Mr. WINTER. Mr. Chairman, you touched on, and I tried to in my

comments, the role that using the technology and new technology

that is going to enable these percentages to be increased. Because

I think what people have been looking for in the past is usually—

people that lie about the value of their merchandise or drugs and

things like that, and we are looking at a new world of what we are

looking for, too. And I think in every industry where it has been

challenged, we have been able to find the technology, whether it is

better gamma rays, faster and so forth, that we can increase the

percentage of the freight that we are looking at without being intrusive in the stream of commerce. I think that is absolutely critical.

Mr. SOUDER. Thank you very much for coming. I thank everyone

for being patient, and those who came here today to listen. And

with that, our hearing stands adjourned.

[Whereupon, at 3:25 p.m., the subcommittee was adjourned.]

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